100. Essence of an organizational system

The WITORG Guide proposes to analyse an organizational system based on the structure that the scheme below shows. This internal element gathers a list of characteristics or influences that are specific to the environment of a specific organization. These characteristics will significantly condition the organizational system.

Essence of an organizational system
Essence of an organizational system. Determinants of the mission, vision and values.

Together with element 100, it is advisable to analyse external element A of the guide, where organizational constraints that are more global and external to the organization are described. This way, it can be checked whether 100 derives from A or if the organizational constraints are created within 100, that is, within the organization itself.

If someone wants to analyse his organization, or one he known, he must collect for this internal element 100 those characteristics of point A that have influenced, influence or will influence the ESSENCE on which the organizational system to be analysed is developed.

Shareholders and CEO’s commitments

In internal element 100, business models, strategies and the main objectives and goals to achieve in an organization are generated at CEO and main shareholders level. In addition to the form of government that is wanted for the organization and the organizational systems to be implemented. Between the CEO and the shareholders (owners of a significant percentage of an organization who make decisions at this level) determine explicitly or implicitly the true mission, vision and values of an organization. These are not always those that can be observed on colourful pictures framed in strategic places such as information panels, receptions, the main managers’ offices, etc. However, in one way or another, mission, vision and true values can be recognized by people within the organization.

Some organizations have participatory systems to create the mission, vision, and values. Although, usually, they are conditioned and directed in some way from top management.

What happens when the economic results or other objectives expected by the CEO and shareholders are not met. Are the values still in effect? Does the interpretation of values change? Are the current mission and vision still valid?

An organization’s true values can vary in time and according to the circumstances, and these changes directly influence the organizational system. Talking about an organization’s values could be endless. Even so, we will try to show the connection of two values on the organizational system: TRUST and TRANSPARENCY in relation to the accessibility to a company’s information. When a company like Google, Apple or Amazon is developing new products or services, how many people in the organization can access that information? If some people in the organization do not have access to this information, does it mean that the company lacks values such as transparency and trust?

If we talk about small organizations, can the people in charge be totally transparent with all others in terms of information about products, services, positioning, etc. to be launched in the future?

Are transparency and trust, in terms of accessibility to information, possible to apply in the two previous examples?

When the decided strategy is going to be implemented, times are an important factor and the organizational system will help to have a better or worse time to market. And here, the availability of information through the organizational system is key. It is the moment in which it is actually seen if values such as transparency and trust are used within the organization. In fact, the organizational system will be influenced if the way of government is more or less Taylorian or more or less holacratic

The CEO and the shareholders decide on the type of organization and on how to establish relationships with the interest groups of the organization itself, as well as with customers, suppliers, collaborators, society, etc. All this through an organizational system.

In other organizations such as cooperatives, for example the case of Mondragón, the workers are the owners. They are called working partners and each of them has a vote regardless of their position in the organization and their salary. In this case, mission, vision and values must be approved by the working partners, even if they have been raised from the top management.

Political and social organizations have methods in their internal governance that define mission, vision and values. The elected leaders will make a proposal that will be endorsed in one way or another by the bases.

Once the true values, the mission and vision are established implicitly or explicitly in an organization, anything that involves developments on the organizational system will be conditioned by them. This does not mean that the mission, vision and values will not suffer changes through time, however, depending on which decisions are made at this level, they will significantly condition the organization and its organizational systems, at least medium-term.

When a person belongs to a different interest group than the CEO and the shareholders, mainly an organization’s employees, an individual can identify with the following situations:

  • If you do not feel comfortable with the mission, vision and values, you may not feel comfortable within this organization’s organizational system either. Changing the system for you will be complicated. The lower you are in the hierarchy, the lower your power of influence will be. Not being comfortable within an organizational system does not imply having to leave the company. People settle, get used to or do not have other alternatives, and live within an organization with some level of frustration because of it. The more people who are in that situation, in principle, the more complex it will be to make an organization evolve.
  • If you do not feel comfortable with the mission, vision and values, you can consider leaving your organization. Maybe the new one will make you feel comfortable and contribute.
  • If you feel comfortable and satisfied with the mission, vision and values, you are in the category of the more or less fulfilled with their work. Congratulations.

Organizational concepts to observe within the types of government in a changing and uncertain world and necessary values

Once mission, vision and values have been established, an organization will practice in its everyday some uses and customs and a common language regarding its organizational relationships. It will be possible to observe if those values defined as a basis for the government of the organization are real or only a requirement of some standard, a declaration of intentions, a fashion…

The predominant form of organization to date has been Taylorism. There are very successful companies with Taylorist forms of government. Although not all Taylorist companies can be included in the same concept in terms of the values practiced on a day-to-day basis within them. Many organizations with a Taylorist organizational origin evolve by detecting inefficiencies in their forms of government caused by the very essence of their organizational origin. Therefore, although WITORG speaks of Taylorist organizations, each will have a reality, even if they all share an origin.

Since 1990, approximately, the increase in the complexity of organizations due to the use of new technologies and globalization make it necessary to reflect on the forms of government. From these reflections and seeking more agile forms of government, Taylorist concepts are weighed against others more holacratic, in principle.

An organization cannot be defined as 100% Taylorist or holacratic. In the following two pictures, opposing organizational concepts can be observed. These concepts show different ways of understanding organizational systems. If we look at the ones on the left, they are more easily recognizable in the Taylorist organizational essence. On the right, concepts normally more connected to the concept of holacracy are defined.

the true mission, vision and values of an organization
Is it necessary to evolve some management concepts within the organizational systems?




The real values to evolve an organizational system?
Is it necessary to evolve some management concepts within the organizational systems?

If you reflect on an organization, you can roughly determine which concept is closest to each pair of conflicting concepts. The following questions may arise:

  • Can two organizations have the same values, one on the left and the other on the right of the pairs of opposing concepts?
  • Do specific values condition a position closer to the right or to the left?
  • Being closer to the concepts on the right, in general, can help an organization adapt to the environment where it interacts or to new ones?
  • Is it possible for any organization to evolve from the concepts of the left to the right?
  • Are organizations, in general, closer to the left than to the right for each pair of opposing concepts? Why is this?
  • There is a stream of ‘gurus’ that recommends the approach from the left to the right in the pairs of concepts shown. However, do they say how to do it? Why is this?
  • How does an organization convince itself that it is necessary to move from left to right?
  • Any other the reader wants to add.

Country and environment

It is obvious that the country and the environment where an organization operates determine its type. There are laws, trade unions, agreements, idiosyncrasies, environmental regulations, foreign trade regulations, official calendars, climate itself and a long etc. that influence, and will influence, organizational systems. It may even happen that systems included in this guide in the external element C must be selected to comply with the requirements of the country where it operates.

There are organizations established in different countries. In these cases, organizations try to standardize everything possible regardless of where they are located. There are cases where a system has been correctly implemented in a country, while the same system for the same organization but in a different one does not work. This may well be because the characteristics of a specific country have not been analysed in depth, and for having overlooked idiosyncrasy conditions, or others, that were truly important.

Economic sector

The economic sector in which it is operated predisposes some conditions for each organization. We will show a list of points that condition you if, for example, your sector is the automotive industry:

  • The sector requires certifications such as ISO 9001, IATF 16494, ISO 14001, etc.
  • The major manufacturers (VW, GM, Toyota, Ford, Nissan Renault, Mercedes, BMW, etc.) will require some standards in terms of communication systems to send you their electronic communications (EDI).
  • The major manufacturers impose design tools (CAD-CAM) and project management models (APQP …).
  • Each factory operates with all its suppliers in a standardized way. Working with two car manufacturers may mean that you must develop two different elements or systems for the same purpose, even if they resemble each other.
  • The cost approach is basic, always ensuring quality standards, although sometimes a risk is taken.
  • A long etcetera.

Automotive projects are assigned for three to ten years, depending on the part of the car. Winning one or several new projects means for a Tier1 supplier (suppliers that deliver products directly to a car assembly plant, joining them in the final assembly process) economic stability for a few years in a manufacturing plant. Given the importance of new projects, negotiations are usually intense. Once the project has been assigned and the client-supplier relationship has been established, it will always be tense. The supplier will want new projects and, the client, get economic improvements whenever it can be offered. And this as long as the provider’s performance in terms of quality and service is correct. In case of problems in these matters, the tension in the deal will become critical.

It is understandable that when a car assembly plant has difficulties in its operation due to quality or service problems, the client’s performance is forceful. In these systems, hundreds of suppliers intervene and the failure of one of them, if it stops an assembly plant, it affects the client and also all the suppliers involved in the same project. The relationship between Tier1 and Tier2 will be like that of Tier1 with the assembly company.

The automotive industry is a sector that conditions the organizational models, so that, to avoid failures, the chain of command is usually very well defined, focused on not making quality and service mistakes, and the Taylor system is the more common, better or worse developed according to the case.

All industries have their own characteristics. Which industry are you in? What are the characteristics of your sector? Can you try to change them?

In external element A this will be explained more widely.

Technological and educational level of an organization

It is not the same thing to work in organizations where the average educational level of their workers is high (organizations with a high technological component where a large part of the workers has university degrees), than in those where there is a labour intensive use (where a certain academic level is not necessary). The organizational system is usually conditioned by the academic level of the people in the organization.

There may be mixed cases in which an organization an important research and development part, while the manufacture of its products is carried out with very manual operations that do not need neither a great training nor a high academic preparation.

How will two interest groups where the differences at the academic level are large relate to each other? Is it convenient to have different essences in an organizational system for each of the interest groups when there are significant differences in the academic level? Can an organizational system be designed with different essences for a specific management process? Could different organizational essences be applied in the continuous improvement for each interest group? What about different interest groups working on a project?

It may be thought that an organizational system is unique to a company or organization. However, when dealing with different interest groups, starting from a specific reality, it is convenient to analyse if a group of interest can negatively influence the rest and the achievement of goals or objectives to be reached.

Over the last three decades, large technology companies have established themselves as world leaders in the different stock exchanges in terms of economic dimension. These organizations have been able to develop successfully in the new technological environment. The academic preparation and professional experience of the people who work in these organizations have been a key part.

In addition to the academic preparation, these people shared other elements:

  • Less influence of bureaucratic and Taylorist systems.
  • Focus on a global world.
  • Non-unionized person-company relationships.
  • New concept of teamwork through collaboration.
  • Any other the reader wants to add.

Social classes within the organization

In the previous section we talked about differences in education levels. Now we will go a step further, that is, situations where we can find very different social classes within an organization. Suppose that a technological worker (not a manager) has a salary between ten and twenty times higher than a unionized person with whom he has frequent professional contact. Surely, they will live in different neighbourhoods, send their children to different schools and rarely have social relationships outside of work.

In these cases, talking about values having two very different realities is complicated. Can we have the same values for each of the social classes or for each interest group? This fact will condition an organizational system.

Environmental relationships

Any organization needs to maintain relations with others in the development of its activity. These can be with suppliers of materials and services, clients, industry associations, engineering and development centres, competition, administration bodies, etc. If you observe the relationships with these entities, you will get an idea of their willingness to collaborate.

The collaboration with other organizations is not only a matter of intentions, it requires an organizational system through which the way in which it collaborates is structured. Can an organizational system be focused to facilitate collaboration with other entities?

In addition, and in relation to the first point of this element, ‘Shareholders and CEO’s commitments’, the vision, mission and values will mark the essence in the opening to collaboration.

Non-rational influences and politics in organizations

There are sometimes situations in the organizations that are not very rational regarding ‘normal’ functioning in terms of standards or optimal management performance. As time goes by, events can occur that condition the evolution of the organizational system to some extent. Some may be:

  • Hiring people as payment for ‘favours’ provided internally and externally to people in the organization with a high position in the hierarchy of the company.
  • Introduce in the organization people close to the owners, but without the necessary expertise for the assigned position.
  • Old clauses introduced in the collective agreement or agreements with the workers, which can represent an impediment to evolve an organizational system.
  • Interest groups treated in very unfair or too favoured way with respect to other interest groups.
  • Others, surely the reader can add a few ‘irrationalities’ to this section.

Essence of an organizational system

In the points shown earlier in this chapter, there are own decisions and environmental influences. The combination of the decisions made, and the external influences or conditioning factors will create the essence from which an organizational system develops.

To visualize the essence of any organization, this guide raises the following questions:

  • Is understanding the vision, mission and values important at the entire organization’s level?
  • Is understanding the vision, mission and values important at each individual of an organization’s level?
  • Are the official mission, vision and values true in your organization?
  • How often are they reviewed? Who does it?
  • Can always the values be applied in the same way and to all members of the organization?
  • Are all people treated similarly within the organization?
  • Are all interest groups treated in the same way?
  • How do the different interest groups of the organization relate to each other?
  • What government philosophies (holacratic, Taylorist…) exist within a specific organization?
  • How does a country condition an organization? And a union of countries?
  • How does a sector condition an organization?
  • How do environmental relationships affect an organization?
  • Any other the reader wants to add.

The essence of an organization will be created from the answers to these questions. The word ‘essence’ is going to be fundamental when it comes to developing and reflecting on the rest of the internal elements of the guide.