Tag: economics

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Making sense of organizations

To what extent is our understanding of organisations and management over the last 100 years applicable to the 21st century?

MAKING SENSE OF ORGANIZATIONS THROUGH THE YEARS

The complexity of interconnections is at the heart of our knowledge economy. In a developing economic ecosystem, all individuals, teams, communities, systems, and other corporate assets are highly interrelated. Each network player in the linked economy is part of a bigger economic web that influences and is impacted by each other (Pettinger, 2017). We can no longer focus on individual actor performance in such a linked system; instead, we must focus on system results.

The performance of the integrated whole is the key. Attempts to make sense of this new environment are revealing certain fundamental principles at work in the complex adaptive systems we call organizations. (Shapiro & Varian, 1999)  said that, “There is a central difference between the old and new economies: the old industrial economy was driven by economies of scale; the new information economy is driven by the economics of networks…”.

Recent study on knowledge economy productivity and effectiveness sheds light on what works in the linked workplace (Pettinger, 2017). When undertaking knowledge work, certain patterns of relationships arise around both effective people and successful teams.

An Organization is a group of people working together to create a surplus (Koontz & Weihrich, 2006). This surplus is profit in business organizations; however, it may represent fulfilment of needs in non-profit organizations such as philanthropic organizations. Management is the act of creating and maintaining an environment in which people work together in groups to achieve specific goals (Koontz & Weihrich, 2006). The basic definition of management implies that managing is concerned with productivity which implies effectiveness and efficiency.

Business success necessitates the development of a smart strategy into a well-executed plan. The process of directing a corporation and efficiently employing or controlling its assets and resources is known as organizational management. It goes beyond a corporate structure; it necessitates that executives have systems in place to resolve challenges and produce solutions that assist the company get closer to its goals (Leonard, 2018). 

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Managers frequently perceive their work as task or supervisory in nature, however this is a fallacy. Management is a discipline that consists of five broad functions: planning, organizing, staffing, leading, and controlling at its most fundamental level (indeed, 2021).Planning entails deciding on acceptable goals and activities to pursue, as well as selecting what tactics to employ, what actions to take, and what resources are required to attain the objectives (indeed, 2021).

Organizing is the process of putting things together. Workers can work together to achieve organizational goals through this process of creating worker connections. Leading involves articulating a vision, energizing employees, inspiring and motivating people using vision, influence, persuasion, and effective communication skills (indeed, 2021). Staffing involves Recruiting and selecting employees for positions within the organization. Controlling is Evaluate how well the organization is achieving their goals, improving performance, taking actions to ensure events conform to plans (indeed, 2021).

The number of levels in management grows in full agreement with the growth of the organization and employees, and vice versa. The various levels of management can impact the chain of command within an organization, as well as the degree of authority and, in most cases, decision-making power that all managerial roles have (Juneja, 2015). The board of directors of an organization, as well as the chief executive or managing director, make up the top level of management.

Because it monitors a company’s goals, regulations, and processes, it is the ultimate source of power and authority. The strategic planning and execution of the entire business performance is their top focus (Juneja, 2015). This intermediate management level is made up of branch and departmental managers.

These individuals are directly responsible to top management for the smooth operation of their departments, allowing them to devote more time to organizational and strategic duties. Lower-level managers are primarily concerned with the execution and coordination of day-to-day workflow in order to guarantee project completion and delivery of deliverables (Juneja, 2015). 

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Traditional organizational structure is a strategy for organizing a business or other entity in what is known as a hierarchy or a top-down structure (Henry, 2016). With this approach, the processes of task allocation and management focus on a vertical structure that strictly defines a chain of command. A bureaucracy of this type allows relatively little open communication between different levels of employees, with those who are assigned to work within departments normally being assigned jobs and told what to do, without much of an ability to have input into policies and procedures (Henry, 2016). 

Hierarchical structures of this type have been common in a number of different organizations, ranging from companies and non-profit organizations to religious organizations (Henry, 2016). While a traditional organizational structure can often be effective when highly competent individuals are placed in positions of authority, there are also potential pitfalls with this model that include a lack of checks and balances.

The creativity of the organization may also be somewhat limited in this type of business structure, since the ideas all come from a relatively small number of individuals who are actually involved in the overall operation (Henry, 2016).

There are four basic models or types of organizational structure. One is known as Structure of a Functional Organization. People who do comparable jobs are grouped together by speciality in a functional organization structure(Alton, n.d.). As a result, all accountants are assigned to the finance department, followed by marketing, operations, senior management, and human resources. Because the group members can readily communicate, this arrangement has the benefit of allowing for speedy decision-making.

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They can also learn from one other because their skill sets and interests are comparable (Alton, n.d.). Another type is the divisional structure on Items, in which your organization divides employees into teams based on the products or projects that best satisfy the demands of a certain client (indeed, 2021). A bakery with a catering operation, for example, may divide its staff into departments based on their primary customers, such as a wedding department and a wholesale-retail department (indeed, 2021).

The matrix structure, on the other hand, is more complicated since it incorporates components from both the functional and divisional models. It organizes employees into functional specialized departments, which are subsequently divided into divisional projects and products (Sullivan, 2019). Team members are given more autonomy and are expected to take on more responsibility for their work in a matrix structure. This boosts team productivity, encourages more invention and creativity, and helps managers to tackle decision-making issues collaboratively through group engagement (Sullivan, 2019).

This organizational structure takes a great deal of preparation and effort, thus it’s best suited to large corporations with the resources to spend maintaining a complicated business framework (Sullivan, 2019). Lastly, most firms’ traditional top-down management method is disrupted by a flat organizational structure (Sullivan, 2019). There is no daily “boss” since management is dispersed.

Each employee is their own boss, which reduces bureaucracy and red tape while increasing direct contact (Sullivan, 2019). This structure eliminates needless layers and distributes authority across many positions. When everyone doesn’t agree, this contributes to improved decision-making, but it may also be confusing and inconvenient. In other words, it has advantages and disadvantages similar to other structures (Sullivan, 2019).

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Although traditional structures excel in industries where procedural uniformity equates to quality, they tend to have some drawbacks in meeting the varied demands of 21st-century businesses. One of the main problems face by the hierarchical method is that it has a complicated chain of command which can slow down decision-making (Anon., n.d.). this type of structure can reduce interdepartmental cooperation and communication. Departments can become indifferent to the concerns of other areas and develop tunnel vision (Anon., n.d.). When acute, departments may put their own agendas ahead of company goals (Anon., n.d.).

Senior persons have a significant role in decision-making under the existing hierarchical arrangement. They can either foster discussion or strive to reach an agreement among multiple viewpoints, then they might be lauded as heroes for successfully negotiating a compromise. When parties can’t agree, they’re tasked with making the ultimate decision, and they’re lauded as heroes for coming to the rescue and putting a stop to the squabble (Palmer, 2018). Or they don’t involve others in their decisions and just announce what is going to happen and are hailed as heroes for taking a strong line (Palmer, 2018).

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Another disadvantage of the hierarchical organizational method is that there is less flexibility to adapt and react to environmental market. As companies develop, they tend to add additional procedures and systems to help them manage their different pieces. With additional regulation and control added to the maze of bureaucracy, this collection of rules and processes can get increasingly complicated over time. This eventually grows into its own business, requiring an army to oversee and maintain the rules and procedures (Hayward, 2019).

Traditional management clashes with creative expression in particular. Employees at advertising firms and art and design, for example, occupations are more productive when the framework is flexible and informal (Kokemuller, 2017). Traditional management is centered on a controlled work environment in which workers are held to high professional and performance standards. As a result, traditional management rarely works in these situations (Kokemuller, 2017).

Employee empowerment, or the practice of entrusting important decision-making to firm employees, has grown prevalent in early twenty-first-century workplaces (Kokemuller, 2017). Employees who are actively participating in decision-making have a better feeling of ownership at work, according to companies. Customers also benefit from more quick problem-solving assistance (Kokemuller, 2017). Tall bureaucratic structures limited employee participation in organizational decision-making, and they were also rigid and time-consuming since decisions had to trickle down the hierarchy from the top before reaching the individuals who needed to hear the message (Kubheka, et al., 2013).

Flattening hierarchies is an attempt to empower lower-level employees by giving them decision-making authority. While team-based approaches to operating have been identified in some organizations, most employees still delegate decision-making authority to their former middle managers, whom they regard as more experienced and knowledgeable (Kubheka, et al., 2013).

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Lastly, this organization method is resistant to creativity. Business divisions are unable to respond quickly to competitive challenges due to the top-down decision-making structure. This is one of the reasons why smaller, more agile start-ups with fewer management layers are frequently able to surprise larger competitors and carve out a profitable market niche (Basu, n.d.). 

The issue is that the chain of command functions properly when it comes to giving instructions and making judgments. It works so effectively that unless fresh ideas are communicated from the top down, they have a slim chance of being implemented. Ideas that emerge from the middle or lower levels of a hierarchy must pass through a series of managers, each having the capacity to veto but not the capacity to implement them (BURKUS, 2012).

The chance of rejection grows as a concept progresses up the levels, because those managers are removed from the area to which the concept relates and are less likely to see its genuine worth in that area (BURKUS, 2012). 

Due to the emergence of factors like globalization, intense competition due to an increase in number of companies, ethics and the green movement as well as a need for increased speed and responsiveness, there has been a growing need to change the traditional organizational structure and hence the modern organizational method emerged in the 21^st century. Modern Organization means a boundaryless organization which are networking together and collaborating more than ever before (Quain, 2018).

They are well-suited for rapid innovation and therefore ideal for companies in the growing technology industry. Its main concept is to diversify its activities and connectivity as a result it can accept new challenges and can set a goal frequently. The old top-down organizational structure is replaced by teams that work on projects collaboratively in a modern organizational structure. Rather than depending on senior management to drive the work process, modern organizational design focuses on empowering individuals to make decisions and execute changes without the need for supervisor approval (Quain, 2018).

Employees are given the criteria, milestones, and productivity objectives of significant projects and must find the most effective approach to fulfill those goals under this sort of organization. This style eliminates the typical company’s vertical structure and offers employees ownership of the job they do (Quain, 2018).

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Unlike the hierarchical method, the modern organization structure is more dynamic with its business strategy. This means that it needs multiple progress and constant changes. Regardless of the fact that the hierarchical method was more stable, it was more costly. Managers jumped from job to job quickly, gaining high positions despite a lack of expertise. They not only required constant supervision, but they also struggled to understand what they needed to know (Neilson, et al., 2003).

The corporation appeared to promote its finest and brightest quickly in order to keep them. This caused extra labour at lower levels by adding superfluous layers to the system. All of these activities are really expensive. The company’s general and administrative expenditures were 20 percent more than the average of our benchmark firms due to the managers’ salary and the real cost of their operations (Neilson, et al., 2003). 

Traditional organizations are slightly conservative and they try to follow traditional rules and regulation. They always flow a static business strategy and make a workflow model maintaining a traditional marketing policy and employee management system. A modern organization is doing modification, rescheduling, flexible entity management and dynamic business strategy (Neilson, et al., 2003).

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Employees in a modern business have more freedom and flexibility in exchanging their opinions. As a result, staff morale is strong in this form of firm and they is a significant increase in employee morale. Because Traditional is a job-oriented company, you are unsure about employee morale (Jahan, 2016). there is a psychological and rational perspective when it comes to employee morale. 

Employee empowerment from a psychological perspective focuses on attempting to characterize the self-perceptions of an employee who feels he or she is empowered. According to proponents of psychological views, empowerment is a subjective state of mind in which an employee believes he or she has effective influence over their work (Kubheka, et al., 2013).

The relational view on empowerment, on the other hand, is concerned with the distribution of power within an organization and how it is influenced by the structure and culture of that organization (Kubheka, et al., 2013). The general theme of the rational perspective is the relocation of power from the upper level of the hierarchy to the lower level workers. Hence the modern organizational prevents people from centralizing authority or embedding power in fixed roles and allows the firm to remain flexible and adaptive (Kubheka, et al., 2013).

With the emergence of factors like globalization and technology, there has been a need for adaptation and change.The modern organization is increasingly technology-driven and devoid of boundaries. As a result, the number of employees or the office compartment are irrelevant. Traditional organizations, on the other hand, are too centralized and backward to embrace sophisticated technologies (Jahan, 2016).

With beurocracy, factors like decision-making, communication and action become slowed down and the company becomes a lumbering entity. However, with modern organisational structure, such factors are easy to adapt to and lead to both profit and growth of the company. 

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Regardless of the multiple advantages of the modern organizational structure, there are still a number of negative factors that lead to companies to retain the traditional structure. For instance, A well-designed organization ensures that reporting connections, decision-making, information flows, and work procedures are all clear (Nouri, 2019). Everyone understands precisely what they are accountable for, who they report to, and what other coworkers are accountable for with a well-crafted design.

This can help a company’s operating efficiency, especially if it’s a large one (Nouri, 2019). However, there are certain disadvantages to this level of clarity. Employees in small startups without a defined framework, for example, may be expected to do a variety of unrelated jobs. Employees in highly organized companies, on the other hand, may reject or refuse to complete work that is not part of their job description (Nouri, 2019). 

Moreover, if employees fail to hold each other accountable for mistakes, the lack of supervisory power can lead to disorder and inefficiency. Another downside is that, because the organization is no longer top-down or bottom-up, prospects for development or upward mobility are restricted, since the company now operates as a “flatter” structure in which all employees are treated equally (Ingram, n.d.). a typical organizational structure, however, concentrates decision-making and authority in the hands of a few individuals inside a company.

It reduces employee uncertainty about who is in control and sends a clear message about what workers are expected to do in the course of their jobs. A machine can be compared to the top-down structure (Ingram, n.d.).

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