Discuss the advantages of analysing organizations as incentive Essay - 1

Discuss the advantages of analysing organizations as incentive mechanisms - Essay Example In other words, it has been made clear that organizations can operate as incentive mechanisms for achieving the goals set by their strategic planners. Such perspective of modern organizations would be particularly important in order to understand the changes in organizational needs through the years and to identify an effective framework of action – meaning a plan for updating existing organizational policies – that would be best suit to the organizational aims; flexibility would be one of the key characteristics of such plan indicating the ability of the plan to be alternated in order to allow the development of the organization involved as an incentive mechanism. The terms and the characteristics of organizations as incentive mechanisms are presented in this paper focusing on the advantages of such perspective for both the organization, as an independent entity, and the organization’s stakeholders. 2. ... In accordance with Herbert Simon (1991) the organizational behaviour should be primarily based on the organizational loyalty (in Knack 2003, p.237); using the above view, the following assumption can be produced: organizations cannot act as incentive mechanisms if loyalty across their units is not strong. Another requirement of the development of organizations as incentive mechanisms has been introduced through the study of Ledgerwood et al. (2006). In the above study it is explained that organizations can operate as incentive mechanisms only under the terms that the communication in the internal organizational environment is at high levels. It is further explained that such organizations can be easily transformed as of their structure, goals and operational activities, without being negatively affected as of their performance. The transformation of an organization from a NGO to a Micro Finance Institution is used as an example of the above phenomenon (Ledgerwood et al. 2006, 292). A t the next level it is made clear that even when all measures have been taken regarding the quality of communication and cooperation within the organization, still it is possible that the organization fails to respond to its role as an incentive mechanism. In accordance with Ledgerwood et al. (2006, 292) one of the key reasons for this failure would be the inability of managers to identify the context of the organization’s incentives as being differentiated from the incentives of its employees. The incentives provided by the organization – acting as an incentive mechanism – are usually different from the incentives setting by individuals (employees) who are more likely to