Evolution of Formal Organizations
Formal organizations are evolving towards flexibility in order to meet the high pace of today’s society. What are the differences in today’s organizations from those in the past? What are present day trends in organizations? What are the future trends? How will business activities and relationships need to change in order to survive? This paper will address these questions and sum up the answers in a predication of the changes that will be necessary for formal organizations. (Macionis 2006)
The Past and Present
Business organizations of the past were made in a formal style. Departments were rigid in strategy and structure without the means to exchange knowledge quickly. Likewise, different business firms were separate entities and thus were unable to access information, which would be mutually beneficial. Therefore, as companies grew boundaries between departments and organizations also grew. The workforce was also rigidly under control with gender disparity and hiring done in a formal manner without knowledge of putting together flexible teams for creativity. In addition, the conservative perspective of the organizations limited information exchange. Therefore, new or novel ideas from other companies were either not accepted or there was no ability to interpret the information.
In contrast, today’s organizations and departments within those organizations are able to exchange information quickly through the internet and through the media. In addition, today’s organizations have made advances in flexibility in their employee relations. A major consideration of companies is the formation of teams and how to make effective groups. Hiring is increasing done with greater respect of social intelligence and compatibility rather than relying specifically on credentials. In addition, relationships of groups and how well they communicate are an important focus.
Current Trends in Formal Organizations
Typical business organizations start with an informal style. The owner or owners directly oversee all operations and control is done in a relaxed style. As an organization grows operations are delegated to departments and control becomes more formal. Informality changes to systems and structure. Policies and procedures are introduced so any actions departments take will be under control. (Yongsun P. & Derick J. H. 2004)
One of the trends of today’s organizations is to loosen control and to step away from rigid bureaucracy (which may have been appropriate during the industrial age) towards a flatter hierarchical structure which is more democratic. This trend gives departments and groups greater flexibility to make decisions on their own and access information that is necessary for speed and efficiency. In addition, attempts are being made to link control systems, choice of strategy, and performance. The major trend of today’s organizations is to find balance between formality and informality that leads to innovation and creativity. (Yongsun P. & Derick J. H. 2004)
How Formal Organizations Must Evolve
The activities of formal organizations must evolve to include education of groups and workforce to insure their capability to handle a global market. A good example is in sales. Sales on an international level must be done with the knowledge of local customs and culture. Especially language and acceptable behavior are necessary for success. Therefore, training in the form of workshops, seminars and training that incorporates role-playing are essential. Further how to communicate to other departments in other countries is part of this education.
(Malcolm & Mindrum 2007)
Hierarchy in today’s organization must evolve to allow structural flexibility. This flexibility must allow management level control of restructuring to meet the need of new ideas and innovation. In addition, strategic flexibility is needed to allow departments and teams to change activities as new ideas and situations arrive.
Today’s organization must revise its rules and regulations in order to respond effectively to global integration and local market demands. If former policies and regulations are standardized, they will not meet the joint needs of local demands and international ones. The policies must integrate to include local legal regulations and customs as well as those in other countries.
(Yongsun & Derick 2004)
“firms employing extremely smart people can also do amazingly dumb things.”
(Scarbrough n.d.) Formal organizations have traditionally loaded their workforce with highly intelligent people. However, today’s organization must have a balance of intelligent people with team leaders and team players. Hiring must evolve to hiring based on personality and social intelligence rather than credentials alone.
Business knowledge must evolve that is not only science and technology but also encompasses management and organizational knowledge. This kind of knowledge is essential to making structure and strategy decisions that establish a wider and better network of relationships. (Scarbrough n.d.)
A formal organization, which has relied on non-technical communication, must evolve to an information enterprise. As an organization grows, its communication becomes both increasingly formal and increasingly inefficient in manually being transferred. A piece of paper put on someone’s desk is no longer an efficient way to communicate. In addition, as operations grow the amount of information transfer can be overwhelming in magnitude if the proper IT system is not in place.
( Johnathan Mar2005)
The focus of formal organizations must evolve to larger areas of knowledge. This knowledge must be broad enough to allow for efficiency of tasks that also includes the people the tasks involve and end user. Therefore, the knowledge is on all levels of the organization. It must create flexibility to meet innovations and the needs of employee workforce as well as the general public.
Within this paper many facts were presented such as the need for flexibility to allow
managers, departments and teams to function on their own. In addition, the need for proper IT information networks to be in place and business knowledge that allows both task and people orientation. Finally, a major point specifying the need for the integration of globalization and localization needs was made. The culmination of these facts leads to the predication that organizations will follow large corporations such as Matsushita, Toshiba, Sony, Samsung, and Thompson. These corporations have all adapted the Regional Headquarters Structure (RHQ) model to meet their global needs and to allow local headquarters to deal with what they do best….meet local needs and demands. Through establishing RHQs in each country, organizations accomplish multiple goals. The legality of operations in each country can be properly followed. In addition, the customs of local consumers and local workforce can be observed (onsite training) and implemented in company policy. The establishment of RHQs gives departments and regional managers flexibility in structure and strategy. Finally, the knowledge of the entire company is increased in many areas causing innovation and creativity. (Yongsun & Derick 2004)
The industrial age brought on formality of business organizations. The major technological advances on the 20th century brought the need for an evolution of organizations. The advent of these advances such as the IT revolution made proper information systems become essential and led to globalization. The increase in the speed of the transfer of information led to increased business knowledge in all areas. This increase in knowledge is causing businesses to change policy and structure to allow for creativity and innovation. This is becoming especially true for large corporations, which must delegate authority to regional
Headquarters (RHQs) in order to retain productivity at home and abroad. In conclusion, it is increasingly obvious that change and evolution is inevitable and only those organizations, which evolve, will survive in today’s global marketplace.
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