Organizational Design and Environmental Performance - Article Example

Organization Theories and Design Name Institution Course Instructor Date of submission Introduction This paper summarizes and discusses an article related to organization theory and design. The paper is divided into three sections. The first section summarizes the article, the second part evaluates the article and the third part assesses the relevance of the article and the implication of the findings. Summary The article ‘Organizational design and environmental performance: clues from the electronics industry’, by Michael Russo and Niran Harrison discusses the role of organization design in environmental performance of organizations. The paper takes a different perspective from contemporary approaches into questioning how the emission performance influences organizational design rather than emission performance being a result of organizational design. By using this approach, the authors claim to simplify theoretical and empirical aggregation to identify the connections in the causal chain between organizational variable and environmental performance. They achieve this by using the congruence model that matches up internal processes of organizations and their environmental performance. They assert that the higher the congruence or level of matching up, the higher the organizational performance. This model utilizes formal organization, informal organization, work, and the individual as the main dimensions which give rise to six possible dyadic fits though the paper concentrates on the connection between work and the informal and formal organization. In the formal organization fit, the empirical study carried out in the paper seeks to find out whether the organizational arrangement promotes behavior necessary in accomplishing the work by assessing how work, environment management can be promoted through formal reporting. Furthermore, the formal organizational fit examines how environment management can be improved through incentives. In the informal organizational fit, the paper explores how environmental management is affected by cross functional coordination. The same way as all other organizational structure and design, the formal fit organizational structure is determined by the type of work an organization performs and the processes and operations involved. They argue that formal structures result in to formal reporting that facilitates efficient communication and flow of information in an organization. The formal structure also influences employee behavior. In this regard, when an environmental manager reports directly to the plant manager, then environmental performance for an organization improves. Furthermore, positioning the environmental manager close to the plant manager in the organizational structure indicates the importance that the plant has placed on environmental management. The paper thus hypothesizes that in facilities where environmental quality managers report directly to plant managers, there is greater cuts in emissions. Incentive-based salary structures in the formal setting have the potential in improving environmental performance for most organizations. This implies that the work must be measurable in order link it to the incentives. In the case of environmental management, productivity of an individual is hard to measure and monitor unless linked to milestones such as the achievement of ISO 14001 certification. On the other hand, a fixed salary incentive will not bear the desired behavior hence the need to develop criteria for measuring productivity in environmental management. This way the plant manager and the environmental quality manager will share a common goal in enhancing their performance in their individual areas of work which combine to bring about sustainability as sure sign of high congruence levels. From this discussion, the authors draw out two hypotheses; facilities that have placed performance based incentives for their environmental quality managers record lower emissions and facilities that have placed performance based incentives for their plant managers record lower emissions. The fit on work and informal organizational designs is realized through cross-functional coordination. However, organizations using an informal design have a high possibility of overlooking environmental management more so in R&D intensive organizations. In such organization, the authors that environmental quality managers are isolated and cross functional communication between such as managers and production and engineering personnel kept at the minimal resulting into incongruence in organizational goals between departments. A cross-functional approach in strategic processes where individuals from various departments share important knowledge and information is seen as the best solution to such organization in order to enhance general organizational performance. The authors conducted surveys on 167 electronics industry-based plants to verify their literature review. The data collection method used was telephone calls to the chosen companies and also secondary data on the Toxics Release Inventory (TRI) report for year 2000. In the study, the dependent variable was TRI which consists of 579 individually listed chemicals and 28 chemical categories while the independent variables consisted of the manner of reporting by environmental quality manager to the plant manager (direct of indirect) and the level on environmental quality managers inclusion in strategic decision making processes using a 5-point scale. Other control variables were size (number of employees), age of organizations, presence of environmental management system (EMS) or ISO certification and product innovation measured on a 5-point scale. In their results, only the coefficient linked to whether or not the plant manager’s compensation is attached to environmental performance realizes a marginal level of significance. Presence of an EMS and ISO 14001 was inconsistent with hypothesis as organizations with EMS and ISO certified recorded greater emissions. Again, neither product nor process innovation leaders showed superior emissions reductions. Facilities with EMS showed greater levels of inclusiveness of their environmental quality managers in mainstream management decisions. The authors argue that the failure of their hypothesis may because for most facility managers, environmental performance is measured by other means other than TRI emissions. Evaluation The issue of environmental management is a very important issue in management more so in this age of green production. Therefore, the linking of environmental management with the general organizational performance and organizational design is very timely. The authors also make a very unusual connection in showing the role of organizational design in environmental management. Very few existing books and articles have made this connection. This implies that modern organization keen on establishing better environmental management programs should evaluate their organizational designs and act accordingly to fit their objectives and goals. The sample used in this study was collected randomly from the electronics industry consisting of six sub sectors; electronic computers, Household audio and video equipment, telephone and telegraph equipment, electronic tubes, printed circuit boards and semiconductors and related devices. Although, the article is aimed at analyzing the electronics industry alone, the sample is not inclusive enough to generate useful data and also because their used data from one year only. The electronics industry is very wide such that today it encompasses even the automobile industry through the use of electronic systems in vehicles. As such, the authors restricted their sample to the traditional electronics industry and more so manufactures of relatively light equipments. Therefore information presented in this paper is not inclusive enough for credibility. Organizational structure and design is one of the most critical elements in management and organizational behavior. It encompasses a lot of issues such as organizational culture, national culture and the management style. This study however ignores these aspects and assumes that an organization’s whole design can be analyzed using just how the manner of reporting by the environmental quality manager to the superior authority. The authors assume that all organization have integrated environmental management processes in their operations rather than outsourcing such services. This may explain the inconsistency reported in their findings and theory. In cases where such services are outsourced, organization may seek services of other organization such as recycling plants in treating their waste products. In such cases again, it becomes impossible for organization to develop strong environmental management systems that will require inclusion and direct reporting to the superior authority. The authors present their data in linear regression form only. This makes it impossible for simple extraction of information for their study for the layman. The fact that the authors state the number of organization sample, it would be expected that simple reporting in form of percentages on the various variable would be presented for easier analysis and comprehension. As the authors had previously observed, organizational design varies greatly from one organization to the other depending on the industry, size and processes involved. By limiting their study to the electronics industry, the authors made one major assumption that they do not appreciate; that there is an expected level of similarity in organizational designs for firms operating in the same industry. This is because organizations operating in the same industry are likely to be faced with the same environmental problems since they share common raw materials though their problems tend to vary greatly with geography and location. Relevance Some of the major multinational corporations such as Wal-Mart have been accused of following a weak environmental management policy in their operations. For instance, the company has been accused of stocking furniture made from protected trees from China. This is indicative of the fact that environmental management processes have not been extended beyond the company operations to their suppliers. Assuming that environmental management exists on the suppliers end, then it implies that communication between the environmental management department in the company and the other departments is weak probably due to indirect reporting. Consequently, organizations that report blips in their environmental policies are better of reviewing the manner of reporting from the environmental quality manager to the superior authority. The measurement of performance in environment management is often done on the long term levels such annual decrease in emissions and waste levels. This makes it almost impossible for organization to develop rewards programs for their environmental quality managers based on their performance. Therefore, it is imperative for the modern organization to develop criteria for assessing performance in environmental management. In their results, the authors report that ISO 14001 certification or presence of an effective EMS does not automatically result into a lower TRI. Modern organization can therefore, deduce that there are more avenues through which environmental sustainability can be achieved other than ISO certification and EMS. It is the objective of these authors to pinpoint that organizations need more than just EMS’s to achieve environmental suitability. In that regard, organizations with EMS have not exhausted ways through which they can reduce emissions and protect the environment as still they have the organization design to explore. Most organizations based their CEO’s incentives and rewards on the overall financial performance of organizations ignoring the contribution of environmental performance. Though this report, organization can introduce incentives tied to environmental performance. As shown in the paper literature review, good environmental performance is likely to lead to improved overall performance of organizations. To improve on environmental performance may require an evaluation of the organizational design since EMS and ISO 14001 do not guarantee improved environmental management. This idea is likely to be adopted by firms keen on positioning themselves in the market as good corporate citizens keen on conserving the environment. The finding that firms with ISO 14001 certification and EMS’s report higher TRI shows that there is need for the reevaluating the ISO 14001 certification criteria. This criterion should be modified to include a suggested organizational design in terms of the manner of the reporting by environmental quality manager to the superior authority. References Russo, M. & Harrison, N. (2004). Organizational design and environmental performance: clues from the electronics industry’ Academy of Management Journal. 48(2), 1-31 Read More