It is very important to have a right organization structure and policies for any organization to be successful. It has been seen that if we don’t have a good framework, the probability of organization failing to achieve its goals is more. There are many tools like benchmarking, reengineering, outsourcing, just-in-time production to identify and improve organizational problems but they are all focused on their own specific area and not provide a complete end-to-end solution for organizations. In order to overcome these problems, the book Managerial Economics and Organizational Structure (Brickley, J., Jerold, Z., Jr., & Cliff, S. C. W., 2006) offers framework that identifies three critical aspects of corporate organization: 1. The assignment of decision rights within the company: This suggests person who makes important decision about companies should have all the relevant information available. In other words, only people who have all the relevant information should be designated to make key decisions. This will enhance the possibilities of setting the organization in the right direction. 2. The methods of rewarding individuals: This is rewarding individuals who make right decisions. The senior management who assigns decision making rights to employees should also consider giving incentives or rewards based on their performance. 3. The structure of systems to evaluate the performance of both individuals and business units: A structure or process needs to be established to integrate reward or performance-evaluation system for both individuals and business units. Conclusion: These three approaches rely on the basic principles of economics and provide an integrated approach to solve number of disciplines like accounting, finance, information systems, marketing, management, operations and strategy.
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