Organizational Structure: Pros And Cons

Every company needs an organization structure, the purpose is to monitor, coordinate and allocate the tasks to directly achieve the achievement of organizational aims. Also, the company need to be efficient, flexible and innovative to achieve a sustainable competitive advantage, this laid an important foundation for a successful company. As a chief executive of a newly established low-cost carrier in Hong Kong, I would like to design our own organizational structure of the airline, and we think that Entrepreneurial structure is suitable for our company. I will describe the strengths, weakness and the measure to avoid the problems anticipated.

There will be some reasons of why we choose Entrepreneurial structure as our organizational structure because this structure brings a lot of benefits. The first strength is the wide span of control, it can simplify the levels of structure and make quick decisions and executions easily, so it can contribute to the airline’s long-term development. As we know that this structure is a flat organizational structure, it requires a wide span of control, so there are very few hierarchical levels, so the message can reach more employees faster and shorten the distance between the manager and subordinates’ levels, the information flow will become faster and make coordination easier so that the manager can make quick decision and executions more easily. And these benefits are contributing to a new established low-cost carrier’s development because the competition in the low-cost airline market is fierce, the reason is the changes in consumption patterns in Asia, consumers want a cheaper ticket. Also, China continues to open air traffic to Asian markets, it makes that many low-cost carriers selected as a destination. So that making a quick decision and executions can make the business survive in the competition because it can propose the solution when the company face different situations. The second strength of this structure is cost saving, as I mentioned that this structure has few hierarchical levels and wide span of control, we don’t need so many managers and staff in this company so that we can reduce the cost of human resources. Also, run a wider span of control don’t need to employ as many managers so that it can reduce corporate general management costs as well. Therefore, the cost of training can be also reduced after the number of employees is reduced. This kind of strength is contributing to our low-cost carrier. As we know that, low-cost carrier is focused on cost control over than a market, it will eliminate the option of onboard catering, free checked baggage allowance and wheelchair service form the traditional airline’s ticket, thus providing the lowest fare to the passengers. So, we can see that all the operations are simplified, thereby reducing the number of staffs can reduce the airline’s expenses. The third strength of this structure is less formalization, it means that the subordinates have more autonomy on the content of work, working hours and work methods. So that is the way that employees can guarantee stable output results, it can contribute to the airline’s company development. Because the low degree of formalization, job behaviours are relatively non-programmed and employees have a great deal of freedom to discretion in their work, therefore they will be willing to put in their work, not only can produce high-quality work efficiency, it also improves their responsibility for work, such as they will be willing to give feedback of ideas to their superiors. So that these kinds of factors will benefit to our company. Because a growing organization must reflect accurately that originality that the business can survive so that the company need a lot a new idea to maintain company competitiveness.

Apart from the strengths, there is some weakness of this structure here. The first disadvantage is the low degree of departmentalization, because this structure only requires a few hierarchical levels of structure, the company cannot over-specialize the various department, so it hard to bring Experts together, also it is difficult for employees to adapt to the work of the department, because they don’t have this kind of knowledge. This not only affects work efficiency but also influences decision-making ability and quality. Especially in the aviation industry, it is usually unpredictable, there will be some unexpectable saturation at any time, for example, adverse weather conditions, mechanical failure or hijack. It will affect the operations of the airline, so good and efficient decisions can avoid and reduce the risk of incidents. Then another disadvantage is the wide span of control and less formalization lead the lower employee performance and the low quality of the product. As we know that a wide span of control will simplify the levels of structure. If the number of subordinates is not changed, that means the manager needs to manage more employees, this will increase management pressure. Also, the managers do not have enough time to provide the necessary leadership and support for the subordinates, therefore the employee performance is adversely affected, they will become lazy and not willing to work, finally, the product quality will be reduced. Such consequences will have a significant negative impact on the airline because aviation is a service industry, if we not providing a high-quality service, the passengers will not be satisfied also it will destroy the passenger’s impressions of the airline, lead to customer loss and profit reduction. The third drawback is the authority centred in a single person may lead to a high degree of centralization, so that only the CEO allowed to have the authority to make decisions in this structure. And excessive centralization will bring various drawbacks, such as reduce the quality of decision making, organizational adaptability and subordinate enthusiasm. Because the problems that occur at the lower-level personnel need to report to their superior, which not only affects the correctness of the decision but also affect the timeliness of the decision making, second excessive centralization will affect the adaptability, because organizations in an unstable environment must constantly adjust the strategy, however an over-centralized organization may deprive the department’s self-adaptation and adjustment. At last, it will reduce the subordinate enthusiasm, because all the decision-making power is concentrated in top management, subordinates only need to follow their instructions, they do not have the decision making power, right of speech and autonomy, so that their enthusiasm, creativity and initiative will be wiped out, it will lose its concern for the organization as well, as a result, it has a negative impact on the newly established company.