Deloitte Global Company' Organizational Design Model | Free Essay Example

Deloitte Global Company’ Organizational Design Model

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Topic: Business & Economics
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Executive Summary

This study looks at Deloitte Global mode of organizational design. Deloitte Global and its affiliate firms within the Deloitte global network have adopted a combined organizational approach in its structure and functions. This structure involves a compromise mix of the other organizational design models as evidenced by the fact that individual roles and responsibilities have been cut out according to the level of specialization, that is, audit functions, tax functions and advisory functions; departmentalization, that is, further classification of roles and tasks according to departments; hierarchy of command, that is, responsibilities and powers increase progressively upwards; span of control, that is, the span of control decreases gradually as one moves down the structure; and level of formality, which increases as an individual progressively inclines upwards the management ladder (Bhagat, Kedia, Harveston & Triandis 2002).

Deloitte’s organizational structure exhibits some aspects of a bureaucracy design, this is exemplified by its strict management hierarchy and the presence of a highly centralized decision making authority that follows a particular chain of command.

Introduction

Deloitte global member firms adopt some aspects of the bureaucratic, simple and matrix organizational designs. The design in practice is neither bureaucratic, simple nor matrix. This is exemplified by the imminent characteristics in its operational design:

Organizational Design

The Deloitte organizational structure follows a hierarchy and can be summarized as below:

Organizational Design

The above design adopted by the firm can also be thought to be fairly mechanistic in the sense that there exists specialization and formality of tasks, there is also a hierarchy and clear designation of status and functions as well as a vertical flow of communication from a centralized decision making organ.

Simple Structure

The operational design in practice borrows from aspects of the simple structure in the sense, there seems to exist a single source of authority. Authority flows downwards in a continuum from the Global Chief Executive Officer (CEO). He is tasked with not only formulating policies to adopt across all the affiliate member firms but also ensuring that these policies are implemented to the latter by all affiliate firms using the name Deloitte. This is ensured through regular and timely audits of all activities of affiliates in what is known as a peer review. A peer review of all member firms ensures that the methodology and professional conduct of the affiliates subscribes to the global standards (Kogut & Zander 1992).

Bureaucracy

The design in operation perhaps can be said to borrow heavily from a typical bureaucracy, In Deloitte “rules are rules” and a strict hierarchy surrounding a centralized decision making authority exists. This follows a specific chain of command indicated in the executive summary above. There can also be said to exist a number of specific and highly specialized routine tasks which is a striking characteristic of a bureaucracy. Activities of the global firm are highly specialized into mainly either Auditing or Assurance functions, financial advisory services, Consulting (also known as Deloiotte consulting services and Tax services (Weiss 2000).

It is also worth pointing out that the firm exhibits a high degree of departmentalization since majority of the available departments are curved out from the already existing numerous specializations and each of this department managed by senior managers whose span of control is narrow and only operational within that specific department.

Matrix Structure

A key aspect of the matrix design structure that is evident in the firm is perhaps the fact that in as much as departments are highly specialized and independent, there exists interdisciplinary and inter departmental functional cooperation. Their roles that is, the role of each department though different are complimentary rather than conflicting. To some degree there may exist a dual chain of command but this is limited to specifics, either a specific task being carried out in collaboration with two or more departments or a joint project that might involve the input of more than one specialization, say both audit and tax or tax consulting and financial advisory (Robbins & Coulter 2003).

Discussion

Suitability of the Design to the Environment

The external environment surrounding the firm can be summarized as Political, Economical, Social or Technological in the acronym PEST. The firm has adapted to a number of political factors in its establishment. Companies in Kenya are established under a charter and registered as chartered corporations by the registrar of companies.

Political Environment

Under this dimension, the firm is expected to abide by the country’s legislation as regards to public conduct and professional ethics especially in the execution of its engagements not only with the government but also other private firms. The firm being also a member of a wider network of firms and Deloitte global also subscribes to the global code of conduct and professional ethics that is, International Accounting Standards(IASs), International Financial Reporting Standards (IFRSs), International Standards on Auditing (ISAs), International Public Sector Accounting Standards (IPSASs) and of course the Generally Accepted Accounting Standards ( GAAPs). Because the firm also does an audit of a number of public corporations (parastatals) it is expected by the government’s controller and auditor general in charge of state corporations to execute this function professionally with utmost due care and diligence (Popovich 1998).

Economic Environment

This is perhaps the firms most immediate and fundamental environment considering it constitutes its core specialization because the firm offers financial services to its clients. It can be mentioned that the firm helps to inculcate a desirable and positive impact in the economy by:

  1. Investigating and Auditing to ascertain the true and fair view of financial statements and give an unqualified opinion to support this fact. This function in essence facilitates accountability to both public and private funds and reduces instances of fraud.
  2. Offering professional consultancy services aimed at customer’s operations that to focus to effectuate their operations concepts in a gradually changing regulatory market. Consulting is done on a number of business functions ranging from human capital recruitment and development, strategy applications and enterprise applications.
  3. Offering Financial Advisory practice to clients throughout every stage of the economic cycle. Pecuniary Advisory comprises five different but correlated worldwide service chains whose common main aim is the development and facilitation of the stakeholders’ worth.

Analyzing the tax burden and the tax amounts to be paid by corporations in order to avoid instances of tax evasion and thereby contributing to the country’s GDP. There exist tax implications on virtually all business transactions and legislation on these issues is dynamic and keeps changing by the day. It is therefore the responsibility of the firm to update its clientele on the various tax implications and update them on current legislation (Whyte 1956).

Social Environment

The vision of the firm is to be a standard of excellence not just in the economic sector but also socially. Right from the people within firm, it believes in exceptional client service delivered by exceptional people pooled from a diverse range of talents and personality backgrounds.

Technological Environment

The Deloitte firm has major clients within the communications and technological sector in its sleeve. Deloitte for instance serves among others, highly reputed and revered big names and firms who are leaders in technology for example, Boeing (The Aerospace manufacturer) , Chrysler, General Motors , Hyundai, TATA Group, Bloomerg L.P , Johnson & Johnson, Vodaphone and Continental Airlines among others (Morgan 1987).

Conclusion

From the foregoing discussion, it is evident that it is rare to find an organization that strictly abides by or follows one particular organizational design principle. This may be partly due to the organizational culture in practice within that entity and of course the fact that by blending two or more design principles, the entity is able to compensate for the inadequacies of one particular design principle (Lam 2000).

References

Bhagat, R., Kedia, B., Harveston, P. & Triandis, H., 2002. ‘‘Cultural variations in the cross-border transfer of organizational knowledge: an integrative framework.’ Academy of Management Review, Vol. 27 No. 2. Pp. 204-21.

Kogut, B. & Zander, U., 1992. ‘Knowledge of the firm, combinative capabilities, and the replication of technology.’ Organization Science, Vol. 3 No. 3. Pp. 383-97.

Lam, A., 2000. ‘Tacit knowledge, organizational learning and societal institutions: an integrated framework.’ Organization Studies, Vol. 21 No. 3. Pp. 487-513.

Morgan, G., 1987. Images of Organizations. 2nd Ed. CA: Thousand Oaks.

Popovich, G., 1998. Creating High Performance Government Organizations. 1st Ed. San Francisco, CA: John Wiley.

Robbins, S. R. and Coulter, M., 2003. Management . New Delhi: Pearson Education.

Weiss, R.M., 2000. Taking science out of organization science: How would postmodernism reconstruct the analysis of organizations? In: Organization Science, 11(6): 702-731.

Whyte, W.H., 1956. The organization man. Harmondsworth, Middlesex: Penguin Books.