AScribe Newswire, January 4, 2005, Tuesday

Copyright 2005 AScribe Inc.
AScribe Newswire

January 4, 2005 Tuesday

HEADLINE: Ready and Able to Change: Companies Move Away from
Traditional Organization Model

BODY:
HOUSTON, Jan. 4 [AScribe Newswire] -- Today's competitive business environment has led to the emergence of an organizational model that reflects a very different kind of company -- one that thrives on its ability to continually anticipate and quickly adapt to change.
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As the manufacturing sector has declined, and the service sector has increased, there has been a gradual move away from the traditional bureaucratic organizational model of many companies. Organizational behaviorists such as Rice University's Brent Smith have seen the emergence of a new type of organization - one that is less hierarchical, highly fluid, and that requires a particular set of skills in its corporate leadership.
"Organizations have faced increased pressures to be more agile," explains Smith, an associate professor of management and psychology at Rice's Jesse H. Jones Graduate School of Management. "Given the rapid pace of globalization, technological innovations, increased competition and the diversification of the workforce, firms, particularly in high tech and consulting fields, have had to react quickly and continuously."
In this rapidly changing and competitive world market, many companies have organized themselves into what Smith identifies as "dynamic" structures - highly flexible organizational models often centering on customers or projects with fewer mid-management levels than classic or non-dynamic organizations. These new models, according to Smith, have demanded a particular brand of leadership and employee profile.
In a dynamic company, everything is fluid and ambiguous, Smith says. Job descriptions, if they exist, may only be based on what employees' particular assignments are at a given time. There may be few, if any, contractual agreements with employees. Overall, the concept of a dynamic organization is antithetical to what typically is considered the primary characteristic of a traditional organization. And that is stability, Smith says.
"A leader's key role in such an organization is to promote a culture within the company that will hold it together," he explains. "This requires structural mechanisms and cultural values that emphasize the importance of adaptability and change."
Smith also stresses the necessity for leaders of dynamic organizations to pay attention to external market forces and help cue the company to whatever impending changes are necessary. He Smith points to the experiences of Xerox and IBM: "Xerox failed to pay attention to the market and lost 50 percent of its market share to foreign competitors, and IBM almost lost out on the personal computer market," he says. "They were too bureaucratic and not close enough to their customers."
Smith also argues that leaders need to understand the type of employees and skill sets that are better suited to a dynamic organization. Employees in dynamic organizations, for example, need a high level of stress tolerance, self-esteem and confidence, and a general lack of anxiety. According to Smith, they should be attracted to jobs which offer a great deal of variety and change, and in the absence of job security, they should be paid well and provided with development opportunities.
"In filling positions in a dynamic organization, leaders should focus on identifying people who are self-starters and capable of setting and monitoring their own goals," Smith says. "They also should look for prospective employees who have strong relationship-building skills, which are generally more important than in a traditional company."
The move away from traditional bureaucratic organizations began in the 1970s when many companies developed the team approach based on what researchers had learned about designing jobs. While the notion of dynamic organizations emerged from this concept, Smith notes that the development of self-managed work teams was an attempt to enhance worker satisfaction, not necessarily to make organizations more responsive to the market.
The need for companies to be financially more competitive was responsible, in part, for the downsizing and re-structuring of the 1980s and '90s. And while those efforts did make companies somewhat more dynamic, Smith says, "they were really short-term solutions and sometimes hurt companies in the long run."
The bigger lesson for companies, Smith says, is not just that they may need to make changes in response to one particular set of circumstances, but that they and their firm must be able to continually anticipate change and be more responsive to their market's environment.
"A dynamic organizational model isn't necessarily appropriate for every company," he concludes, "but a company will only be successful at managing change if change is part of its structural capability and culture."
Prior to joining the Jones School, Smith was on the faculty at Cornell University's School of Industrial and Labor Relations and the Johnson School of Management from 1998 to 2001. A graduate of the University of Tulsa where he received bachelor degrees in psychology and sociology, Smith earned his master's and Ph.D. degrees in organizational psychology from the University of Maryland.
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To learn more about this research, contact Smith at smithb@rice.edu or 713-348-5386, or Debra Thomas in the Jones School at dthomas@rice.edu or 713-348-6343.

CONTACT:
Debra Thomas, dthomas@rice.edu, 713-348-6343