“The term organizational structure refers to the formal configuration between individuals and groups regarding the allocation of tasks, responsibilities, and authority within the organization” (Galbraith, 1987, Greenberg, 2011).
TG has a divisional organisational structure that is further split into functional structures. This is based on the assumption that Travel UK is an example that represents the remaining parts of TG in terms of structure. Travel UK has divisions (Airline, Commercial and Customer Operations) which have individual functional departments assigned to them. Divisional structures are organised by products or locations rather than functions (sales, finance, etc.). Divisional structures are decentralised, giving authority to the managers of the individual divisions to allow for well informed decisions to be made by the specialised manager overseeing the division (Fouraker and Stopford, 1968). Large organisations face complex issues due to global markets, multiple interdependent business activities and cooperation with other organisations. These factors require for complex decisions to be taken quickly. (Mihm, Loch, Wilkinson, and Huberman, 2010). This, combined with the rules and processes in place at Travel UK to guide managers in making such decisions objectively form a relatively secure foundation for TG’s volatile environments it is operating in. The divisional structure allows quick adjustment to factors impacting the operation. “Many corporations have developed and organisational structure consisting of relatively autonomous business units to achieve clear focus of skills and effort towards different markets, plus clear accountability of managers” (Hewitt, 2003) providing further evidence for the divisional structure being the most appropriate for globally operating TG. Another advantage is that the divisional structure’s autonomous nature tests and trains the division heads’ capabilities which enables the development of General Managers (Fouraker, Stopford, 1968). A disadvantage of this structure is that knowledge can be contained within each unit limiting the sharing of expertise among the organisation (Steiger, Hammou, Galib, 2014). Each operational division having its own sphere of competence make it likely for this to be the case within TG.
Each division within TG/Travel UK has its own business support units divided by function (sales, HR, etc). Functional structures give each local business unit direct access to areas of expertise but this type of structure can foster a ‘silo mentality’ in which all the departments work for themselves and do not communicate with each other (Connor, McFadden and McLean 2012). TG has made the decision to merge some functions where duplication existed. According to Mintzberg, many other organisations have made the decision to accept functional duplication to make the divisions less dependant on one another (Steiger, Hammou, Galib, 2014) which gives greater market robustness compared to the shared services model (merged functional departments).
TG’s structure is also impacted by employee relations (ER) aspects. “ER is the process of managing both the individual and the group in terms of contracts, regulations and collective behaviour…” (Purcell, 2012). This includes the differences in conditions of employment among and within TG’s business units due to mergers with other organisations. One of the main reasons for unsuccessful mergers is poor integration. One of the motivations to harmonise conditions of employment following mergers (vertical integration) is that work of the same value needs to be compensated in a similar way in accordance with the Equality Act 2010. Not harmonising terms of conditions of employment may increase the risk of legal claims under equally pay, discrimination and employment protection laws (Suff, Reilly, 2007). Towers and Perrin (2003) explain that “disparate benefits and compensation policies need to be integrated to align the company’s employees with the senior management teams business objectives”. The delay of aligning terms and conditions of employment may result in increased staff turnover (Suff, Reilly, 2007). Mergers provide an opportunity to revise practices and policies. Not revising such policies and practices can have a negative impact on organisational capability (PWC, 2016). If following a merger, ways of working are different, it can create frustration and anxiety leading to additional turnover (Stafford, Miles, 2013). Further complexity to this issue is added by the the different conditions of employment and working practices exist not only in job descriptions but also in agreements that have been negotiated by the trade unions with TG. Such differences are described as “monumentally difficult problems” as they are covered under the UK’s Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and “involve some forceful negotiating from any unions” (Levinson, 2014). TUPE is designed to to protect employment rights for workers who are being taken over by a different organisation. Not following the process can incur compensation and legal fees as in the case of the Ministry of Defence which paid £5,000,000 in an out of court settlement to 1,600 Unite (union) members) (Stevens, 2014).
Changing such practices would therefore be complicated due to the seemingly inadequate cooperation between TG and with the trade unions. Whilst the organisation holds monthly joint consultative meetings with the unions, the relationship between them appears to be strained. This is evident in Travel UK’s fear of strikes when making changes to the cabin crew hours and working practices. An example of the impact that a general lack of trust between the unions and organisations can have is the one of British Airways and the union Unite in the years of 2010/2011. In 18 months the cabin crew went on strike four times over issues such as working conditions, redundancies and benefits resulting in revenue loss and customer complaints (BBC, 2011).
TG’s current divisional structure is is only appropriate for the future if TG eliminates all factors that could hinder it from reaching its strategic goals. Some of them are:
- Customer satisfaction: The strained relationship with the trade unions can result in reoccurring industrial action which can delay or stop services causing customer complaints.
- Profit: The underlying fear of strikes and differences in terms and conditions of employment create an environment in which TG cannot react quickly to changes needed to remain profitable.
- Staff engagement: The fractured conditions of employment and working practices among its business units can have a negative impact on engagement levels.
- Sustainability: Different work practices among the organisation make it difficult to reach a common goal.
If these barriers are not removed, the structure of TG is not appropriate for the future. This statement is supported by the CIPD’s 18 key points for high performance and high commitment in workplaces. Two of them are outlined as commitment to single status for all employees as well l has holiday harmonisation (Tamkin,2004); both of which are currently not met within TG.
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