“Towards Innovation”
The world today is experiencing the most rapid pace of change in its history. The purpose of this essay is to discuss what organizational structure is suitable in the business circumstances of today. This essay will argue that ‘the environment of the 21st century is such, that to be effective, organizations are tending towards less formalized structures than used in the past’. To support this argument, firstly organizations will be defined, and then the properties that make an organization effective will be identified. Next organizational structure will be appraised, and what constitutes business environment will be established. Finally the influences globalisation and technology have had on the will be addressed in relation to changes in organizational structure.
Robbins et al. define an organization as ‘a deliberate arrangement of people to accomplish some specific purpose’ (2000: 5). While Wood et al. consider organizations as ‘collections of people working together in divisions of labour to achieve a common purpose’ (1998: 15). These definitions fits a wide variety of groups such as sporting clubs, religious bodies, voluntary associations etcetera however for this essay will concentrate on business organizations. A Business organizations’ purpose is to deliver and product or service in such a way that a benefit is gained for the organization, profit or goodwill for example.
The Macquarie dictionary is defines effective as ‘producing the intended or expected result and producing a striking impression’ (1990). Thus an effective organization is an arrangement of people that successfully achieved their purpose, ie. a large profit of fine product, and have done so in a noteworthy, exemplary, commendable method or fashion. It is understood that to be effective an organization must be efficient. Efficiency is defined as ‘the relationship between inputs and outputs, the goal of which is to minimize resource cost’ (Robbins et al., 2000: 8). Usually a business organizations’ success is primarily measured in financial profit, though this is not the only benchmark.
Organizational structure is defined as ‘the organization’s formal framework by which job tasks are divided, grouped and coordinated’ (Robbins et al., 2000: 351). Generally an organizations’ structure is considered to be the managerial framework that directs the non-managerial employees. Traditionally western organizational structure can be argued to have developed from the feudal system of government where a strict pyramidal power and class structure existed. Termed as mechanistic organizations they are described by Robbins et al. as being ‘characterized by high specialization, extensive departmentalization, narrow spans of control, high formalization, a limited information network, and little participation in decision making by low-level employees’ (2000: 361).
Organic structures on the other hand developed as alternatives to mechanistic structures. The underlying philosophy of the organic model is to provide the “space” for all people to contribute ideas and effort towards the well being of the organization. Organic organizations are characterized by Robbins et al. as ‘highly adaptive and flexible with little work specialization, minimal formalization and little direct supervision of employees’ (2000: 362). Examples of organic structures include ‘team based structures, matrix organizations, project structures, boundaryless organizations and learning organizations’ (Robbins et al., 2000: 370-377). Organic organizations usually provide employees with more autonomy than those with mechanistic structure.
Business organizations are classed as open systems, that is, they ‘dynamically interact with their environment’ (Robbins et al., 2000: 18). Robbins et el. define environment to be “outside institutions or forces that potentially affect an organizations performance” (2000: 101). Wong et al. list elements of the environment to include competition; economic conditions; physical environment; political and legal atmosphere; socio-economic characteristics; sociocultural elements; population distribution; infrastructure; technological conditions; workforce composition and education of the population (1998: 4). Once an organization could essentially ignore environmental forces but Wood et al. states now ‘an effective organizational design reflects the powerful external forces’ (1998: 417).
‘Organizations need to “know” their environment in order to recognize and take advantage of the opportunities it offers, to recognize the constraints it imposes and to seek to turn the constraints into opportunities’ (Dawson, 1992: 80). To “Know” their environment organizations must engage in environmental scanning, described by Robbins et al. as ‘the screening of much information to detect emerging trends and create scenarios’ (2000: 311). Robbins et al. argues that organizations have to pay special attention to ‘the part
