Organisations and management accounting
Organisations and management accounting

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Organisations and management accounting

3.7 Recent trends in organisational design

In response to a dynamic, fast changing and competitive environment, flexibility and speed of decision making have become increasingly important in modern organisations. This has led to a number of trends in recent years:

  1. The flattening of structures to remove levels in the organisational hierarchy. This shortens the chain of command and thereby increases the speed of decision making.
  2. The establishment of multi-functional project teams and an empowered, multi-skilled workforce to increase flexibility.
  3. A customer service orientation rather than an inward, internal process orientation.
  4. The emergence of the ‘flexible firm’. In an increasingly competitive environment, continuous reduction of costs is essential. Organisations have responded by replacing full time, permanent, salaried staff with temporary and part time contract labour. This allows greater flexibility, as labour can be readily taken on/laid off as demand conditions fluctuate. It also provides substantial savings in pension, health insurance and holiday pay costs. Such organisations consist of a small core of permanent full time salaried professional staff, who organise and direct the organisation’s affairs, supplemented by various levels of contract staff. Some of these will be professionals contracted for particular projects, but the majority are likely to be the flexible workforce that carries out the routine operations of the organisation.

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