Businesses Adopt New Organizational Structures to Meet Changing Needs
- Alongside the different organizational structures discussed earlier, businesses adapt their organizational structure to stay agile amid market shifts, technological advances, and changing customer demands.
- Two instances of this includes project-based organization and shamrock organizations.
Definition
Organizational structure
The framework that defines how tasks are divided, coordinated, and supervised within a company.
Project-Based Organizations: Flexibility in Action
Definition
Project-based organizations
A structure where teams are temporarily formed to work on specific projects, disbanding once the project is completed.
Note
This approach is common in industries like construction, film production, and consulting, where work is project-centric and requires specialized skills.
Key Features of Project-Based Organizations
- Temporary Teams: Employees are grouped based on the skills needed for a project.
- Dynamic Structure: Teams dissolve after project completion, allowing resources to be reallocated.
- High Autonomy: Project managers have significant authority to make decisions and drive outcomes.
Advantages of Project-Based Organizations
- Enhanced Flexibility: Teams can be quickly restructured to address new projects or challenges.
- Improved Focus: Teams concentrate on specific goals, increasing efficiency and accountability.
- Skill Development: Employees gain diverse experiences by working on varied projects.
Hint
Having clear project goals help minimize duplicate efforts in project-based organizations.
Charles Handy’s Shamrock Organization: A Modern Workforce Model
Definition
Shamrock organization
A model that divides the workforce into three distinct groups: core workers, contract workers, and peripheral workers.
This structure emphasizes flexibility and cost-efficiency by leveraging different types of employment relationships.
The Three Leaves of the Shamrock
- Core Workers: Highly skilled employees on permanent contracts, responsible for critical tasks.
- Contract Workers: Specialists hired for specific projects, such as freelancers or consultants.
- Peripheral Workers: Part-time or temporary staff who handle routine tasks and provide flexibility.
Example
A tech company employs software engineers as core workers, hires freelance designers for a product launch, and uses temporary customer support staff during peak seasons.
Advantages of the Shamrock Organization
- Cost Savings: By reducing the number of full-time employees, businesses can lower fixed labor costs.
- Scalability: The organization can quickly adjust its workforce to meet changing demand.
- Access to Expertise: Contract workers bring specialized skills without long-term commitments.
Note
The Shamrock Organization is particularly effective in industries with fluctuating demand, such as retail or event management.
Challenges of the Shamrock Organization
- Lack of Loyalty: Peripheral and contract workers may have limited commitment to the organization.
- Coordination Complexity: Managing a diverse workforce requires strong leadership and communication.
- Job Insecurity: Temporary and contract workers may face unstable employment, affecting morale.
Hint
- While contract workers are more readily available and flexible, they are rarely as committed as core employees given their project-specifc focus.
- It's important to consider how something as simple as how much someone "cares" can create ripple effects across the organization and the quality of work.
Real-World Applications
1. Project-Based Organizations
- Film Production Studios
- Studios like Pixar form teams for each movie, bringing together animators, writers, and directors.
- Once the film is completed, the team disbands, and members move to new projects.
- Consulting Firms: Companies like McKinsey & Company create project teams tailored to client needs, drawing on experts from various disciplines.
2. Shamrock Organizations
- Uber: The company relies on a small core team of engineers and managers, while drivers operate as independent contractors, providing flexibility in service delivery.
- Retail Chains: Stores like Walmart use part-time workers to handle peak shopping periods, supported by a core team of managers and full-time staff.
Evaluating the Appropriateness of These Structures
| Factor | Project-Based Structure | Shamrock Structure |
|---|---|---|
| Best For | Industries with short-term projects (e.g., consulting, construction). | Businesses needing flexibility (e.g., tech firms, gig economy). |
| Flexibility | High—teams form and disband per project. | Very high—mix of core staff, contractors, and gig workers. |
| Cost Efficiency | Can be expensive due to frequent restructuring. | More cost-effective by outsourcing non-core tasks. |
| Employee Stability | Low—job security depends on project availability. | Varies—core employees are stable, but others face insecurity. |
| Scalability | Challenging—requires constant hiring and training. | Easier—adjust workforce as needed. |
Self review
- How do project-based organizations and the Shamrock Organization address the need for flexibility in today’s business environment?
- What trade-offs must businesses make when adopting these structures?
- How might these models evolve in response to future trends, such as remote work or the gig economy?
