SABIC
ORGANISATIONAL STRUCTURE AND CULTURE
Table of Contents
Description of the organisation structure. 4
Critical analysis of the current organisational structure. 7
Critical discussion of employee motivation. 10
Introduction
This chosen organisation for this study Amazon which is the world’s largest retailer and a multinational technology company that focuses on e-commerce, cloud computing, artificial intelligence and digital streaming. Amazon operates 13 country-specific sites such as the US, UK, India, Japan, Italy, Spain, Germany, Austria and others. Amazon has 200 million prime members and it has reached shoppers of more than 200 countries in the world. In this study, Amazon’s organisational structure will be described along with its components such as company ownership, management levels, types and numbers of departments, authority structure and others. Additionally, the current organisational structure of Amazon will be critically analysed according to its advantages and disadvantage, and how it promotes organisational success. On the other hand, how the employees are motivated, which approaches are applied to motivate employees in Amazon and how effectively these methods accelerate employee productivity will be explained.
Description of the organisation structure
An organisational structure is a system that promotes organisational operations and activities in a certain direction in order to obtain organisational goals and objectives. Organisational structure detects how information flows in an organisation (Jaakkola and Hallin, 2018). There are several types of organisational structure include Hierarchal
structure, functional, divisional, matrix, team-based, network, horizontal and others. In the case of Amazon, a Functional organisational structure is followed focusing on different business functions.
The organisational chart and Authority structure — Amazon’s corporate structure is a centralised structure, which means it represents a top-down control of its international e-commerce business activities. At the top of its corporate structure, at the CEO position, Jeff Bezos is operating (Meyer, 2019). The primary components of Amazon’s organisational structure include Global financial groups, global hierarchy, and geographic sections with their sub-sections. After Jeff Bezos, there is a functional global hierarchy regarding its multiple services, product lines, and others. For example, after CEO, there come Amazon web service CEO, financial officer, Worldwide consumer CEO, Worldwide business development CEO, business development CEO, Accounting officer. Then in the division section, there is America Amazon Fashion president, America AWS President, America sales Vice president and other global divisions (Ahmed, 2017). The fundamental function-based groups in Amazon include CEO, Business Development, Amazon web services, Finance, Accounting, Consumer business and legal and secretariat (Meyer, 2019).
Figure 1: Amazon’s organisational structure
Source:
Figure 2: Fundamental function-based groups in Amazon
(Source:Meyer, 2019)
Company ownership- Jeff Bezos the no 1 holder of the company shares, is also the founder of the company. Jeff Bezos owns 51 million Amazon sock share with a stake worth $165 billion in 2021. Then, Warren Buffet owns half a million shares. However, 60% of the Amazon stock is owned by institutional investors. One-fifth of its equity is owned by ETF mutual fund powerhouses such as Vanguard (6.5%), State Street (3.2%), Fidelity (3.0%), Black Rock (5.6%), and T.Rowe Price (3.1%) (Martins, 2021).
Management levels- The CEO is at the 12th level, The director is at level 8 and 10, the level 7 is for the senior manager and principal product manager. It has several levels of product managers, level 4 (product manager 1), level 5 (product manager 2), level 6 (product manager 3) (Eichhorn and Lacson, 2019).
Types of departmentalisations- Departmentalisations refers to the procedure of grouping activities in several departments. The purpose of departmentalisation is to perform each of the activities with specialisation, efficiently to create greater value for the organisation. The objectives of departmentalisation include maintaining control, simplify the operational process, group specialised activities, increasing organisational efficiency and performing activities with maximum level of responsibility (Nurek and Michalski, 2020). There are several types of departmentalisations such as functional, process, product, geographical, customer, divisional, matrix and others. In Amazon, three factors impact Amazon’s departmentalisation, service offered product lines and geographic regions. Hence, with a functional organisational structure, Amazon applies a mix of functional, product and geographical departmentalisation in Amazon (Talamo and Bonanomi, 2020).
Figure 3: Types of departmentalisations in Amazon
Source:
The benefits of functional departmentalisation include performing controlled and specialised global functions, focusing on fulfilling a particular department’s strategic goals, performing specialised jobs with specialised, skilled, accurate team members with decreased conflict and better coordination. On the other hand, being a customer-centric company, product departmentalisation helps Amazon to provide high-quality customer service, promotes the increased practice of innovation and promotes managerial talent retention. On the other hand, geographical departmentalisation helps Amazon to take care of different market demands, and reduce resource costs (Eichhorn and Lacson, 2019).
Critical analysis of the current organisational structure
As depicted above, the functional organisational structure is followed in Amazon. Functional structure helps corporations to divide their employees based on their skills and knowledge according to the functions (Tadyanemhandu et al. 2020). It structures every department vertically with duties and responsibilities from CEO to financial, sales, marketing department, to employees, customer service assigned with one or more product related tasks. Each of the functional department is headed by a functional manager Functional managers have experience in group roles so that they can supervise the executions effectively, resulting in each functional department motivated to win each corporate objectives resulting in the facilitation of the corporate performance (Meyer, 2019). Employees are grouped into function-based groups. The common organisational chart of functional corporate structure includes CEO, president, vice president, human resources, finance departments, sales department, customer service and administration and others (Barnhill et al. 2021). In the case of Amazon, according to many researchers, the main reason for Amazon’s success is the corporate structure. As it operates in 13 country-specific sites and connects more than 200 countries’ shoppers, it needs a vast, different market-based, different function-based, diverse structure that permits its rapid international expansion (Amazon, 2021). The advantages of functional corporate structure in the case of Amazon include wide, top-down, centralised control over its global diverse functional groups, clearly defined roles and responsibilities, fixed roles and responsibilities, increasing competency of the employees in the specialised work areas, close communication network, boosted career growth, coordinated performance, job security, increased work engagement and others (Ahmed, 2017). On the other hand, the disadvantages of Functional corporate structure include productivity conflicts, self-centred mentality, weak communication among the departments, lack of teamwork with other departments, slow change adaptation, slow decision-making and problem-solving, autocratic decision-making within the teams, personal bias, low chance of obtaining diverse skills, bored of performing repetitive tasks, complex management of challenges and others (Correia et al. 2018).
Figure 4: Advantages and disadvantages of functional corporate structure
(Source: Jaakkola and Hallin, 2018)
Though according to many researchers, this corporate structure is effective to support the international expansion of Amazon. Amazon handles so many, diverse, different functions such as Amazon web services, e-commerce, cloud computing, streamlining and others. Hence to all these different operations, it is required to have a centralised corporate structure where decisions can be made fast and facilitate through other divisions (Jaakkola and Hallin, 2018). With its strong global reach hierarchy group, it is easy for Amazon to address challenges quickly, after that, the senior managers with the help of CEO directives, senior managers implement directives that are effective to all relevant offices worldwide. On the other hand, its divisional groups based on geographic regions help Amazon to develop and structure its business goals, The regional divisions help to make business decisions particular for that region based on its economic conditions. Moreover, with its geographic divisions, Amazon quickly addresses the local challenges resulting in quick mitigation of the issues. Thus, this organisation structure is effective for Amazon (Meyer, 2019).
However, looking at functional structure’s disadvantages, such as domination of different functional groups and global hierarchy groups hindering the problem addressing and mitigation, lack of flexibility of the employees, teams, lack of coordination and others, it can be suggested that Amazon can apply a corporate structure such as a divisional corporate structure that can solve all these issues. A divisional corporate structure can help Amazon to take ownership of their own resources, activities and operations. Leaders can lead each divisional office like their own company, with their supervision. The different divisional corporate structure includes a market-based, geographical, product-based structure. This corporate structure can help Amazon to stay flexible, to identify challenges, to respond to the challenges immediately, efficiently and mitigate them, can promote coordination, employee work flexibility, can provide growth opportunities to employees, can help in fast decision making, increased teamwork and others (Ahmed, 2017).
Critical discussion of employee motivation
The various methods Amazon uses to motivate its employees, including providing employee benefits, implementing diversity, inclusion and equity practices, providing employee growth and opportunities, incorporating workplace safety practices and others. The total worldwide employee volume of Amazon is 1,298.000 (Amazon, 2021).
Figure 5: Employee motivation methods applied in Amazon
(Source: Amazon, 2021)
● Employee benefits- Employees get a starting pay of $15 per hour, which is more than double than deferral minimum salary. Amazon not only helps its employees but also their eligible family members. The employee benefits include parental leave, saving for the future, health care coverage and other health and well-being resources. There are paid accident and life insurance facilities, financial counselling, real estate facilities, short- and long-term disability benefits are also there. Amazon takes maintaining employee health, wellbeing and safety as one of the top priorities so, medical, dental, drug, vision coverages also (Amazon, 2021).
● Diversity, inclusion and equity practices- Amazon promotes its every employee to share their knowledge from their cultural perspective and also enforces a rule in all team to welcome and gain knowledge from different culture, race, gender, ethnicity and other perspectives. Amazon seeks to be the top employer of diverse talents. Also, Amazon invests in tech education organisations, that represent underrepresented communities. Additionally, Amazon invests in 13 affinity groups that recruit skilled talents from every corner of the world (Amazon, 2021).
● Training and upskilling- amazon invested $700 million to deliver free training to its employees. Tech hubs, retail stores, fulfilment centres, corporate offices, transportation network and all other types of employees have the access to the training programs that make them competent enough to move into high paying, in-demand jobs within or outside of Amazon (Amazon, 2021).
Thus, with these methods Amazon is satisfying the employees, fulfilling all their demands, motivating its employees, boosting their work deviation. Amazon received so many awards and recognitions due to its best workplace and employee motivation schemes. Forbes has awarded Amazon as World’s Best Employers in 2920, Morning Consult also awarded Amazon as the World’s most admired employers in 2020 (van der Kolk et al. 2019).
However, personalised training and counselling can be also helpful in Amazon because it can give Amazon employees personalised career goals tailored to the corporate goals. Also, as per performance evaluation results, personalised action plans can be provided. For that, Amazon needs to in invest building a human resource counselling team. On the contrary, prioritising work-life balance can be also helpful. In this case too, personalised work scheduling can be done according to individual lifestyle, day to day activities, personal life issues and others (Guterresa et al. 2020).
Conclusion
Amazon which the world’s largest retailer and a multinational technology company that focuses on e-commerce, cloud computing, artificial intelligence and digital streaming. a Functional organisational structure is followed focusing on different business functions. The primary components of Amazon’s organisational structure include Global financial groups, global hierarchy, and geographic sections with their sub-sections. The fundamental function-based groups in Amazon include CEO, Business Development, Amazon web services, Finance, Accounting, Consumer business. and legal and secretariat. Disadvantages such as domination of different functional groups and global hierarchy groups hindering the problem addressing and mitigation, lack of flexibility of the employees, teams, lack of coordination and others are seen in this organisational structure. On the other hand, various methods Amazon uses to motivate its employees, including providing employee benefits, implementing diversity, inclusion and equity practices, providing employee growth and opportunities, incorporating workplace safety practices and others.
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