COVID-19: The Virus Prescribing Change To Organisational Structures

The coronavirus pandemic has caused an outbreak of financial hardship, making it a nauseating time for businesses. The virus has spread infection within pre-COVID business models, leaving companies with no choice but to transform the way they operate, or else risk losing their battle with the worsening recession. The unprecedented global crisis has propelled businesses into the digital age. Digitising the employer-employee relationship has accelerated much needed change to organisational structures, altering the future of the working environment.  

Organisational structures are concerned with the allocation of authority in a business, and determines how information and instructions are communicated within a hierarchy. There are three main types of organisational change: developmental, transitional and transformational. Developmental change improves on pre-existing processes; transitional change abandons former processes in favour of a new strategy to solve problems (such as a pandemic); and transformational change radically alters company culture and operations.

The need for speed

During such uncertain times, fast decision-making is crucial in keeping abreast of developments in the economic and political landscape. Productivity being the buzzword; companies must review their short-term and long-term strategies to ensure that they are agile and adaptive in their operational capabilities.

Reformed organisational structures favour flatter hierarchies, dotted line reporting and a wider, more horizontal span of control. This model promotes higher levels of autonomy in employees, particularly with regards to those on the edges of the hierarchy. Up-skilling workers and embracing situational decision-making has meant that productivity has increased while maintaining a high level of alignment across groups.

“We were not ready for telework. Work-style reform has been the buzzword. And now, we can afford no further delay in implementing it” – Akio Toyoda, President of Toyota

Toyota have been quick to implement changes to their organisational structure (effective April 1, 2020) in light of the pandemic, by consolidating senior management positions and reducing layers of management.

Cost-cutting

Companies are looking to alter their organisational structures to reduce operational costs and maintain profitability. In response to coronavirus, Go Pro have drastically changed their structure to accommodate for the bleak commercial market, moving towards a flatter, more efficient hierarchy with a reduced supply-chain. Their plan to decrease operating expenses by $100 million in 2020 has led them to a 20% staff reduction, promoting their online presence as the main store-front, and the reduction of their office space in five geographical locations.

Communication is key

Arguably the most significant challenge facing organisational change is communication. Internal communication has become increasingly difficult in the unique digital world, as virtual workforces grapple with the concepts of remote learning and the absence of face to face communication.

Coronavirus has caused abrupt changes within the workplace. Thus, organisations are reducing middle managers and span-breakers so that information can be communicated directly to all workers who require it. Furthermore, organising virtual meetings is more inconvenient than meetings in the office; therefore, virtual meetings are typically more concise and densely-packed with information.

The new normal?

This begs the question: what does this mean for future business workers? The companies who are likely to be outcompeted will regard this command change as temporary. However, technological advancement infers that a move towards a greater digital reliance is favourable for productivity and efficiency.

“I think we’ll end up with plus or minus 80% of our population remaining as some kind of permanent homeworkers or transient workers – for instance, those who work three days at home and two days in the office” – Karl Warmbold, Director of facilities, property and procurement at DWF

Prospective business workers should become accustomed to the digital landscape and perceive it as a growth opportunity. The future business model likely has less management layers, which may create less promotion opportunities. However, this can in fact be advantageous because employees will likely be given more responsibility and authority in their position.

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