Organizational change can be brought by changing the structure. Under some circumstances, a manager can produce more change by changing formal structure than by changing organizational culture. If the change is initiated either through team building and improved interpersonal relationships (soft levers) or through formal restructuring for driving organizational change (hard levers) then it should be done by corporate head office as this first act to bring about the change lay the foundation stone of change.
Changes to formal structure and systems play a central role when substantial shifts in strategic direction are involved. The author has given Monsanto as an example which spun off its traditional chemical businesses and acquired seed and biotechnology companies. Organizational culture and team building activities are the facilitating factors in the transformation. Organizational structure plays major role in the transformation. It is also found that the companies, who have strategize the diversification, have been successful only by changing their traditional organizational structure.
Change can be altogether changing the strategic direction (as ‘Monsanto’ change) or it could be in the form of diversification where the company is not changing its strategic focus. In both the cases structural changes can play a major role. Professional services or MNCs that eye on global services have to shift their focus of organization by country towards organization by customer. The companies have established the formal structures (hard lever change) to customer based units. These companies know their clients’ functional areas better and are giving them customized services and are gaining global market penetration by providing customer delight.
To bring about organization wide change, the professional service firms are following the six step sequence. They are creating customer focus teams where the client has business. Then they are expanding these customer focus teams to provide region-wise customized service. They are employing the coordinator who can understand the global business situation of the industry and can better coordinate with the team of different regions. They are also employing the experts of particular field to service customer in a better way e.g. a financial consultancy service providing consultancy to a bank knows all the technicalities involved in the business. The firms are also shifting powers to these professional teams serving global customers. Now the firms are serving locally in different geographic locations which they are responsible to the global coordinators.
The organizations are able to reconfigure themselves by updating these skill levels, competencies and resources e.g. a company finds a formula that can be exploited in other domains also where the company is not functioning. It then goes for partnerships, mergers etc. to leverage the skill levels. The designs responsible for reconfiguration use stable and variable structures, and human resource practices that support this flexible structural form.
