Tesla’s Organizational Structure & Design
Introduction
Organizational structures play an essential role in how well a business handles various operations. It is thus paramount to develop and implement an excellent structure to streamline the performance of a company. Each structure provides both advantages and disadvantages to a company. According to researchers Lim, Griffiths, and Sambrook (2010), the proposal that the development of organizational structures majorly depends on expressed strategies, management behavior, and all workers in line with the power distribution between them and environmental factors. The advantage of coming up with a proper organizational structure is increasing efficiency of how resource allocation is done to various assets. It also provides the organization with an opportunity to explore more about functional departmentalization (Bateman, & Snell, 2011). Tesla Motors is one of the companies that have successfully developed a state of art products and proper organizational structure. In Tesla Motors, the founders ensured that the organization was structured with the ability to departmentalize activities that created a functional link between employee’s working goals and company aims and objectives (Reina, 2012).
Organizational Structure
Tesla Motors Company uses a functional organizational structure. The reason why Tesla Company utilizes functional structure is its small size and newness to the market (Reina, 2012). Many larger automotive companies use divisional structures with several brands such as General Motors, which has the following US brands; Cadillac, GMC, Chevrolet or Daimler, and Buick.
Tesla Company is well known for its great innovative ideas with complex and non-standard products, which it has developed by teams coordinated working seamlessly to produce leading industrial technologies. The company embraced practical perspective and general knowledge approach in engineering management that giving various departments to functions in a knowledge-sharing environment, thus improving project creativity and building strong teamwork (Radius Global Growth Experts 2014).
Organizational Functions
Even though Tesla Motors may not have elite engineering level and product development, the approach they use to develop the product and their corporate culture allows the company to use a ‘Knowledge Creation Model.’ This is where all employees work side-by-side in a collaborative effort in developing a product (Reina, 2012). Tesla Motors have the following functional departments; Vehicle Engineering, Design, Manufacturing, Sales and services, and Business Development. Because of these developed divisions and others that helped shape and mold Tesla’s direction and structure, it takes its form now. Since Tesla Company does not have product diversification, it shows that the company would not have operated well if another organizational structure was implemented (Radius Global Growth Experts 2014). The functional structure utilized in this company gives them a platform to develop electric technologies and vehicle engineering techniques that lead to innovative product development, which it directs markets to customers.
Organizational Design
Tesla Motors company uses the organizational design established by the CEO Elon Musk, which focuses on the needs of the product and the requirements of the teams building/designing and engineering the product (Reina, 2012). What greatly influenced the organizational design is attracting leaders who are thinking of creating knowledge by collaborating with other product development teams. The great advantage leaders thought it wise was to develop different departments that allowed for the simultaneous development of products and services. According to researchers Bateman, Thomas, and Scott, “Cross-functional coordination is essential for total quality, customer service, innovations, and speed.” With this realization, Tesla Motors utilized this concept, which became successful in functional integration. The expansion of the functional organizational structure of Tesla Company was boosted by the leadership decision to directly approach customer marketing and sales by avoiding the dealership (Reina, 2012). Since Tesla has not given much separation to different departments both in operations and geographically, it can operate in the middle of a large and small organization having many brands and products to develop with a narrow business operations approach.
Because of the functional structure, Tesla Motors have had effective managerial control of many operations and implement new strategies in the whole organization (Reina, 2012). Departments have promoted effective financial reporting and analysis, thus ensuring that all the resources are monitored well. Through such advantages, Tesla has been able to build its internal growth and increase competition against big automotive companies such as Toyota, etc. the disadvantage of a functional structure is the rigidity that limits the rapid growth of a company in case they decide to expand. The success of the Tesla Company can be significantly attributed to transformational leadership, which has been exhibited by the CEO (Bateman, & Snell, 2011). He modeled the way by giving them an example of shared values. He also ensured that he inspired the company’s vision to all by challenging the process to achieve the goals. Additionally, through his leadership, he enables workers to act and encouraged everyone to work to meet companies’ goals (Judge and Piccolo, 2004). Even though transformational leadership is time-consuming, it has worked for the Tesla company because of the fruitful outcome.
Effect of Current pandemic on Organization structure
Since the commencement of the current pandemic, there has been a significant adverse effect in the Tesla company. Every country went into lockdown, making employees stay at home. As a result, the work in the company stalled, thus stagnating the progress of the company (Ding, Wenzhi, et al. 75). Other employees decided not to go to work to keep themselves safe, making the organization to lay them off (Reina, 2012). This brought a significant impact since employees of great experience lost their job, leaving the company struggling to train other workers. The products’ market has gone down to the extent of threatening the company being bankrupt if the government does not give relief. Salary reduction has been another measure to caution the company from falling something that did not go well with the employees. As a result, it has threatened the good relationship that had existed between leadership and employees.
At some point, the organization had to consider allowing its employees to work from home to protect them (Reina, 2012). This is a great challenge for automotive industries because engineers can’t work remotely. They need to engage in the production of products manually. In terms of communication, it is well known that internal communication plays a critical role in Tesla Company since it ensures a smooth running of business operations at all times. Internal communication as well ensures there is an effective cross-departmental collaboration that empowers employees to work to achieve the company objectives. Since this pandemic’s commencement, internal communication has been greatly affected because of people working remotely (Ding, Wenzhi, et al. 75). This has reduced the teamwork spirit and slowed the production rate since people have to work on a project alone in their houses. This has proven to be a great challenge to Tesla motors, and if the government does not offer reasonable packages to caution such industries, they might finally close.
Conclusion
Tesla Motors was started and designed to be as much of an innovative industry changer as possible in line with the founder’s vision, who was an electrical and mechanical engineer for whom the company was named after. Tesla’s radical approaches to automotive industry standards have made the company stand at the global market, transforming what is known to be its great idea into what has now become a successful company in the world (Reina, 2012). However, it is good to note that Tesla has also been experiencing challenges to achieve its goals. For instance, the company struggled with funding and political setbacks when they decided that it would make direct sales by approaching customers. It is because of such challenges that pushed Tesla Motors to strengthen and improve its organizational structure and push harder in putting the right strategies, such as bringing collaboration in all the departments in the organization. The departments would then work together to design, develop, market, and produce a world-class product. This was made possible by the transformational leadership employed by the CEO, where he modeled the way, inspired all workers, challenged its process, always enabled workers to act, and encouraged them (Bateman, & Snell, 2011). Tesla Motors’ organizational design, functions, and structure can serve as an example of how to effectively fuse a business’s various functions into a structure that most effectively pushes the industry toward its goal and success. Despite the pandemic challenges, the company is pushing hard to keep moving on.
References
Bateman, Thomas S., and Scott A. Snell. Management: Leading & collaborating in a competitive world. McGraw-Hill, 2015.
Reina, A. Tesla Motors. PREZI (). Retrieved from http://prezi.com/lyhpfg-kchfr/tesla-motors/, 2012, November.
Radius Global Growth Experts. Retrieved from http://www.radiusworldwide.com/knowledge/case-studies/case-study-tesla-motors, 2014
Lim, M., G. Griffiths, and S. Sambrook. Organizational structure for the twenty-first
century. Presented the annual meeting of The Institute for Operations Research and The Management Sciences, Austin, 2010.
Judge, Timothy A., and Ronald F. Piccolo. “Transformational and transactional leadership: a meta-analytic test of their relative validity.” Journal of applied psychology 89.5 (2004): 755.
Ding, Wenzhi, et al. Corporate immunity to the COVID-19 pandemic. No. w27055. National Bureau of Economic Research, 2020.