IBBusiness ManagementHLRevision Notes2. Human Resource Management2.2 Organisational StructureAdaptive Organisational Structures

Adaptive Organisational Structures (HL IB Business Management)

Revision Note

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Lisa Eades

The Impact of Changing External Factors on Structure

  • When there is a change in external factors (market conditions, technology advancements or changes in laws) businesses may need to reassess their current structure
     
  • An adaptive organisation is able to change its structure in response to external factors
     

Evaluating Organisational Structures in the face of Uncertainty


External Factor
Explanation

Market Uncertainty

  • If the market becomes highly volatile or uncertain a business may benefit from a more flexible structure
     
  • Project-based structures can help a business to respond quickly to changing market conditions
    • They allow for collaboration across functional areas
    • Resources can be shared

Rapid Technological Advancements
  • Technological change can significantly impact an industry
    • Businesses may require a structure that allows for innovation, agility and quick decision-making
    • Flat structures encourage information sharing, collaboration and empowerment of employees

Global Expansion
  • Businesses expanding into international markets may benefit from a regional organisational structure
    • Coordination/control of operations across different countries taking into account local market conditions, laws and cultural differences
    • Supports centralised decision-making
    • Subsidiaries can adapt to specific regional needs

Competitive Pressures
  • Intense competition may call for a structure that enables speed, efficiency and customer responsiveness
    • Decentralised structures empower teams to make fast decisions and respond directly to customer demands
    • Promotes speed and  a customer-focused approach that may provide a  competitive edge

  • The appropriateness of an organisational structure depends on the context and unique characteristics of each business

  • Factors such as organisational culture, leadership style and employee capabilities should also be taken into account when selecting and implementing a new organisational structure

Changes in Organisational Structures

  • Some businesses choose to adapt their organisation structure to allow them to respond flexibly to changes in the external environment

  • Two examples of this are
    • Project-based organisation structures
    • Shamrock organisation structures
       

Project-based Organisation Structures

  • In a project-based structure employees are assigned to projects full-time
  • Project teams are led by project managers who have authority and decision-making power
     

Diagram of a Project-based Organisation Chart

2-2-project-based-organisation-chart-ib-hl-business-rn

A Project-based organisation chart showing human resources organised around two projects

  

  • Project-based structures are said to improve collaboration, communication and make use of specialised skills across different projects 
  • Employees often report to both a functional manager and a project manager or team leader
  • These structures are commonly found in industries such as engineering, software development and construction
     

The Advantages and Disadvantages of Project-based Organisation Structures


Advantages
Disadvantages

  • Project-based structures allow businesses to allocate resources based on project requirements

    • Specialised skills are effectively utilised
       

  • Project-based structures promote communication and collaboration between different functions/project teams which can improve problem-solving

     

  • Resources can be reallocated and businesses can respond quickly to changing business needs and market demands

  • There are two reporting lines which potentially generates conflicting priorities for employees

  • There is a need for constant communication and coordination across different functional and project teams

    • Can result in additional administrative work and potential inefficiencies
       

  • Conflicts may occur between functional managers and project managers

Shamrock Organisational Structures

  • Charles Handy's "Shamrock organisation" is based on the belief that workers are the most important business resource

    • Shamrock organisation structures provide flexibility and adaptability

    • They allow businesses to concentrate on their core functions

    • They can respond to changing market conditions and vary workloads without a large permanent workforce
       

  • Handy believes that:
    • Businesses should focus on meeting employees' needs for enrichment and flexibility
    • The organisational structures should be dynamic
    • Businesses should move away from the traditional employment hierarchy where they offer 'jobs for life'
       

Diagram Showing the Three Parts of a Shamrock Structure

ibdp-business-management-shamrock-organisational-structure

The Shamrock Organisation consists of core, peripheral and flexible employees
 

  • Core Staff are the small group of individuals who are directly employed by the business
    • They typically hold key positions 
    • They are responsible for strategic decision-making and managing the businesses overall direction
    • They are well-paid and have job security

  • Flexible Workers are individuals who work for the business on a part-time, temporary, contractual or ad-hoc basis
    • They provide flexibility to the business and can be scaled up or down based on the workload
    • They tend to be lower-paid for short periods of employment

  • Outsourced Services involves giving control over certain functions or services to external third-party providers that handle specific tasks
    • Example include IT support, human resources or facilities management
    • These are specialist functions and these services may therefore be expensive
    • By outsourcing these services the business can focus on its core competencies
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Lisa Eades

Author: Lisa Eades

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.