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What are the various Organisational Design and Change Variables?

Centralized decision making is common for some functions, such as finance, research and development that are organized for the entire corporation, whereas other functions such as production, marketing and sales, are more appropriately decentralized. Two key issues are the speed with which the decisions have to be made and whether they primarily affect only a certain subsidiary or other parts of the company as well.

As noted, culture is another factor that complicates decisions on how much to decentralize and how to organize the work flow and the various relationships of authority and responsibility.

At this point, it is important merely to note that cultural variables must be taken into account when designing an organization. Delegating a high level of authority to employees in a country where workers usually regard “the boss” as the rightful person to make all the decisions is not likely to work well. Managers must think through the interactions of organizational, staffing and cultural issues before making final decisions.

There is no one way to organize a business, in fact, companies can adapt to changing environment by adopting various organizing methods. Contingency theory applies to organizational design as much as to any other aspect of management. The best organizational structure is the one that facilitates the firm’s goals and is appropriate to its industry, size, technology and competitive environment.

Structure should be fluid and dynamic, and highly adaptable to the changing needs of the company. The structure should not be allowed to get bogged down in the administrative heritage of the organization to the point that it undermines the very processes that will enable the firm to take advantage of new opportunities.

However, the future for an MNC structure as well as for small businesses lies in a global web of networked companies. Ideally, a company tries to organize in a way that will allow it to carry out its strategic goals; the staffing is then done to mesh with those strategic goals and the way the organizational structure has been set up. In reality, however, the existing structural factors often affect strategic decisions, so the end result may be a trade-off of desired strategy with existing constraints.

Ideal staffing plans have to be adjusted to reflect the realities of assigning managers from various sources and the local regulations or cultural variables that make some organizing and staffing decisions more workable than others.

What may at first seem a linear management process of deciding on strategy, then on structure, and finally on staffing is actually an interdependent set of factors that must be taken into consideration and worked out as a set of decisions. Staffing decisions should be intricately intertwined with other decisions regarding strategy, structure, and so forth.

A unique set of management cadre and skills in a particular location can be a competitive advantage in itself, and so it may be a smart move to build strategic and organizational decisions around that resource rather than risk losing that advantage.

Tim Scott:
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