The Impact of Organizational Structure on Rio Tinto's Performance

This report examines the organizational structure of Rio Tinto, a leading multinational mining and metal corporation. It analyzes how the company's hierarchical structure, including the recent changes with the creation of the Growth and Innovation group and the HSEQ division, impacts its management innovation and overall business performance. The report details Rio Tinto's strategic approach, highlighting its commitment to innovation and the positive effects of these structural adjustments on resource utilization, safety, and financial outcomes. The report also provides recommendations for improvements, such as incorporating more flexibility and strengthening communication channels, to enhance Rio Tinto's adaptability and future growth. The paper concludes by summarizing key findings and suggesting strategies for optimizing organizational structure to drive innovation and ensure sustained success.

Running Head: ORGANIZATION STRUCTURE AND EFFECTIVENESS
ORGANIZATION STRUCTURE AND EFFECTIVENESS
Name of the Student
Name of the University
Author Note

1ORGANIZATION STRUCTURE AND EFFECTIVENESS
Executive summary
The purpose of the paper is to discuss the impact of organizational structure on
innovation and performance understanding the strategy behind designing a specific
organizational structure. The paper presented the organizational structure of Rio
Tinto, explaining the purpose, reason behind the change. In this paper, the positive
impact of organizational structure on innovation management of Rio Tinto is
depicted. The commitment of growth and innovation group, strict organizational
goals, and guidelines for every division allows the organization to have positive
performance. However, Rio Pinto needs to incorporate flexibility for improving the
compatibility of organizational structure with different or changing business models.
The paper also recommended the intervention of maintenance department as well as
a strong interlink between every department for better demand and supply forecast
and optimum resource utilization.

2ORGANIZATION STRUCTURE AND EFFECTIVENESS

3ORGANIZATION STRUCTURE AND EFFECTIVENESS
Table of Contents
Introduction...................................................................................................................2
Discussion.....................................................................................................................2
Background of the company:....................................................................................2
Organizational structure of Rio Tinto:.......................................................................3
Impact of organizational structure on management innovation:...............................5
Impact of the company's structure on business performance:.................................6
Recommendations........................................................................................................8
Conclusion....................................................................................................................8

4ORGANIZATION STRUCTURE AND EFFECTIVENESS
Introduction
The hierarchical arrangement, including communication, duties, authority, and
rights of the organization, is known as organizational structure. The organizational
structure includes activities like task allocation, organization, and management
focussed on the aspect of achieving organizational goals. The purpose of the paper
is to determine the effects of organizational structure over the functions of
performance and innovation in an organization. The organization selected for this
paper is Rio Tinto. Rio Tinto is considered to be one of the largest Mining and Metal
Corporation in the world. The paper will present the organizational structure and
strategies with the impact on management innovation and overall performance. In
this paper, the recommendation associated with improving performance and
innovation will be provided. The report will be concluded by reflecting a summary of
the critical decisions, strategies for structuring the organization, and
recommendations that can improve the current operations.
Discussion
Background of the company:
The Anglo-Australian multinational organization, Rio Tinto, was founded in the
year 1873. The company has developed numerous best quality operational functions
and mines for the workforce working in approximately 35 countries and six
continents. The organization has been a leader in the industry by partnering with
local communities and new markets. Rio Tinto incorporates innovative measures
such as low-Co2 through hydropower and Mine of the Future Programme. The
organization aims at producing products that are responsibly made. The materials of
Rio Tinto can be found in planes, cars, smartphones, home appliances, and

5ORGANIZATION STRUCTURE AND EFFECTIVENESS
hospitals. The activities of the organization lead to the aim of growing economy and
community of the countries where Rio Tinto is operating. Rio Tinto owns open pit,
refineries, underground mines, power stations, smelters, and R&D facilities. The
main aim of Rio Tinto is to operate the functional processes by ensuring safety for
the employees, communities, and contractors as well as ensuring minimum
environmental impact.
The organizational structure of Rio Tinto:
Fig. - Organizational Structure
(Source: Riotinto.com 2019)
General
Manager
Finance and
Logistics Human Resources Casthouse Engineering and
HSEQ
Maintainance
Services Electrolysis
Communications

6ORGANIZATION STRUCTURE AND EFFECTIVENESS
Fig. Product group division
(Source: Riotinto.com 2019)
Rio Tinto follows a simple hierarchal structure that has been changed for
ensuring growth and innovation in the organization (Sahay 2017). The organizational
structure of Rio Tinto will be strengthened for the purpose of accomplishing an
improved performance and innovative measures. The structure was changed from
July 2016 for effectively aligning assets with business strategies (Sahay 2017). The
organizational structure of Rio Tinto has four product groups, Aluminium, Energy and
Minerals, Iron ore and Copper and Diamonds. These divisional product sections will
be supported by the newly formed growth and innovation group. This newly formed
group will be focussed on technical support and future assets (Schwartz 2019).
The growth and innovation department will offer technical assistance with
strategic leadership for the purpose of end-to-end delivery and managing growth
through the initiative of exploring various projects. The technology and Innovation
Product
Group
Aluminium Copper &
Diamonds
Energy &
Minerals Iron Ore
Growth
and
Innovation

7ORGANIZATION STRUCTURE AND EFFECTIVENESS
group executive of the organization has been given the responsibility of managing
the Growth and Innovation group, in Brisbane. In the process the strategy of
changing the organizational structure, Rio Tinto also improved the concentration on
the health and safety responsibility of the operational function by making it as a
separate division, included in the executive committee. The global Head of Health,
Safety, Environment and Communities, Joanne Farrell, adopted the role of group
executive for the Health, Safety and Environment Quality (HSEQ) division of Perth.
Joanne Farrell is also the Managing Director of Australia. The organizational strategy
is based on four Ps, Performance, Portfolio, Partners, and People, which is
facilitated by a disciplined approach of capital allocation.
Thus, the changes in the organizational structure reflect the commitment
towards enhancing the continuous need for incorporating innovative measures,
which can ensure optimum utilization of resources and minimize the impact on the
community as well as for the reason of ensuring safety and growth of workforce
contribution.
Impact of organizational structure on management innovation:
The decision of separating the division of Growth and Innovation is the
alignment of the other product division was a very crucial change in the
organizational structure of Rio Tinto. The main aim of the division is to offer technical
assistance in executing change or innovative measures and for managing future
assets of the company. The strategy of changing the organizational structure allows
Rio Tinto to support the assets for the purpose of accomplishing improved
performance in the lifecycle. The organizational structure indicated the significance
of the intervention of Growth and Innovation group in every product group in the
chart for the purpose of incorporating innovative ways of researching, studying,

8ORGANIZATION STRUCTURE AND EFFECTIVENESS
developing and optimizing the assets for ensuring the productivity, safety, and
profitability of the operational activities. The group of Growth and Innovation team
has been made the heart of the organizational structure of Rio Tinto, which ensures
value addition by exploring and obtaining new Tier one resources. The team
provides an innovative approach by proceeding with optimal business projects.
The operations of Rio Tinto is structured and supported with one of the most
advanced technologies in all across the world. In the country of Australia, innovation
is considered to be the only driving force for aligning activities with success. The
intervention of Growth and Innovation group in every product group of organizational
structure connects the skills of partners and people. The interlink between the
product groups and the team of growth and innovation allows the operational
activities such as management of real time complications in the operational center of
Perth
Impact of the company's structure on business performance:
The inclusion of division of Growth & Innovation and HSEQ as a separate
entity in the organizational chart of Rio Tinto, assist the company in improving every
product offerings. The company structure has led to the dual role of Joanne Farrell.
She is the managing director of Australia and also heads the division of Health,
Safety, Environment Quality in Perth. The dual responsibility of handling interactions
with key stakeholders and ensuring the efficiency of HSEQ department will help in
recognizing the need for improvement in the business (Loi 2016). The collaborative
efforts of the team of Growth and Innovation and HSEQ ensures the high productivity
of Rio Tinto. The company has a simplistic form of hierarchical structure with
differentiated functional groups. Each executive manager of various functions allows
effective coordination and quality maintenance with complete focus. The simple

9ORGANIZATION STRUCTURE AND EFFECTIVENESS
hierarchy ensures effective communication between the Head of the company and
the executives of each division. Moreover, the company also has a communications
department that provides the efficiency of idea flow between the CEO and the
divisional executives.
The intervention and assistance of Growth and Innovation team enable the
accomplishment of superior performance in the lifecycle. This outcome is made
possible through the optimization of values from initial to the closure of the process.
The interlink between the Growth and Innovation team and the four product classes
helps in stimulating the process of safely executing capital based projects on time
and within the budget. The interlink formed between the groups with the addition of
Growth and Innovation department helps in optimizing the resource usability,
contribution for achieving technical excellence and productivity by eliminating
technical risks (Matysek and Fisher 2016). The strategy of focussing on technical
capabilities and capital based projects enables the delivery of improvement in
operational solutions and addresses the challenges of business through the
implication of technological innovation. The gross sales revenue of Rio Tinto was
around 40.5 billion U.S. dollars in the year 2018, which is higher than the year 2017,
which was 40 billion dollars (Statista.com 2019). In terms of business performance
related to environmental impact, Rio Tinto has dedicated their HSEQ division for
eliminating adverse environmental risks (Forbes.com 2019). This aim is facilitated
through the successful alignment of each division with the organizational standards.
The standards and policies are easily communicated in the organizational structure
of the company. Each site and division are instructed by HSEQ group with separate
improvement targets. Each division follows the communicated guidelines for
environmental and stakeholder safety by reducing the emission from energy-

10ORGANIZATION STRUCTURE AND EFFECTIVENESS
intensive functions. For instance, the initiative of the aluminum product class
incorporates the strategy of reducing carbon dioxide footprint around three times
below the industry average (Fubini and McCarthy 2019). The company might be
growing its performance in terms of revenue and responsible operational activities,
but it lacks efficiency in numerous areas including the effectiveness in recognizing
business opportunities, responding to the challenges directed by new entrants
(Kemp, Worden and Owen 2016). The organizational structure of Rio Tinto is
compatible with only the current business model, which limits the expansion
opportunities.
Recommendations
 The feedback system for internal and external feedback mechanism from the
sales group and stakeholders for ensuring the effectiveness of demand
forecasting in every department.
 Flexible work culture for changing the organizational structure based on
evolving business model improved innovation and expansion strategies
 The horizontally spread hierarchal structure of the organization is beneficial
easy communication from top to bottom but the communication ton flow from
bottom to top and to ensure an active link between each of the functional
division is crucial for the understanding of demand and supply function.
 Along with the intervention of Growth and Innovation group, maintenance
services should also be linked with each of the operational units for improved
performance.

11ORGANIZATION STRUCTURE AND EFFECTIVENESS
Conclusion
Therefore, it can be concluded from the paper that Rio Tinto has a simplistic
organizational structure will enable the free flow of communication, acceptability of
innovative measures and effective productivity by the intervention of Growth and
Innovation group in all product classes. However, the organization needs to
incorporate a flexible culture for improving the compatibility of company structure
with a changing the business model. Moreover, the company needs to ensure the
equal flow of ideas and communication from bottom to top as well as should ensure
the involvement of the maintenance department in the operational business units for
improved innovation and performance.
References:
Forbes.com 2019. Rio Tinto To Post Better Financial Performance In 2018 Following
The Sale Of Its Coal Business?. [Online] Available at:
https://www.forbes.com/sites/greatspeculations/2019/02/25/rio-tinto-to-post-better-
financial-performance-in-2018-following-the-sale-of-its-coal-business/
Fubini, D. and McCarthy, J., 2019. Rio Tinto: Decommoditizing Aluminum.
Kemp, D., Worden, S. and Owen, J.R., 2016. Differentiated social risk: Rebound
dynamics and sustainability performance in mining. Resources Policy, 50, pp.19-26.
Loi, T.H., 2016. Stakeholder management: a case of its related capability and
performance. Management decision, 54(1), pp.148-173.
Matysek, A.L. and Fisher, B.S., 2016. Productivity and innovation in the mining
industry. Research report, 2016.1, BAEconomics.