Todays companies face a number of risks, problems and issues, they could be strategic, operational, financial, customer oriented, competitor etc. this has brought about concerns of increased international competition brought about by the rapid globalisation phenomenon. Management experts therefore have argued time and again that firms or companies should be able to adapt the ever-changing environment such as increased competition. This can be done by engaging in more systematic planning to predict and respond to the changing and unforeseen events. The reason for this argument is because formal strategic planning has been seen to enhance a firm’s performance.
The traditional take on organizational structure in a business is hierarchical, meaning power flows vertically and upward, and employees are departmentalized. all employees follow a chain of command. for instance, the Ceo has final say on operations in all divisions, but each department has a manager who runs day-to-day operations and ultimately reports to the Ceo. a common example is the military.
in the traditional hierarchical structure, employees have a clear knowledge of their role and responsibilities within the organization. thus, companies with this structure make predictable moves and are easily controlled. hierarchical companies tend to have many rules that let managers use
In today’s global and Internet-driven economy, the rapid movement of people and goods across borders means the traditional hierarchical organizational structure can slow down functions in a company. For instance, if a company needs to approve the purchase of new supplies to meet a client’s order, an employee needs to go up the chain of command until he reaches sometimes with authority to approve the transaction. Companies trying to adapt to the new economy can create additional problems by altering their outdated organizational structure through time rather than redesigning it from top to bottom, causing confusion among employees as to who has authority over who.
Over the past years, there have been an unprecedented development in the operational environment and made radical demands in the art and culture of the organizations. we witness strong focus on the growth and longevity, arts, demographic shifts and new forms of resource development that reveals critical ; new organizational structures that require thriving in the new era of art and culture.
When you talk of organizational culture you will come across seven major characteristics that ensure that the company is ready to embrace the organizational culture these are;
Innovation and risk taking: abilities, a way to encourage members with the courage to take risk and less rule-oriented
Detail analysis: a degree of expectation to enjoy precision analysis and attention to various details.
Handling the outcome: a degree to which the management focuses on the results rather than on the process used to have results in the outcomes.
Team orientation: required to create terms in order to achieve a goal rather than giving due importance to individualism.
Employee engagement: important to ensure that the culture effectively manages and stays aligned with the cultural assumptions of the organizations.
Aggressiveness: This encourages being insistent and competitive rather than sticking with the easy going attitude.
Stability required maintaining the status quo.
However, the organizational culture and their trends have taken a giant leap with time. The new and emerging cultures increase the level of conflict to fulfil the seven key features.
Some mistakes that lead to organisational failure can be one of the five :Mistake #1: The strategy changes but the structure does not
Every time the strategy changes this includes when there’s a shift to a new stage of the execution lifecycle, the managers need to re-evaluate and change to the structure. The common mistake made in restructuring is that the new form of the organization follows the old one to a large degree. That is, a new strategy is created but the old hierarchy remains embedded in the so-called “new” structure. Instead, you need to make a clean sheet with the past and design the new structure with a fresh eye. The fact is that changing structure in a business can seem really daunting because of all the past precedents that exist – interpersonal relationships, expectations, roles, career trajectories, and functions. And in general, people will fight any change that results in a real or perceived loss of power. All of these things can make it difficult to make a clean break from the past and take a fresh look at what the business should be now. There’s an old adage that you can’t see the picture when you’re standing in it. It’s true. When it comes to restructuring, you need to make a clean break from the status quo and help your staff look at things with fresh eyes. For this reason, restructuring done wrong will exacerbate attachment to the status quo and natural resistance to change. Restructuring done right, on the other hand, will address and release resistance to structural change, helping those affected to see the full picture, as well as to understand and appreciate their new roles in it.
Mistake #2: Functions focused on effectiveness report to functions focused on efficiency
Efficiency will always tend to overpower effectiveness. Because of this, you’ll never want to have functions focused on effectiveness (sales, marketing, people development, account management, and strategy) reporting to functions focused on efficiency (operations, quality control, administration, and customer service). For example, imagine a company predominantly focused on achieving Six Sigma efficiency (which is doing things “right”). Over time, the processes and systems become so efficient and tightly controlled, that there is very little flexibility or margin for error. By its nature, effectiveness (which is doing the right thing), which includes innovation and adapting to change, requires flexibility and margin for error. Keep in mind, therefore, that things can become so efficient that they lose their effectiveness. The takeaway here is: always avoid having functions focused on effectiveness reporting to functions focused on efficiency. If you do, your company will lose its effectiveness over time and it will fail.
Mistake #3: Functions focused on long-range development report to functions focused on short-range results
Just as efficiency overpowers effectiveness, the demands of today always overpower the needs of tomorrow. That’s why the pressure you feel to do the daily work keeps you from spending as much time with your family as you want to. It’s why the pressure to hit this quarter’s numbers makes it so hard to maintain your exercise regime. And it’s why you never want to have functions that are focused on long-range development (branding, strategy, R;D, people development, etc.) reporting to functions focused on driving daily results (sales, running current marketing campaigns, administration, operations, etc.). For example, what happens if the marketing strategy function (a long-range orientation focused on branding, positioning, strategy, etc.) reports into the sales function (a short-range orientation focused on executing results now)? It’s easy to see that the marketing strategy function will quickly succumb to the pressure of sales and become a sales support function. Sales may get what it thinks it needs in the short run but the company will totally lose its ability to develop its products, brands, and strategy over the long range as a result.
Mistake #4: Not balancing the need for autonomy vs. the need for control
The autonomy to sell and meet customer needs should always take precedence in the structure — for without sales and repeat sales the organization will quickly cease to exist. At the same time, the organization must exercise certain controls to protect itself from systemic harm (the kind of harm that can destroy the entire organization). Notice that there is an inherent and natural conflict between autonomy and control. One needs freedom to produce results, the other needs to regulate for greater efficiencies. The design principle here is that as much autonomy as possible should be given to those closest to the customer (functions like sales and account management) while the ability to control for systemic risk (functions like accounting, legal, and HR) should be as centralized as possible. Basically, rather than trying to make these functions play nice together, this design principle recognizes that inherent conflict, plans for it, and creates a structure that attempts to harness it for the overall good of the organization. For example, if Sales is forced to follow a bunch of bureaucratic accounting and legal procedures to win a new account, sales will suffer. However, if the sales team sells a bunch of underqualified leads that can’t pay, the whole company suffers. Therefore, Sales should be able to sell without restriction but also bear the burden of underperforming accounts. At the same time, Accounting and Legal should be centralized because if there’s a loss of cash or a legal liability, the whole business is at risk. So the structure must call this inherent conflict out and make it constructive for the entire business.
Mistake #5: Having the wrong people in the right functions
I’m going to talk about how to avoid this mistake in greater detail in a coming article in this series but the basics are simple to grasp. Your structure is only as good as the people operating within it and how well they’re matched to their jobs. Every function has a group of activities it must perform. At their core, these activities can be understood as expressing PSIU requirements. Every person has a natural style. It’s self-evident that when there’s close alignment between job requirements and an individual’s style and experience, and assuming they’re a #1 Team Leader in the Vision and Values matrix, then they’ll perform at a high level. In the race for market share, however, companies make the mistake of mis-fitting styles to functions because of perceived time and resource constraints. For example, imagine a company that just lost its VP of Sales who is a PsIu (Producer/Innovator) style. They also have an existing top-notch account manager who has a pSiU (Stabilizer/Unifier) style. Because management believes they can’t afford to take the time and risk of hiring a new VP of Sales, they move the Account Manager into the VP of Sales role and give him a commission-based sales plan in the hope that this will incentivize him to perform as a sales person. Will the Account Manager be successful? No. It’s not in his nature to hunt new sales. It’s his nature to harvest accounts, follow a process, and help customers feel happy with their experience. As a result, sales will suffer and the Account Manager, once happy in his job, is now suffering too. While we all have to play the hand we’re dealt with, placing people in misaligned roles is always a recipe for failure. If you have to play this card, make it clear to everyone that it’s only for the short run and the top priority is to find a candidate who is the right fit as soon as possible.
In these four theories of organization, there are scientific management and human relations that focus largely on individual worker while the two others concern more about the structure of the organization. In scientific management, Frederick Taylor, writer on management, believed that managers could help workers to work in “the best one way” by scientific management which replaced the tradition method “rule of thumb”. Also focus on human factor, but human relations approached the field of psychology in which workers’ productivity is affected by peer norms, recognition, team work, participation and cooperation. Concentrating on addressing the organization as the whole, Max Weber created bureaucratic principles where hierarchy structure is required; legitimating is the core; law and regulation is the fundamentals and reference to all actions. On the other hand, administrative principles concern about specializing jobs and employees into departments and groups and coordinating process between them.
There is an increase in productivity, operating with low cost is the targets of every organization. In order to do so, it is not always necessary to invest money in hiring more employees or modernize technology, but it can be done by reorganizing, rearranging effectively the available resources within the organization. Aiming at organizing organization effectively, there are four organizational theories: scientific management, administrative theory, bureaucratic principles and human relations.
The four methods are different in content; however, we can see that, three out of four had the mechanical approach, and only human relations approached by psychology.
Bureaucracy refers to the collective organizational structure, procedures, protocols, and set of regulations in place to manage activity, usually in large organizations and government characterized by standardized procedure (rule-following) that guides the execution of most or all processes within the body, formal division of powers, hierarchy, and relationships intended to anticipate needs and improve efficiency. bureaucracy is further defined as a management system invented to handle state affairs and organize state relationships with its citizens. As it developed further, it helped different types of organizations in managing their internal and external affairs. Thus, standardization of procedures, keeping records of transactions, and organizing decision making processes have become essential components of every management system
Interestingly, four structural concepts are central to any definition of bureaucracy, namely:
a well-defined division of administrative labour among persons and offices;
a personnel system with consistent patterns of recruitment and stable linear careers;
a hierarchy among offices, such that the authority and status are differentially distributed among actors; and
formal and informal networks that connect organizational actors to one another through flows of information and patterns of cooperation.
The major theorist that played a major role in the intergration of manargrmnet structures and design are:
Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth were all classical management theorists in the early 1900’s, who spent their time researching how a specific job was done, the steps were taken by an employee to complete the work, and the amount of time it took a worker to complete a task using different methods. They then used this information to determine the most effective way of completing a task. However, many believed that placing too much emphasis on standardization of jobs and workers had not created this ‘mental revolution’ that Taylor and his associates had hoped for, but rather it had inadvertently created an attitude among managers at the time that employees were nothing more than an addition to a machine. While machines and processes could be standardized, critics argued that it was unrealistic to expect that standardization among emotional beings; the two needed to be looked at individually. So, as Taylor and other classical management theorists continued their work on standardization, others started to conduct research on the worker, and thus, the neoclassical theory of management was born. The neoclassical theory was an attempt at incorporating the behavioural sciences into management thought in order to solve the problems caused by classical theory practices. The premise of this inclusion was based on the idea that the role of management is to use employees to get things done in organizations. Rather than focus on production, structures, or technology, the neoclassical theory was concerned with the employee and not the employer. Neoclassical theorists concentrated on answering questions related to the best way to motivate, structure, and support employees within the organization.
Henri Fayol (1841-1925)
Born in 1841 in Istanbul, Turkey, Henri Fayol received his education at a mining school at Saint Etienne and graduated in 1860.
Managerial abilities that he felt were essential in a manager include physical, mental and moral qualities, general education, specialized knowledge and experience. The absence of management training in schools made Fayol see the need for management theory and identified fourteen principles of management to serve as guidelines to help managers resolve work problems. Fayol was the first person to identify the functions of a manager’s job. The “management process” was represented by five elements: Planning, organizing, command, coordination and control. Planning was one of the most important elements in ensuring business success as it predicts future events that determine the next move of the company. Organizing involved ways which organizational structure is developed as well as the flow of communication and authority. Commanding is how managers direct employees through effective communication and the use of discipline and remuneration. Coordinating is the process of creating relationship among organization’s efforts to achieve common goals and controlling looks at how managers evaluate performance of employees.
Poor working conditions in the 1890s and strikes in 1900’s were the cause of long working hours and low wages, which influenced Fayol’s development of management theories, specifically his principal “division of work” and “remuneration”.
Before 1892, no regulations were established to govern the number of working hours for workers. From 1892 to 1906, laws were passed to curb long working hours, hence the introduction of standard working hours from ten hours daily to sixty hours per week with a rest day. However, workers created several strikes from 1906 – 1910, as they wanted higher wages and shorter working days for them. In view of the political unrest, Fayol developed his principle of “division of work” to minimize the wastage of resources, which decreases the efficiency of the organization. Workers and managers always work on the same matters to increase the output of work. However, output was reduced when a change in work leads to a change in adaptation. Fayol also believed that the remuneration of the workers should be fair and provide satisfaction to both the employees and the firm. This includes paying the workers by rates, profit sharing etc .Elton Mayo
George Elton Mayo was born in Adelaide, Australia on 26th December 1880. studied philosophy and psychology at The University of Adelaide and graduated in 1911.
In 1923, Mayo became a researcher at the University of Pennsylvania’s Wharton School of Commerce and Finance where he examined the physical and psychological factors which caused high employee turnover at the Continental Mills.
Mayo was also significantly involved in the research relating to The Hawthorne Works of the Western Electric Company from 1924 to 1932. This study formed the basis of Mayo’s views on industrial settings as a social system (Pugh & Hickson 2007). Mayo died in Guildford, Surrey on 1st September 1949.
MAYO’S KEY WORKS AND THEORIES
Mayo’s works and theories have made significant contributions to the evolution of management in organizations.
One of Mayo’s key theories was derived from the research undertaken at the Continental Mills. He concluded that the central problem underlying the high turnover rate of employees in the spinning department was due to “pessimistic reveries”. According to Mayo, the term pessimistic reveries, is the state of mind in which negative thoughts and distractions dominate the minds of individuals, interfering with their work performance. It is caused by exhaustion and monotony in work routines. This led to Mayo’s theory of implementing rest periods to ease employees’ fatigue which would dismiss these pessimistic reveries.
Another key point Mayo brought up from his studies at the Hawthorne plant was the significance of work groups in creating employees’ contentment. According to Mayo, there is a tendency for groups to establish their own culture and build on their own ideologies, thereby influencing the way individuals behave at work. An intimate environment created from these informal work groups provides a sense of belonging within individuals. This resulting recognition leads to higher productivity within organizations.
Mayo also emphasized on the need to work towards effective human collaboration to re-establish the diminishing social function within industries. Based on Emile Durkheim’s concept of anomie, he sees the term as the cause of social disorganization in society, raising a sense of inferiority and disenchantment within individuals To resolve this predicament, Mayo introduced the concept of managerial elites, who were trained to manage not only the technical aspects, but also the social aspects of industrial organization.
Max Weber (1864-1920)
Karl Emil Maximilian Weber (Max Weber) was born in Erfurt, Germany on April 21, 1864. Max Weber was one of the greatest sociologists of the twentieth century, a founding “father” of modern sociology; he was also a historian and a philosopher. Weber deeply influenced social theory, social research and the study of society itself. His wide-ranging contributions gave incentive to the birth of new disciplines such as economic sociology and public administration as well as a significant change of direction in economics, political science, and religion. Weber’s most inspiring work was focused on the study of religion, bureaucracy, and rationalization. He was assigned as professor of political economy at the University of Freiburg in 1894 and at Heidelberg University in 1897. He suffered from a mental breakdown in 1898 after his father died and did not continue his academic works until. In 1907, Weber received a family inheritance which enabled him to continue his work as a private scholar. Max Weber died of pneumonia on June 14, 1920.
Max Weber was mainly interested in the reasons behind the employees’ actions and in why people who work in an organization accept the authority of their superiors and obey the laws of the organization. Since authority and power can be used interchangeably, Weber was able to uniquely define these two terms. According to Weber, power forces individuals to comply with the rules and regulations in place and therefore power influences people to act or do something they would not have done. As opposed to power, Weber defined legitimate authority involved the individual’s consent that authority is practiced upon them by their superiors. According to Weber, there are three distinct types of legitimate authority.
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