By Andrew Mendes
Management theorist Henry Mintzberg places business organizational structures into the following five categories:
1. The Simple structure (for organizations comprising fewer than twenty persons)
2. The traditional machine bureaucracy or hierarchical structure,
3. The professional bureaucracy (reflective of law offices),
4. The divisionalised structure (modified hierarchy), and
5. The ad-hocracy or organic structure.
Mintzberg contends that in order to be effective, the organizational structure of a business must reflect the environment in which it operates. The business environment, he says, is conditioned by the planning horizons for business as follows:
• Stable – planning horizons of 5 years or more.
• Unstable – environment allows for a projection of no more than 2 years.
Mintzberg further suggests that the typical machine bureaucracy or divisionalized structure – to which most local medium and large businesses appear to aspire – require a stable environment. A stable environment can be defined as one that has limited pressures for change or adaptation and wherein the efficiencies achieved by segregation of roles or functions (decision makers and workers) can be coordinated over time for maximum effectiveness.
Rapid technological change, the speed of global communication and, often, a turbulent domestic environment render planning horizons of two years or less more appropriate than five or ten-year plans in the contemporary global business environment. Accordingly, Mintzberg identifies the ad-hoc or organic structure as the most appropriate organizational structure for business. In this structure dynamic, flexible, motivated individuals quickly form (ad-hoc¬) teams to solve problems or address issues as they arise. On the other hand, in traditional structures, leadership arises solely out of persons with designated leadership titles. Here, the point should be made that in ad-hoc organizational settings leaders emerge based on the challenges that surface and the skills and experience required to respond to those challenges. Put differently, a leader in one situation can become a follower in another. and vice-versa.
Since most employees are probably potential leaders businesses must focus on careful recruitment practices, relevant training, adequate salaries and other incentives. In the final analysis the focus must be on the recruitment of a cadre of well-trained, well-paid, motivated individuals with the confidence and ability to address the varying issues and challenges as might orise within the organization from time. Remunera-tion, for example, must be based on performance, merit, and results and not necessarily on designation or length of service. Such a system also requires employees who demonstrate loyalty and integrity.
No less important is a structure that creates space for subordinates to make decisions.
In Guyana, many businesses appear to give insufficient consideration to the fashioning of a suitable organizational structure. Accordingly, they face difficulties in transitioning from simple structures to larger, more complex organization. Larger businesses ones. Their establishments continue to reflect an owner-at-the-top, hierarchical management configuration. This type of structure finds difficulty in quickly adapting (and responding) to change in the local business environment. The focus of the proprietors is on seeking to exert some measure of control over the operating environment by establishing relationships with influential individuals and groups in order to secure strategic advantages through patronage. While this approach may realize limited material ‘payback’ it fails, in the final analysis, It does little to create a meritocracy. Instead, rewards accrue based on ‘who knows whom,’ rather than on their business acumen. Within organizations this problem is exacerbated by the fact that many employers tend not to focus on human resource development and adequate remuneration as rudders for the development of their businesses. Rather, they reduce their chances of their businesses’ successfully transitioning to an organic structure.
This situation is made worse by the fact that many managers/owners are divorced from the actual production processes within their establishments; they have little or no understanding of the issues that impact most on theior organixations. Accordingly, it becomes difficult for them to make sound decisions in areas such as resource allocation, a deficiency that often leads to frustration on the part of the rank and file employee. This condition frequently manifests itself in high staff turnover, often among the better-trained, more capable individuals who have the greatest potential to contribute to the success of the organization. Business owners are, in fact, often our own worst enemies insofar as we are guilty of creating the very conditions that we bemoan.
Here – and enjoining the views expressed by Dr. Kelly Mekdeci in an earlier contribution to this column – modern businesses require critical thinkers. As Dr Mekdeci points out, acquiring these skills is a lifelong pursuit that must begin during the formative years. The best, most productive employees are those, whom, from their formative years, are taught to seek and utilize information quickly and effectively. Given the myriad sources of information and the ease of access, workers ought to be able to quickly access and apply information in order to provide the requisite answers/solutions.
Too many of today’s job applicants, their academic qualifications notwithstanding, appear to be inadequately trained in analytical and problem-solving skills and are therefore unable to lack the ability to critically analyze problems and thus find real or new solutions to the issues businesses face. While academics do provide a basis for entrance into the workforce, (e.g. good verbal skills are a pre-requisite for effective communication) other factors such as self-confidence, integrity, flexibility, critical thinking, teamwork, leadership, willingness, and open-mindedness are crucial to the success of both the individual and the organizations that employ them. Job applicants whose personal validation as individuals is caught up in the successful completion of exams for subjects that are essentially irrelevant to the modern workplace, will find it harder and harder to enter, or survive and prosper in modern organizations. Not coincidentally, the lack of these skills in the local workforce will negatively impact businesses’ ability to effectively compete and prosper in the global village or “flat world” economy, where merit rather than relationships is rewarded.
Andrew Mendes is the Chief Executive Officer of Farfan and Mendes
