Organizational Complexity as a Contributing Factor to Underperformance

Uwe Beyer and Oliver Ullrich
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Uwe Beyer: Fraunhofer Institute for Intelligent Analysis and Information Systems IAIS, Schloss Birlinghoven, 53757 Sankt Augustin, Germany
Oliver Ullrich: Fraunhofer Institute for Intelligent Analysis and Information Systems IAIS, Schloss Birlinghoven, 53757 Sankt Augustin, Germany

Businesses, 2022, vol. 2, issue 1, 1-15

Abstract: A high organizational complexity above the cognitive limits of employees and management can contribute to a business performing sub-standardly in comparison to its competitors. As businesses can grow over time into a state of high complexity, an active approach to complexity management has to be taken. This paper presents the NES classification method, aimed at facilitating the modeling and assessment of organizational complexity. Here, any system is classified as belonging to one of three classes: class N natural, class E engineered, or class S slipped systems. Operationalizing NES by applying the Tree Attribute Matrix modeling method, this paper describes exemplary observations made as part of consulting projects that demonstrated typical underperformance situations resulting from their organizations “slipping” into structures of high complexity, and includes management measures to reduce complexity and thereby improve performance.

Keywords: complexity management; organizational complexity; performance improvement (search for similar items in EconPapers)
JEL-codes: A1 D0 D4 D6 D7 D8 D9 E0 E2 E3 E4 E5 E6 E7 F0 F2 F3 F4 F5 F6 G0 G1 G2 H0 J0 K2 L0 L1 L2 M0 M1 M2 M3 M4 M5 N0 N1 N2 O0 O1 P0 (search for similar items in EconPapers)
Date: 2022
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