The Concept of New Forms of Organization

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The entire paper is going to explain the modern concept of NFO or New Forms of Organization in the context of suspension or the replacement of traditional organizational view that has been emerged recently because of the insider and outsider competitive forces of an organization. This concept has evolved a number of criteria in modern business today ranging from innovativeness to the basic operational efficiency by drastically changing the current pattern of human resource management. The adoption of such methodology can be observed in a Spanish insurance company named Fremap, which has created a record by developing many of the complementarities.

NFO implication within current literature of HRM

NFO generally improves the backwardness of hierarchical and technical types by shifting the liabilities of the size of an organization by composition of big or small with reformation of internal system by converting them take away of formality. Similarly, NFO can also be used for junction in trends for downsizing, formation of tiny business units, raising profit for the firm and decreasing the threshold of autonomy by removing some unenthusiastic procedure of organizing.

Structural view of NFO: NFO causes two types of change in an organization- vertical and horizontal. Vertically, a company becomes matured by increasing level of management while horizontal changes result in nurture of internal activities to the goal where various functions, goods specification and regional segmentation abolish to produce efficient organizational members and control centers as a basis of corporate interaction. However, holistic NFO has following advantages, as:

  • Nature of the company interacts and moves to a point, which has more weight than the combination of its separate ingredients.
  • It is essential to modify at all stages of the company at the similar point.
  • The holistic view has also greater use in making a strong tie in decentralization, IT, HR implementation, and outsourcing.

Nature of NFO: In case of structure, significant variation lies between modern NFO and traditional firms especially regarding the general logic of functioning and integration structure and finally, systematic arrangement.

HR and functioning of NFO

The basic goal of NFO is to make strategic and constructive changes in the human resource development of an organization. According to Allred, Snow and Miles, it is the fruition of organizational structure, which moves the components of management way of careers. In short, NFO works effectively with a requirement of individual practical analysis. Several aspects of NFO in HRM implementation are discussed below:

Designing and controlling the job: Traditionally, corporations relied on division of labor. For this, they wanted a straightforward segregation of jobs for grouping them into some individual units. However, imposition of rigidity of demarcation on such process flow thrown upon the employees and the hunt of activity, jobs can be broaden and enriched that demanded the researchers to be more effective huge number of distinction. Such types of firms are now emphasized by the flow of general description of job. With this, job formulation becomes stabilized that permits using a modified bridge of job incumbents by which toughness is gained by a distinctive structure of role specialization in which each component can be altered by staffing and internal mobility.

On the other hand, historically, control can be established by observing directly, shorthand response, personal judgment, accumulation of success result, and general assessment of performance while hierarchical maintenance can be reinforced by chain- of- command scheduling. But modern corporate framework wants newer procedure of work assembly as workers are now put in “empowered work” through a practice of major discretion and control of resources. So, firms are more demanding for “de- jobbed” for an easy adoption to the reformatted managerial skill and pointing out core- capabilities and lastly, NFO also modifies self- discipline of workers.

Group work, leadership and reformed role of management: Through planning and co- operation members of a team supervise their personal assets, which results in the wider curiosity for making decision. According to Ezzamel, Lilley and Willmott, for this capability of the team for formulating their personal decision successfully permits the holistic view for meeting the complexity than the broken view of traditionalism.

According to other authors, NFO with blurring of task and operational constraints and team activity cannot be talented without a new vision of direction. New leadership is optimistically viewed to enlarge responsibilities through a search of developing staffs for a better acquisition of expertise by moving upon the leadership from “centralized” to “decentralized” forms. Modern leadership is perceived as role- modeling by evoking the nature of “analyst”, “architects” or “protectors”. According to Nohria, NFO requires completely a distinctive set of managerial talent, which needs to magnetize, motivate and regain employees who are able to establish newer management talents.

The modified psychological agreement- NFO combines many bonds from both employees and employers. It actually does so by “psychological contact” with a current revision of downsizing and NFO workshop. Here, two issues are important, as below:

  • Modern preparations evolve a broader range of intra- corporate agreements by which organizations want to have more demarcation between various types of workers for their complexity to the company. For this, management of numerous deals with an individual firm creates stress on the constant HR practices crosswise it.
  • Extra emphasize on time motivates the newer forms to make deep relationship with the firm and employees for the issue of “employability.

This modification demands more flexibility to motivate the employees to go anywhere, any time to do any thing according to their willingness. But sometimes workers attitude may vary to the NFO than traditional system in terms of more fulfillment and experience.

Practice of employment – The process by which firms conduct the staffing process is a major point for gaining top- presentation arrangements. To impoverish the soft technology in this methodology, companies should choose and develop the perfect workforce in a right way in which significant differences can be idealized between NFO and traditional forms.

Strategic fits were achieved by linking the workers with their jobs or workers with organizational behavior in the past while the modern time reflects job redesigning process by adapting their cultures to the modifies spirited challenges. Therefore, NFO is now able to maintain fits with flexibility, between current demand and future skills and capacities. For this, recruitment and selection becomes a scope of developing diversified personal skills despite of particular combination of recent job vacancies. NFO is also contributing in social channel as the medium for harmonization with the firm by making the firm modern and dynamic.

Career assessment- NFO is helpful in changing career pattern by importing more pluralistic scopes as:

  • Instead of dominance of linear pattern’s conventional arrangements, NFO requires expertise and temporary specifications conditional on the strategy of pattern of the firm by refining the rigidity of traditionalist into “cafeteria- style” pattern for making it customized according to the needs and wants of the employees and the firm.
  • Change in corporate function, leadership and team activity.

Reward procedure: Since rewards are significant means for personal motivation, firms always try to bind behavior of the workers as a key corporate function. In NFO, reimbursement is based neither on job definition nor on position since it is less hierarchical while personal success is based on trustworthiness rather than those other combination. Transformation from paying a job to person consequences in motivating acquisition of developed skills, cultural advancement and self- management. Therefore, bringing changes in rewarding is effective for acquisition and growth.

The innovative organizational view

Here, a clear view of INNFORM program is required which has following three objectives:

  • To address the use of innovativeness in firms of Europe, USA and Japan,
  • To test the consequence of performance of NFO, and
  • To evaluate the management and organizational shift from older ones to NFO.

Therefore, the INNFORM focuses on the form and exclusivity of the form, which absorbs identifications, skin texture of form, and idealizes those options are responsive to the perceptions and arguments of those forming and answering to the forms. Here, the following issues are important:

  • Severe decentralization with reliability on internal astringent techniques,
  • Straightforward corporate hierarchy,
  • Limited role of headquarters with chief management glorification of diffusion,
  • Move from ‘command and control’ to ‘benefits and empowerment’.
  • Explained intrinsic formal and informal communication procedure,
  • Utilization of insider labor force with knowledge diffusion,
  • Utilization of interdivisional and inter- operational meetings.

In 2000, Fenton and Pettigrew recognized three related concepts of innovative forms as below:

  • The international firm and its expanding boundaries,
  • Networking and socially responsible organization,
  • The informative firm in an acknowledge industry.

According to the 3 goals of INNFORM programs, multi-method study result and time series information are needed to prepare. So, it has been started on the literature review of the NFO which has conducted in behind 1980 and early on 1990 which has been resulted on the exposition of major corporate changes, such as:

Change in structure: – these changes occurred because of double pressure as:

  • Expensive involvement of mid- level managers.
  • Impeded data flow and frequency in responses for plasticity and idea generation.
NFO indicators
Graph: NFO indicators

Change in process: Vertical and horizontal co- ordination is the outcome of the skill and flexibility requirement. Communication intensiveness demands for speculation in IT, which combines causes flow of information within the firm. Here, a basic phase is ‘co- adaptive’ diminishing of cross- business integration as well as moving a new dimension of EDI (Electronic Data Interchange) which permits the advance innovation regarding contribution, polycentricism and softness. Modern HR forces horizontal communication in terms of conference, seminar, meeting or other occasions.

Change in limitations: Delivering can be a key component for generating core competencies for identifying boundaries for sustaining competitive advantage. For this, many firms are moving towards little and decentralized forms whether strategic partnership or outsourcing a limitation of boundaries are composed.

Complementarities and showmanship: Complementarities visualize performance as reliable on ‘fit’ between size and formation of the company by moving beyond homogeneous comparisons regarding the theory of configuration.

NFO in the context of Fremap

One of the most successful NFO implementation criteria can be observed in a Spanish insurance company known as Fremap. Since 1992 this introduction can be termed configurationally to the NFO while this mid- large head corporation of insurance in that country transferred from a complete centralized to a decentralized formation by teamwork that can be characterized as flexible and dynamic pattern of management.

Fremap is basically operates for non- profit purpose that has been originally established in 1933 having many branches over Spain and countrywide medical centers which perform the following activities:

  • Risk assessment caused for work occupational accidents.
  • Financial services caused by short- run injury from general sickness and off- job incidents.
  • Professional risk prevention facilities to other organizations.

Till 1992, the company was designed those attributes as “scientific organization” for working but its administrative framework had untouched since 1933. During that time, the firm could be characterized as:

  • Specialized structure
  • Division of rigidity
  • Area segmentation based of works with limitation and niches serving no particular purpose,
  • Disadvantageous customer service: less solution of problems and more paperwork etc.

Thus in 1988, an attempt of value identification had been conducted by the company’s entire workforce who revealed two values:

  • Guiding rules including ethics and a person’s concept as a motto of social affairs,
  • Quality.

Evolving the change

  • Basically the change had been evolved by the view of an individual’s capability for solving all complexities regardless the customer would be a firm or person while major employees’ ability supported so since the top management believed that the insider conditions were liable for generating claims by realizing an essence interpersonal associations for incorporation.
  • In lieu of many workers to solve an issue, a new idea “integral agent” was disclosed exposure only to branch management. Job categorization was removed each clerk would enable to build relationships between the firm and the customer while the agent would not regulate the employee with liability for adopting necessary steps for solving problems against the customer’s claim.
  • Customers are employed on the basis of territory. In a specific region, the agent handles all types of association between the company and the customers independently but as a part of the team. Each couple of agents coordinates with a salesman and a technician covering 2 zones. Major team is composed of the technician and a salesperson based on equal support, placement in holiday or sickness with the branch’s support with freedom and accommodation for who have traveled at several speeds.
  • The integral agents help to make a close customer accomplishment, vital source of knowledge of them.
  • At the beginning of NFO in Fremap, it enjoyed a great support of training and IS for the necessity of adopting modern technological construction which can be observed by accomplishment of frequent reflection of values of the firm as the generation of agent system while people can carve up their feelings by learning upon one another.

NFO at three organizational levels

Meaningful task: With NFO, a single employee in Fremap can solve all criteria of complexity. Other changes are:

  • Case management by workers,
  • More information system and technological integration,
  • Lower need of specialization,
  • Employee’s knowledge of entire workflow and huge training regarding this,
  • Assessment of favorable work attitude, and
  • Wider vision of the flow.

HR effort: Besides having substantial initiative, other factors are:

  • Decision making authority,
  • Operational and management task,
  • Self- managed workforce.
  • Versatile and mobile job,
  • Numerous capacities of the workforce.

Serviceability: It involves:

  • Teamwork,
  • Closeness to customers,
  • View of “for whom” for accomplishment,
  • High level of service sensitivity,
  • Highly responsiveness to the customer order,
  • Employees are motivated more by intrinsic values derived by service sense and less by monetary and promotional facilities.

Other aspects

  • Decentralization is on the most important matters as Fremap’s basic headquarters are employing 2.7% of the total work force while it was 5% before implementation of NFOs while it is accounting the slightest example of centralization in insurance industry with tiny branches and continuous growth since a branch is broader enough, it is broken into two. This satisfaction not only comes from HR but also business functioning, employee inspiration, profit maximization, quality and customer approval.
  • The company also believes in the happiness of its employees who now can get broader dispatch that has enriched their task by achieving independence with salary as a second concern and according to one agent, it is not so much effective to switch the current job while an offering of 20% more money.
  • While some of the employees were not much interested in changes because of the complexity of performing in traditional way. The several managers were also feared by the lose of power while NFO plan had been implemented with a careful and appropriate speed of seeking clerical jobs within the company specially for those who have not exposed their capacity of being an “integral agent” although after some years agreement to the alteration was fulfilled.
  • Regarding quality, in 1996, Fremap achieved EN- ISO 9001:2000 certificate, which a recognized global quality standard is giving certificates to the organizations and workers. The year 2000 was also important as Fremap obtained EN- ISO 14001 environmental safety diploma. In 2003, it adopted model EFOQ for fulfilling the needs of customer initiation, leadership, worker reinforcement and social issues while in 2001, it gained “Madrid excellent” prize.
  • Today Fremap is vigorous throughout Spain with numerous networking-providing services by merely 600 health cares and professionals. In 2003, its revenue was about €1.85 billion with 4600 workers among them 60% is outsourced for changes.
  • Fremap also maintains rules of discretion by strong capital structure, operational performance, muscular business role and similar forms of practical management.
  • The reason for bringing the changes was based on improving quality and adoptive view of personal adoption corporate culture that leads modern subsidiary concept. Similarly, the new horizontal agents of Fremap entail freedom in all sectors by emphasizing initiatives and empowerment with adequate training and supportive programs.


Although there exists some of the contradictions regarding the NFO and its implementations in Fremap, the truth is that with such procedure, the company has achieved a number of goals. It has established itself a preemptive image in the Spanish insurance market in terms of decentralized functioning, practical HRM, IT modulation, straight linkages and unit- based tasks that can be performed in short- run with an objective of gaining organizational aim in an effective and efficient manner.


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