Three Aspects Of Organizational Architecture

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Three aspects of organizational architecture According to Brickley, Smith & Zimmerman (2009, pp. 5 & 359), the following three critical aspects of organizational architecture are major determinants of success or failure for a firm. - The assignment of decision rights within the company; - The methods of rewarding individuals; - The structure of systems to evaluate the performance of both individuals and business units. As for the first aspect we can identify it as the empowerment of individuals. Within an organization, delegation of powers can’t be made only while trusting an individual. The assigned decision rights have to be linked with the other key aspects that identify the organizational architecture (ibid. p. 5). Actually, a simple reporting relationship does not grant efficiency or effectiveness of information flows, neither of actions that should create value for the organization. In fact, and here we are identifying the second key aspect, only proper incentives will harmonize individuals’ interests with that of the whole organization. The third aspect can be seen as the integrating element. Decision rights and rewards are coordinated within a fair performance-evaluation system for both individuals and the business organization (ibid. p. 4). Organizational architecture differs, in view, from classic hierarchical structures where mainly reporting relationships should assure the necessary coordination among units and individuals. Moreover, the reward and performance-evaluation systems should also overcome discrepancies between interests of individuals and of the firm. Organization structure is mostly represented by elements that describe both vertical and horizontal aspects. According to Daft (2009) key components are that organization structure: - designates formal reporting relationship,

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