Organizational structure, life cycle, and decision making adapted to contingency for effectiveness

Organizational structure, life cycles, and decision making adapted to contingency for effectiveness

By: Leontes Dorzilme

Introduction

If the organization is not paying great attention to the constituencies and contingencies, it may be effective, but not successful, (Daft, 2010). The comprehension of the evolution of organizational structures in relation to its operations, its external environment, and also the use of technology are many components to study in a holistic evaluation of today’s organizational effectiveness. The purpose of this paper is to address the ways organizational effectiveness and success can be reached based on the interplay between the organizational structure during its life-cycle with the use of technology, the resources, while keeping opened eyes on the contingency and the constituency factors. By using the available studies on the subject, the thesis will also demonstrate how diagnosing deficient structures can serve as indicator to monitor organizational effectiveness.

Modifying organizational structures in order to reach efficiency and effectiveness

The understanding of organizational life cycles and the way each stage may impact the organizational effectiveness is very important to attain effectiveness and success. That is, it is very important for management to be able to diagnose many possible symptoms of structural deficiency in organization. The main importance of this diagnosis is to tackle weaknesses on time and to reinvigorate the organization as it is going through diverse stages in its life-cycle. The principal symptoms of structural deficiencies may be a functional issue related to the lack of opportunity for leadership development. At this point, the solution needs to be focused on the definition of the functions and the way it is applied to the general organizational structure and is meshed with the pursued goals. Many organizations are so concentrated on daily productivity that management or leadership does not have enough time to plan the organizational strategy. The organization, in this particular case, is running like a boat with no compass. The operational tasks are prioritized over the organizational strategy planning. That can be understood as a serious sign of structural deficiency.

When the alignment of resources in relation to the operations is not made well, the organization may also suffer from conflicts arising among departments, managers, or individuals during its operations. If many departments are duplicating tasks, it may cause conflicts. This may be also the result of lack of integration (GCU, 2013). Technology may help in solving this problem as Wal-Mart did. The hand scanner helps associates in scanning the entrance and the exit of each product while the quantity at hand is recalibrate automatically. In addition, the distribution center is automatically informed when the item is out of stock.

Beside structural and operational problems, the Porter’s model of market definition is crucial for leadership in order to prevent lack of market definition.  The Porter’s strategy defines particular group of customers, market area, or product line in order to develop its products and services (Dess & Davis, 1984). Weakness in market definition is linked to organizational structure. The leadership must review the strategic positioning strategy of the organization while being focus of products development or technology that can help in reaching the desired goals. When organizations anticipate poor future performance, it is necessary to make strategic decisions and to modify the organization's structure to accommodate the new strategy. In addition, Taylor (1856–1915) scientific management perspective proposed a more modern approach which has taken into consideration the situational and environmental factors. The capacity of management to identify in a timely manner the causes of the aforementioned deficiencies are determinant in solving the problems and to redesign the internal structures to face challenges, to adapt to external environment, and to make the best use of available resources.

The effects of technology on organization's design, efficiency, and effectiveness

Effectiveness is not a state but rather a process; it is a characteristic of relations and not outputs; it is negotiated rather than produced. Effectiveness inheres only partly in bottom line figures. Indeed, the study of technology to understand the process of transforming raw materials from inputs to outputs is crucial to evaluate the organizational efficiency and effectiveness in long range. Closed systems approaches have been used for years to describe and analyze the multiple phases that characterize technology revealed Rousseau (1979). However, the technology is being used by a wide variety of organization now depending on size, structural design, operations, and goals. The organization is normally engaged in the process of technology either by assimilation- institutionalization to maintain its legitimacy, technical cohesion, and/or economic fitness. The literature suggests different approaches to define the role of technology through the organizational life-cycle. Pishdad, A. et al., (2012) state technology use can be made from three main perspectives: techno-centric, human-centric, and innovation-institutionalization.

From the employee training to the employee performance review, technology is now used at all levels in organizational life. It can help in producing goods or services, controlling the production level, educating employees, or evaluating the outcomes. Pishdad, A. et al. (2012), suggest that in contemporary business organizations, technology provides the foundation around which organizations evolve and mature. It not only aids in enabling automation of operations, but with their information processing and decision support capabilities, these technologies also support the business planning and management.

The impact of technology on organizational structure and design is significant and limitless. The technology reduces personnel displacement to solve many problems that can be tackled through remote locations. Moreover, intranet and extranet also constitute an important development in technology use. Tasks are performed by internal employees from different departments with the use of intranet, individual tasks can be assigned through the intranet and the completion will make the job move faster in many cases. For example Procter and Gamble using the intranet to outsource its customer support for many brands. Sykes Company used to handle customer requests for about 20 Procter and Gamble products from Bounty paper towel, to Pringles chips, and coffee brands using the extranet system. The requests can be escaladed in minutes using the extranet alert system that allows the head of the customer service based in Ohio to handle an emergency while it has been submitted by a Sykes’ customer agent located in North Dakota.

Contingency decision-making framework in implementing adaptation to environmental uncertainty

It is not enough for organization to make decisions that can be profitable, based on the constituency model, the organization needs to take into account the best interest of the main stakeholders. That is, the decisions made need to be also ethical, in a sense they will not harm the community, the environment and the constituencies. This approach make of the organization depend on the environment and the constituencies. In this case, if we think of the contingency decision making in relation with the constituencies because they cannot be neglected, three basic principals may constitute the framework, as suggested by Ferrell and Gresham (1980), the leadership or management cognitive structure knowledge, values, beliefs, attitudes, and intentions; the significant others in the organizational setting; and the opportunity for action. According to Gaertner, G. and Ramnaravan, S. (1983), the assessment of organizational effectiveness is not simply on how much of particular outputs is being produced, but also on the decision making that sets the framework. In addition, Effectiveness also lay down in the relation with many external factors considered as contingency and they do not depend on the sole organizational leadership.   

The rational and objective contingency approach in organizational decision making process supposes also making an extensible relation to market situational variables and external environment. Another factor that cannot be neglected in this era of corporate citizenship where more social pressures are putting on the organization to adopt ethical decision making, is the complexity of the elements in establishing the framework, (Ferrell & Gresham, 1980). Indeed, it can be developed either on organizational perspectives or on individual perspective. But, anyway, decision making process will always be a matter of metacognition.

Many variables should be analyzed in order to decide the kind of structure will sustain the needed results through wise decision making or the management may have to adapt its decision making styles to fit the structure and to produce results. We may comply that the second approach is more difficult. Defining the system approach that may help in organizational sustainable efficiency and effectiveness should be the focus of leadership. In many ways, therefore, hypercompetition or interorganizational collaboration will impose some kind of hyperflexible, (Carlopio et al., 2012). According to Dalton, D. R. et al. (1980), depending on many constituencies and contingencies, the evaluation of effectiveness will necessitate different tools and measurement. Therefore, structural and contextual variables are systematically associated with those value sets (Daft et al., 1996). The internal process needs to be smooth using effective communication to explain the organizational goals to employees and to be sure that the sets of value are understood and followed. If not the organization may become inefficient, therefore ineffective.

Either the decision making process is rational or political; it may follow a reasonable approach in relation to the goals and to the environment based on the available resources.  The distinction between the rational and political aspects of decision making is cognitively analyzable. First, the power content of objectives which be pursued by applying various decision making strategies, including optimizing. Second, the multiple objectives when there are conflicting interests. Third, the negotiation approach which can be described as cognitively analyzable, reports (Anna Grandori, 1984). From one to another, leadership may analyze external factors. That means, theoretical and practical contributions are achieved through identifying important contingency variables that distinguish between contexts in which decisions are made (Ferrell & Gresham, 1980).

Organization's life cycle and strategies to improve efficiency and effectiveness

The concept of organizational life cycle applies a humanization form to explain that organizations are born, grow and die like people. It looks very practical to understand the organization in such a way because leadership style, structural design, and also the management approach will have to be chosen in accordance to the organizational specific cycle of life. As Bridges (2009) suggests that interventions will be made in different step of an organization life span and it is vital to understand the structure and the management style correspondent to the environment, moment, objectives, and available resources. Leadership style is very important at that level where employees into the organization are attached to one big system value. The “us” concept is expressed through the hiring process. Thus, people are chosen less for talent and motivation, but more for being able to feel like us, think like us, and fit the company’s culture. Managing transition during the various stages of the organizational life cycle is the key to maintain the boat afloat. According to Daft (2010), eighty-four percent of businesses that make it past the first year still fail within five years because they can’t make the transition from the entrepreneurial Stage (Daft, 2010, p. 363).

The first step in creating the organization comes from a dream. The project is taking form in your mind and you have to convince yourself that it is a great business idea. At the second step, the project is in the process to come true. The initial structure is designed on that level similar to the childhood of the organization. Then, ventures are made where the organization is growing up. Mistakes will also happen. The policies are not existent and “there is no fixed way of doing thing” would say Bridges (2009, p.79). The second step called Getting organized (Bridges, 2009) is the potty training process to get the infancy an independent experience. It is described as entrepreneurial stage (Daft, 2010, p.360). This stage allows a well structured input, transformation and distribution process. The external contacts and internal flows are working well in order to produce the goods. The extended structure might become more centralized as the organization is getting bigger contrary to the flexible, open system of the launching step.

Third, comes the Making it is the stabilization part where everything seems to be stable and under control. For Bridges (2009), “this is the point when the organization’s adulthood begins” (p.80). Some intangible output can be seen toward this step by ensuring that a motivated team work is understand the vision of the company and work for the well being of the stakeholders, the customers and the community. The landmark of the organization, its culture and values, same as the corporate citizenship are visible and firm in the fourth step called Becoming an Institution. This is like the collectivity stage as reported by Daft (2010).

Entering the formalization stage (Daft (2010), the clan control used, for example, by Southwestern airline is visible. The control style that is determined and applied by the organization is instilled in the values and culture at this level. The next step will be to reinforce the internal structure and to reinvent the vertical and horizontal relations. Thus, organizations need to be designed with skillful leadership and middle level management to continually adapt to internal and external changes in the environment. If not they will undoubtedly show symptoms of fatigue when organizational structure and design no longer support the organization's strategic and operational goals (GCU, 2013). Therefore, the elaboration stage (Daft, 2010) requires a new sense of collaboration and teamwork.

Conclusion

Pishdad, A. et al., (2012) state that organizations react to institutional forces in many different ways according to their organizational structure, culture, stockholders, and field of business. An organization may be highly efficient but fail to achieve its goals because it makes a product, for which there is no demand, (Daft, 2010, p.95). In addition, organizational efficiency is tight to structural organization. Either the organization is aim at opened system or closed system; the decision has to be made consciously in order to attain the defined goals. For an organization to be successful, leadership must intelligently follow the flow of contingency while being conscious of the overall role of the stakeholder constituencies in accordance to the organizational goals. The leadership may be also conscious of the crucial impact technology may have on the organization in redesigning and alleviate cost and personnel. All these factors are ground for sound decision making following the right approach.

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