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Introduction
This paper attempts to define the structure of a contemporary organisation. Due to the 'technology revolution', the traditional mechanistic paradigm is shifting to a more dynamic and organic form. This shift affects organisational structure as firms are focusing on organic principles such as renewal, agility and vitality as opposed to mechanistic philosophies of efficiency, uniformity, control, predictability and economies of scale. Some mechanistic structures still exist in extremely stable and certain markets; however, increasingly more organisations are employing the organic structures that complement the changing economy.
Contingencies such as environment, strategy and goals, size, technology and culture will greatly influence organisational structure. When defining an organisational structure the impact of these contingencies must be taken into account. As these dynamic variables change from organisation to organisation, it is impossible to define one single contemporary structure.
It must be noted however, that there is a general trend toward organic structures, the matrix, network and virtual structures are examples of structures that have resulted as a consequence of this shift in paradigm.
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A Shift in Paradigm Moving from Mechanistic to Organic Organizations
The beginning of the twentieth century showed a quantum shift from an agrarian to an industrial economy (Youngblood 000). Mass production and traditional management techniques were created to operate in the new economy. Traditional management, which is based on the philosophy of Newtonian-Cartesian science, treats organizations like machines for producing profit, and employees are seen as the cogs of the machinery (Youngblood 000). It places emphasis on mechanistic principles of efficiency, uniformity, control, predictability and economies of scale. These mechanistic fundamentals have been ingrained in organizational structure and are locked into the values and assumptions of organizational culture. They have become the standard for organizations throughout the twentieth century (Youngblood 000).
The world economy is moving from a stable mechanistic paradigm to a more dynamic organic paradigm, which consequentially calls for a different set of organizational rules (Black and Edwards 000). This new economy is influenced primarily by technology. Today's business environment rewards agility, innovation and vitality. Organizations must attain these characteristics if they are to survive and thrive in the twenty-first century (Youngblood 000). Specifically, Youngblood believes that organizations must
•Increase speed in every thing that they do
•Develop new business models to compete in multiple markets
•Radically improve competitive innovation and new value creation
•Rapidly leverage the internet and other new technologies
•Create and distribute knowledge and;
•Attract, develop and retain talented people.
Black and Edward believe that this shift to an organic paradigm calls for
1.Organizational forms that have neither too little or too much structure; and
.Organizations that have an adaptive culture,
Youngblood points out that traditional management was developed to create stability and predictability, not to generate change. As Black and Edwards asserts, a general change in culture and a transmutation to an organic model is needed for companies which hope to achieve Youngblood's capabilities, but who are still rooted in the mechanical paradigm.
Most all long-lived and highly successful companies attribute the source of its prosperity to its culture . Culture involves every aspect of the organization, how it is designed, how people relate to one another, what is considered to be true, what is deemed to be important, the criteria to use for decisions, how to treat customers, and a multitude of other factors (Youngblood 000). Mechanistic cultures inhibit organizations in today's competitive environment. They cannot deliver the speed, creativity and responsiveness required to compete effectively, nor are they attractive to talented people that companies need (Youngblood 000).
The organic model views the organization as a natural system that has the intrinsic ability to change, grow and renew itself (Youngblood 000). It promotes a culture of renewal, agility and vitality. All which are essential in this changing and dynamic environment.
Renewal
In today's fast changing environment, innovation and renewal are life saving attributes (Youngblood 000). Organizations must continually invent new business concepts in order to renew their business models. Factors that inhibit renewal may be
•A narrow vision
•A lack of strategic leadership
•Hierarchical and rule-based management control systems and;
•Barriers to the flow of information, diversity of thinking and collaboration
(Youngblood 000)
The culture in organic structures allows and attracts leaders that create an environment that can renew itself in order to achieve the strategic vision. Youngblood describes these leaders as being gardeners who are cultivating the organization's innate creative capabilities. He suggests that leaders use leverage disruptions, such as the growth of the Internet, merger or acquisition, to aid in the instillation of deep-seated changes.
Agility
Organic organizations achieve agility through creating alignment around a clear vision, strategy and goals. They then generate adaptability by providing people with the freedom and resources they need to act quickly and responsively. A high level of cooperation is among people and groups, both within the company and with other companies is also needed. Clear boundaries are specified to give the organization shape and direction, but within those boundaries employees are given the freedom to act in the organization's best interest. What results is employees have the ability and autonomy to make decisions at the local level that cumulatively articulated at the organizational level with out management directing the decisions and actions (Youngblood 000).
This degree of freedom requires a culture of trust (Youngblood 000). This is often hard for leaders to allow as this gift of freedom is generally seen as a renouncement of power. Middle managers especially feel that their positions may be threatened by the increased autonomy of employees.
Vitality
According to The American Heritage Dictionary of the English Language Vitality is Physical or intellectual vigor; energy. Youngblood states that in organic structures, employees are the living cells of the organization. If employees are cynical, demoralized, overworked, or uninspired, the company will perform poorly. He states that it is for this reason that vitality is essential to competitiveness, as it affects everything that the company does.
In short an organization needs to display a high level of vitality to attract and retain the talent needed to compete effectively. In organic models people are seen as capable, creative, trustworthy, and committed to doing great work. Employees must be seen as being the company not merely as an asset (Youngblood 000). Youngblood suggests several ways to increase an organization's vitality these include
•Providing a meaningful and inspiring vision
•Giving employees the freedom to show initiative and creativity
•Ensure that jobs are challenging and rewarding
•Help employees achieve a satisfactory work-life balance
•Cultivate a sense of community and belonging
Contingencies
In addition to the changing paradigm there are several contingencies that influence the structure of an organization (Daft 001). For organisations there must be 'goodness of fit' between their structure and the contingencies threat influence them (Daft 001). These are environment, strategy and goals, size, technology, and as already mentioned culture.
Environment
Environment has an immense impact on the structure of an organization; therefore changes in the external environment will have major implications. Organizations are open social systems, which come into contact with hundreds of external elements daily. Key elements include the industry, government, customers, suppliers and the financial community (Daft 001, pg. 18). Most organizational decisions, activities, and outcomes can be traced to stimuli in the external environment (Daft 001, pg. 155).
An organization's internal structure must match the external environment (Daft 001, pg. 156). Burns and Stalkers' studies have identified that mechanistic structures are designed for stable environments while organic structures are better suited for changing and innovative environments (Reigle 001). Daft provides a framework for organizations to determine the level of environmental uncertainty that they face. He uses the dimensions of simple-complex and stable-unstable. In a simple, stable environment, uncertainty is low. In this environment, the few external elements that the organization is exposed to are relatively stable. The complex, stable environment has a greater uncertainty. This environment brings a large number of dissimilar external elements that remain the same or change slowly. A higher degree of uncertainty is found in a simple, stable environment. Elements that influence organizations in this environment are few and similar; however they change frequently and unpredictably. Finally, the most uncertain environment is the complex, unstable environment. This has a large number of dissimilar elements, which change frequently and unpredictably. Today's world of increased global competition, rapid technological breakthroughs and shifting markets, will increase the environmental complexity and change for organizations in all markets (Daft 001).
Strategies and Goals
An organization's strategies and goals define the purpose and competitive techniques that set it apart from other organizations (Daft 001 pg. 0). Structuring an organization to fit strategies and other contingencies will lead to organizational effectiveness (Daft 001). Daft gives two models for formulating strategies Porter's model of competitive strategies and Miles and Snow's strategy typology. Choice of strategy affects internal organizational characteristics. These characteristics need to support the organization's competitive approach.
Size
Size is the number of people within the organization. It is a contextual variable that influences organizational structure and can be measured for the organization as a whole or for specific components (Daft 001). There are vast differences between the functioning of large and small organizations. Large organizations focus on economies of scale, global research and have a stable market. They typically have a vertical hierarchy and are mechanistic in nature. Bureaucracy is a logical form of organizing that allows large firms to use resources efficiently (Daft 001). Bureaucracy however, has come under attack in recent times as it is often associated with traditional mechanistic structures and is thought to reduce agility and vitality. Attempts have been made in many bureaucratic organizations to decentralize authority, flatten organizational structure, reduce rules, and written records (Daft 001 pg. 0). This is done in an attempt to create a small company mind-set.
Small companies are able to respond quickly and be flexible in fast changing markets. They have a regional reach, flat structure and are characteristically organic in structure (Daft 001). Small organizations are able to fill niches and serve targeted markets .
Technology
The information revolution has had a tremendous impact on organizations in all industries (Daft 001 pg. 66). It has played an essential role in aiding organizations in achieving competitive advantage through low-cost leadership or differentiation . Technology can increase operational efficiency, coordination, and the speed of re-supply, can lock into customers, improve customer service and enhance product development (Daft 001, pg. 67).
Information technology has been the main acceleration behind the recent trend toward knowledge management . Mechanisms such as data warehousing, data mining, knowledge mapping and electronic libraries are useful for the leverage and management of explicit knowledge . For explicit knowledge, organizations can use mechanisms such as dialogue, learning histories and story telling, and communities of practice. Intranets are important to the sharing of both explicit an implicit knowledge. An organizational change in culture to encourage employees to share knowledge as opposed to hoarding it; this is vital in the leverage of knowledge (Daft 001).
Culture
Daft explains that organizational cultures serve two critically important functions
1)To integrate members so that they know how to relate to one another and;
)To help the organization adapt to the external environment.
(Daft 001, pg. 7)
Organizational culture should reinforce the strategy and structure that the organization needs to be successful in its environment (Daft 001, pg. 7). Culture can be shaped to fit both. Reigle believes that a lack of insight into culture leaves managers venerable to forces of evolution and change which they may not understand and which they may have difficulty in controlling. Culture is observed and interpreted through rites, ceremonies stories, heroes, symbols and language. Daft outlines four types of culture adaptability/entrepreneurial culture, clan culture, mission culture and bureaucratic culture .
An accommodating culture is vital to the successful implementation of a new organizational structure. The terms organic and mechanistic describe culture as well as structure (Reigle 001). In this understanding it would be near impossible to implement an organic structure on a mechanical culture and vice versa.
As exemplified, the above contingencies significantly influence the appropriate structure for organizations. These contingencies will also vary from organization to organization. Although mechanistic structures do still exist in some stable environments, there is a general tend toward structures that are more organic in nature. This is due to the influence of increased global competition, rapid technological breakthroughs and shifting markets (Daft 001). Organizations must analyze the impact of their contingencies and choose a structure of best fit.
Contingencies affect each organisation in a different manner and shape a firm's structure. As a result organisations should evaluate the effect of each contingency. This array of dynamic variables will vary from organization to organization and it is for this reason it is impossible to define a single contemporary structure (Black and Edwards 000). There are countless organisational structures; the best strategy for an organisation is one that complements its contingencies.
Structures
Due to the current organizational trend toward structures that are organic in composition, the focal point for the remainder of this paper will be on structures that exemplify the organic paradigm. Examples of these are matrix, network and virtual organizational structures.
Matrix Structure
Pioneered by the American aerospace industry in the 170s, the matrix structure was developed to combine the stability of functional structure with the flexibility of the divisional structure (Hunge and Wheelan). The matrix structure is effective when the external environment is uncertain. Hunge and Wheelan propose that matrix structures are generally employed when
1.Ideas need to be cross-fertilized across projects.
.Resources are scarce.
.Abilities to process information and to make decisions need to be improved.
In matrix structures, functional and product forms are combined simultaneously at the same level of the organization (Hunge and Wheelan). Although matrix structures are flat, with few hierarchical levels, it is based on a dual chain of command (Martinsons et. al. 14). As a result employees inside the matrix have two bosses a functional boss and a project boss (Hill and Jones 001). This structure however requires only the minimum of hierarchical control by supervisors. Team members control their own behavior, monitor other team members and learn from each other (Hill and Jones 001).
Other advantages of matrix systems include
•The provision of autonomy to motivate employees, leaving top management to concentrate on strategic issues (Hunge and Wheelan).
•The availability of specialized knowledge to all programs on an equal basis, knowledge and experience can be transferred form one project to another (Cleland and King 18).
•Increased speed in responsiveness to project needs and customer desires because the lines of communication are established and decision points are centralized (Cleland and King 18).
Of course there are some disadvantages to the matrix system. The balance if power between the functional and project divisions must be watched so that neither one erodes the other. The balance between time, cost and performance must also be continually monitored so that neither group favors cost or time over performance (Cleland and King 18). The bureaucratic costs of operating the structure are very high, in addition, because employees tend to be highly skilled, both salaries and overheads are high . The two-boss employee's role of balancing between the two divisions is difficult to manage as loyalty is required to more than one supervisor (Hubbard 000) and conflicts must be avoided over resources (Hill and Jones 001).
Network Structure
A newer and somewhat more radical design is the network structure. Hunge and Wheelan term networks a 'non-structure' with its near elimination of in-house business functions . A network organization electronically connected to a series of independent firms or business units that are linked together by computers in an information system which designs, produces, and markets a product or service . When an organization's environment uncertain and is expected to remain so, innovation and quick responses are needed it is in this context that networks are most effective (Hunge and Wheelan).
The advantages of networks are they provide organizations with increased flexibility and adaptability to cope with rapid technological change and shifting patterns of international trade and competition. It allows a company to concentrate on distinctive capabilities while gathering efficiencies from other firms (Hunge and Wheelan). Network organizations are also credited with requiring less capital as overheads are reduced (Daboub 00).
Disadvantages may be seen as being the availability of numerous potential partners can be a source of trouble. Contracting out functions to separate supplier/distributors may keep the organization from discovering any synergies by combining activities (Hunge and Wheelan 001, pg. 17). There is also less commitment between two independent parties than an internally linked organization (Hubbard 000). There may also be differing commitments and loyalties between the organization and its contractors.
Virtual Structure
The ability of managers to develop a network structure to produce or provide the goods and services their customers want has lead to the idea of virtual structures. Virtual organizations are composed of people who are linked by computers, faxes, computer-aided design systems and video conferencing and who may rarely if ever see one another face to face (Hill and Jones 001, pg. 477). In a manner very similar to matrix structures, people come and go as and when their services are needed. It is for this reason that knowledge plays a large role in virtual structures. To aid in the dissemination of tacit and explicit knowledge an internal database and company intranet are essential (Hill and Jones 001).
Many theorists believe that virtual organization is the ultimate form of business organization (Morgen 00). This is due to the fact that its structure requires few or no tangible assets. It exists in a 'virtual space' created using the Internet and other communication networks. As they have very low running costs, they are able to meet changing strategic needs through the structure's immense flexibility (Morgen 00).
By their nature, are diffuse and formless and therefore harder to control. The implementation of virtual structures, management is required to develop new skills such as network management, communications management and the ability to manage across organizational boundaries (Morgen 00). Many of the dotcoms incorrectly called themselves virtual organizations . The quick decline of the dotcom industry shows what happens when theory is applied with out attention to reality (Morgen 00).
Conclusion
The world economy is currently transforming from a paradigm, which is mechanistic in nature toward a more organic model. This requires a whole new set of organizational rules as a consequence (Black and Edwards 000). Instead of focusing on principles of efficiency, uniformity, control, predictability and economies of scale, organizations are turning their attention and energy to renewal, agility and vitality in order to survive (Youngblood 000).
Contingencies such as environment, strategies and goals, size, technology and culture will affect an organization's strategy. This array of dynamic variables will vary from organization to organization and it is for this reason it is impossible to define a single contemporary structure. Indeed, contingencies make it difficult for an organization to find and maintain their own ideal organizational structure (Black and Edwards 000). Consequently, organizations implement structures that satisfy their current needs and which provide a reasonable degree of flexibility for its future (Black and Edwards 000).
Word Count 876
References
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