The Evaluation of Organisational Design and Effectiveness of the Managers - Report Example

Theoretical Analysis of Organisational Design and Effectiveness to Evaluate Why Most Managers Find Rational Approaches to Organisations and Organising Appealing Table of Contents 1.Introduction 3 2.Organisational Design Concepts 3 2.1.The Rational Approach 4 2.2.The Natural Systems Approach 6 2.3.The Open Systems Approach 7 3.Conclusion 9 References 10 1. Introduction Organisational design may be defined as “the deliberate process of configuring structures, processes, reward systems, and people practices to create an effective organisation capable of achieving the business strategy” (Kates & Galbraith, 2007, pp.1). It has also been observed that organisational design aims at aligning individual enthusiasms with the organisational interests and in turn helps individual employees make right decisions on a daily basis. The interrelationship between organisational design and effectiveness has been justified by the fact that “insights from organisation design research can help managers improve organisational efficiency and effectiveness” (Daft, 2009, pp.22). In the light of the concepts mentioned above, this report will aim at analysing the different approaches to organisational design as well as organisational effectiveness in order to evaluate why most managers find rational approaches to organisations and organising appealing. 2. Organisational Design Concepts Corporate strategy is among the important factors that affect organisational design; however, numerous other contingencies such as “environment, size and life-cycle, technology, and organisational culture” are found to be influencing organisational design. In order to manifest effectiveness, an organisation should be “designed to fit the contingency factors” (Daft, 2009, pp.73). This has been depicted in the form of the figure appended below. Figure 1: Contingency Factors that Affect Organisational Design (Source: Daft, 2009, pp.74) Organisational effectiveness is one of the major objectives of organisational design and efficient organisations have a tendency to generate growing amounts of riches to be shared out among employees, management, and the society as opposed to the fact that such organisations are relatively more occupied with their internal functioning in comparison to effective organisations. One of the major challenges faced by organisational evaluation is to find out the most practicable methods for differentiating between ineffective and effective organisations. Hence, managers should design the companies that they lead, taking into consideration the fact that this is predominantly a creative endeavour. 2.1. The Rational Approach It has been said that “by far the predominant view of how decisions ought to be made is the rational approach”, and Mintzberg et al. (1976) have summarised the stages associated with it as recognition, diagnosis, search, design, evaluation, choice, authorisation and implementation (Butler, 1991, pp.43). It has been theorised that “rationality as applied to organisations considered the actions of the organisational members, implementation of goal attainment approaches, and a formalised structure that limited the actions of all members”, and in this context, Scott (2003) has opined that “rational behaviour within organisations takes place within – some analysts would argue, because of clearly specified limits” (Triplett, 2007, pp.3) and has further suggested that resources should be gathered from the organisational environment. This approach used to find extensive application in classical bureaucracies – such as Royal Dutch Shell – that had previously been observed to be controlled on the basis of authority, hierarchy and perceptions of control. Furthermore, these organisations give an excess preference to rational approaches as well as long term strategy formulation (McMillan, n.d., pp.5). The degree of complexity that Shell’s organisational structure used to exhibit prior to the year 1995 can be described by the fact that it was comparable only to the United Nations (UN) and the Roman Catholic Church (Grant, n.d., pp.3). However, it has been observed that the company had realised the necessity for change and transformed their structure from formal (rational) to one that is decentralised (open systems). This shift was justified by the company’s CEO Jeroen van der Veer, who had commented that “we have made good progress on simplification and improving efficiency in recent years, but the competition is not standing still, and neither is Shell” (Shell, 2009). The rational approach comes under the traditional view towards organisations as well as change that assumes the occurrence of variations in the form of a rational method, and tries to “discover, diagnose, design, recommend, and implement solutions to rational problems” (Stanford, 2005, pp.274). It has been reported that “managers rarely make rational decisions of maximising nature and make choices which are of satisfying nature”, and thus, it can be inferred that “once the structures, rules, regulations, policies and procedures are in place, these provide boundaries and guidelines for areas of rational decisions” (Srivastava, 2007, pp.163). 2.2. The Natural Systems Approach It has been said that “business ecology is based on the elegant structure and principles of natural systems” largely because “it recognises that to develop healthy business ecosystems, leaders and their organisations must see themselves, and their environment, through an ecological lens” (Abe, Dempsey & Bassett, 1998, pp.19). It has been theorised that an organisational design environment supported by a relevant organisational model forms the base for a thriving value creation strategy, and it is also believed that “in the new ecological economy, viable, adaptive organisations will adopt such traditional wisdom along with organisational models that emulate natural systems” (Abe, Dempsey & Bassett, 1998, pp.63). In general, the natural systems approach explains the informal characteristics of organisations that are beyond the scope of formal designs and entails a perceptiveness of the wide range of human resource elements as an indispensable component. It has been propounded that organisations should embrace this design perspective in order to deal with their counterparts in the external environment, thereby highlighting the fact that the modern business environment calls for an organisational design that is different from the conventional bureaucratic structure and is significantly dynamic to address the issues arising out of unstable environments. An outstanding example as to how this system may be utilised by companies is the cradle to cradle (C2C) certification that “provides a company with a means to tangibly, credibly measure achievement in environmentally-intelligent design and helps customers purchase and specify products that are pursuing a broader definition of quality” (Global Stewards, n.d.). EcoHangers® Direct has been observed to one of the successful companies that have made optimal use of this model, and it has been found that it “provides completely customized eco-friendly clothes hangers for distribution in national retail chains, licensed merchandise stores, hospitality and tourism locations, government agencies, campuses and college bookstores” (EcoHangers® Direct, 2010). 2.3. The Open Systems Approach This approach ensues from the theory of open systems that may be defined as “a theory of organisation that views organisations not as simple closed bureaucratic structures separate from their surroundings, but as highly complex entities, facing considerable uncertainties in their operations and constantly interacting with their environment” (Burton, DeSanctis & Obel, 2006). It also presupposes that organisational constituents will seek balance between the driving forces that press on them as well as their own reactions to these forces. As shown in the figure appended below, this model consists of four basic elements, viz. an organisation; its environment; interaction among the organisation and its environment; and internal dynamics of the organisation. Figure 2: Basic Elements of the Open System (Source: Coffey, 2009, pp.67) When an organisation is considered as an open system, it provides a holistic overview and emphasises that the developments take place within it as a result of dynamic interactions between the attributes of the system as a whole, the features of the external environment of the system, and the interactions between the system and its environment. An improvisation over the rational approach, “open systems were put forth as a collection of interdependent yet semiautonomous parts that ranged from simple and stable to complex and dynamic” (Triplett, 2007, pp.46) and it has been found during the course of research that this point of view had ensued from an advancement from the naive rational system via the natural system (which is organic) to the multifaceted theories that define the open system. Though flat organisations, by virtue of adopting the open systems approach, have comparatively fewer stages in the organisational hierarchy, put less stress on formal structures, and exhibit loose associations between subunits – that in turn allow for brisk modifications regardless of dynamic as well as unstable environments. It has been reported that although open systems may have regularities, these are inexact as well as transitory, and hence, being different from the conventional bureaucratic structure, they help organisations to thrive successfully in the modern business environment that is increasingly turbulent as well as dynamic. Taking into consideration the fact that organisations using the open systems approach maintain an extensive interface with their external environment, it has been identified that multinational enterprises (MNEs) such as Johnson & Johnson, Procter and Gamble, Coca Cola Co., etc. evaluate the needs of their customers, employees and the community, and simultaneously initiate marketing campaigns targeted specifically to the audiences as well as cultural configurations in different nations (Thomson, 2007, pp.4). 3. Conclusion The open systems approach provides the best possible organisational design that can help the modern corporate to thrive in the globalised business environment. However, the rational system finds an extensive application in bureaucratic organisations that are based on the underlying principles of a well-defined chain of command, authority as well as a strong perception of control and hence, most managers in such organisations find rational approaches appealing. It has been conceptualised that despite being effective for conventional, bureaucratic organisations, the rational approach cannot provide the modern corporate with the much needed competitive edge, and under the present circumstances that is increasingly turbulent as well as dynamic, the open system has been found to have the potential to help organisations prosper as it permits rapid adjustments regardless of dynamic as well as unstable environments. References 1. Abe, M. J., Dempsey, E. P. & Bassett, A. D. 1998. BUSINESS ECOLOGY: GIVING YOUR ORGANIZATION THE NATURAL EDGE. Butterworth-Heinemann. 2. Burton, M. R., DeSanctis, G. & Obel, B. 2006. ORGANIZATIONAL DESIGN: A STEP-BY-STEP APPROACH. Cambridge University Press. 3. Butler, R. 1991. DESIGNING ORGANIZATIONS: A DECISION-MAKING PERSPECTIVE. Taylor & Francis. 4. Coffey, W. G. 2009. A SYSTEMS APPROACH TO LEADERSHIP: HOW TO CREATE SUSTAINED HIGH PERFORMANCE IN A COMPLEX AND UNCERTAIN ENVIRONMENT. Springer. 5. Daft, L. R. 2009. ORGANIZATION THEORY AND DESIGN. 10th ed. Cengage Learning. 6. EcoHangers® Direct. 2010. ECOHANGERS® DIRECT. [Online]. Available at: http://ecohangersdirect.com/ [Accessed on June 24, 2010]. 7. Global Stewards. No Date. SUSTAINABLE BUSINESS SOLUTIONS FOR GREEN BUSINESSES. Solutions. [Online]. Available at: http://www.globalstewards.org/business.htm [Accessed on June 24, 2010]. 8. Grant, M. R. No Date. ORGANIZATIONAL RESTRUCTURING WITHIN THE ROYAL DUTCH/SHELL GROUP. Case Seven. [Pdf]. Available at: http://www.blackwellpublishing.com/grant/docs/07Shell.pdf [Accessed on June 24, 2010]. 9. Kates, A. & Galbraith, R. J. 2007. DESIGNING YOUR ORGANIZATION: USING THE STAR MODEL TO SOLVE 5 CRITICAL DESIGN CHALLENGES. John Wiley and Sons. 10. McMillan, E. No Date. CONSIDERING ORGANISATION STRUCTURE AND DESIGN FROM A COMPLEXITY PARADIGM PERSPECTIVE. [Pdf]. Available at: http://www.ifm.eng.cam.ac.uk/mcn/pdf_files/part5_5.pdf [Accessed on June 16, 2010]. 11. Shell. May 27, 2009. ROYAL DUTCH SHELL PLC ANNOUNCES NEW SENIOR MANAGEMENT STRUCTURE. News and Media Releases. [Online]. Available at: http://www.shell.com/home/content/media/news_and_library/press_releases/2009/new_management_structure_27052009.html [Accessed on June 24, 2010]. 12. Srivastava, B. 2007. ORGANIZATION DESIGN & DEVELOPMENT: CONCEPTS & APPLICATIONS. Dreamtech Press. 13. Stanford, N. 2005. ORGANIZATION DESIGN: THE COLLABORATIVE APPROACH. Butterworth-Heinemann. 14. Thomson, S. G. September 19, 2007. THE OPEN-SYSTEMS APPROACH IN ORGANIZATIONAL DESIGN. [Pdf]. Available at: http://works.bepress.com/cgi/viewcontent.cgi?article=1011&context=grace_thomson [Accessed on June 24, 2010]. 15. Triplett, J. 2007. ORGANIZATIONAL DESIGN: A HOLISTIC VIEW. Collective Erudition Publishing. Read More