Networked Organisation- Its importance

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Challenges and Importance of Networked Organisation

The human resource management is the management of the people of an organization. The efficient management of the employees is the duty of the HR department of the company. HR is primarily related to people, requires to perform various operations to achieve the common goals of an organization. The duty of the HR department is to hire the skilled workforce suitable for the operation and need of the department. The training and development policy, the compensation benefits to be provided to the employees, performance appraisal technique adopted by the company all comes under the duties of the HR department. The department will perform its duties efficiently to ensure the success of the organization through its people.

A networked business is the commercial interconnected system of people in an enterprise. The enterprise, whose value producing assets are working well for them to achieve the common goals. In a narrow sense, the networked organization consider each department or unit as the individual department, which will partner other departments for their operations. On the other hand, in the wider perspective networked organization is the collaborative system in which all the departments or units work in harmony and create the value for an organization.

Importance of networked organizations

  1. Decision making: in the networked organizations all the decisions will be taken by the individual department by considering the operations of other departments.
  2. Skilled workforce: the efficiency of an organization can be achieved only if the workforce hired in each department is a skilled one then they will be able to integrate the operations with each other.
  3. Non-Hierarchical system: the networked organization doesn’t follow any hierarchy every department Is free to take their decisions which will contribute towards the success of the overall organization.
  4. Low cost: the networked organization ensures global excellence by outsourcing the best skills from geographically diversified partners.
  5. Opportunities: there are plenty of opportunities available to the networked organizations, the company have to align the potential opportunities with their mission and functioning.
  6. Professional advice: the skills available from the geographically diversified business with the integration of various skilled partners will provide the benefit of professional advice of the company which will ensure the utilization of strengths of the company by overcoming weaknesses and threats will be overcome by acquiring the potential opportunities.
  7. Business tie-ups: The business partners will provide more collaborations to the company through which the business can be grown or diversified. Along with this direct benefit other indirect benefits can also be achieved.
  8. Increased confidence: The improved efficiency, better collaborations, professional advice will provide more confidence to the enterprise. Which will provide more efficiency to them.

Challenges to HRM in the networked organization

  1. Difficulty in communication: in the networked organization the efficiency will be improved if the standards followed are high. Thus, the communication of the standards set by the management is difficult in the non-hierarchical But the success of the networked enterprise is based on the free float communication.
  2. Excess diversification: the networked organization is the collaboration of various business partners of different backgrounds and operations. It is beneficial for an organization but on the same side, it is also difficult to manage such a high level of diversification. It can work on both sides the effective use can provide great success to the organization or can mar it badly.
  3. Cross-culturalism: The HR department has to hire various people from different backgrounds or demographics, which are difficult to coordinate with other employees. Thus, it is necessary to formulate the cross-cultural policies for an organization which will motivate them to work in harmony. The higher level of harmony will take an organization on higher levels.
  4. Delay in Decision making: The networked organization doesn’t have proper hierarchy thus the decision making lies at every step. Each department is taking its own decisions thus it is difficult to coordinate the decisions of one department with the decisions of the other departments. In this, the overall aim of the enterprise will get affected and the resources will be wasted.
  5. Higher Cost: the networked organization emphasize the skilled workforce to achieve high efficiency and work level. For the high skill set, they have to outsource the workforce from different areas which can provide better efficiency and effectiveness in the performance. The outsourcing of higher skillset will require the enterprise to incur higher cost. Thus, it is the duty of the HR department to acquire the high skillset at a lower cost for higher profitability of the firm.
  6. Difficulty in performance appraisal: The non-hierarchical pattern of an organization will not have the proper check on the operations or duties performed by the particular employee, the employees generally provide their services in all the departments as per the requirement. Thus, it is difficult for the HR department to evaluate its performance and appraise it.


"Human resource management",, 2019. [Online]. Available: [Accessed: 05- Feb- 2019].

  1. Barjis, A. Gupta and R. Sharda, "Knowledge work and communication challenges in networked enterprises", Information Systems Frontiers, vol. 13, no. 5, pp. 615-619, 2010. Available: 10.1007/s10796-010-9240-6 [Accessed 5 February 2019].

IHRM_Chapter2 | Organizational Culture | Human Resource Management", Scribd, 2019. [Online]. Available:

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What is a networked organizational structure?


It is a new type of oganisationational structure, which is considered to be less hierarchical, highly flexible and more decentralized. It is connected with a series of informal networks and is generally driven by the demand.

What are the 5 types of organizational structures?


The five types of organizational structure include Hierarchical structure, team structure, functional structure, network structure and divisional structure. Other than these few more can be named as a flat structure, projectized structure and matrix structure.

Why is network important in the organization?


Network is considered to be important in an organization as it helps in spreading positivity about the company, builds credibility for the organization and even keeps the management informed about important beliefs.