Three Basic Functions of Hierarchical Systems - Coursework Example

Introduction Organisations take input from the society and process them into outputs of value which are sold to members of the public. In the world today, organisations are formalised institutions that are set up to provide goods or services that are sold on the markets to consumers. As the name suggests, organisations are structured in a way that ensures that they can effectively and efficiently provide the best services to consumers. One of the theories that defines the concept of organisations is the hierarchical systems. It gives a deep insight into how the people and systems of organisations are grouped to provide effective work and service for optimum results. This paper examines the three basic functions that hierarchical systems of organisations are designed to fulfil. It goes on to examine the key functions that organisations should focus their hierarchical systems should focus on. Components of Organisational Hierarchy An organisation is often an entity that aims at commercialisation a solution to the members of the public. It is therefore a fabrication of the people who own control the production and those who are funding the business. These people are often the owners and shareholders of the business. They therefore have the power to get things done in the organisation. The owners of organisations have the power and authority to produce what the company was set up to produce. However, since they might not be capable of managing and running the day-to-day affairs of the organisation, they will need to get other people to do it for them. This is known as delegation. Delegation enables owners to grant authority to people who do their work for them. The people to whom power is delegated have to be accountable to the people who granted them that authority. Due to accountability, there is the need for communication between various people in the organisation so that each of them are in touch with updates on their requirements and expectations. As different delegates operate in a given entity, an organisational culture forms and there are relationships with stakeholders. This brings up the need for some structures to support the organisation and maintain consistency. Hierarchical Structure Weber identified three main things in the bureaucratical model (Walonic, 1993). First of all, an organisation must have a hierarchical structure because there is the need for division of labour. In other words, the people in authority needs to divide up work to specific tasks and functions which can be effectively discharged by people they can employ. This therefore means that work will be divided amongst different people who will be expected to discharge them within the tenets of the organisation. Division of labour automatically comes with the idea of specialisation. Specialisation boils down to the fact that each division of work will master its responsibilities and continue to perfect its operations and outputs as it operates. The concept of specialisation ensures that standards are set and people with the most appropriate qualifications and experience can be appointed to discharge the job. Secondly, Weber identifies that hierarchical structures exist in organisations to ensure that a formal set of rules can be instituted. This effectively means that important rules and ideas can be made and observed by members of the organisation through a defined framework. This ensure stability of the organisation. This is because the problem of chaos and anarchy can be eliminated and different people in the organisation can get a standard to which they can operate. Secondly, the idea of formal rules in the hierarchical structure ensures that there is uniformity and people are aware of what to do and how to do it. Thirdly, the hierarchical structure ensures that leadership and behaviour of the people in the company is rational and legal in nature. In other words, the hierarchical structure ensures that the most efficient systems and justified methods and tools are utilised in an organisation. This therefore means that the hierarchical sets a defined system and method through which the various people can operate to ensure that they discharge their services legally and optimally. Functions of the Hierarchical Structure Kanawaty (1981) identifies that the hierarchical structure ensures maximum specialisation, maximum simplification and minimum training time. This is because the hierarchical structure sets out a clearly defined framework for people to carry out their obligations and responsibilities in an organisational setting. The hierarchical structure ensures that the best people are employed for a given job or vacancy. This means that the people with the most appropriate qualification and experience can be chosen to fill up such a vacancy. Ones such a person gets onto the job, s/he is encouraged to work and learn more and more skills about the operational system of the organisation. This way, the person builds competencies which increase gradually and then gets to the maximum levels. Without such a system, people will hardly focus on what they do and just anybody could be appointed to fill a vacancy. However, the hierarchical system ensures that the right people are put in the right level of employment an as they work, they learn more and become more productive and efficient. The hierarchical structure ensures that positions are stratified in an organisation. It defines psychologically, which relationships exist at various positions in the organisation. The various boundaries of each position and role is clearly defined and responsibilities are set out. This way, relationship with other positions in the organisation are defined. This helps an employee to liaise with other members of the organisation to provide good and excellent results. Often, these relationships are laid out in the form of an organisational structure which specifies the working relationships between the various positions. This simplifies the whole system of organisations. Also, with each and every role defined, the organisation becomes some kind of a perpetual entity. This is because employees who leave their positions can be easily replaced by other potential workers on the labour market. This ensures that there is little time needed to train new hires and these people get to fit into the system without the disruption of an employee exit being felt in the organisation. Hierarchical structure ensures that there is authority and there are defined paths of communication in the organisation (Steiner, 2005). This means that the main idea of the people at the top of the organisation can be safely and conveniently translated to the lower levels of the organisation without much difficulty. Best (1990) identifies that the hierarchical structure of organisations ensures that businesses can compete in todays markets. This is because the hierarchical structure ensures that firms are strategically oriented. This means that the top level management have the ability to plan and implement long-term and organisationwide ideas and concepts which can be effectively implemented because of the hierarchical structures. This is because in the 21st Century, most businesses are highly competitive and there is internationalisation. Thus, to ensure survival of businesses, there is the need for the top level management to identify the best opportunities and implement it to promote the best interest of the business. Without the hierarchical structure, when these people identify the best strategy, they cannot get other members of the organisation to work within it to attain optimum results. It is therefore important for businesses to maintain such hierarchies and structures. Also, the hierarchical structure of an organisation defines the scope and growth of a business (Gaggio, 2007). This is because with a hierarchical structure, a business can internalize transactions that were previously left for outsiders only. This means that they will have to pay extra money and also lose important opportunities if such a drive is not carried out. However, in a hierarchical structure, a business can effectively put together all these transactions and ensure that they are carried out in-house and generate revenue. There is efficiency since there are different units of the business that enables the various components of the business to work at the most efficient levels. The existence of authority and patterns of communication ensures that business processes are ultimately discharged to the best interest of the organisation (Williamson, 1996). This is because the processes allow room for monitoring and the infiltration of the ideas of the people in authority to the lower levels of the organisation. Functions Organisations Should Focus on As identified, the hierarchical structure ensures that there is some order in organisations and people are able to co-ordinate with each other to ensure that there is efficient allocation of resources and effective discharge of services. Of course a business cannot exist without entrepreneurs. There is the need for directors and management who will represent the needs and expectations of shareholders. This function is one that must inevitably exist in all organisations. The directors and management must focus on maximising the returns of shareholders and also respect other stakeholder needs and remain legal. Once this is established, there is a good case for business. When a business is set up, it will need to have people working within it. This means that there will be the need for recruitment and monitoring of employees. This is usually a function close to management because they are the ones to whom the employees will report. However, there is the need for the best people to be selected objectively. This means that an organisation needs a human resource management function. Also, a business will not exist if it has no customers. It is therefore imperative for businesses to find a way of promoting their products to the customers and ensure that the marketing of products and services are carried out in the most efficient way. This means that every business must keep a marketing department. This department will ensure that there will be proper co-ordination of sales and promotion of products and services. Perhaps the most important function that a business needs to keep going is the production department. This is because production is the main essence of a business. It is therefore important for a business to keep an operations department that will ensure that production is up to expectation. Accounting and Finance are key units of every business. A business will need to raise funds and ensure that the way funds are spent are carefully evaluated and monitored. This therefore means that the accounting and finance departments are indispensable components of a business that must be kept. Aside these four basic functions, there might be other functions that might exist differently in different organisations. They vary on the basis of the complexity of businesses. Functions like Research & Development and others might be needed by different businesses based on their specific requirements. Conclusion The hierarchical system ensures that the authorities of businesses are translated to the various levels of an entity. It ensures that businesses are divided up into functions and each one operates with the other to seek the best results for the organisation. The main functions that must be kept in an organisation are Production, Marketing and Accounting References Best Michael (1990) The New Competitive Institutions of Industrial Restructuring MA: Harvard University Press Gaggio, Dario (2007) In Gold We Trust Princeton University Press Kanawaty George (1981) Managing & Developing New Forms of Work Organizations International Labour Organization Steiner Florian (2005) Formation & Early Growth of Business Webs London: Springer Walonick David (1993) Organization Theory & Behaviour Management MA: Harvard University Press Williamson Oliver E. (1996) The Mechanisms of Governance Oxford University Press Read More