The Importance of Organizational Structure: A Case Study Analysis of Semco and Grimsville Borough Council (GBC)

The structure, culture, and teamwork of an organization have significant effects on its performance and operations. The structure and design are chosen depending on a company’s objectives and functions. Culture and teamwork, on the other hand, are achieved based on the organization’s design and structure.

That is, coordination and cooperation among the stakeholders are dependent on the organisation’s structure. Therefore, organisational structure is a very critical issue in every organisation. This paper investigates organizational structure and its importance by examining and analyzing case studies of two different organizations.

Comparison of Organizational Structure and Design

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Semco and Grimsville Borough Council (GBC) are very different in terms of their organizational structure and design. Defining organizational structure, “it involves issues as how the work of the organization will be divided and assigned among positions, groups, departments or divisions and how the coordination necessary to accomplish total organizational objectives will be achieved” (Dalton et al, 1970).

In other words, an organisation should be designed based on a structure which can help an organisation achieve its objectives. Semco, has a very flat structure with only four organisational level, utilising a decentralised approach. Basically, a company is said to implement a decentralized structure when decision making is disaggregated into a number of divisions, each making its own decision (Siggelkow & Levithal, 2003).

Semco has managed to have a democratic and non-bureaucratic type of organisation by reducing the level of management and allowing the employees to participate in decision making.  The primary purpose of flat organizations is to rapidly respond to customers’ needs or changes in the business environment (Allen, 1998). Semco utilised this type of organisational structure because as an engineering company, it is always subject to technological changes and other changes in its environment.

Contrary to the flat structure of Semco, bureaucratic organisation like GBC is tall in structure, consisting of hierarchies with many levels of management (Allen, 1998). GBC has many levels of management and supervision; each department’s management reports to the councillors and to the chief executive while they handle member staff and employees which are at the bottom of the hierarchy.

The organizational structure of GBC is considered to be centralized and bureaucratic. This type of structure is obviously the opposite of the decentralised; its decision-making is made only at the upper level of management.

Additionally, bureaucracy is a form of organization that is characterized by a rational, goal-oriented hierarchy, impersonal decision making, formal controls, and subdivision into managerial positions and specialisation of labour (Allen, 1998). Bureaucracy is common to government agencies in which there should be specialisation in different types of public services such as education, social services and others, and formal controls must be practiced in order to ensure satisfactory public service.

Comparison of Approaches to Teamwork and Teamworking

According to Allen (1998), flat organizations have a strong emphasis on teams while Cohen & Bailey (1997) added that team-based organizations, with flat structures, can respond quickly and effectively in fast-changing environments. Semco possesses such characteristics as it has become a profitable company with enhanced organizational performance.

A team-based organisation also enables the organisation to learn more effectively and because of the combination of team members’ diverse perspectives, decision making is comprehensive (Anonymous, 2006). Diversity of ideas in a team leads to high-quality decision making and innovation (West, 2002).

Because Semco allows work teams to make decisions, employees and team members are empowered. Employees also undergo training programs that help them develop and learn new skills within the team, making them an effective and productive part of the team. In other words, Semco gives high acknowledgment on teamwork that almost every decision such as pay rates and working times and pattern are decided by teams.

On the other hand, teamwork is not highly regarded at GBC. Senior management is aloof and hard to be approached by their subordinates. Decision-making is also performed only by the council leader and the chief executive, thus processing of plans and completion of projects are slow. Moreover, GBC is departmentalized but each department is not working together but instead, they compete with each other and undermine other department’s activities, resulting in a diminished level of services and poor overall performance.

The problems of GBC mentioned in the case such as unhappy employees, slow decision making and competition instead of coordination exist because GBC has no teamwork. Team-based working can lead to improvements in organizational performance in terms of efficiency and quality (Applebaum & Batt, 1994 on Anonymous) while employees working on teams were found out to have higher levels of involvement and commitment to the organization (Anonymous, 2006).

Comparison of Cultures

Generally, Semco is considered to have a better organisational culture compared to GBC as reflected by each organisation’s performance. Defining organisational culture, it is an organisation’s set of shared behaviours, artefacts, values, beliefs and assumptions that it develops as it learns to cope with the external and internal aspects of survival and success (Oden, 1997).

Culture was said to be developed as an organisation interact with its environment thus organisational culture is unwritten. Because Semco and GBC have a different organizational structure, its culture also differs; Semco’s culture can be classified as task culture or the type of culture in which organizations has strong and cleared implemented objectives and mission and in which teamwork is emphasized because it is the basis on which jobs are designed (Anonymous, 2006).

On the other hand, GBC’s culture can be classified as role cultures which are highly formalized, bounded with authority, and in which hierarchy dominates relations (Anoymous, 2006).

Semco believes in employee empowerment and it is one of their motivations to make employees satisfied and happy with the company. Transparency is also part of Semco’s culture since the company practiced a profit-sharing scheme. Employees can have access on financial and strategic data to be able for them to participate actively in decision making. Trust and discipline are the core values of the company, ensuring that each employee is well committed to the organization.

On the contrary, GBC’s value is centred on power; that is, the authority has the right to decide and the employee must only follow resulting to unhappy and unmotivated employees. Employee empowerment is not practice and management does not even acknowledge lower-level employees’ concerns. Corruption is also suspected to be practiced at GBC along with overused power because transparency is not being practiced by GBC.

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