International, as well as local companies of the 21st century, have to change their missions, organizational culture, structure, power division, reward system, and leadership styles. These changes are unavoidable if companies want to remain competitive in the global rapidly-changing market.
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As the world becomes more and more interconnected and interrelated, the business environment dictates new rules and creates new challenges for multinational corporations.
Environmental issues such as increasing pollution and global warming pose ethical dilemmas for leaders who have the responsibility to maintain culturally tolerant working environments for employees all over the world and to ensure safe working conditions.
Competitive and efficient organization of the 21st century promotes integrity, cooperation, teamwork, support, participative leadership, tolerance, informal organization structure, and performance-based reward system.
Vision and value statements define how people interact with each other as well as set the direction on how to treat customers and the internal community. According to the research, the top values in terms of popularity are professionalism, diligence, integrity, cooperation, and good humor, while the least popular personal values are competition and stability (Hyde & Williamson 2000).
Vision, as the statement of what the organization would like to become, holds all employees proud and excited for being part of a company and, therefore, should reflect the personal values of employees. Effective vision strengthens an organization’s image from the inside (employees) and outside (customers, suppliers). The vision of the international company has to shape and provide direction for the company’s future.
For example, the international company of the 21st century might have the following value statement: “To provide all people with access to quality and safe products despite their income.” The mission statement might be the following: “To ensure integrity among employees and customers, to promote the credibility of products and services, and to maintain the flexibility of operations.”
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The issue of organizational culture is highly important for companies operating in the 21st century. Organizational culture is vital for successful organizational change and maximization of human capital potential. In addition, culture management has become a critical managerial competency. The right working culture is an essential condition for organizational success.
Managers of international business units are responsible for the development of the most effective culture, even if the change is required. The ideal new multinational company has to reflect an appreciation of integrity, collaboration, loyalty, diversity, tolerance, as well as include fundamental values and behavioral norms. In particular, discrimination and prejudice of any form are totally eliminated.
Unlike traditional strong organizational culture, which stressed commitment, solidarity, identity, and sameness, new companies are oriented on responsiveness, cooperation, focus on performance, and diversity. As Kathryn Baker (2002) has noted, the mission hypothesis and participation hypothesis are more relevant to the new business environment.
For example, the mission hypothesis is based on the idea that shared mission, purpose, direction, and strategy coordinate and direct employees towards collective goals, while participation hypothesis promotes the idea that involvement of all employees contributes to the sense of responsibility and, therefore, ensures loyalty and commitment.
The new company integrates organizational culture, which promotes responsibility, is focused on loyalty, and establishes open, informal cooperation and participative leadership. It means that organizational structure is decentralized.
Companies of the 21st century have decentralized organization and establish participative managerial practices. While formal communication is preserved as an essential element of documentation and subordination, informal communication is promoted to motivate cooperation among employees and to ensure the sharing of ideas.
Hierarchical structure with bosses at the top and everyone else beneath them (Willax 2001) is no longer acceptable. Employees are not treated as impersonal human machines. Maximum control does not ensure the best use of talented and increasingly expensive human resources.
Informal communication channels are established by the people who are involved in organizational processes at all levels. Flexibility gives employees an opportunity to determine their own channels of communication. Moreover, self-organization is encouraged, and layers of management disappear.
Organizational structure is based on the pie-share model (Willax 2001) under which leaders and employees are encouraged to participate freely, to share ideas, suggestions, as well as criticism and responsibility. New companies create a favorable environment promoting efficaciously mobilized groups of employees able to meet the set objectives and highly adaptable to changes.
Reactions and actions are mostly spontaneous, and employees are empowered to act as needed immediately to accomplish the mission. Liberalization of organization structure is inclined to experiment, innovation, ingenuity, and creativity.
New organizations streamline and simplify line-management, and vertical structures, and the roles of line managers are narrowed (Bryan & Joyce 2005). Teams consisting of representatives of several lines are created to discover opportunities and ensure dynamic management processes. Knowledge and talent marketplaces are developed to stimulate the exchange of professional employees.
The company becomes more reliant on performance measures rather than supervision to stimulate self-motivated and self-directed individuals. A new organizational structure supports the clarity of reporting relationships, responsibility, and accountability of the line managers who ensure that short-term expectations are met.
Multilayer tasks (development and launching of the new products or redesigning fundamental technology) are carried out by small groups of focused individuals who are granted freedom to innovate, discover something new, and try recent developments (Bryan & Joyce 2005).
A new leadership philosophy is integrated: shared leadership, leadership in the community, and leadership as a relationship (Sandmann & Vandenberg 1995). Shared leadership is distributed and group-centered. Under participative leadership, every employee has an opportunity to participate in the decision-making process.
Leadership in the community puts the community as the setting in which the leadership occurs. The shift from competition towards cooperation is made. Companies are open to practice new ways of relations and promote the sharing of such values as trust, tolerance, and commitment.
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Leadership as relationships is built upon the concept of partnership, participation, service, and empowerment. Thus, the leadership of the new companies is holistic, centered in groups, with the community being the driving force and vision being the heart of leadership. New companies are evolving from an individual-centered leadership approach to collective-centered focused on building productive and motivating relationships.
A successful leader is insightful, challenge-oriented, and decisive. He identifies business opportunities prior to competitors and analyzes informational in all possible directions. He is passionate about achieving the goal and is willing to attack competition and is devoted to continuous self-improvement (Tice 2007).
New leaders are adaptable and are willing to help the organization to develop the capacity to adapt as well. They are self-aware and tackle the challenges within and outside of their organizations. The leader assumes responsibility for the fulfillment of organizational goals and is ready to share the decision-making process with others. New leaders promote purposefulness and have a strong vision of the company’s direction.
A leader is decisive and collaborative. He desires to reach consensus and make the best possible decision as well as creates an organizational culture that fosters the sharing of ideas. A new leader encourages innovation and creativity. Finally, leaders of the 21st century are capable of setting a vision and developing an execution plan to reach the desired results.
The leader understands that effective people management is the source of competitive advantage and works on the integration of human management and business strategy. As a result, the traditional reward systems are replaced with innovative ones.
In particular, new reward systems are based on employees’ contributions (Chen & Hsieh, 2006), competency, and performance. Skills, knowledge, and abilities determine the reward of every employee. The pay is influenced by the competencies required to perform the duties successfully and to run the company.
Rewarding for performance, productivity, and accomplishment holds employees responsible for specific objectives. A reward system combines variable pay, recognition, celebration, and benefits as vital elements of the total reward package. Effective reward tools include training opportunities, development opportunities, recognition vehicles, flexible schedules, and a caring message to employees (Chen & Hsieh, 2006).
Baker, K. (2002). Organizational Culture, Chapter 11.
Chen, H.M. & Hsieh, Y.H. (2006, October 24). Key Trends of the Total Reward System in the 21st Century. Compensation Benefits Review, 38 (64).
Hyde, P. & Williamson, B. (2000, September). The Importance of Organizational Values. Focus on Change Management, 67, 9-13.
Lowell, B. & Joyce, C. (2005, August 16). The 21st-Century Organization. Big corporations must make sweeping organizational changes to get the best from their professionals. The McKinsey Quarterly.
Sandmann, L. & Vandenberg, L. (1995, December). A Framework for 21st Century Leadership. Journal of Extension, 33 (6).
Tice, C. (2007, February). Building the 21st Century Leader. Entrepreneur Magazine.
Willax, P. (2001, June 22). “Fluid” is the world in the 21st century organizational structure. Business First of Louisville Journal.