Managerial Economics
a
1. Define the three aspects of organizational architecture.
The three aspects of organizational structures as highlighted in the synopsis of Managerial Economics and Organizational Architecture are as follows :
1. The assignment of decision rights within the firm 2. The methods of rewarding individuals 3. The structure of systems to evaluate the performance of individuals and units
These three components are often referred to a stool with three legs. If one of the legs is shorter, the stool is out of balance. These three elements must be in balance in the organization as well. 1
The study the three aspects is very significant as it is related to the achievements of goals and objectives set by management which will be carried out by the employees whose attitudes and morale can directly affect the financial outcomes and even the survival of their own company, as a result of the organizational architecture designed and made decisions by management board’s strategy. Among the three legs, the rewarding system is reminded in the fact that it can create backward effects when individual benefits are more observed than the business reputation as the case, in page 29 of the text, of Sue Chen’s, a Merrill Lynch sales person, whose utility function of money and integrity are challenged with the company picture being blurred by ethics melt- down trends when she only tries to obtain sweet bonus by resorting to any tactics possible to allure customers.
Many companies wonder about which reward systems to be used: to set purely on the ''pay-for-results'' financial rewards or to focus on the evaluation of efforts and skills. While some are positive in mechanically determining the rewards using sophisticated programs such as the MAS200 information technology, a Sage accounting system that tracks the salespersons’ achievements through their financial transactions with customers
In conclusion, organizational structures are highly concerned by
1. Define the three aspects of organizational architecture.
The three aspects of organizational structures as highlighted in the synopsis of Managerial Economics and Organizational Architecture are as follows :
1. The assignment of decision rights within the firm 2. The methods of rewarding individuals 3. The structure of systems to evaluate the performance of individuals and units
These three components are often referred to a stool with three legs. If one of the legs is shorter, the stool is out of balance. These three elements must be in balance in the organization as well. 1
The study the three aspects is very significant as it is related to the achievements of goals and objectives set by management which will be carried out by the employees whose attitudes and morale can directly affect the financial outcomes and even the survival of their own company, as a result of the organizational architecture designed and made decisions by management board’s strategy. Among the three legs, the rewarding system is reminded in the fact that it can create backward effects when individual benefits are more observed than the business reputation as the case, in page 29 of the text, of Sue Chen’s, a Merrill Lynch sales person, whose utility function of money and integrity are challenged with the company picture being blurred by ethics melt- down trends when she only tries to obtain sweet bonus by resorting to any tactics possible to allure customers.
Many companies wonder about which reward systems to be used: to set purely on the ''pay-for-results'' financial rewards or to focus on the evaluation of efforts and skills. While some are positive in mechanically determining the rewards using sophisticated programs such as the MAS200 information technology, a Sage accounting system that tracks the salespersons’ achievements through their financial transactions with customers
In conclusion, organizational structures are highly concerned by