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Article Published: Al Zajel Magazine, Issue 50, February 2011

Organizational Boundaries and Design

In an era of political, social, economical, cultural and technological revolution organizations struggle to ride the wave to safety. In this global economic downturn organizations should start asking themselves which wave are they riding: Is it the rational, natural or open system perspectives?

Organizational rationality means economic efficiency of the administrative unit within an organization. It is a basic organizational necessity for both individuals and management. For example, some organizational internal administrative policy relies on the top-down rationalization which is totally different than what Taylor argued that it should be a bottom-up rationalization that allows work efficiency by the staff and give them a wider scope on how to deal with their departments. For administration to succeed in its own circumstances organizational bureaucracy has to be developed in the right direction. Weber's theory of bureaucracy opens the discussion to authority within in an organization. By definition, bureaucracy is an administrative structure that is built within the rational-legal mode of authority.

The second organizational system is known as the natural system. This system was introduced and critically studied through the informal structure of organizations. The difference between the rational system and the natural system is that social structure does not consist of the formal administrative or bureaucratic the rational system that consists of. But what shapes the informal system is the informal structure such as informal life which is structured and orderly. Among the schools that I am interested in is the school introduced by Selznick in 1966.

If cooperation is a common feature among rational and natural organizational systems then will institutionalization also be a common characteristic for both? According to Selznick institutionalization is the processes by which an organization “takes on a special character” and “achieves a distinctive competence or, perhaps, a trained or built-in incapacity”. The importance of this theory is to add value to these organizations away from technical requirements that are used. It is building an organization with a proper system where this system is strong enough not to fail once its founder leaves the organization. This is what makes institutions more stable than relying on a leader that once he is retired the organization fails to proceed in the future.

Leadership to Selznick is the person who defines the mission of the organization. It is his responsibility to protect the distinctive values of the organizations and to create a social structure which embodies them. Socialization is an aspect that determines the success of the organization. Among these successful elements are understanding clientele within the market, the determination of the strategic and tactical strategies, the selection of the right people and the decision making process from the right person to the right channels.

The final organizational structure is the open system perspective that emerged following World War II. The open system structure, or the relatedness of parts, can be observed directly when the system itself is physically bounded and its subparts are also bounded within the larger structure. The main difference between the open system and the rational and natural system is that the open system can best be seen in contrast to the limitations and misconceptions of closed system thinking. The most important of these misconceptions, almost by definition, is the failure to recognize fully the dependence of organizations on inputs from their environment.

In the upcoming issue we will go more in details on each and every system of organizations and how we can use these schools to implement in our own organizations in the travel industry.


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