Valve Corporation Organizational Structure and Architecture - Coursework Example

Valve Corporation Case Study VALVE CORPORATION CASE STUDY Introduction Valve Corporation, also known as Valve Software, is a popular computer game manufacturer headquartered in Bellevue, Washington. The company also deals in digital distribution and development of video games, connecting over a million global consumers to its gaming community (valvesoftware.com, 2014: p1). By 2014, the company had more than 300 employees and the case study of Valve shows that these employees do not operate under managers. The company follows a flat and organic structure that reduces the barriers inherent in employee-customer relationships. This structure is useful to some extent as innovative employees are given the freedom to create new technologies and experiment with them sans any fear of failure. However, this structure also runs the risk of having no leadership in times of crisis, thus harming risk management. In addition, motivation at the company suffers as a result of this organizational structure (Edidin, 2011: p42). Valve does not have visionary leadership that can articulate the company vision to employees, instead relying on their employee handbook to orient and direct employees. Valve also faces potential problems with mentoring employees because of its organizational culture. This report will seek to conduct a case study of Valve Corporation with regards to its organizational structure and motivation of employees. Organizational Structure and Architecture Valve Corporation’s organizational structure and architecture are flat in nature with no managers to manage the more than 300 employees. One of the most interesting aspects of Valve Corporation’s organizational structure is its flat and organic nature. The organic theory of organizational structure posits that an organization’s organic structure is directly linked to a flat structure (Takahara & Mesarovic, 2012: p22). Because there are no managers in the company or management levels for that matter, the employees can communicate more easily with one another, while they also have the power to make decisions. In addition, the organic theory holds that business processes are not formalized, which can be evidenced at Valve Corporation that has no fixed description for employee positions. It is the employees who elect the groups and jobs they would want to work in for a particular period of time. The job descriptions are created by the employees according to the specific goals of a project, of which the job descriptions are, therefore, temporary and hold only until the project is completed. This means that there is flexibility in job description within the organization structure, which can be amended at any time, belying an informal organizational structure (Why There Are No Bosses at Valve, 2012: p1). The organic structure at Valve Corporation also involves decentralization, whereby the employees take part at all levels of decision making, rather than leaving the process for the company’s management. At Valve, managerial roles do not carry much weight and decisions are made by the employees, although this can also harm the company in the long term, especially during crisis management and team conflicts (Why There Are No Bosses at Valve, 2012: p1). Although the company is reaping the benefits of having a system free of managerial oversight by improving creativity and innovation as the employees are not scared of the consequences of failure, there is need for strategic management as the company continues to generate record revenues. Probably the biggest weakness of this organization structure is that information is not distributed efficiently because there are no mentorship programs due to lack of formalized systems of mentorship at the company. While, in the short-term, this organizational structure without managerial oversight is functional, its decentralized nature could result in poor long-term strategic management, limitation of employee skills, increased employee turnover, poor management of an increasingly diversified workforce, and bias during the informal process of hiring and selection (What Makes Valve Software the Best Office Ever?, 2012: p1). This unique flat and organic organizational structure is able to generate record revenues for the company, making it more profitable than Microsoft and Amazon. The contingency theory contends that an organic organization structure is grounded on higher performance yields and higher risk, while the mechanistic structure is based on lower revenues and lower risk (Takahara & Mesarovic, 2012: p31). Mintzberg’s theory of the structuring of an organization posits that adhocracy structure is based on highly organic organization structures. In the organic, flat structure of an organization, the employees have the ability to adapt to new technologies continuously, which means that they have more potential for innovation. As a gaming software company, Valve Corporation is able consistently come up with innovations for the market because the employees can adapt to the needs of the consumer. However, there is also the risk that these innovations may fail in the market because, even though the innovations address market needs, there is no managerial implementation in the development and implementation of new software (What Makes Valve Software the Best Office Ever?, 2012: p1). In short, development of the gaming software is done in a long-term strategic planning vacuum. Motivation With more than 300 employees, Valve, interestingly, has no formal HR division or marketing department. Rather, the employees are forced to organize themselves around group or individual projects, while also dealing with customer contacts and service by themselves. The handbook for new employees offers a glimpse of the company’s spirit, in which their work ethic is mainly based on intrinsic motivation and individual responsibility (Silverman, 2012: p1). This draws as much attention as the employee work environment that has sound equipped bathrooms, massage rooms, a gym, and cafeteria, all meant to increase the employees job satisfaction and motivate them. The company’s most critical aspect with regards to employees, however, is finding the correct personnel to work in the organization, which, sometimes, means that mistakes made in hiring personnel take a long time to correct. This may have a detrimental effect on employee motivation, especially if they are working with employees who do not understand the company’s culture (Silverman, 2012: p1). This individual approach may also make it difficult to for the company to create mentorship programs to improve employee motivation. Great teams do not necessarily need managers or leaders but can manage themselves, although this is rare in medium-sized organizations like Valve Corporation. Distribution channels and products in the software market niche could be one of the reasons that the company is able to maintain this organizational culture. In the future, it will be interesting to see whether Valve Corporation can maintain their informal organizational culture over the longer term, especially as they become more profitable, and their employee base grows (Silverman, 2012: p1). In order to maintain their competitive advantage, which is based on creativity and innovation, Valve Corporation has to constantly hire new talent, which has increasingly proven difficult due to employees who may prefer a more mechanistic and formal organizational culture. While they do offer competitive salaries, compensation plans, and annual vacation plans for employee families, this motivational plan may prove ineffective in the long-term. The scientific management theory, which is a motivational theory, focuses critically on remuneration among employees, regarding it as a critical motivating factor for employees. This theory holds that the employees’ motivation is increased if employees get remuneration that is proportional to their work input and output (Fargus, 2010: p33). Valve adheres to this theory to motivate its employees, although, in the real world, there are more aspects to motivating employees than just money. Due to the flat and organic organizational structure, it is possible that employees at Valve could diverge from the company’s strategic path, particularly due to the lack of managerial oversight (Fox, 2014: p22). Thus, the scientific theory of management would not apply wholly to the company due to lack of motivation for employees to meet the specific strategic targets of the company. Employees in the current labor market are also seeking for intrinsic and extrinsic benefits, of which Valve fails to offer significant employee programs for development, which could potentially create problems in motivating and orienting new employees. Maslow’s theory of needs posits that employee motivation is reliant on satisfaction of their self-actualization needs, while compensation and increased performance are self-actualization motivators of the employers (Fargus, 2010: p42). Since there are no formal managers at the company, valve is only able to fulfill the latter. Employees have more needs as per Maslow’s hierarchy of needs, of which psychological needs are the greatest motivators, while self-actualization is the last need. If Valve works towards fulfilling the basic needs of their employees, the employees will work towards attaining the next need level. Conclusion Valve Corporation does not have a formal organization structure, instead relying on a flat, organic structure, in which employees have to rely, on the employee handbook, to understand how the company works. However, issues faced by Valve like problems in managing employee diversity, orienting new employees, and lack of formal mentoring structures may be blamed on the organic, flat structure. However, given that the software market is mainly based on innovation and creativity, this organizational structure has several advantages over a more formal and bureaucratic structure. On the other hand, this structure has ramifications for employee motivations since it only serves to satisfy the employees’ self-actualization needs, ignoring other intrinsic and extrinsic motivating factors like employee development through mentorship programs. In the future, Valve should seek to integrate a more mechanistic organizational structure into its organic structure by ensuring that, there is a small hierarchical structure, which will fulfill motivation goals. References Edidin, R. (2011). Valve presents: The sacrifice and other steam-powered stories. Milwaukie, Dark Horse Books. Fargus, P. (2010). Measuring and improving employee motivation. London, Financial Times Prentice Hall. Fox, J. (2014). The game changer: how to use the science of motivation with the power of game design to shift behaviour, shape culture and make clever happen. Richmond, Vic. Wiley Silverman, R. E. (2012, June 19). Whos the Boss? There Isnt One. Retrieved May 10, 2014, from Wall Street Journal: http://online.wsj.com/news/articles/SB10001424052702303379204577474953586383604 Takahara, Y., & Mesarovic, M. (2012). Organization Structure. Boston, MA, Springer US. What Makes Valve Software the Best Office Ever? Suddath, C. (2012, April 25). Retrieved May 10, 2014, from Bloomberg Businessweek: http://www.businessweek.com/articles/2012-04-25/what-makes-valve-software-the-shangri-la-of-offices Why There Are No Bosses at Valve. Suddath, C. (2012 , April 27). Retrieved May 10, 2014, from Bloomberg Businessweek: http://www.businessweek.com/articles/2012-04-27/why-there-are-no-bosses-at-valve valvesoftware.com. (2014). Welcome to Valve. Retrieved may 10, 2014, from Valve: http://www.valvesoftware.com/company/index.html Read More