How to Create an Effective Organizational Architecture

How Organizational Architecture and Corporate Culture are Related 

Organizational architecture and corporate culture have a cause and effect as well as means and end relationship respectively. In this respect, organization architecture operates as both the cause and means while the organization culture is the effect and the end (Brickley et al, 2016). Euphemistically, corporate culture is the house or finished product while organization architecture entails both the building materials and the blueprint used to build the house. There are five primary components of the organizational architecture which include strategy, structure, business process and lateral links, reward systems, and human resource management. Strategy entails the mission, vision, and objectives of the company while structure comprises of leadership roles and chain of command. B usiness process and lateral links entail how the internal environment of the company is organized and how the company reacts to its external stakeholders (Brickley et al., 2016). The reward systems relate to both compensation and rewards while human resource management determines who works for the company and who are superintended. These 5 processes are actively planned and executed hence elicit a direct and passive outcome, both internally and externally. It is this outcome that is dubbed as organizational culture. 

From a practical perspective, Apple Inc. is one of the most famous organizations whose vision, mission, and objectives are based on using innovation to build the best IT products in the world and at the lowest possible price. The company hires the sharpest and most innovative brains globally, and pays them very well. These are the innovators who come up with the unique ideas upon which apple products are based. The leadership structure is made up of innovators focused on getting things done best but at the lowest possible price. They are willing to move production in third world countries and pay the least possible salary for mundane operations in order to cut costs. This is the organizational architecture of Apple. It has in return informed Apple’s reputations as great innovators who sometimes cut corners. This reputation is the organizational culture of Apple Inc. 

Lack of Delegation in Leadership 

The Billy Riggan aspect of the case study portrays a leader who is either unable to delegate or declines to do so. Riggan is placed in a sensitive and important position in Always Round Tire as he handles technical development. In the technical consumer goods industry such as tire manufacturing, continuous innovation is paramount. This entails both innovation on the nature of the product , means of production, and supply chain management. This makes Riggan not only a very important person but also one with a major obligation. His employer clearly understands the monstrous nature of Riggan’s obligations and has provided him with a team of research scientists. However, these research scientists seem more interested in playing tennis than conducting research and giving Riggan the data he needs to make the right decisions. This leaves Riggan to make all the decisions himself, a fact that is gradually creating fatigue and disenchantment. There are two possible explanations for this scenario. The first is that Riggan does not delegate duties at all, thus his team has nothing to do leaving all the work for him. The second is that even when Riggan delegates duties, his final decisions do not reflect the inferences of his subordinates hence their disenchantment (Haselhuhn et al, 2017). Either way, as a leader, Riggan has failed in delegation of duties . 

Failure in delegation can be caused by several reasons. The first could be that Riggan is a perfectionist who lives in the abject fear of failure. He may, therefore, fear that unless he does everything himself, things will not be done right. The second reason would be envy based on the feeling that delegation may cause his researchers to outshine him. Thirdly, Riggan might have a superiority complex and believes he is exponentially better than his team. Finally, Riggan could be having an overwhelming desire for control and feels that he might lose control of his department if he delegates too much power. Either way, Riggan is failing as both a leader and a manager (Haselhuhn et al., 2017). 

Seniority and Leadership 

The instant aspect of this case study limits the issues to leadership qualifications without the inference of management qualifications since academics are not a factor. Through practical application, Always Round Tire has realized that promotions on the basis of seniority works on lower echelons of leadership but not on the upper echelons. The most probable concept that causes this phenomenon can be best understood when leadership is looked at as an inverted pyramid (Dowding, 2011) . Floor supervisors and team managers are within the lowest echelons of leadership and therefore at the top of the pyramid. The group of workers they lead is not only extremely small but also in active interaction with them. This makes characteristics such as personal charisma and substantive active control as the most important elements of leadership. How much the teams know, trust and respect their leaders at this level is fundamental hence seniority has an advantage (Dowding, 2011) . 

At a more senior level of leadership such as middle level and top management, the leadership level is at the wider parts of the inverted pyramid or even the top part. This higher echelon leader has a large team under them which includes individuals they might never meet except in large organizational gatherings. They are also not direct leaders but rather leaders of leaders. Personal charisma and whether the followers know and trust the leader become secondary to the capability to both plan and coordinate (Dowding, 2011) . This is refined skills that are not easily acquired or honed through experience hence order of seniority does not work as a qualification at this level. 

The Free Rider Problem in Reward Systems 

The biblical book of Deuteronomy, chapter thirty-two and verse thirty speaks of one soldier being able to chase a thousand while two are capable of putting ten thousand to flight. This is one of the best euphemistic representations of marketing from a perspective of teamwork. Indeed, it is mainly in the aggressive areas of business such as marketing where the issue of individual versus team-based reward systems arises (Ladley et al, 2015). The biblical reference presents the difference between a scenario where a marketing team of two has one champion and one lethargic player. This champion may chase the thousand and get a major reward for it but the team has not achieved a lot. However, if the company is able to make the two members of the team work together, each will bring in their strengths and their weaknesses to the cesspool. The strengths of one will supplement the weaknesses of the other and vice versa. With the two working together in coordination as opposed to in opposition, the euphemistic ten thousand will be put to flight creating an exponentially higher profit for the company. From a practical perspective, two good marketers competing with each other may sell one thousand pieces each making two thousand but when they coordinate their resources, they will sell ten thousand pieces. 

The concerns of economists about freeloaders in a team-based reward system are therefore generally mislaid. Whereas it is true that a freeloader benefits at the expense of the hard worker, the company stands to benefit more when the team works together. From a different perspective, individual reward systems may create unhealthy competition between members who may even try to sabotage one another (Ladley et al, 2015). When this happens, the reward becomes detrimental to both the team and the company giving the reward. 

360-degree Performance Evaluations 

Reward systems are not designed for the benefit of the employee but rather for the benefit of the employer. The idea behind it is based on the concept that by the time the employer gives the reward, the employee will have achieved so much for the employer that the reward will benefit the employer even more. However, rewards can also expose employers to the principal-agent problem (Shapiro et al., 2016). This is the problem that arises when the interests of the employer, who is the principal, do not align with those of the employee who is the agent. An ingenious employee can find a way to get the reward without benefiting the company or even to the detriment of the company. It is to avoid this outcome that Holmstrom's informativeness principle was developed and introduced in 1989. It is based on seeking to get information from many different sources so as to confirm or contradict the information provided by the agent as a protection measure for the principle (Shapiro et al, 2016). 

The 360-degree feedback operates on the same principle of contradicting or confirming information from one source for it to be considered as valid. Under this principle, information is collected from the subordinate, lateral, supervisory and secondary sources. The creation of several layers of information relating to the same subject makes it difficult for the system of collecting information to be compromised to the detriment of the company (Shapiro et al, 2016). For example, when a sales employee presents data showing exponentially high sales and seeking a reward, the 360-degree feedback will show if the said sales were made through sabotaging colleagues, exploiting juniors and members of the supply chain or insubordination. Unfortunately, the 360-degree feedback is based on a careful balance between being too vague and being too personal. The questions asked have to be too vague to avoid a breach of privacy or eliciting acrimony. This vagueness exponentially reduces the effectiveness and usefulness of the data collected. Secondly, research has shown that in most cases, the use of the 360-degree feedback system results in a witch-hunt (Shapiro et al., 2016). 

Responsible Stewardship 

Human error is a common predicament that canvasses all areas of life both professional and private. No matter how well any system is planned, set or organized, it can easily be compromised and jeopardized through human error. For an organization, all theoretical factors can be well developed, organized and put in place only to be absolutely or critically compromised through human error. Whereas human error cannot be absolutely eliminated, its frequency and adverse effects can be diminished if all care and attention was taken (Mohrman et al, 2015). Responsible stewardship is an unquantifiable but vital component in entrepreneurship. It entails conscientiously doing all that is practically possible to ensure that the right resources of the company are used in the right way. 

Economic analysis comes into play in this perspective when the company is facing scarcity of resources. These available resources are, therefore, crucial for the profitability and in some instances, the survival of an organization. It is, therefore, incumbent upon the individual tasked with the application and utilization of these resources to apply responsible stewardship to ensure maximum output from the scarce resources (Mohrman et al., 2015). Errors and misappropriation at this juncture would be greatly detrimental to the company. Similarly, organizational architecture entails using the resources available to the company to actively and passively generate the right organizational culture. These resources must be utilized properly so as to avoid compromising the integrity of the company through the creation of a negative reputation and/or compromise the success of the company through misappropriation of resources. 

References 

Brickley, J. A., Smith, C. W., Zimmerman, J. L., Zhang, Z., & Wang, C. (2016).  Managerial economics and organizational architecture . Sixth Edition. New York. McGraw-Hill Education 

Dowding, K. M. (2011).  Encyclopedia of power . Los Angeles: Sage. 

Haselhuhn, M. P., Wong, E. M., & Ormiston, M. E. (2017). With great power comes shared responsibility: Psychological power and the delegation of authority.  Personality and Individual Differences ,  108 , 1-4 

Ladley, D., Wilkinson, I., & Young, L. (2015). The impact of individual versus group rewards on work group performance and cooperation: A computational social science approach.  Journal of Business Research ,  68 (11), 2412-2425 

Mohrman, S. A., O'Toole, J., & Lawler III, E. E. (Eds.). (2015).  Corporate Stewardship: Achieving sustainable effectiveness . Yorkshire: Greenleaf Publishing 

Shapiro, D. L., Hom, P., Shen, W., & Agarwal, R. (2016). How do leader departures affect subordinates’ organizational attachment? A 360-degree relational perspective.  Academy of Management Review ,  41 (3), 479-502