Organizations increasingly face a complex, fast changing and volatile environment. This situation demands a rethink of how management and leadership are exercised in organizations.
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In the subsequent sub-sections this essay will explore the issue of complexities that organizations face in the current business environment. It will also provide an analysis of why the traditional approaches of management and leadership prove ineffective in addressing this complexity.
The Complexity That Organization Face Today
The global economy is facing a significant workforce shortage. This is due to inadequate supply of workers with skills needed to perform the jobs being added in the market by organizations.
Nowadays, there are routine reports of companies and industries facing shortages of qualified and experienced workers. Organizations that are mostly facing these complex problems are those dealing in specialized information systems, medicine and pharmaceuticals, construction industries among others.
Workforce quality deficit
Many organizations are in need of well educated staff in the current years. The number of jobs that require advanced knowledge and skills is growing at a faster rate than that with which the training institutions are churning the students out in the field. There is a growing gap between the knowledge and skills required by organizations and those possessed by employees and applicants.
This poses a big challenge to managers in many organizations as they experience difficulties in obtaining well educated and trained workers. For instance, in the U.S, which is the world’s largest economy, it is estimated that about half of the workforce (totaling to about 50 million workers) need or will need enhanced workplace training to adapt to the myriad jobs and technological changes that are occurring in the global economy.
China, the second largest economy is no better; it is a pointer of the glaring danger facing organizations across the world. When an organization is faced with this problem, it is susceptible to produce goods and services of low quality which might not go well with the expectations of the customers.
Growth in contingent workforce
Contingent workers represent a group of workers who are either on short-term employment, on contract, leased, or part timers. In the past, this group was used to cater for the deficit created by workers on maternity leave, vacation relief or during workload peak. However, this has changed drastically with contingent workforce representing a significant percentage of the global workforce.
In U.S for instance, they form around 20% of the entire workforce. Many employers have been forced to operate with a core group of regular workers with crucial skills and then fill the rest of the workforce through contracts (Coveney and Highfield, 1995).
The overreliance on contingency workforce is a complex issue for the organizations since this is a group that promises no future in the company as they can move out any time. The group owes less royalty to the organization as opposed to permanent and salaried employees.
Globalization as external force that drives increased organizational complexity
Globalization is the increased mobility of goods, sources of labor, technology and capital all over the world (Furness, et.al, 2003). This new phenomenon has been occurring for many years but it has accelerated over the past few decades. Globalization has come with many advantages as well as disadvantages which have had a major impact on the complexity of organizations (Lee Hecht Harrison, 2009).
For instance, globalization opens up a number of new possibilities, both as a way of executing functions and increasing decisions made in the management of organizations. This implies that, the environmental demands on the organizations will increase, rendering them susceptible to making wrong decisions, or in other words taking the wrong possibilities.
The complexity arises when globalization presents many possibilities both right and wrong, hence, the organizations have an uphill task of sieving thoroughly to get the right and most suitable possibilities for them (Choi, 1993). A case example is when a company wants to expand beyond its mother country.
The move confers many benefits, but apparently, it presents the organizations with multiple decisions which need to be made regarding construction, establishing new supply chains, dealing with cultural issues of workers and stakeholders in the host country, while at the same time having to grapple with many regulations.
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New technology- proves complex for the organization
The advent of new technology has brought with it both advantages and disadvantages. In the modern business world, organizations are more networked and less hierarchical unlike in the past. This is a pointer of more complicated work environments. Technology has been attributed to a byproduct of complexity, namely, less hierarchical organizations (Furness, et.al, 2003).
According to Hinds and Kiesler (1995), the growth of technical work and horizontal organizational structure of technical workers increase collaboration and non-hierarchical communication within the organization.
The authors go on to maintain that, this collaboration and sharing of information means that workers in the organization communicate whenever and in whatever means they need, to solve their problems (2003). This is a tricky position for organizations as this uncontrolled communication may result in decisions that are not in line with the organization’s strategic plan.
The growth of Information technology is good news for many organizations. Communication and operations within the organizations have been greatly enhanced with the invention of computers and web services (Malone and Rockart, 1991). However, there is a big challenge posed to organizations by attacks on computer and network systems by attackers.
The attacks which are in the form of hackers, viruses and worms, result in denial of services to the organizations. Organizations have to operate under the fear of their systems being hacked by rivals to filch and/or even obliterate their confidential information.
Terrorist and criminal networks and cyber attacks have become a greater security concern for many organizations which have to come up with better measures of preventing their occurrence (Diamond, n.d.).
Interdependence within the global business environment
In the current business environment, organizations have to manage the effect of global interdependence to an exceptional degree (Amann, et al., 2007). The global effects of interdependence mean that everything is related to everything else. The impact of this interdependence is felt more rapidly and pervasively by companies (Diamond, n.d.).
As the world becomes more interlinked by human activities, the problems for organizations become more complex. The environmental and social predicament being experienced nowadays is as a result of a number of changes in the globe. Some of these include the high levels of environmental degradation, food insecurity, climate change, global recessions, human resources shortage among others (Allen, et al., 2009)
The traditional value chains which were much simpler have been replaced completely by modern value chains which are much complex for the organizations (Furness, et al., 2003).
This means that financial flows, value chains, reputation of the company, top management and corporate governance have reached greater levels of interdependence (Maltz and Witt, n.d.). This interdependence has created many opportunities for organizations, but has on the other hand increased the number of challenges for the organizations (Amann, et al., 2007).
Modern organizations are faced with a complex set of challenges which are characterized by multiplicity both inside and outside the organizations.
Inside the organization, top level management must have to manage and respond to more sundry human resource issues, variety in the systems of management, various business models, different cultural values for customers and workers, superfluity of stakeholders with various expectations, political, economic and environmental regulations, and stiff competition from business rivals (Amann, et al., 2007, LHH, 2009).
The complexity arises out of managing all these diversities which face the organizations at the same time.
The business world in the modern world is experiencing too much flow of information which is difficult to construe and relate in real life situations. For instance, a diversity of an accounting standard makes the financial figures more confusing. Various studies, surveys, reports and researches conducted for organizations have become unreliable due to them not being clear.
This means that organizations are left with the option of multiple interpretational which overwhelms the traditional decision making methods. Ambiguity combined with interdependence and diversity provides the building blocks of managerial complexity giving the modern organizations the reputation of being the most complex organization in the history of global business (Amann, et al., 2007).
Rapidly Changing Business Environment
The global business environment is dynamic, which means that organizations are faced with new challenges and opportunities every now and then (LHH, 2009). These challenges arise out of global economic recessions, political issues, and industrial relations.
Both the workplace and the workforce are a shifting landscape, a scenario coupled by globalization, regulation and new technologies which increase the complexity of running organizations. Leadership behaviors, attitude, skills and strategies that worked yesterday and today may not necessarily work in the future (Amann, et al., 2007).
Reasons As To Why Traditional Management And Leadership May Not Be Sufficient To Deal With Complexity
Traditional management and leadership are often compared to theory X which was advanced by Douglas McGregor in his 1960 book of titled ‘The Human Side of Enterprise’. The style of management involves a lot of directive and authoritative form of leadership. This has rendered the approach less effective in solving the complexity challenge that faces modern organizations.
Limited Motivation Potential
Motivation of employees is a key factor that contributes to the overall output of any given organization that seeks to overcome the challenge of complexity. However, traditional management and leadership rely on lower order motivational tools. Managers using this mode of management tend to lack the knack to inspire their personnel.
They make a visor supposition that a sensible pay and benefits are the best incentive tools that can be employed on the workers (eHow, n.d.). They have little space for motivation tools such as training, commend on hard working staff, productive comment, entrustment, and collaboration between them and the workers.
Traditional management and leadership is characterized by a clear separation between the management and the employee levels within the organization. The system of communication between these two tiers is rather complex making it hard for the management to solve the complexities facing the organizations.
The approach discourages open communication which allows employees to offer feedback about their experiences in the workplace, a move which help in addressing the issue of complexity.
Restricts creativity and innovation
Traditional style of management conflicts with creativity of employees. It is based on an ordered place of work where employees are held by stringent standards of professionalism and performance. Organizations which deal with creativity such as advertising firms and art and design firms, find it hard to cope with using this style of leadership. One of the complexities facing contemporary organization has been the issue of uncertainty.
There is a dire need for employees of an organization to come up with inventive ways of handling this ambiguity in their places of work. Managing complexity by the traditional method of management and leadership which applies the techniques of command and control are likely to repress the much needed creativity and innovation. Hence, traditional leadership is not suitable for this task.
At the same time, the advent of new technologies in the business world has resulted in lots of complexities both in the systems of operations, as well as in the threats posed by cyber attacks. To be better placed to compete in the modern economic environment, organizations need to become more adaptive to the changes. This entails being in a position to respond with speed, to the dynamic demands of the customers and other stakeholders.
The business environment is complex as it is characterized by countless interactions among the various agents-employees, suppliers, customers and competitors.
The only option out of this complexity is adoption of appropriate technology which means that, companies have to be creative enough to embrace the relevant technology, while laying strategies to control against the limitations of technology (Hawkings, 2000).
In order to achieve this, organizations are required to up their creativity on how to address this issue, which renders traditional management ineffective in providing solutions.
Inefficiency of strategic Approach
Traditional management and leadership approaches lay much emphasis on strategic planning as one of the best way of solving complexity in organizations. However, it has come to be established that strategic plans often fail to solve the emerging challenge of complexity in organizations (Mintzberg, 1994).
The writer holds that strategic planning fails to solve the complexity brought about the many management issues facing leaders in organizations due to the partial nature of approaches to strategic management.
According to Gregory (2007), strategic management involves decision making on an organization’s objectives together with the formulation and implementation of plans, most notably on the allocation of resources, to support their achievements. This makes strategic management a dynamic and complex process which involves a lot of consideration of internal and external factors, and the long and short term factors.
Traditional approach of management and leadership relies on this aspect of management in running organizations. The system itself is complex, hence, not an effective way of reducing the complexities that face modern organizations.
From a systems perspective, these approaches represent a partial approach to management that neglects the complex, embedded and dynamic nature of modern organizations (Gregory, 2007).
Restricts employees empowerment
Another reason why traditional management is not in a position to address the issue of complexity in modern organizations is, because of its nature whereby, it restricts the empowerment of employees.
Organizations have come to realize that the employee is the greatest asset that they have in solving the complexities and assisting them in achieving the business goals. In order to realize this, there is need to involve the workers in decision making, a move which makes them develop a sense of ownership and belonging in their places of work.
Traditional management approach contradicts the aspect of employee empowerment as it centers on the premise that employees lacks the ambition, they do not love to work, and cannot make intelligent business decisions (eHow, n.d.).
In the midst of current global recessions, many organizations are experiencing financial crisis that makes them adopt some stringent measures. For instance, in employing traditional method of management, it is recommended that companies downsize as a way of adjusting their structures as a way of making them fitter and more effective.
However, this approach results in a wave of complex problems such as employee insecurity, loss of expert knowledge, and industrial unrests as workers protest against downsizing. Such an approach proves ineffective as it has negative immediate social costs, loss of experience and valuable skills (McMillan, n.d.).
The result of this approach is to outsource as well as use of contingent workforce to cater for the employee deficit, which does little to address the human resource complexity discussed earlier in the essay.
In conclusion organizations are faced with complex processes that offer a big challenge especially when using traditional methods of management. This in essence means that, in order to effectively address the issue of complexity in modern organizations, there is need for a paradigm shift from the traditional methods of management to modern management techniques.
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