Encyclopedia of Health Care Management Vision Contribu.docx

Encyclopedia of Health Care Management
Vision
Contributors: Rebecca I. Porterfield
Edited by: Michael J. Stahl
Book Title: Encyclopedia of Health Care Management
Chapter Title: "Vision"
Pub. Date: 2004
Access Date: February 14, 2019
Publishing Company: SAGE Publications, Inc.
City: Thousand Oaks
Print ISBN: 9780761926740
Online ISBN: 9781412950602
DOI: http://dx.doi.org/10.4135/9781412950602.n837
Print page: 586
© 2004 SAGE Publications, Inc. All Rights Reserved.
This PDF has been generated from SAGE Knowledge. Please
note that the pagination of the online

version will vary from the pagination of the print book.
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The vision for an organization is generally reflected in a
statement of direction and future for the organization.
The vision statement reflects organizational aspiration, whereas
the organization's mission statement reflects
the organization's purpose. The gap between the mission
statement (what we are) and the vision statement
(what do we aspire to be) provides the basis for the setting of
goals and objectives to move the organization
from the mission to its vision.
The vision statement, in its best form, provides an energizing
force around which the organization's execu-
tives, employees, stakeholders, and financial analysts rally.
The statement typically is brief, consisting of one or two
sentences. A well-conceived, effective vision state-
ment will
• Convey a broad sense of direction that unifies organizational
direction
• Aid in changing organizational direction and the rationale for
redirection when internal resistance ex-
ists
• Provide all levels within the organization a clear
understanding of where the organization's future lies
• Provide executives with an opportunity for a clear, consistent
compass for resource justification and

allocation
• Rally and energize employees and stakeholders
• Set an expectation of energy and action
• Provide confidence in the organizational leaders to set
direction
When the organizational leader communicates the organization's
vision, it sends a signal throughout the or-
ganization that change is happening. The vision may serve as a
catalyst for new thinking and at the same
time may ferret out internal resistance to change. The vision for
the organization's future, by definition, will
necessitate the rethinking of resource alignment to accomplish
the vision.
The vision statement is frequently considered the “drumbeat” of
the organization. It is clear, consistent, reso-
nant, and often repeated. The vision statement frequently is
written as a logo or catchy phrase that captures
the internal and external public. It is the “march” of the
organization providing a cadence and direction for
the organization's future purpose. The vision often sets a tone
for organizational pride, thus stimulating ideas
and a new work ethic. The drumbeat must be repeated often and
reinforced at every opportunity to ensure
organizational acceptance and commitment.
Developing and Communicating the Vision Statement
A vision statement is not just plucked from the air. Rather, it is
the result of thoughtful analysis and assessment
of the environment in which the organization exists.
Technology, regulation, economics, competition, politics,
demographics, and the social environment are just a few of the
factors that mold and change the dynamics in
which an organization operates (the external environment).

Some of these factors will provide opportunities
for the organization; others pose threats to the organization's
viability. The tone and direction of the vision
statement is developed by the analysis of the industry's driving
forces and the possible directions available to
the organization as a result of this analysis.
A vision statement must be perceived as achievable. It is not
essential that all strategies be known when the
vision statement is developed; however, the vision must be
viewed as possible. Slogans and platitudes with-
out substance will not engender the outcomes sought through an
appropriate vision statement. Over time the
articulated vision would be viewed as a dream rather than a
potential reality. The organization will become
disenfranchised to future change. Thus it is important to
frequently communicate successful progression to-
ward accomplishing the vision.
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Page 2 of 4
Finding the most effective means of communicating the vision
statement is as critical as its development. The
statement should create a visual image that evokes excitement
and pride. Ideally it should be simple enough
to be remembered yet complex enough to establish commitment.
The vision should be transmitted through
media that gets the attention of the organization. Most

important, the highest-ranking executive must consis-
tently and clearly articulate the vision in every forum in which
he or she participates. The vision must always
be recognized as coming from the top of the organization.
Vision Statements and Strategic Planning
Unlike mission statements, which are frequently developed
down to the department level, vision statements
are generally developed for the organization as a whole. The
exception to this is for those very large multina-
tional conglomerates that have unrelated business units. The
multinationals may have a strategic vision for
the corporation as a whole and one for each of the strategic
business units, depending on the level of diversity
among the units.
As the vision directionally sets the purpose for change and the
mission statement focuses on the existing pur-
pose, the gap between these two statements necessitates goals,
objectives, and strategies to move the orga-
nization from its mission to its vision. The external
environmental analysis used to develop the vision and the
internal assessment of the organization's strengths and
weaknesses supporting its mission must converge.
This convergence effectively links internal resources with
external factors essential to accomplish the vision
and is reflected through the strategic plan at the corporate level.
The vision statement, broadly defined, sets the direction,
whereas the strategic plan charts the course. As an
example, if a local hospital sets a vision to become a regional
hub, the strategic plan will articulate the steps
(both short term and long term) to accomplish the vision.
Vision Statements in Health Care

The health care industry has, over the past decade and into the
foreseeable future, been highly affected by
government regulation, population demographics, and political
legislation. These factors have required health
care providers to reassess who they are and the services they
will deliver. Some organizations have narrowed
their scope of operations in favor of specialized services, while
others have expanded their scope of opera-
tions through acquisition and other strategies to large and
specialized population segments. Each strategy,
whether product based or customer based, requires changes in
operations. It is critical, especially in times of
dynamic environmental shifts, to develop and articulate a new
strategic vision. By communicating the vision,
confidence is gained that senior management is willing and
ready to meet new challenges, that employees
do not have to be worried about changes ahead, and that
stakeholders (the community, the customers, the
stockholders) are assured that the organization understands its
industry and can provide and deliver the ser-
vices or product to meet these challenges.
• missions and mission statements
• mission
• strategic plans
• organizations
• staff
• organizational change
• demographics
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Rebecca I. Porterfield
http://dx.doi.org/10.4135/9781412950602.n837
See also
• Leadership
• Mission
• Organizational Change
• Strategic Planning
Further Reading
Brill, P. L., & Worth, R.(1997)The four levers of corporate
change. New York: AMACOM.
Collins, J.Porras, J. I.Building your company's vision. Harvard
Business Review74(5)70–82(1996, Septem-
ber–October)
Horak, B. J.(1997)Strategic planning in healthcare: Building a
quality-based plan step by step. New York:
Quality Resources.
Lipton, M.Demystifying the development of an organizational
vision. Sloan Management Re-
view3683–92(1996, Summer)
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clopedia of Health Care ManagementVision
Encyclopedia of Educational Leadership and
Administration
Values of Organizations and Leadership
Contributors: Beverly Irby, Genevieve Brown & Ling Ling
Yang
Edited by: Fenwick W. English
Book Title: Encyclopedia of Educational Leadership and
Administration
Chapter Title: "Values of Organizations and Leadership"
Pub. Date: 2006
Access Date: February 14, 2019
Publishing Company: SAGE Publications, Inc.
City: Thousand Oaks

Print ISBN: 9780761930877
Online ISBN: 9781412939584
DOI: http://dx.doi.org/10.4135/9781412939584.n587
Print page: 1053
© 2006 SAGE Publications, Inc. All Rights Reserved.
This PDF has been generated from SAGE Knowledge. Please
note that the pagination of the online
version will vary from the pagination of the print book.
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Values are defined as beliefs and attitudes held by individual
persons or collectivities. Values are also viewed
as the principles that guide behavior. The values held within a
group or an organization are the values shared
by the group's members, which go beyond individual values.
An organization's or group's beliefs, desires, behavior,
accountability, initiatives, innovation, integrity, and flex-
ibility reveal its core values, which influence organizational
perceptions and decisions. Core values are time-
less, guiding principles that require no external justification.
Such principles have intrinsic value and impor-
tance to those inside the organization. An organization's culture
is made up of core values that unify the social
dimensions of organizations. Core values become the foundation
and conscience of the organization, which
distinguish successful organizations from the unsuccessful.

Within enduring organizations, values became the organizations'
essential and enduring tenets. Values can-
not be instilled into people; people must already have a
predisposition to holding them. However, it is acknowl-
edged that a clear and well-articulated ideology will attract
people to the enterprise whose personal values
are compatible with the organization's core values, and
conversely, may repel those whose personal values
are not similar. The task for executives is to find and retain
people who have a disposition to share the orga-
nization's core values.
Values inform leadership practices. Prominent leadership
researchers recognize the significant correlation
among attitudes, values, beliefs, leadership, and organizations.
In their 2002 Synergistic Leadership Theory
(SLT), Beverly Irby and Genevieve Brown stressed the
interconnectedness of four particular factors: (a) be-
liefs and values, and attitudes; (b) leadership behavior; (c)
external factors; and (d) organizational structure.
The SLT theory proposes that an alignment between the leader's
attitudes, values, and beliefs and those of
the organization are important to the success of the leader and
the organization. Without this alignment, those
who do not share the similar attitudes, values, and beliefs may
counter changes necessary for reform with
resistance.
Sometimes value conflict occurs within organizations when the
interest of one group indicates one course of
action, while the other group's welfare demands another. Many
scholars and researchers on value conflict
resolution stress the “person-situation fit” in organizational
settings, which is generally defined as the congru-
ence between norms and values of organizations and the values

of persons. Thus, leaders have two respon-
sibilities: (a) to articulate, model, and emphasize the core
values of the organization so that all members work
together toward meeting organizational goals and (b) to make
the effort to incorporate employees' values so
that there is a congruity between an organization's values and
the values of its members.
Beverly Irby, , Genevieve Brown & , and Ling Ling Yang
http://dx.doi.org/10.4135/9781412939584.n587
See also
• administration, theories of
• capacity building, of organizations
• career development
• collaboration theory
• conflict management
• consideration, caring
• constructivism
• empowerment
• esteem needs
• ethos, of organizations
• group dynamics
• human resource development
• leadership, participatory
• management theories
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Encyclopedia of Educational Leadership and Administration
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http://origin-sk.sagepub.com/reference/edleadership/n11.xml
• morality, moral leadership
• open-door policy
• personnel management
• transactional analysis
• values pluralism, in schools
Further Readings and References
Irby, B. J., Brown, G., Duffy, J. A., and Trautman, D.The
synergistic leadership theory. Journal of Educational
Administration40304–
322(2002)http://dx.doi.org/10.1108/09578230210433409
Scott, W. A.(1965)Values and organizations. Chicago: Rand
McNally.
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Encyclopedia of Educational Leadership and Administration
http://dx.doi.org/10.1108/09578230210433409Encyclopedia of
Educational Leadership and AdministrationValues of
Organizations and Leadership
Project 4: Structuring a New Business Venture
Start Here
In this project, you will be called upon to research the possible
legal structures and organizational structures for some
businesses. As you consider starting your own company, you'll
make a determination about which structures will work best.
Click Step 1: Research the Steps to Create and Manage a Small
Business to get started.Step 1: Research the Steps to Create and
Manage a Small Business
You decided to take a week of vacation time from Colossal to
devote yourself entirely to developing your new business
venture. You begin by going into your home office to work on
the task at hand—the preparation of a narrated PowerPoint to
practice your presentation to potential investors. The
presentation will address all of the key issues related to the
legal form and organizational structure of your business.
Specifically, you will include the following in your narrated
PowerPoint:
· A name for your business, a brief mission statement reflecting
the primary goals of the business, and an explanation for why
you chose this name and mission statement. You will explain
how this mission statement is drafted so that it is clear, concise,
and meaningful to your business’s stakeholders.
· An examination of the three most appropriate legal forms of
business for your venture. Include a detailed examination of the

advantages and disadvantages of these three forms and an
evaluation of these six factors:
·
· creation and maintenance
· continuity
· ownership and control
· personal liability
· compensation and division of profits
· taxation
·
· A choice of the best legal form of business for your new
company
from the three you considered and a full explanation of your
choice.
· A detailed diagram of your organization chart and a rationale
explaining structural decisions reflected in your organization
chart, including:
· the titles of the different individuals and why you chose those
titles
· the tasks the different individuals and groups will have for
contributing to the aims of the company
· the reporting structure (who will report to whom and why)
· a choice regarding outsourcing the human resources function,
including a detailed analysis of the pros and cons of outsourcing
the human resources function
· all other relevant factors (for example, will your business
structure be functional, centralized, decentralized, etc.),
including how your chosen structure will contribute to your
long-term aims of going national and international, or how it
will need to be modified to achieve these aims
After reviewing the above outline of your presentation, you
recall the recent conference call with your potential business
partners, Roza and Gary. You realize that you will need this
information to make the best legal and organizational decisions
for your business. You’re asked by one of your collaborators to
examine some resources on creating and managing a new

business and on drafting a mission statement.
In order to complete this task, you realize that you must do
some additional research to address the legal and strategic
implications of your decisions if your business is to get off the
ground.
Step 2: Determine the Legal Structure of Your Business: Gather
and Analyze Information
Now that you have read a broad overview of new business
creation and management, you recognize that the next step in
creating your new business is to decide on one of the many
legal forms of business you will use to form your new company.
You want to show the investors that you really know your stuff,
so you decide to select three forms of business to analyze and
you’ll explain in your presentation why the option you chose is
the best for your new venture.Step 3: Determine Your
Organization's Structure: Gather and Analyze Information
After selecting the most appropriate legal form of business,
you’re messaged by one of your colleagues in the collaboration,
Roza Worrell:INBOX (1 NEW EMAIL)
From: Roza Worrell
To: You
I’m glad you finalized your decisions on the legal form for the
new business. Now we need to decide on the organization
structure and design that would work best for our goals. We
need to determine what departments the organization will need,
who will report to whom, how many levels we will have in our
organization's hierarchy, and how many individuals will report
to each manager (span of control).
We really need a structure that will promote communication and
coordination of efforts across the entire organization. We also
need to consider whether or not we should be outsourcing the
HR function.
After formulating your thoughts, you may also need to do some
additional research on the web and in the library to enhance
your knowledge for this presentation.
Thanks for all you’re doing to make this business a reality.

Good luck in your final prep for the presentation.
Sincerely,
Roza
Step 4: Prepare Your Presentation
Using the information you gathered from your reading and
research, you now are ready to prepare a narrated PowerPoint.
Because you want to record yourself and critique your own
work, it should follow the form of asynchronous presentations.
After doing some research, you find that the best presentations
are organized by using the following guidelines:
· Tailor your presentation to suit the audience.
· Include a title slide, with your name on it, introducing the
presentation.
· Include only the major bullet points for each issue on the
presentation slides.
· Include no more than 15 slides (not counting title page or
references list).
· Cover all the elements of your plan as outlined in Step 1.
· Use your narration to provide the supporting rationale for each
major bullet point.
· Include a script of your narration in the Notes section of
PowerPoint.
· Include a clear summary of your major conclusions and any
recommendations on the conclusion slide.
· Include a reference page in APA format citing any sources you
used to develop your presentation.
· Title your files using this protocol: lastname_New
Venture_date.ppt.
When your presentation is complete, submit it in the next
step.Step 5: Submit Your Work
By the end of Week 8, submit the following files to the dropbox
below.
Recommended Project Delivery
Step
Submission Week
Deliverable

File-naming protocol/Submission instructions
Step 4
Week 8
New business venture narrated PowerPoint
lastname_NewVenture_date.ppt
Learning TopicOutsourcing the HR Function
Outsourcing is a technique used by some companies in which
they transfer or contract out certain work to external companies,
typically in an effort to save costs. Outsourcing the human
resources (HR) function involves the transfer of the tasks
usually performed internally by human resources employees to
external companies. Depending on the structure of the
organization, the human resources office often handles such
matters as managing employee compensation and benefits,
recruiting new employees, ensuring compliance with employee
rights and safety laws, overseeing employee relations, and often
the provision of certain employee training.
There are advantages and disadvantages associated with
outsourcing the HR function. In addition to the potential cost
savings, outsourcing the HR function provides companies with a
means of garnering expertise in the growingly complex areas of
employee rights and employment compliance without hiring
additional staff. Outsourcing the HR function may also give
companies, whether large or small, a layer of protection from
some lawsuits. By outsourcing, a company can more readily
focus on its primary purpose and avoid potential distractions.
Outsourcing the HR function, like any outsourcing, creates
distance between the employees of a company and the outside
contractors. This distance may lead to a culture mismatch
between the company and its contractor, delays in processing,
and reliance on another company to manage a critical function
(i.e., loss of control). The best HR managers align their actions
with the organization's strategic goals. HR managers typically

have organizational and financial knowledge that comes from
being a part of the company. Can the outside contractor provide
the necessary alignment with the company's strategic interests?
This outside contractor may or may not be as dedicated to
making process improvements as your own company is, and so,
particularly when in a long-term contract, may not expend
resources to improve the quality of service.
For multinational organizations, there are special challenges.
Best HR practices may not transfer effectively between
countries due to cultural and institutional differences. Can the
outside contractor adapt to local practices and customs while
standardizing the best HR practices across country borders?
These, and other, advantages and disadvantages of outsourcing
the HR function should be weighed carefully and discussed
prior to action.Resources
· What Is Human Resources?
· The Changing Role of Strategic Human Resources
· Risks Associated With Outsourcing
Learning TopicOrganization Structure and Design
The structure of an organization plays a pivotal role in how
everyday tasks are handled, in how resources are allocated, in
employee supervision and reporting, and in coordination
amongst employees. It impacts employee behavior, demeanor,
and psyche in ways that are still being studied by theorists
today. Organizational structure may play a role in employee
motivation and even productivity.
A primary factor in creating and managing a new business
involves choosing the best organizational structure for it. Some
types of business are better suited for a clear hierarchical
structure, while others are more apt to work within a flatter
organizational structure, with fewer or even no levels of
authority. From time to time, a business may reorganize, as
online shoe retailer Zappos did when moving from a hierarchy
to a flatter "holacracy." There were reportedly mixed results

spurring from this major shift in business structure (Reingold,
2016).
As the Zappos case and others reveal, business structure plays
an integral role in organizational success. Thus, one should
clearly define the initial organizational structure at the outset of
starting a new business and monitor it through the business life
cycle, tweaking it and shifting it as necessary.
References
Reingold, J. (2016, March 4). How a Radical Shift Left Zappos
Reeling. Retrieved February 07, 2017, from
http://fortune.com/zappos-tony-hsieh-holacracy/Resources
· Structured for Success: How the Structure of Today's
Professional Organizations Are Changing
· Creating an Organizational Structure
· Organizations and How They Grow
· Organizational Structure
· Organizational Chart
· A Flexible Organizational Structure as a Way of Knowledge
Management in SMEs
Learning TopicMission Statement
In the contemporary economic environment, businesses must
often take on roles beyond those of mere profit centers. A well-
crafted mission statement assists in defining the role of a
company by succinctly outlining its core purpose and values.
All other organizational documents, such as codes of conduct,
should be created to support the mission statement of the
organization. Once crafted, a mission statement should play a
role in employee training, advertising, and management. It is
the core principle that states who a business is and what it does.
Learning Topic
Legal Forms of Business
Business entities are an integral part of business practice and

economic productivity. An effective business practitioner must
understand the characteristics of the major types of business
entities, as these attributes can dramatically affect the nature of
the business's relationships. Before beginning to conduct
business, one should always weigh the benefits and burdens of
the different types of business entities and make a conscious
decision about which type of entity to form to conduct one's
business.
Depending on the type of business, the people involved, and the
goals of the business, some entities may be more appropriate
than others for a particular business. To make the decision
about the appropriate type of entity to form, one should
consider factors including the following:
· creation and maintenance—the effort associated with forming
and maintaining the entity
· continuity—the continuity or stability of the organization
upon given occurrences
· ownership and control—the ownership rights and control of
those involved with the business
· personal liability—the potential for personal liability of those
involved with the business
· compensation—the compensation and division of profits
among business owners
· taxation—the taxation of the organization's earnings and its
distributions of profits to the owners
Weighing these and related factors, which vary in consequence
depending on the entity, informs the choice of the type of
business entity best suited to one's business. Examination of
these characteristics will make obvious the effect of these
attributes on stakeholders of the business entity. The decision of
which entity is right for a particular business impacts many
facets of a business's operation, including accounting,
management, and finance.
CHECK YOUR KNOWLEDGE:
Question 1
Which of the following business entities imposes unlimited

liability on all of the owners?
limited partnership
general partnership
limited liability partnership
S corporation
Incorrect. In a limited partnership, there are two types of
owners: the general partner and the limited partner. Although
the general partner has unlimited liability, the limited partner
has limited liability.
Correct. The general partnership imposes unlimited liability
upon the owners (partners). This means that the personal assets
of the owners are at risk for the liabilities of the owners,
including the torts and contracts entered into within the scope
of the partnership, by each partner himself and other partners.
Incorrect. All owners (partners) in a limited liability partnership
have limited liability.
Incorrect. An S corporation provides all owners (shareholders)
with limited liability.
Question 2
Which of the following is a characteristic of a sole
proprietorship?
A sole proprietorship is subject to double taxation.
A sole proprietorship has perpetual life, beyond that of the
owner.
A sole proprietorship is formed simply by someone carrying on
an activity seeking a profit.
A sole proprietorship provides limited liability to its owner.
Incorrect. A sole proprietorship is subject to pass-through
taxation, and is not double taxed like a C corporation is.

Correct. A sole proprietorship is easily formed, without formal
registration with the state, simply by someone carrying on an
activity seeking a profit.
Incorrect. The unlimited liability attributed to a sole proprietor
is one of the greatest disadvantages of the sole proprietorship.
Incorrect. A sole proprietorship is limited to the life of the
owner. Although business assets and client lists can be
transferred, the sole proprietorship cannot be.
Question 3
What are the owners of a limited liability company (LLC)
called?
stakeholders
partners
shareholders
members
Incorrect. "Stakeholder" is a term originating in management
and ethical theory, which generally refers to anyone who is
affected by or can affect an organization. Although this
definition is broad enough to include the owners of an LLC, it is
not limited to it, but also includes employees, customers,
distributors, and others.
Incorrect. The owners of all forms of partnerships, including
general partnerships, limited partnerships, and limited liability
partnerships are all referred to as partners.
Incorrect. The owners of for-profit corporations, including C
corporations and S corporations, are referred to as shareholders.
Correct. They often act very much like partners in a partnership,
but because an LLC is not a partnership, the owners are called
members.
Question 4

Which of the following is the greatest disadvantage of a C
corporation?
The C corporation is subject to double taxation.
The C corporation allows for limited liability.
The C corporation requires a board of directors.
The C corporation provides a means of seeking investment
through issuing equity and debt securities.
Correct. The C corporation is taxed on its earnings and then the
shareholders are taxed on the dividends. This is the greatest
disadvantage of a C corporation, because the double taxation
can be costly.
Incorrect. A C corporation does allow for limited liability, but
this is an advantage of a C corporation, not a disadvantage.
Incorrect. A C corporation does require a board of directors, but
this is typically perceived an advantage rather than a
disadvantage, because management is done by a group of minds,
as opposed to a single mind. Some do, however, perceive a
board as a disadvantage because often the owners must give up
some control over management to the board.
Incorrect. A C corporation does provide a means of seeking
investment through issuing equity and debt securities, but this is
an advantage of a C corporation, not a disadvantage.
Question 5
Which entity allows for the owners to elect whether they
manage the business or they appoint managers?
limited partnership
limited liability company
general partnership
C corporation
Incorrect. The general partners in a limited partnership must

manage the partnership. The limited partners are prohibited
from managing.
Correct. The owners of a limited liability company may elect to
be manager-managed or member-managed.
Learning Resource
What Is Human Resources?
Human resource management (HRM) is the process of
employing people, training them, compensating them,
developing policies relating to them, and developing strategies
to retain them. As a field, HRM has undergone many changes
over the last twenty years, giving it an even more important role
in today’s organizations. In the past, HRM meant processing
payroll, sending birthday gifts to employees, arranging company
outings, and making sure forms were filled out correctly—in
other words, more of an administrative role rather than a
strategic role crucial to the success of the organization. Jack
Welch, former CEO of General Electric and management guru,
sums up the new role of HRM: “Get out of the parties and
birthdays and enrollment forms….Remember, HR is important
in good times, HR is defined in hard times” (Frasch, Shadovitz,
& Shelly, 2010).
It’s necessary to point out here that every manager has some
role relating to human resource management. Just because an
employee does not have the title of HR manager doesn’t mean
he or she won’t perform all or at least some of the HRM tasks.
For example, most managers deal with compensation,
motivation, and retention of employees—making these aspects
not only part of HRM but also part of management.
The Role of HRM
Keep in mind that many functions of HRM are also tasks other
department managers perform, which is what makes this

information important, despite your chosen career path. Most
experts agree on seven main roles that HRM plays in
organizations. These are described in the following sections.
Staffing
You need people to perform tasks and get work done in the
organization. Even with the most sophisticated machines,
humans are still needed. Because of this responsibility, one of
the major tasks in HRM is staffing. Staffing involves the entire
hiring process from posting a job to negotiating a salary
package. There are four main phases in executing the staffing
function:
1. Development of a staffing plan—This plan allows HRM to
see how many people they should hire based on revenue
expectations.
2. Development of policies to encourage multiculturalism at
work—Multiculturalism in the workplace is becoming more and
more important, as we have many more people from a variety of
backgrounds in the workforce.
3. Recruitment—Recruitment involves finding people to fill the
open positions.
4. Selection—In this stage, people will be interviewed and
selected, and a proper compensation package will be negotiated.
This step is followed by training, retention, and motivation.
Development of Workplace Policies
Every organization has policies to ensure fairness and
continuity within the organization. One of the jobs of HRM is to
develop the verbiage surrounding these policies. In the
development of policies, HRM, management, and executives are
involved in the process. For example, the HRM professional
will likely recognize the need for a policy or a change of policy,
seek opinions on the policy, write the policy, and then
communicate that policy to employees. It is key to note here
that HR departments do not and cannot work alone. Everything
they do needs to involve all other departments in the
organization. Examples of workplace policies include the
following:

· discipline process policy
· vacation time policy
· dress code
· ethics policy
· internet usage policy
Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair,
meets industry standards, and is high enough to entice people to
work for the organization. Compensation includes anything the
employee receives for his or her work. In addition, HRM
professionals need to make sure the pay is comparable to what
other people performing similar jobs are being paid. This duty
involves setting up pay systems that take into consideration the
number of years with the organization, years of experience,
education, and similar variables. Examples of employee
compensation include the following:
· pay
· health benefits
· 401(k) (retirement plans)
· stock purchase plans
· vacation time
· sick leave
· bonuses
· tuition reimbursement
Retention
Retention involves keeping and motivating employees to stay
with the organization. Compensation is a major factor in
employee retention, but there are other factors as well. Ninety
percent of employees leave a company for the following
reasons:
· issues around the job they are performing
· challenges with their manager
· poor fit with organizational culture
· poor workplace environment
Despite this data, 90 percent of managers think employees leave
as a result of pay (Rivenbark, 2010). As a result, managers

often try to change their compensation packages to keep people
from leaving, when compensation isn’t the reason they are
leaving at all.
Training and Development
Once a company has spent the time to hire new employees, it
wants to make sure they not only are trained to do the job but
also continue to grow and develop new skills in their job. This
results in higher productivity for the organization. Training is
also a key component in employee motivation. Employees who
feel they are developing their skills tend to be happier in their
jobs, which results in increased employee retention. Examples
of training programs might include the following:
· job skills training, such as how to run a particular computer
program
· training on communication
· team-building activities
· policy and legal training, such as sexual harassment training
and ethics training
Dealing with Laws Affecting Employment
Human resource workers must be aware of all the laws that
affect the workplace. An HRM professional might work with
some of these laws:
· discrimination laws
· health-care requirements
· compensation requirements such as the minimum wage
· worker safety laws
· labor laws
The legal environment of HRM is always changing, so HRM
must always be aware of changes taking place and then
communicate those changes to the entire management
organization.
Worker Protection
Safety is a major consideration in all organizations. Often, new
laws are created with the goal of setting federal or state
standards to ensure worker safety. Unions and union contracts
can also impact the requirements for worker safety in a

workplace. It is up to the human resource manager to be aware
of worker protection requirements and ensure the workplace is
meeting both federal and union standards. Worker protection
issues might include the following:
· chemical hazards
· heating and ventilation requirements
· use of “no fragrance” zones
· protection of private employee information
Communication
Besides these major roles, good communication skills and
excellent management skills are key to successful human
resource management as well as general management.
Awareness of External Factors
In addition to managing internal factors, the HR manager needs
to consider the outside forces at play that may affect the
organization. Outside forces, or external factors, are those
things the company has no direct control over; however, they
may be variables that will positively or negatively impact
human resources. External factors might include the following:
1. globalization and offshoring
2. changes to employment law
3. health-care costs
4. employee expectations
5. diversity of the workforce
6. changing demographics of the workforce
7. a more highly educated workforce
8. layoffs and downsizing
9. technology used, such as HR databases
10. increased use of social networking to distribute information
to employees
For example, the recent trend in flexible work schedules
(allowing employees to set their own schedules) and
telecommuting (allowing employees to work from home or a
remote location for a specified period of time, such as one day
per week) are external factors that have affected HR. HRM has

to be aware of these outside issues, so they can develop policies
that meet not only the needs of the company but also the needs
of the individuals. Another example is the Patient Protection
and Affordable Care Act, signed into law in 2010. Compliance
with this bill has huge implications for HR. For example, a
company with more than fifty employees must provide health
care coverage or pay a penalty. Currently, it is estimated that 60
percent of employers offer health care insurance to their
employees (Cappelli, 2010). Because health care insurance will
be mandatory, cost concerns as well as using health benefits as
a recruitment strategy are big external challenges. Any manager
operating without considering outside forces will likely alienate
employees, resulting in unmotivated, unhappy workers. Not
understanding the external factors can also mean breaking the
law, which has a concerning set of implications as well.
External Factors that Influence an Organization
One way managers can be aware of the outside forces is to
attend conferences and read various articles on the web. For
example, the website of the Society for Human Resource
Management not only has job postings in the field but discusses
many contemporary human resource issues that may help the
manager make better decisions regarding people management.
Seven Roles of HRM
References
Cappelli, P. (2010). HR Implications of healthcare reform.
Human Resource Executive Online. Retrieved from
http://www.hreonline.com/HRE/story.jsp?storyId=379096509
Frasch, K. B., Shadovitz, D. & Shelly, J. (2009, June 30).
There’s no whining in HR. Human Resource Executive Online.
Retrieved from
http://www.hreonline.com/HRE/story.jsp?storyId=227738167.

Rivenbark, L. (2005, May). The 7 hidden reasons why
employees leave. HR Magazine. Retrieved from
http://findarticles.com/p/articles/mi_m3495/is_5_50/ai_n137214
06.
Licenses and Attributions
1.1 What Is Human Resources? from Human Resource
Management by the University of Minnesota Libraries
Publishing is an adaptation of a work whose original author and
publisher request anonymity and is available under a Creative
Commons Attribution-NonCommercial-ShareAlike 4.0
International license. © 2016, University of Minnesota. UMUC
has modified this work and it is available under the original
license.
Learning Topic
Creating and Managing a New Business
There are many things to consider when creating and managing
a new business. Planning a business involves many
considerations, including:
· choosing a business entity type
· registering with required government agencies
· acquiring licenses and permits
· opening bank and credit accounts
· adopting management agreements
· adopting a business plan and organizational structure
· adopting a marketing plan
· developing a mission statement
· developing a code of conduct or ethics code
· joining relevant professional organizations
· choosing a stakeholder set of employees, customers, suppliers,
advisors, and investors
All of these actions should be researched and achieved in the 12
months or so before starting a new business.
One common reason small businesses fail is because of
inadequate preparation and planning beforebeginning a new
business. The reality of business practice is that no one can

predict every potential issue or dilemma. Nevertheless, the
resolution of unknown issues will be expedited and a process
will be in place to address them through instruments such as
management agreements, mission statements, business plans,
and codes of conduct.
Moving a business from local to national or even international
involves many additional considerations of management,
structure, tax, law, culture, and strategy. Preparing in advance
for such an expansion is a key element of successfully
expanding to other markets. Those who treat international
expansion as an afterthought frequently face a more difficult
time when trying to transition to other markets. Moreover, many
companies have blundered by not considering the cultural norms
of targeted markets when attempting to expand beyond local
distribution.
Learning Resource
The Changing Role of Strategic Human Resources
Culture as a Major Aspect of HRM Overseas
Culture is a key component to human resource management
(HRM) on a global scale. Understanding culture but also
appreciating cultural differences can help the HRM strategy be
successful in any country. Geert Hofstede, a researcher in the
area of culture, developed a list of five cultural dimensions that
can help define how cultures are different.
The first dimension of culture is individualism-collectivism. In
this dimension, Hofstede (n.d.) describes the degree to which
individuals are integrated into groups. For example, in the
United States, we are an individualist society; that is, each
person tends to look after himself or herself and immediate
family. There is more focus on individual accomplishments as
opposed to group accomplishments. In a collective society,
societies are based on cohesive groups, whether it be family
groups or work groups. As a result, the focus is on the good of
the group, rather than the individual.

Nonverbal Language
One of the factors of culture is nonverbal language, such as the
use of handshakes, kissing, or bowing. This image shows Luisa
Dias Diogo, Prime Minister of Mozambique greeting Adao
Rocha, Senior Counselor of the Prime Minister of Cabo Verde.
Source: Richter Frank-Jurgen, Flickr
Power distance, Hofstede’s second dimension, refers to the
extent to which the less powerful members of organizations
accept that power is not distributed equally. For example, some
societies may seek to eliminate differences in power and wealth,
while others prefer a higher power distance. From an HRM
perspective, these differences may become clear when
employees are asked to work in cross-functional teams. A
Danish manager may have no problem taking advice from
employees because of the low power distance of his culture, but
a Saudi Arabian manager may have issues with an informal
relationship with employees, because of the high power
distance.
Uncertainty avoidance refers to how a society tolerates
uncertainty. Countries that focus more on avoidance tend to
minimize uncertainty and therefore have stricter laws, rules, and
other safety measures. Countries that are more tolerant of
uncertainty tend to be more easygoing and relaxed. Consider the
situation in which a company in the United States decides to
apply the same HRM strategy to its operations in Peru. The
United States has an uncertainty avoidance score of 46, which
means the society is more comfortable with uncertainty. Peru
has a high uncertainty avoidance, with a score of 87, indicating
the society’s low level of tolerance for uncertainty. Let’s
suppose a major part of the pay structure is bonuses. Would it
make sense to implement this same compensation plan in
international operations? Probably not.
Masculinity and femininity refers to the distribution of
emotional roles between genders, and which gender norms are
accepted by society. For example, in countries that are focused

on femininity, traditional “female” values such as caring are
more important than, say, showing off. The implications to
HRM are huge. For example, Sweden has a more feminine
culture, which is demonstrated in its management practices.
Mentoring to employees is a major component in managers’
performance appraisals. A manager coming from a more
masculine culture may not be able to perform this aspect of the
job as well, or he or she may take more practice to be able to do
it.
The last dimension is long-term and short-term orientation,
which refers to the society’s time horizons. A long-term
orientation would focus on future rewards for work being done
now, as well as persistence and an ordering of relationships by
status. A short-term orientation may focus on values related to
the past and present, such as national pride or fulfillment of
current obligations. We can see HRM dimensions with this
orientation in succession planning, for example. In China the
person getting promoted might be the person who has been with
the company the longest, whereas in short-term orientation
countries like the United States, promotion is usually based on
merit. An American working for a Chinese company may get
upset to see someone promoted who doesn’t do as good of a job,
just because they have been there longer, and vice versa.
Based on Hofstede’s dimensions, you can see the importance of
culture to development of an international HRM strategy. To
use a transnational strategy, all these components should be
factored into all decisions such as hiring, compensation, and
training. Since culture is a key component in HRM, it is
important to define some other elements of culture.
Examples of Countries Exhibiting Hofstede’s Dimensions
Country
Power distance
Individualism/Collectivism
Masculinity/Femininity
Uncertainty Avoidance
Long/Short-Term orientation

New Zealand
22
79
58
49
30
United Kingdom
35
89
66
35
25
United States
40
91
62
46
29
Japan
54
46
95
92
80
Taiwan
58
17
45
69
87
Zambia
64
27
41
52
25

India
77
48
56
40
61
China
80
20
66
40
118
Philippines
94
32
64
44
19
Note: Power distance refers to the comfort level of power
differences among society members. A lower score shows
greater equality among levels of society, such as New Zealand;
A high ranking here in individualism/collectivism, such as the
United States, means there is more concern for the
individualistic aspects of society as opposed to collectivism.
Countries with high scores on individualism means the people
tend to be more self-reliant; A lower score in
masculinity/femininity may indicate lower levels of
differentiation between genders. A lower score, such as Chile,
may also indicate a more openly nurturing society; Uncertainty
avoidance refers to the tolerance for uncertainty. A high score,
such as Japan’s, means there is lower tolerance for uncertainty,
so rules, laws, policies, and regulations are implemented;
Long/short-term orientation refers to thrift and perseverance,
overcoming obstacles with time (long-term orientation), such as
China, versus tradition, social obligations.
Culture refers to the socially accepted ways of life within a

society. Some of these components might include language,
norms, values, rituals, and material culture such as art, music,
and tools used in that culture. Language is perhaps one of the
most obvious parts of culture. Often language can define a
culture and of course is necessary to be able to do business.
HRM considerations for language might include something as
simple as what language will documents be written in (the home
country’s, the host country’s, or a third option)? Is there a
standard language the company should use within its
communications?
Management in International Business
HR as a Strategic Partner
The role of HRM is changing in business, particularly in
international business. Previously considered a support
function, HRM is now becoming a strategic partner in helping a
global company achieve its goals. The strategic approach to
HRM—strategic human resources management (SHRM)—means
going beyond administrative tasks such as payroll processing.
Instead, managers need to think more broadly and deeply about
how employees will contribute to the company’s success.
SHRM is not just a function of the human resources (HR)
department—all managers and executives need to be involved
because the role of people is so vital to a company’s
competitive advantage. In addition, organizations that value
their employees are more profitable than those that don’t
(Huselid, 1995; Pfeffer, 1998; Pfeffer & Veiga, 1999;
Welbourne & Andrews, 1996). Research shows that successful
organizations have several things in common (Pfeffer & Veiga,
1999):
· providing employment security
· engaging in selective hiring
· using self-managed teams
· being decentralized
· paying well
· training employees
· reducing status differences

· sharing information.
When organizations enable, develop, and motivate human
capital, they improve accounting profits as well as shareholder
value in the process (Becker, Huselid, & Ulrich, 2002). The
most successful organizations manage HR as a strategic asset
and measure HR performance in terms of its strategic impact.
When each piece is in the right place, it creates a high-
performance work system (HPWS)—a set of management
practices that attempt to create an environment within an
organization in which the employee has greater involvement and
responsibility.
The following are some questions that HRM should be prepared
to answer in this new world (Ulrich, 1998):
· competence—To what extent does our company have the
required knowledge, skills, and abilities to implement its
strategy?
· consequence—To what extent does our company have the right
measures, rewards, and incentives in place to align people’s
efforts with the company strategy?
· governance—To what extent does our company have the right
structures, communications systems, and policies to create a
high-performing organization?
· learning and leadership—To what extent can our company
respond to uncertainty and learn and adapt to change quickly?
Crucial Role of SHRM in Global Firms
Developing an effective international workforce is much more
difficult for a competitor to emulate than buying technology or
securing capital (Briscoe, Schuler, & Claus, 2009). Besides,
how well companies manage their HR around the world can
mean the difference between success and failure. In a nutshell,
firms that effectively manage their international HR typically
outperform competitors in terms of identifying new
international business opportunities, adapting to changing
conditions worldwide, sharing innovation knowledge throughout
the firm, effectively coordinating subsidiary operations,
conducting successful cross-border acquisitions, and

maintaining a high-performing, committed overseas workforce
(Brannen & Peterson, 2009; Gong, 2003; Minbaeva, Pedersen,
Björkman, Fey, & Park, 2003; Oddou, Osland, & Blakeney,
2009).
In many multinationals, an important challenge is balancing the
need to coordinate units scattered around the world with the
need for individual units to have the control necessary to deal
effectively with local issues (Schuler, Budhwar, & Florkowski,
2004). Achieving this balance becomes more difficult as the
level of diversity that firms are exposed to increases. For
example, consider a situation where the parent firm’s national
culture differs dramatically from the cultures in its overseas
subsidiaries. In this case, it may be harder for the parent firm to
share information, technology, and innovations between the
home office and foreign outposts. It may also be more difficult
to promote needed organizational changes and manage any
conflicts that arise between employees in different countries.
Fortunately, international human resources management (IHRM)
strategies can overcome such problems. For instance, IHRM
professionals can help ensure that top executives understand the
different cultures within the company workforce and around the
world. They can also offer advice on how to coordinate
functions across boundaries and develop outstanding cross-
cultural skills in employees (e.g., through various training
programs and career paths that involve significant overseas
exposure) (Briscoe, Schuler, & Claus, 2009; Fey & Björkman,
2001; Wright, McMahan, & McWilliams, 1994).
Of course, these are general suggestions, and a range of HR
practices might be used to implement them. Companies should
develop an international HR philosophy that describes corporate
values about HR—this in turn, will shape the broad outline of
what constitutes acceptable IHRM practices for employees all
over the world. From there, individual units can fine-tune and
select specific practices that best fit their local conditions. But
this is easier said than done, especially for firms operating in
dozens of countries. Multinationals typically find it extremely

difficult, for example, to design a compensation system that is
sensitive to cultural differences yet still meets general
guidelines of being seen as fair by employees everywhere.
Indeed, culture may impact local HRM practices in a variety of
ways—from how benefit packages are constructed to the hiring,
termination, and promotion practices used, just to name a few
(Briscoe, Schuler, & Claus, 2009).
Nevertheless, selecting the right IHRM strategy can pay off,
particularly in difficult foreign markets. Consider
multinationals wanting to quickly enter countries with
transitional economies—those that are moving from being state-
dominated to being market-based (e.g., China and Russia).
Choosing to enter those markets by buying local firms, building
new plants, or establishing joint ventures may create significant
HR challenges that will undercut performance if not handled
well. Consequently, global firms need to adopt an appropriate
IHRM strategy to meet transition economy challenges.
The Importance of Human Capital
Employees provide an organization’s human capital. Your
human capital is the set of skills that you have acquired on the
job—through training and experience—which increase your
value in the marketplace. The Society of Human Resource
Management’s Research Quarterly defined an organization’s
human capital as “the collective sum of the attributes, life
experience, knowledge, inventiveness, energy, and enthusiasm
that its people choose to invest in their work” (Weatherly,
2003).
Focus on Outcomes
Unfortunately, many HR managers are more effective in the
technical or operational aspects of HR than they are in the
strategic, even though the strategic facet has a much larger
effect on the company’s success (Huselid, Jackson, & Schuler,
1997). In the past, HR professionals focused on compliance to
rules, such as those set by the federal government, and tracked
simple metrics—for instance, the number of employees hired or
the number of hours of training delivered. The new principles of

management, however, require a focus on outcomes and results,
not just numbers and compliance. Just as lawyers count how
many cases they’ve won—not just how many words they used—
so too must HR professionals track how employees are using the
skills they’ve learned to attain goals, not just how many hours
they’ve spent in training (Ulrich, 1998). John Murabito,
executive vice president and head of Human Resources and
Services at CIGNA, says that HR executives need to understand
the company’s goals and strategy and then provide employees
with the skills needed. Too often, HRM executives get wrapped
up in their own initiatives without understanding how their role
contributes to the business. That’s dangerous, because when it
comes to the HR department, “anything that is administrative or
transactional is going to get outsourced,” Murabito says
(Marquez, 1997). For example, Bank of America outsourced its
HRM administration to NorthgateArinso. NorthgateArinso now
provides timekeeping, payroll processing, and payroll services
for 10,000 Bank of America employees outside the United
States. To avoid being outsourced, HRM needs to stay relevant
and accept accountability for its business results. In short, the
people strategy needs to fully align with the company’s business
strategy, keeping the focus on outcomes.
Key Elements of HRM
Beyond the basic need for compliance with HRM rules and
regulations, the four key elements of HR are summarized in the
figure below. In high-performing companies, each element of
the HRM system is designed to reflect best practices and to
maximize employee performance. The different parts of the
HRM system are strongly aligned with company goals.
Key HRM Elements
Selection and Placement
It’s good for firms to acquaint prospective new hires with the
nature of the jobs they’ll be expected to fulfill early in the
hiring process. This includes explaining the technical
competencies needed (e.g., collecting statistical data) and

defining behavioral competencies. Behavioral competencies
may have a customer focus, such as the ability to show empathy
and support of customers’ feelings and points of view, or a
work-management focus, such as the ability to complete tasks
efficiently or to know when to seek guidance.
In addition, an SHRM best practice is to make the
organization’s culture clear by discussing the values that
underpin the organization. For example, firms can describe the
“heroes” of the organization—those employees who embody the
values of the organization. A service company’s heroes may be
the people who go the extra mile to get customers to smile. In a
software company, the heroes may be the people who toil
through the night to develop new code. By sharing such stories
of company heroes with potential hires, the firm helps reinforce
the values and behaviors that make the company unique. This,
in turn, will help the job candidates determine whether they’ll
fit well into that organization’s culture.
Job Design
Job design refers to the process of combining tasks to form a
whole job. The goal is to design jobs that involve doing a whole
piece of work and that are challenging but ultimately doable for
the employee. Job design also takes into account issues of
health and safety of the worker. When planning jobs or
assigning people to jobs, HR managers also consider training
(ensuring that employees to have the knowledge and skills to
perform all parts of their job) and giving them the authority and
accountability to do so (Lawler III, 1992).
One company that does training right is Motorola. As a global
company, Motorola operates in many countries, including
China. Operating in China presents particular challenges in
terms of finding and hiring skilled employees. In a recent
survey conducted by the American Chamber of Commerce in
Shanghai, 37 percent of US-owned enterprises operating in
China said that recruiting skilled employees was their biggest
operational problem (Lane & Pollner, 2011). Indeed, polled
companies cited HRM as a problem more often than they cited

regulatory concerns, bureaucracy, or infringement on
intellectual property rights. This is because Chinese universities
don’t turn out candidates with the skills that multinational
companies need. As a result, Motorola has created its own
training and development programs to bridge the gap. For
example, Motorola’s China Accelerated Management Program is
designed for local managers. Motorola’s Management
Foundation program helps train managers in areas such as
communication and problem solving. Finally, Motorola offers a
high-tech MBA program in partnership with Arizona State
University and Tsinghua University, so that top employees can
earn an MBA in-house. Such programs are tailor-made to the
minimally skilled—but highly motivated—Chinese employees.
Compensation and Rewards
The SHRM function also includes evaluating and paying people
on the basis of their performance—not simply for showing up to
the job. Firms must offer rewards for skill development and
organizational performance, emphasizing teamwork,
collaboration, and responsibility for performance. Good
compensation systems include incentives, gainsharing, profit
sharing, and skill-based pay that rewards employees who learn
new skills and put those skills to work for the organization.
Employees who are trained in problem solving and a broad
range of skills are more likely to grow on the job and feel more
satisfaction. Their training enables them to make more valuable
contributions to the company, which, in turn, gains them higher
rewards and greater commitment to the company (Barnes,
2001). Likewise, the company benefits from employees’
increased flexibility, productivity, and commitment.
When employees have access to information and the authority to
act on that information, they’re more involved in their jobs,
more likely to make the right decision, and more inclined to
take the necessary actions to further the organization’s goals.
Similarly, rewards need to be linked to performance so that
employees are naturally inclined to pursue outcomes that will
earn rewards and further the organization’s success at the same

time.
Diversity Management
Another key to successful SHRM in today’s business
environment is embracing diversity. In past decades, “diversity”
meant avoiding discrimination against women and minorities in
hiring. Today, diversity goes far beyond this limited definition;
diversity management involves actively appreciating and using
the differing perspectives and ideas that individuals bring to the
workplace. Diversity is an invaluable contributor to innovation
and problem-solving success. As James Surowiecki (2005)
shows in The Wisdom of Crowds, the more diverse the group in
terms of expertise, gender, age, and background, the more
ability the group has to avoid the problems of groupthink.
Diversity helps company teams to come up with more creative
and effective solutions. Teams whose members have
complementary skills are often more successful because
members can see one another’s blind spots. People from
different backgrounds will probably make different kinds of
errors, which also means that they’ll be more likely to catch and
correct each other’s mistakes.
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14.1 Offshoring, Outsourcing from Human Resource
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Learning Resource
Structured for Success: How the Structure of Today's
Professional Organizations Are Changing
Abstract: Many if not most of the organizational models in use
today have their roots in theories and practices developed at the
height of the industrial revolution. As the rate change in the
environment increases, these molds are proving themselves
inadequate to deal with the demands they are currently facing.
This article explores the need for new social technologies and
products to replace those that are failing, and the need for these
structures to be designed to more natively deal the challenges
we face today. The author reviews several of these models with
an eye to discussing the attributes that are increasing the
effectiveness of modern organizations.
Keywords: Organizational Design, Management, Innovation
Introduction
Recently there has been a great deal of attention paid to the
structure of organizations, and how often they are poorly
designed for their current purpose. With a casual reading of the
popular business press, one could argue that many popular

theorists have been having a series of Thomas Kuhn moments.
Kuhn suggested that paradigms (or models for dealing with
reality) are built to account for a specific set of variable and
environmental conditions. With time, paradigms often
breakdown as the variables or environmental conditions change.
They often reach the point where they stop being an effective
predictor of how things will work out—or as a tool to organize
our response to the environment (Kuhn, 1996).
The most popular models of organization structure are broken,
or at the very least ill-suited to the current environment. For
decades, there have been attempts by innovators to change these
models, and these attempts have been meet with significant
resistance. Many people continue to process the world with an
inadequate paradigm for a number of reasons. Sometimes the
resistance has a lot to do with inertia, sometimes we are simply
blind to our current level of ineffectiveness, sometimes we may
fear change, and sometimes it is simply because we are so
invested in the current ideas of how things should work we
simply don't want to let them go. Whatever the reason,
organizational change typically proves difficult.
Many of our organizations were built on ideas that were
developed for a very different time—with a very different set of
performance requirements. Many organizations can trace their
current organizational structure to the industrial revolution or
soon thereafter. Their current structures were developed in a
time when the pace of information, change, and business itself,
was much more stable. The workforce was also far less educated
and less mobile.
This is the environment where Fredrick W. Taylor developed
the concept of scientific management. Scientific management
began by breaking down complex tasks to simple repeatable
tasks that could be performed by low-skill, poorly educated
workers. Under Taylor's model there was a very distinct
hierarchy. Workers did just that: they worked. They did not
think. Thinking was reserved for a limited number of senior
managers, and decisions were carried out by a hierarchy of

supervisors who reported back on the progress of workers.
Actual data collection was fairly limited and data was only
shared with managers, many of whom lacked context and
knowledge to understand how to best evaluate the data. Taylor's
model works well when the tasks are clear, the environment is
highly stable over a long period of time, and the organization
can benefit from an economy of scale (Wren, 2004).
The problem many organizations face today is that they don't
meet the success criteria for a Taylor model. Our environments
are fluid (at best) and can experience dramatic changes on a
regular basis (at worst). Therefore, we should shift to
organizational designs that can operate in more volatile
environments. But the process of shifting often comes with its
own challenges.
We need to introduce new social technologies, and/or new
social products, into the market—technologies and products
designed to deal with our current environment and designed to
meet the new goals and challenges we face today. When
considering how to frame the associated models and rules, we
might consider reviewing the successful models and rules for
introduction of other types of new products/new technologies
that we have used in the past. One thing to keep in mind is that
the first generation of a new product often underperforms the
incumbent products. Once adopted, the pioneers of the new
concept make a number of changes, through trial and error, and
several new versions of the new technology or concept begin to
appear in the market in short order. The successful versions take
hold with innovators and early adopters, but these early
adopters often look past the current capabilities of the products
and toward a vision of what the future might hold when the
paradigm is fully developed (Christensen, 1997; Moore, 2006).
Things such as social norms, culture, and technology have huge
effects on the potential success of any new organizational model
and its ability to move beyond those early adopters. There are
patterns of adoption that can be predicted, and many of these
predicted patterns can be useful when planning the introduction

of a new system. These models—such as the ones developed by
Evert Rogers (2003) and Geoffery Moore (2006)—outline how
there is often a tipping point. A point where a critical mass of
users has adopted the product and an almost viral adoption
cycle begins to drive its success. I believe we are nearing that
point. In the last couple of decades, we have begun to see a
number of new organizational models being used by forward-
thinking companies, but we seem to be reaching the point of
viral explosion.
For the purposes of this article, we will explore several
organizational structures that have emerged in recent decades
that in some way attempt to deal with the shortcomings of the
Taylor models of management and leadership. This is not
intended to be a complete taxonomy of modern organizational
structures. It is only intended to be a glimpse of some new and
creative models, that may help managers develop a new
perspective on the shortcomings of their own organizational
model—as well as a glimpse of what is possible with some
creative thought and concerted effort.
Lattice
Beginning the late 1950s, Gore & Associates developed an
organizational structure that was highly team-focused and
almost devoid of direct management authority. The structure is
based on a flat lattice organization in which teams are self-
directed. The self-direction requires each location to begin by
developing a list of projects they wished to work on and
dividing the work among teams. The teams recruit members to
their projects and each team member is expected to spend 10
percent of the time developing a new project of his or her
choosing. Even project funding and employee compensation are
driven by teams primarily consisting of employees who choose
to be on the teams (Harrington, 2003).
Over the decades since its founding, Gore has grown to an
organization of over 10,000 employees. Through flat lattice
organizational structure, and its commitment to keep group
sizes under 150 employees, it has been able to maintain a

culture of innovation that is rare in organizations of it size and
scope. Deutschman (2004) contended the atmosphere at Gore
was collegial; there was an energy and excitement about
projects, team members were encouraged to contribute, and
there was a general conscientiousness that no one wanted to let
the team down. Peer pressure and fear of letting the team down
supplanted the role of traditional first-line management.
In addition to the team culture, the rule that encouraged all
research associates spend 10 percent of their time dabbling with
new ideas generated some of Gore's most successful products.
Gore was listed among the best places to work in the United
States, the United Kingdom, Germany, Italy, and the European
Union (A. Deutschman, 2004). Clearly at some level the style
translates across cultures. However, there may be concern going
forward in regards Gore's expansion in non-European cultures
that do not have a history of open discussion, collaborative team
debate, or peer leadership. The Gore approach of self-directed
teams may be too much of a cultural shock to Asian cultures,
such as China, which has lived under a totalitarian regime for
decades.
Open
Jim Whitehurst (2015), the CEO of Redhat (the open-source
software giant), describes his philosophy of organization
development and leadership in his recent book The Open
Organization: Igniting Passion and Performance. Although some
might argue there is not a unique theory within Whitehurst's
book, it does provide a number of clear examples of the
implementation of progressive organizational theories.
Unlike Gore, Whitehurst does see the need for formal leadership
positions in large organizations; however, not in the traditional
hierarchical sense. The leadership role is focused not on
command and control but rather on building, supporting, and
moderating a meritocracy. He believes that organizational
success is enabled by high levels of employee engagement.
Gallup polls suggest that employees in over 60 percent of
organizations today are disengaged and unwilling to make any

discretionary effort, and 24 percent are actively disengaged to
the level where they are spreading their disengagement to other
employees (Crabtree, 2013). Therefore, even moderate buy-in
by employees would lead to significant competitive advantage.
Whitehurst suggests that you start with a mission: A well-
developed and supported mission inspires employees to higher
levels of effort and lower levels of turnover. Moreover, if
managed properly, a well-developed and supported mission
might inspire a community of supporters including customers,
contributors, third party developers, and channel partners—the
essence of the open-source model.
Taking the mission, meritocracy, and community concepts a bit
further, Whitehurst believes that employees need to have high
levels of discretion within a decision framework. He sees them
as members of a community that are driven by a cause—not by a
transaction mindset. For the community to work, and the
decisions to be sound, there must be extreme levels of
transparency—as well as high levels of involvement on key
decisions by the community at large.
Teal
In one of the most popular articles published by Wharton in
2015, Frederic Laloux (2015) suggests that in the 100,000 years
of mankind's anthropological history there have been a number
of step changes in how organizations have developed. He has
identified five distinct phases of this development. In addition,
given the rising level of tension and disillusionment in modern
organizations, he believes we are due for another significant
step change in the not-too-distant future. This belief is based on
the concept that "human societies, like individuals, don't grow
in a linear fashion, but in stages of increasing maturity,
consciousness, and complexity" (p. 70).
Exhibit 1: Evolutionary Breakthroughs in Human Collaboration
Color
Description
Building metaphor
Key breakthroughs

Current examples
Red
Constant exercise of power by chief to keep foot soldiers in
line. Highly reactive, short-term focus. Thrives in chaotic
environments.
Wolf pack
· division of labor
· command authority
· organized crime
· street gangs
· tribal militias
Amber
Highly formal roles within a hierarchical pyramid. Top-down
command and control. Future is repetition of the past.
Army
· formal roles (stable and scalable hierarchies)
· stable, replicable processes (long-term perspectives
· Catholic church
· military
· most government organizations (public school systems, police
departments)
Orange
Goal is to beat competition; achieve profit and growth.
Management by objectives (command and control over what,
freedom over how).
Machine
· innovation
· accountability
· meritocracy
· multinational companies
· investment banks
· charter schools
Green
Focus on culture and empowerment to boost employee
motivation. Stakeholders replace shareholders as primary
purposes.

Family
· empowerment
· egalitarian management
· stakeholder model
Businesses known for idealistic practices (Ben and Jerry's,
Southwest Airlines, Starbucks, Zappos)
Teal
Self-management replaces Hierarchical pyramid. Organizations
are seen as living entities, oriented toward realizing their
potential.
Living organism
· self-management
· wholeness
· evolutionary purpose
A few pioneering organizations
Source: Frederic Laloux, Reinventing Organizations (Nelson
Parker, 2014)
Laloux correlates the scale for his steps to the
infrared/ultraviolet light spectrum, with red being the oldest
structure and teal being the most modern. He recognizes that the
Amber organizations and the Taylor structures on his scale are
incompatible with the high levels of engagement necessary for
knowledge workers to compete effectively; and command and
control practices have issues with efficacy as organizations
scale. However, we need to step beyond simple empowerment
and egalitarianism. "Efforts to make everyone equal often lead
to hidden power struggles, dominant actors who co-opt the
system, and organizational gridlock" (p. 73).
Under Laloux's model, the more enlightened Teal organizations
have several things that would make them distinct from their
predecessors: self-management, wholeness, and evolutionary
purpose.
Laloux is clear that self-management is not about consensus. It
is about allowing people to have "authority within a domain,
and the accountability to coordinate with others. Power and
control are deeply embedded throughout the organizations, no

longer tied to the specific positions of a few top leaders" (p.
74). Of course, this requires training for all involved to
understand the frameworks with which these decisions should
be made, and how to effectively coordinate their efforts across
the organization.
Wholeness is about being authentic. The premise is that total
professionalism is a façade built on self-censorship and one that
inhibits engagement and innovation. With wholeness, parts of
the employee's personal life are exposed to the professional
environment. Examples of wholeness would include having a
daycare in the office so that children could join their parents for
lunch, or creating a dog-friendly office where one might find
several personal pets attending a meeting.
Evolutionary purpose grows out of a mindset where the
organization is viewed as a living entity that must adapt and
change to meet the environmental needs, or die. Such a mindset
encourages participants to move away from a predict-and-
control mindset and toward a sense-and-respond approach. For
example, companies with older organizational structures might
develop a five-year strategy and a detailed one-year plan.
However, companies under a Teal structure would take more of
a farmer's approach. "A farmer must look far out when deciding
which fruit trees to plant or crops to grow. But it makes no
sense to plan for a precise date for the harvest"(p.77-78).
Farmers sense and adjust their plans based on weather, other
environmental variables, and the ability of the organization to
adapt to those conditions.
Holacracy
Holacracy is a self-directed organizational structure founded by
software executive Brian J. Robertson (2015). At the core of the
structure is an organizational construct that outlines key beliefs
and rules under which the organizations operates. The hierarchy
(for lack of a better term) is based on teams called circles, and
begins with the development of a general company circle. This
general company circle, and every other circle, can have sub-
circles. Each circle or sub-circle assumes responsibility for

some task or work effort. Members of a circle have defined
roles. These roles carry with them a series of responsibilities,
decision making authority within a specific domain, and
accountabilities for actions taken or not taken.
Individuals can, and often do, hold several different roles—and
these roles can be in different circles. One of the key roles
would be a link, or representative, to another circle. These links
allow information to flow between the circles. When
functioning properly they help circles to coordinate their
efforts.
Governance meeting are held in every circle and sub-circle to
define the structure and operational rules for that circle, and
align those structures with an organizational constitution. Issues
considered in a governance meeting could include:
· defining the work of the circle
· creating sub-circles when necessary to assume some
responsibility
· dissolving sub-circles that are no longer necessary
· developing the roles and the responsibilities of those roles
· defining what links are necessary and recruiting a member to
those roles
· processing tensions, or discontinuities, felt within the group
In addition to governance meetings, there are tactical meetings
within each group. Governance meetings are for structure of the
organization and deal in principles—not specific project issues.
Tactical meetings are project meeting that help to organize the
work and project related issues. Examples of issues that would
be dealt with in a tactical meeting would be:
· triage of tensions related to a specific project
· deciding next action on a project by a specific role
· tracking the progress of a project
· directing of attention or resources
Both the governance and tactical meetings are scheduled on a
regular basis, but the level of regularity is based on what the
circle feels is necessary. It is common for circles to have
meeting in shorter intervals in the beginning and to extend the

intervals between meetings over time. In addition, what many
people new to Holacracy find odd is the level of structure and
rigor that is part of the typical governance or tactical meeting.
It is highly reminiscent of Roberts Rules of Order. What is
counter intuitive is that the structure creates efficiency and
allows the participants to focus on the roles and the circles, and
not the personalities and people involved.
Team of Teams
General Stanley McChrystal et. al. (2015) recently outlined the
changes to the US military structure that he implemented while
heading US operations in Iraq. Through the engagements with
al-Qaeda in Iraq, he realized that the insurgents had a much
more effective structure for the type of conflict that was and is
the war in Iraq. Historically, the US military has been
exceptionally efficient in its operations; however, efficiency
and effectiveness are very different. Systems and processes in
Iraq had to be rethought to increase the level of flexibility and
agility.
The hierarchical decision making structures that are common in
the military take time to function. In a highly fluid environment
such as Iraq this means that the opportunities to successfully
engage the enemy may have passed before approvals were
gained. McChrystal found it was much more effective to provide
information, decision frameworks, and specific authority to
teams in the field. These team were allowed and encouraged to
make their own decisions. This dramatically increased the speed
of decisions and dramatically increased the effectiveness of the
teams.
Information flow and communications became one of the most
critical components of the war effort. Workspaces were
redesigned to allow for far more collaboration. Large
technology investments were made to tie teams together in the
field, and support groups around the globe, allowing for
ubiquitous sharing of information. All this allowed a high level
of information sharing. Of course, the danger of this level of
information sharing is that the information could fall into the

wrong hands. However, this risk is often worth the dramatic
increase in agility, innovation, and effectiveness.
A culture of transparency and sharing developed. There were
still the remnants of a formal military hierarchy; however, the
daily operations were accomplished by a highly effective
network with small teams at the core. These communications
were constant between the team members. In addition, each
member could act as a contact point to other teams across the
network, coordinating efforts in real-time. These contact points
were often just informal relationships; however, other times,
when there was a need to overcome cultural or organizational
issues, formal liaisons were embedded for extended periods
with other teams to build communication and relationship
bridges.
The military has had a long history of strong leaders passing on
detailed instructions to those under their command—leaving
little room of interpretation. However, McChrystal realized, that
with the complexity of the environment in Iraq, it was far better
allow leadership and decision-making responsibility to be
deployed to at all levels of the organization. He described it as
the difference between being a chess master and a gardener.
Chess masters look to position highly compliant pieces to
strategically out-think and out-maneuver their opponent.
However, Chess pieces don't think, and the game breaks down
when the opponent does not play by the same set of rules. A
gardener develops an environment where plants take root and
grow on their own. In an organization the gardening approach
grows smart autonomous assets that make their own moves
without the need for the intervention of the chess master.
Conclusion
Although each of the modern organizational models presented is
very different, a few elements seem consistent across many of
the newer organizational models. Among the things that seem to
make these models highly effective are:
· communications across all levels needs to be rapid and
ubiquitous

· team and organizations need to share information to the point
that it may be uncomfortable for traditional managers
· diversity of thought and perspective are key to the decision
process
· structures should be designed for rapid aggregation of ideas
from a broad set of people and disciplines
· new ideas should standup to the scrutiny of a team
· agility and response time are more important that the efficient
use of resources or the quality of the response once both have
passed a minimum hygiene level
· gardening creates engagement and trumps chess as a basic
strategy of attack
Progressive organizations are beginning to make the move to
greater openness; but, highly traditional organizations might
find the ideas outlined above too much to implement in the near
future. Some top managers find they lack the privileges they
have enjoyed in the past, and many less progressive employees
may feel uncomfortable with the uncertainty in their role within
these structures—all of which could lead to organizational
resistance. However, as we move forward, it would seem clear
that these more open, flexible, and agile structures are
harbingers of an even more open, flexible, and agile future set
of organizational structures to come, and that this direction
seems inevitable.
References
Christensen, C. (1997). The innovator's dilemma: When
technologies cause great firms to fail. Boston, MA: Harvard
Business School Press.
Crabtree, S. (2013, October 8). Worldwide, 13% of employees
are engaged at work. Retrieved January 3, 2016, from
http://www.gallup.com/poll/165269/worldwide-employees-
engaged-work.aspx
Deutschman, A. (2004, December). A call to remember. Fast
Company, (89), 18.
Deutschman, A. (2004, December). The fabric of
creativity. Fast Company, (89), 54–62.

Harrington, A. (2003). Who's afraid of a new product? Fortune,
148(10), 189–192.
Kuhn, T. (1996). The structure of scientific revolution. Chicago,
IL: The University of Chicago Press.
Laloux, F. (2015, July 6). The future of management is teal.
Retrieved January 7, 2016, from http://www.strategy-
business.com/article/00344?gko=10921
McChrystal, G. S., Collins, T., Silverman, D., & Fussell, C.
(2015). Team of teams: New rules of engagement for a complex
world. New York: Portfolio.
Moore, G. A. (2006). Crossing the chasm: Marketing and selling
disruptive products to mainstream customers (Revised). Boston,
MA: HarperBusiness.
Robertson, B. J. (2015). Holacracy: The new management
system for a rapidly changing world. New York: Henry Holt and
Co.
Rogers, E. M. (2003). Diffusion of innovations (Vol. 5th ed.).
New York: Free Press.
Whitehurst, J., & Hamel, G. (2015). The open organization:
Igniting passion and performance. Harvard Business Review
Press.
Wren, D. A. (2004). The history of management thought (Vol.
5th). New York: Wiley.
Structured for Success: How the Structure of Today's
Professional Organizations Are Changing by Tom Coughlan
from Journal of Management and Innovation is available under
a Creative Commons Attribution 3.0 Unported license. UMUC
license.
Learning Resource
Risks Associated With Outsourcing
Outsourcing can have significant benefits but is not without
risk. Some risks, such as potentially higher offshoring costs due

to the eroding value of the US dollar, can be anticipated and
addressed through contracts by employing financial hedging
strategies. Others, however, are harder to anticipate or deal
with.
As a general principle, functions that have the potential to
interrupt the flow of product or service between a company and
its customers are the riskiest to outsource. For example,
delegating control of the distribution process to an online
retailer can result in customers not receiving goods promptly;
outsourcing call-center responsibilities can result in customers
being dissatisfied with the product or service and, thus, in
higher product returns, lower repurchases, or complaints that
could endanger the company’s reputation.
The second-riskiest type of activity to outsource is one that
affects the relationship between a company and its employees.
Outsourcing the human resources function, for example, can
affect the quality of employee hiring; outsourcing payroll and
benefits processing can result in information breaches that
generate identity theft issues and resultant legal issues; and
outsourcing software design can generate a decline in
organizational innovation. By contrast, support functions such
as accounts payable and maintenance are less risky to outsource
because they have few direct links to customers or internal
organizational processes.
More formally, risks associated with outsourcing typically fall
into four general categories:
· loss of control
· loss of innovation
· loss of organizational trust
· higher-than-expected transaction costs
Loss of Control
Managers often complain about loss of control over their own
process technologies and quality standards when specific
processes or services are outsourced. The consequences can be
severe. When tasks previously performed by company personnel
are given to outsiders, over whom the firm has little or no

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