Question departmentalization are key elements of a

Question 1.1

What is organizational structure?
The term “organizational structure” implies how individual & team actions within
an organization are coordinated. Organizational goals and objectives can only
be achieved if individual work is well coordinated and managed. Structure is
considered to be an extremely useful tool that helps to achieve coordination, as
it determines authority relationships (who reports to whom), specifies the formal
communication channels and media in an organization, and
describes how individual actions are related. Organizations can operate in a
series of different structures, each having specific pros and cons. Formalization,
hierarchical levels, centralization and departmentalization are key elements of
a company’s structure. Centralization shows
the level where power and authority are being held on
superior levels. In centralized companies, many important decisions are made at
superior levels of the hierarchy, whereas in decentralized companies, power and
authority are being devolved to inferior levels and problems are resolved by
employees who are closer to the problem. Formalization shows the extent to
which the procedures, policies, rules and job descriptions in an organization are
written and explicitly articulated. Formalized structures contain numerous
explicit and written rules and regulations. The structures define employee
behavior with written rules, so that employees have almost no autonomy to take
decisions on a case-by-case basis. Another key element in a company’s structure
is how many levels the hierarchy composes of. Assuming the size of the
organization is constant, tall structures have different layers of management
between frontline employees and the senior level, while flat structures compose
of only a small number of layers. In tall structures, employees that report to
each manager tend to be fewer and, thus, managers have greater opportunities to
supervise and oversee staff activities, whereas flat structures entail a higher
number of employees reporting to each manager. In the latter, managers are
relatively less able to secure close monitoring and as result employees enjoy
more freedom of action. Organizational structures are different in terms of
departmentalization. There are two types of departmentalization: functional and
divisional. Organizations with functional structures group activities by functions
performed. Such structures may place employees in departments such as
marketing, manufacturing, finance, accounting, human resources, accounting,
manufacturing, logistics and IT. These structures assign each person a special role
and each person manages big volumes of transactions. In organizations with divisional
structures, departments are the sole customers, services, products or geographic
locations the company serves. As a result, each unique service or product the company
is producing is assigned to a different department. In every department,
functions such as manufacturing, marketing and other roles are replicated. In
these structures, employees act more as generalists and less as specialists. Employees
are responsible for performing a wide range of tasks in the service of the
product rather than performing specialized tasks. Organizational
structures can be
classified as either mechanistic or organic. Mechanistic structures are rigid, bureaucratic and resist changes. These structures are highly formalized and
centralized. Organic structures are the antithesis of mechanistic
organizations. They are low in complexity, formality and formalization.

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For almost all its existence,
Toyota’s organizational structure employs a traditional Japanese business
hierarchy model where most senior executives take most or all of the decisions
for the whole organization. It is characterized by little delegation of
authority, and all activities are too focused on one-way information flow:
from the top down. For instance, senior executives working in U.S. plants are
closely monitored by a Japanese counterpart who makes sure that the American
executive conforms to structured protocols. This example defines centralized
decision making. On the one hand, centralized decision making promotes the
business goals and strategies defined by the board of trustees. On the other
hand, it also means that the organization responds, as a whole, slowly to
external threats or internal weaknesses. The weakness in this type of
organizational configuration is that such a strict hierarchical structure seems
to promote secrecy; only the people on the top of the pyramid know what is really
going on. This can mean great damages in cases where there are massive product
recalls, such as the cases with Toyota back in the late 2000s. Toyota’s board
of directors currently comprises of 29 Japanese executives,
all of whom are Toyota insiders. The Chairman has worked at the company since
1960 and all of the other directors have worked at Toyota since the 1960’s and
1970’s. They are all Japanese men. The board cannot get any more homogenous and
interlocked than this. This centralized power structure prevents authority from
being generally delegated within the company; all U.S. executives are mentored
by a boss based in Japan and are not authorized to issue a recall. Information
flows to a great extent one-way, back to Japan where decision makers call the
shots. Within this rigid, seniority-based and hierarchical system employed by
organizations, people are not willing to disclose bad news to more senior
levels and keep all information from those who need to hear it thinking they
will protect them from losing face. In many companies, such as Toyota, family bonds
make challenging the boss almost impossible. If someone tries to bypass the
hierarchy, he is regarded a disloyal member acting in violation of the
traditional consensual corporate culture. Groupthink becomes established taking
into account that there isn’t any significant mobility between companies: looking
for staff from outside is thought to disrupt a company’s internal balance, and
an executive who wants to change job will be stained as a disloyal and untrustworthy “job-hopper”. Further, the company becomes less
able to take decisive action. Harmony and balance take precedence over alternative

Product-based organizations provide
the opportunity to dissolve in-house barriers and eliminate unnecessary
coordination work, thus ensuring all team member efforts will be focused on the
purpose of building improved cars and developing a talented workforce. Enhancing
the strength and autonomy of regional operations; and underlining the
importance of genchi genbutsu, the “Go and See” philosophy
of Toyota that encourages employees to go to the source and find the facts to
make correct decisions, build consensus and achieve goals) in training

Objectives for the change are the

Ø  To streamline work processes from R&D
to manufacturing, for building ever-better cars and enhancing TMC’s workforce.

Ø  To provide individual business units
the opportunity to take quick and independent decisions.

Ø  To strengthen the functions
responsible for setting mid-to-long term objectives and creating corporate

In the last several years, Toyota
has been faced up with a series of challenges, such as global scale recalls due
to defective parts. The recalls stained Toyota’s reputation for being a
high-quality provider and raised concerns about its ability to react quickly to
customers’ problems. All these organization changes in favor of a product-based
structure have urged Toyota to address these quality issues and simplify work
processes, e.g. abolish the disproportionate time and effort scheme as well as
the cross-functional co-ordination currently in place. The company’s latest
massive recalls affected issues such as faulty seatbelts, power-window switches,
and Takata airbags.


Furthermore, the new changes will
contribute to the company achieving its sales and production targets for 201. It
predicts flat sales and production in comparison to 2015. The automaker expects
to build 10.19 mil units (incl. subsidiaries Daihatsu and Hino) worldwide in
2016, up just 1% from 2015, mainly due to the fall in overseas production.

Question 1.2

After the reorganization that was
implemented in 2013, Toyota’s new organizational structure now has the
following main characteristics:




In today’s organizational structure,
the firm has increased the power of regional heads and business unit heads to
take decisions. In other words, the company’s decision-making processes ended
up being less centralized. However, the heads in all business units report to
the global headquarters based in Japan. Toyota’s new organizational structure composes
of eight regional divisions (Japan, North America, Europe, East Asia and Oceania,
China, Asia and Middle East, Africa, and Latin America and Caribbean). All heads
in the regional divisions report to the company’s headquarters. With these
regional divisions, the organizational structure helps Toyota to improve
products and services based on regional market conditions. The company owns four
of these divisions: (a) Lexus International, (b) Toyota No. 1 for operations in
North America, Europe and Japan, (c) Toyota No. 2 for operations in all other
regions, and (d) Unit Center (engine, transmission and other “unit”-related operations).
This characteristic of Toyota’s organizational structure promotes development
of brands and product lines. Toyota’s new organizational structure is highly
more flexible compared to the old bureaucratic and hierarchical organizational
structure. This new structure has helped the company to respond faster to
regional market conditions. This flexibility is what has helped Toyota to
speedily respond to issues and to build top quality products. Nevertheless, the
increased power of regional heads to make decisions has lessened the headquarters’
control over the global corporation. Still, this organizational structure is
the key to business resilience, business continuity
and sustained growth.


Case 2

Question 2.1

Contemporary organizations are
driven by the following key factors that face-lift the management of workforce practices:

The impact of globalization; Nowadays,
businesses are not limited to national boundaries – they extend to the entire
world. The rise of multinational companies sets new requirements on HR managers.
The HR department is now responsible of securing the right mix of employees that
combine skills, knowledge, know-how and cultural adaptability handle global

Employees expect Self-Service
Technologies (SSTs); On-demand services have become
the new trend. Online shopping, banking and information available round the
clock have redefined expectations: employees seek the same independence at workplace
that they have as plain consumers. Top organizations motivate their employees
by granting them access to manage their schedules, whenever and wherever they
want. Employees are able to manage everything from bidding for open shifts, stating
availability and asking for PTO directly through a company-specific web portal,
data collection device or mobile app. These self-service features not only
empower the employees, but they also help senior managers streamline processes
and secure time to work on strategic goals.

A 9-5 schedule is no longer the
norm; The 8-hour
work day may have been a byproduct of the industrial revolution, but the
technological revolution makes the idea of 9-5 schedule seem rather obsolete. Employees
are taking up the time to respond to emails before heading to bed, taking calls
on the bus station and crossing out tasks done at home. All this counts as work
time. Organizations must now monitor this developing concept of time worked,
rather than just tracking hours spent at the workplace, in consideration of legislative
and regulatory requirements. The U.S. government is making changes to FLSA rules and regulations for
the first time in more than ten years to reclassify employees eligible for
overtime protection—this update will affect more than 4 mil workers and force
many companies to review and rethink the way they track time worked.

Compliance must be simple and easy; In
case legislative and regulatory mandates are not followed, it may lead to
serious and expensive consequence. However, complicated and regularly changing requirements
can present an obstacle to maintaining consistent compliance. Companies with
modern workforce management systems in place may use automatic processes in an
effort to reduce the risk of non-compliance. Simple automated rules, learning
alerts and a complete audit log ensure that employees are compensated based on
time worked, properly trained and certified, and the organization has fully complied
with all applicable laws and regulations.

Visibility means a lot—especially
when it comes to violations. Companies follow rules showing up on time, when
employees can take breaks and hours worked. The big question is how are these
rules enforced? Are these rules enforced by the managers on equal terms or does
one play favorites? Companies are seeking tools that can contribute to time and
attendance rules being evenly—and fairly—applied to all employees. These tools secure
a prominent level of consistency and continuity helping to avoid employee
dissatisfaction, turn-over or even litigation. With occurrence tracking, data
managers may efficiently and consistently enforce time and attendance policies
across the workforce.

International operations are based on
a high-level interaction and integration; Taking into account that offices and employees
around the globe try to stay connected, the demand grows for global workforce
management. Companies with global activities often used to function in regional
siloes, rather than as unified enterprises. Nowadays, companies seek a comprehensive
worldwide system, with a pack of benefits: one vendor, one joint interface, global
consistency and comprehensive talent and learning applications. Growing
companies find this option highly attractive: they deploy the system to new business
units easily, with small modifications to meet new local requirements and
secure increased consistency.

Versatile, adjustable, flexible and
agile workforce management solutions make the difference. Corporations aim to provide
simple and quick solutions to their target audience: user friendly systems that
comply with the business’ specific rules and requirements. Standardizing can be
one way of streamlining systems and processes. Today, workforce management requires
flexibility—a solution that can meet easily evolving and changing needs while keeping
its core structure.

Netflix represents one of the most
prestigious corporations that employ the policy of unlimited paid vacations.
The policy relies on providing freedom and responsibility to employees,
showcasing that they are treated as mature and fully formed adults.

Netflix seeks self-sufficient employees
and awards them accordingly for that. This is also the reason behind the
company’s policy not to hire talents right out of college.



Question 2.2

In my opinion, reinforcement theory describes best the policy
of unlimited paid vacations. Reinforcement theory is based on
the work of Ivan Pavlov on behavioral conditioning and the later work of B. F.
Skinner on operant conditioning. According to reinforcement theory, behavior is
a function of its outcomes. Reinforcement theory describes four interventions
to modify employee behavior. Two of these are methods of increasing the
frequency of desired behaviors, while the remaining two are methods of reducing
the frequency of undesired behaviors. Positive reinforcement is a method of
increasing the desired behavior, Negative reinforcement is also used to
increase the desired behavior, Extinction is used to decrease the frequency of
negative behaviors, Punishment is another method of reducing the frequency of
undesirable behaviors.