Please enable JavaScript.
Coggle requires JavaScript to display documents.
Business orientation - Coggle Diagram
Business orientation
Functional business orientation and the silo effect
Traditional business designs such as the functional design creates groups of people typically as departments with specific responsibilities for work related activities
Work is allocated according to professions
Eg HR will look after recruitment, selection, performance management and payroll at the operational level, the accounts department will process payments and sales will take orders
People within a given functional area may master the work activities for which they are responsible but are unlikely to have a full understanding of how their work fits into the total work of the organisation
The core work of the organisation typically requires a contribution from more than one functional area or department
Within the functional structure, the chain of command and consequently information and decision making flow upwards however work typically flows horizontally across functions and departments
If day to day decisions continue to be made by flowing up the chain and then across the functional boundary to the managers of another function and then back down to the operations team in that function, the process can hardly be said to be efficient. When looking at a process map, it would be as if a barrier were put between two consecutive steps in the process requiring a detour
People working in functional areas can become parochial (narrow minded) focusing on their work activities without understanding the work conducted by other departments. They also cannot see the full end to end picture of the process having visibility only of those activities performed in their immediate area of operations - this is known as the silo effect
Silo effect:
A term used to describe teams or business functions operating in isolation to others
The silo effect is seen as a significant problem because departments need to work together and a major challenge of organisations and their managers is to co-ordinate activities among different functional areas
It is now recognised that managers must think horizontally in adiditon to vertically
Managers must view the business across functional boundaries considering the end to end nature of work, thus managers talk about breaking down silos in their attempt to increase collaboration and co-operation across business areas that are involved in the same process
Business process orientation
An approach that emphasises customer satisfaction and business outcomes through focusing on business processes rather than hierarchical structures
Focus on business processes as apposed to a function business orientation where an organisation organises along functional lines such as sales and production
A process enterprise is an orientation whose design and supporting management systems are strongly oriented to horizontal systems (Hammer and Stanton 1999)
The process view considers the organisation to be a process that transforms inputs into outputs, organisations with a process orientation will often appoint process owners to co-oridinate the various functions and work activities at all levels of a process
A process owner will have the authority or ability to make changes in the process as required and manage the entire process cycle to ensure performance effectiveness
Process owners are often senior managers given the importance of the cross functional or integrated business approach
This approach has some degree of similarity with a matrix approach
Adopting a business process approach can bring many benefits in terms of efficiency, differentiation or responsiveness, improved co-ordination, control and quality along with employee and customer satisfcation
Information systems often go hand in hand with process orientation and contemporary organisations typically implement cross functional and enterprise wide systems to support the flow of data and information throughout the organisation and its supply chain