Organizational Theory, Leadership, and Business Performance

Introduction to Organizational Theory

Organizational theory, leadership theory development, and management theory and practices collectively address the impact of these aspects on businesses and their efforts to bring about effective and successful performance. To begin with, organizations can be perceived as machines, cultures, organisms, political structures, transformational systems or structures, and also constituents of domination (Morgan, 2006). In order for any individual to gain an understanding of the form of an organization, it is considered necessary to employ metaphors. Using metaphors may prevent one-sided perspectives, and in general, a flawless viewpoint cannot consist of only one theory.

Taking into perspective contemporary scholarly research, Heugens and Scherer (2010) draw comparisons between an organization and a machine. This analogy works in the sense that an organization has a dominant body, and that it partly operates as a machine because it possesses dissimilar parts. The understanding of an organization can also be perceived by means of culture. An organization becomes relational with a community through the exemplification of beliefs acknowledged as representative of groups' philosophies and opinions. Finally, from a postmodern standpoint, the depiction of an organization is defined by a set of structured principles by which individuals are administered.

Organizational theory can be defined as the use of intellectual capabilities to attain information concerning the proposed determination and the practice of change in the social structure that consists of organizations in an intricate contemporary way. The designs must take into consideration incidents that are both internal and environmental. As pronounced in the modern viewpoint of an organization—offering support to its moving parts—the theory of organization addresses consistent and definite factors supporting its purposes entirely so as to be effective and efficient (Heugens and Scherer, 2010).

Organizational Theory Perspectives

Organizational theory is centered on three perspectives: the post-modern perspective, the modern perspective, and the symbolic-interpretive perspective. Each of these perspectives has dissimilar approaches when it comes to the manner in which an organization is managed (Hatch and Cunliffe, 2006). The modernist perspective encompasses objectivists who lay emphasis on the realism of knowledge constructed through theorization and conceptualization. For instance, an organization generates its earnings or profits based upon the ability of the chief executive to initiate and institute the right decisions during a period of capital investment (Amlus et al., 2014). The outcomes of these decisions and actions are measured directly in the form of profits and losses. In this organizational theory, outcomes are acknowledged by making use of the five senses—what humans touch, taste, hear, see, and smell (Hatch and Cunliffe, 2006).

Another perspective of organizational theory is the symbolic-interpretive perspective. This perspective takes into account experiences that cannot be felt through the five senses, such as emotion and intuition. The outcomes of this particular perspective cannot be easily replicated by others, which is why modernists tend to dismiss symbolic-interpretive outcomes. The assurance researchers address is to be precise about individual experiences and to take into consideration explanations made by others. The symbolic-interpretive perspective concentrates on significance and understanding, and its outcomes ought not to be extended beyond the setting in which they were fashioned. Symbolic-interpretive organizations hold that if employees understand the organizational culture and the cultural connotations of actions, verbal and nonverbal communication, and internal signs and objects, they will begin to comprehend themselves (Hatch and Cunliffe, 2006).

In particular, this perspective outlines organizational structure in the sense that it looks to what adds meaning to work by reforming structure through observation and involvement. The symbolic-interpretive approach recognizes the reasons why work is fashioned in a particular manner by maintaining steady practices through understanding and human collaboration to achieve organizational objectives (Hatch and Cunliffe, 2006).

Lastly, there is the post-modern perspective of organizational theory. This perspective deviates from the two previously mentioned perspectives because it has a reluctance to pursue truth or to create long-lasting ontological or epistemological obligations. For example, the post-modern perspective differs from the modernist tradition of scientific inquiry and from the symbolic-interpretive explanations of the significance of human implications leading to action. Viewed from these other perspectives, postmodernists appear to skim between theoretical positions. They often decline to take even a momentary metaphysical stand because they believe that doing so privileges certain kinds of understanding over others, which encroaches upon postmodern ethics (Hatch and Cunliffe, 2006).

Organizational behavior is a field of study that encompasses the examination and analysis of the influence that persons, groups, and structure have on behavior within organizations. The primary intent is to employ such behavioral understanding to make organizations function more effectively. In other words, it is the analysis of what individuals undertake in an organization and how their behavior influences organizational performance. By understanding the manner in which individuals interact and work together within the organization, improvements can be made for any company. An apparent characteristic of organizational behavior is discerning the detailed behaviors of personnel or groups of workers in diverse settings and how they respond to certain occasions or circumstances (Robbins and Judge, 2013).

Organizational culture, also referred to as corporate culture, encompasses the association and affiliation between members of the organization and the manner in which they interact with each other as they undertake their duties and roles. Having confidence in and partaking in similar objectives and expectations within an organization is what defines the organizational culture (Hatch, 1993). An organization that has resilient mutual beliefs and strives towards a common objective and vision is able to operate effectively and efficiently. Organizational culture has noticeable features that take account of day-to-day observations of work practices within the organization or through individual understandings from members of the organization who are directly influenced by occurrences that have taken place (Stokyo, 2009).

Form of an Organization Model

Organizations can be considered relatively recent in the history of mankind. Nevertheless, organizations have risen to become largely important in present-day society, becoming essential and fundamental to people's lives with immense influence. It is imperative to note that organizations presently surround us and shape our lives in several ways as they pool resources together to attain certain objectives (John, 2014).

Organizations share common characteristics in the sense that they exist with a mission. In particular, the mission statement proclaims the purpose of the organization and the causes for its existence. A mission statement delivers context and perspective to help direct the organization's policies and activities by explaining in simple terms the general objectives of the organization and/or corporation. For that reason, they are purposely designed in a structural and organized manner, connecting the entity to its external setting (John, 2014).

The organizational model can come about in different forms. There are four forms of organizational structures that are most common and which can be applied by any organization: [1] the matrix structure; [2] the divisional structure; [3] the functional structure; and [4] the entrepreneurial structure. The functional structure encompasses a workflow that is reliant on the incorporation of different tasks within the organization. The majority of businesses make use of this basic approach in structuring their organizations. The functional form is deemed straightforward and more often than not effective in practice. This organizational form is considered the most appropriate for small- or medium-sized businesses that do not have a wide array of product portfolios or production requirements—that is, businesses that offer products or services that are one-lined. Functional structure can be labeled as an organizational form that embraces the fewest possible departmental units; the form is not intricate and connects each top management section with sub-departmental partitions connecting to the relevant departments. This organizational structure is best utilized by organizations made up of a small number of members and participants (John, 2014; Aguirre and Alpern, 2014).

The entrepreneurial organizational form is an adaptive form that brings process activities and management together with a connection to attaining profitability upon distinct prospects. This organizational form holds steady and resilient management practices in order to attain essential promptness, agility, and originality to maximize opportunities. In this organizational form, the departments within the organization are diversified; the connections between the departments are numerous, and every top management division resembles other sub-departments that exist below it—for instance, an operations division that includes warehouse and logistics sections and a quality assurance section (John, 2014; Aguirre and Alpern, 2014).

The matrix organizational structure is employed by businesses for short intervals or time periods to come up with solutions to problems or for the completion of projects. It can also be a long-lasting arrangement in business where work is allocated by project, intersecting into functional divisions. In this organizational structure, personnel report to more than one superior. The divisional organizational structure is essentially a form of organizational structure categorized by having different internal departments within the organization. These internal divisions are created to facilitate large-sized organizations—more often than not in the manufacturing or production sector, or those centered in more than one market or geographical area (John, 2014; Aguirre and Alpern, 2014).

Functional Structure, Strategy, and the Competitive Environment

The functional analysis of business activities is usually observed as a top-down breakdown that commences with the wide-ranging goals and objectives of the organization, identifies the functions that achieve those objectives, and then fosters those functions down to the level of frequent, repeated transactions. More specifically, functional analysis makes use of organizational examination that incorporates analysis of the corporate environment and the regulatory environment, taking into consideration transactional and structural analysis. Structural analysis allows for scrutinizing the precise details that constitute the whole. In contrast, transactional analysis examines the actions themselves in a more precise manner.

The functional structure of an organization is divided into key areas depending on the purpose of the organization. Important functional areas include marketing, research and development, finance, human resources, manufacturing, and information technology. The marketing function is a significant segment of any organization, as it makes sure that the business processes ultimately meet the wants, needs, and desires of its consumer base. Every organization seeks to have a distinctive and unique marketing mix. The marketing function might incorporate aspects such as market share, the position of the organization in the marketplace, the organization's social standing, its status as a market leader, and the complexity of its product range and selection (Kotler and Keller, 2014).

The research and development (R&D) function of an organization is connected with the invention, originality, and advancement of new products. While this is very important, the improvement of already existing products is of comparable value, because consumer preferences are continually shifting. R&D is a substantial way of achieving future progress and maintaining a relevant product in the industry and marketplace. The central purpose of the R&D function is to generate and produce goods and products that meet the needs and desires of customers in forthcoming periods. The manufacturing function takes into consideration the production protocols of any organization—the manner in which products and services are made and delivered (Martin, 2014).

The finance function is central to the effective set-up and practice of any organization. Finance specialists within the organization work with the rest of the management team to ensure that resources are competently and positively acquired, sustained, and deployed in the best interests of all of the organization's stakeholders. The human resource function, on the other hand, is intended to function as the bonding agent that connects all the units and divisions within the organization. The human resource function accomplishes this by taking on two leading approaches: [1] circulating a shared human resource practice within the organization; and [2] working towards employee development, particularly with respect to mid-level officials for future senior management responsibilities (Aswathappa, 2005).

Conclusion

This paper lays emphasis on organizational theory, organizational systems, and the functional components within an organization, in addition to discussing different business principles and practices. In accordance with Hatch and Cunliffe (2006), the intricacy of organizational theory makes it quite challenging to discuss. Organizational theory is centered on three perspectives: the post-modern perspective, the modern perspective, and the symbolic-interpretive perspective. Each of these perspectives has dissimilar approaches when it comes to the manner in which an organization is managed (Hatch and Cunliffe, 2006). According to Morgan (2006), organizations can be perceived as machines, cultures, organisms, political structures, transformational systems or structures, and also constituents of domination. Heugens and Scherer (2010) assert that organizational theory can be defined as the use of intellectual capabilities to attain information concerning the proposed determination and the practice of change in the social structure that consists of organizations in an intricate contemporary way. The designs are bound to take into consideration incidents that are both internal and environmental. As pronounced in the modern viewpoint of an organization—offering support to the parts that are moving—the theory of organization identifies the steady and definite factors supporting its purposes entirely so as to be effective and efficient.

The overall functional structure and strategy of the business interacts with the regulatory setting in the sense of ethics. Value is considered to be the focal point of organizational culture, which is made up of essential viewpoints and philosophies that are shared by the personnel of an organization. The plain reasoning that provides a backup for the need for ethical guiding philosophies is that activities in organizations are the consequence of decisions by individuals, and human beings have a propensity to seek validation for their activities beyond the principle of financial gain alone (Price, 2007).

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