The Role of Organisational Infrastructure

INTRODUCTION
• Organisational infrastructure is the collection of the business
procedures and policies of a company based on the defined
responsibilities and duties of its employees. In other words, it’s
how companies arrange and organise the “people” part of their
operation.
• As discussed in Chapter 3, organisational structures provide some sense to
employees as to where their role fits within the organisation and the reporting
lines in which they operate.
• However, the organisational infrastructure provides employees with the
procedures and policies to enable them to enact their roles within specific
guidelines.
• It helps to define the way in which the business of the company gets done and
the extent to which the business is creative, innovative, responsive or proactive.
4.1 The concept of organisational infrastructure
• Organization infrastructure typically refers to the framework or
physical assets, both tangible and intangible, that support the
functioning of an organization. This includes:
i. Physical Infrastructure: Buildings, facilities, equipment, and
machinery necessary for operations. This might include office
spaces, manufacturing plants, warehouses, and transportation
systems.
ii. Technological Infrastructure: Hardware, software, and
networks used to facilitate communication, data management, and
other technological operations within the organization. This
encompasses everything from computers and servers to internet
connectivity and software applications.
iii. Human Infrastructure: The workforce of the organization,
including employees, management, and other personnel. This
involves organizational structure, roles, responsibilities, and the
iv. Financial Infrastructure: The financial systems and
processes in place to manage money, investments, budgets, and
financial reporting. This includes accounting practices, banking
relationships, and financial planning.
v. Information Infrastructure: Systems and processes for
managing and disseminating information within the organization.
This includes databases, knowledge management systems, and
communication channels.
vi. Legal and Regulatory Infrastructure: Compliance
frameworks, policies, and procedures to ensure that the
organization operates within legal and regulatory boundaries. This
might involve contracts, licenses, permits, and adherence to
industry standards and regulations.
vii. Supply Chain Infrastructure: The network of suppliers,
distributors, and logistics partners that support the procurement,
production, and distribution of goods and services.
COMPONENTS OF ORGANIZATION INFRASTRUCTURE
• Figure 1 represents the components of organisational infrastructure.

• Start with the middle column: it shows that the organisational goals are achieved through people,
processes and structure.

• The columns either side show two different approaches that can be taken to achieve this.

• The column on the right considers that this could be achieved by doing things “right first time” (namely
being efficient). In this approach, people tend to be specialised and approach processes as a set of rules
to be followed with a tight structure (or clearly defined job roles). Bureaucracy tends to rule in this type
of organisation.

• On the other hand, the column on the left suggests that the organisation’s goals can be achieved by
being effective (namely “doing the right things”); this tends to be achieved through people with
generalised skills operating processes along guidelines, rather than rigid rules. The structure tends to
be loose with wider job roles and greater empowerment for job holders, relying on individuals and
 Resources that make up organisational infrastructure
These include people, physical resources and intellectual capital.
I. People
We often hear that “people are our greatest asset” but what does that actually
mean? People apply their knowledge, skills and attitude during their employment
both individually and collectively towards achieving organisational objectives.
In the past, management theorists such as F. W. Taylor viewed individuals as a mere
unit of production. However, the human relations movement started to dismiss this
notion as individuals and groups of people could be seen as social entities that
could apply their motivations to achieving both the organisational objectives and
their own personal objectives.
Employee bring the following to the employer:
• experience – previous experience that the employer can utilise in their
organisation;
• motivation – you demonstrated motivation to be part of the organisation but
also are supportive of the organisations goals;
• skills – you may have technical or specialist skills that the employer uses in
delivering their product or service;
• knowledge – you possess knowledge, which can be put to good use within an
organisation.
However, the employer has to use a range of methods to encourage you to employ
the aspects mentioned above. These methods might range from reward to more
punitive measures to control your behaviour towards achieving organisational
objectives.
ii. Physical resources
Physical resources are the tangible aspects that an organisation possesses to
achieve its organisational objectives and may differentiate it from its competitors.
This could include the following.
• Plant and machinery – specific technology might be used to gain some
competitive advantage.
• Premises – these could be state-of-the-art to ensure efficiencies or environmental
credentials.
• Finances – a business may be “cash rich”, meaning it has a lot of money available
to purchase assets or carry out research and development.
• Products – the products or services the organisation provides may
be unique or so efficiently delivered that it is very difficult for a
competitor to replicate.
• Location – the location of a particular organisation may be significant in achieving
organisational performance.
iii. Intellectual capital
The final set of resources an organisation might have are those that are intangible but can have
a huge value in terms of the final product or service it delivers in gaining competitive advantage.
Intellectual capital may include things such as:
• trademarks and copyright
• innovation and creativity
• knowledge management
• explicit – written down in policies, procedures, manuals and so on
• tacit – held by individuals
• training and education – investment in people to create explicit and tacit knowledge.

Organisations may use a combination of its resources to achieve competitive advantage. For
example, computing firm Intel will introduce a new manufacturing process (a combination of
intellectual property and physical resource) to improve its existing technology whilst innovating
new technologies.
4.2 Factors affecting organisational infrastructure
i. Organisational competence
• Does the organisation know what it is good at? Organisational competence is a
combination of all those aspects identified above: its physical resources, people,
and intellectual capital and how it is employed to deliver its product or service to
gain competitive advantage.
• Evaluation of organisational competence may include reviews of:
• development of corporate vision and mission
statements
• strategy analysis and formulation
• business model generation
• strategy maps and balanced scorecard
• marketing plans
• budgeting and planning
• research and development
• innovation
• talent management
ii. Workforce skills
The skills, capabilities, and preferences of the workforce can
impact organizational infrastructure. For instance, a workforce that
values flexibility and remote work arrangements may require
investments in remote collaboration tools and flexible work
policies.
Whilst organisational competence encompasses talent management, the aspect of
workforce skills deserves a special mention.
Organisations may locate themselves where there are other similar companies and
where the local labour market has the skills it requires. For example, Silicon Valley
in California is home to many major IT and dot.com organisations.
Organisations will not only need to recruit for certain skills but also maintain and
enhance skills for existing employees. Perhaps, the greatest challenge is not to
continually develop employees but enable employees to unlock their discretionary
effort to improve competitive advantage.
1.Organizational Size and Complexity: Larger organizations typically require
more complex infrastructure to support their operations compared to smaller ones.
As an organization grows in size and complexity, its infrastructure needs may
evolve to accommodate increased scale and scope.
2.Industry and Market Dynamics: Different industries have unique requirements
and regulatory environments that can shape organizational infrastructure. For
example, highly regulated industries such as healthcare or finance may require
robust compliance frameworks, whereas technology companies may prioritize
innovation and flexibility.
3.Technology and Innovation: Advances in technology can significantly impact
organizational infrastructure. Organizations may need to adapt their infrastructure
to leverage emerging technologies, such as cloud computing, artificial intelligence,
or blockchain, to stay competitive and meet evolving customer demands.
4.Globalization and Market Expansion: Organizations operating in multiple
geographic locations or expanding into new markets may need to adjust their
infrastructure to accommodate diverse regulatory environments, cultural
differences, and logistical challenges.
5.Organizational Strategy and Objectives: The strategic goals and priorities of
an organization influence its infrastructure needs. For example, an organization
focused on cost leadership may prioritize efficiency and scalability in its
infrastructure, while one emphasizing product innovation may prioritize flexibility
4.3 Measuring organisational performance
In this section, we will look at marginal gains and the performance management
cycle.
1. Marginal Gains
Marginal gains refers to the strategy of making small, incremental
improvements in various aspects of performance or efficiency,
with the belief that these cumulative improvements will lead to
significant overall progress. The concept is often associated with
fields like sports, business, and personal development.
The idea behind marginal gains is that while it may be difficult to
make substantial improvements in one single aspect, focusing on
numerous smaller areas for improvement can result in overall
better performance.
This approach acknowledges that progress is often achieved
through continuous refinement and optimization rather than
drastic changes.
• Advantages of Marginal Gains:
1.Cumulative Effect: Small improvements accumulate over time,
leading to significant overall progress. This approach allows for
continuous enhancement without the need for drastic changes.
2.Attainable Goals: Breaking down improvements into smaller,
manageable steps makes goals more attainable and less daunting.
This can improve motivation and engagement.
3.Focus on Details: By paying attention to numerous small details,
marginal gains encourage a comprehensive approach to
improvement, leaving no stone unturned in the pursuit of excellence.
4.Sustainable Progress: Marginal gains emphasize sustainable
progress, as they typically involve changes that are feasible to
implement consistently over the long term.
5.Adaptability: The strategy of marginal gains is adaptable to various
fields and contexts, from sports and business to personal
development and education. It can be tailored to suit individual
needs and objectives.
• Limitations of Marginal Gains:
1.Diminishing Returns: As improvements accumulate, the potential for further
gains from marginal changes may diminish. Eventually, it may become
increasingly challenging to identify and implement additional improvements
without significant investment.
2.Time and Resources: Pursuing marginal gains can require considerable time,
effort, and resources, especially when focusing on numerous small details.
This may not always be practical or feasible, particularly in resource-
constrained environments.
3.Risk of Overlooked Factors: While marginal gains encourage attention to
detail, there is a risk of overlooking larger, systemic issues that may have a
more substantial impact on performance or efficiency.
4.Lack of Immediate Impact: Marginal improvements may not always yield
immediate, tangible results, which can be frustrating for individuals or
organizations seeking rapid progress or turnaround.
5.Potential for Distraction: Focusing too much on marginal gains can
sometimes lead to a lack of focus on larger strategic objectives or core
fundamentals. It's essential to strike a balance between incremental
improvements and broader, strategic initiatives.
2. The performance management cycle
The performance management cycle is a systematic process that
organizations use to manage, evaluate, and improve employee
performance. It typically consists of several stages, each serving a specific
purpose in optimizing individual and organizational performance.
The performance management cycle follows a number of steps to improve
the overall performance of individuals and organisations. The stages are
as follows.
• Plan – identify and set objectives. Ideally, an individual’s objectives
should be linked to those of the organisation.
• Monitor – review how the individual is progressing. Are there any
interventions we need to take to ensure the individual’s success?
• Develop – support performance by the provision of learning and
development.
• Measure – have quantitative (hard) and qualitative (soft) measures in
place to provide evidencebased analysis of an individual’s performance.
• Reward – reward individuals based on their achievement of their
Measuring organisational performance
Measuring organizational performance involves assessing how
effectively an organization is achieving its objectives and
delivering value to stakeholders.
There are various methods and metrics that organizations can use
to evaluate their performance across different areas.

• Quantitative (hard) measures may include aspects such as

profitability, revenue or sales, scores such as customer service
scores or service levels.
• • Qualitative (soft) measures may include opinion-based
information such as customer feedback, staff engagement
surveys, feedback from peers and managers, and examples of
behaviour that may be linked to competency-based assessments.