Reengineering of organizations<\/p>\n
By Muhammad Sauri Hasibuan<\/p>\n
JAKARTA (JP): The law on regional autonomy stipulates that
\nregions should be able to take the initiative to solve their
\nproblems, without waiting for a decision from central government.
\nPower and information, the two main elements needed to settle a
\nproblem, now rest with the regions.<\/p>\n
But what does a region have as a basis for taking these
\nmeasures? The main problems that regions encounter include the
\nneed to increase income, and reviving regional small and medium
\nscale (SME) businesses.<\/p>\n
To effectively implement regional autonomy in empowering SMEs,
\nthe government must create an administrative organization capable
\nof quick, flexible, integrated and innovative action.<\/p>\n
Present administrations lack the ability to take rapid,
\nflexible, integrative and innovative action because of their
\nhierarchical structure.<\/p>\n
The highly rigid structure makes it difficult to come up with
\nthe characteristics required to deal with rapid changes, and to
\nensure improvement in their services, quality, costs and speed.
\nThese changes are essential in order to overcome cumulative
\nproblems and promote national competitiveness.<\/p>\n
This requires organizational overhaul, or \"organizational re-
\nengineering\", which means that an administration in a particular
\nregion must determine its own vision and mission in tune with the
\nneeds of locals.<\/p>\n
Such re-engineering means that the processes involved should
\nbe reviewed and replaced by those needed to meet local people's
\nneeds and to respond to continuous changes in the region.<\/p>\n
This should lead to doing away with the highly hierarchical
\nnature of the organizational structure. An overhaul of the South
\nJakarta administration, for instance, would cut the current eight
\nlevels of its secretariat to three or four.<\/p>\n
The regional administration must facilitate human resource
\ninvestment. First, through discussions, business leaders should
\nbe made aware of upcoming challenges. Second, the administration
\nshould provide financial aid to ensure the ability of small and
\nmedium enterprises to overhaul their organizations.<\/p>\n
Third, even if a business is located in a district or a
\nvillage, in principle it must be oriented to the global market.
\nOf course it must meet the required quality standards and the
\nlike. Such SME businesses will need investment to ensure that
\nthey have the right connections to the global market.<\/p>\n
Business people must also clearly prioritize the market and
\nconsumers' logic as a source of internal changes. Aid from the
\nregional administration to these businesses must aim to ensure
\nthat business organizations can undergo re-engineering and can
\nlater be fully oriented to the logic of the market and consumers.<\/p>\n
Changes in administrative organizations should significantly
\nreduce transaction costs associated with licenses and other
\nneeds, which should lean toward maximum service provision from a
\nregional administration for SMEs within its territory.<\/p>\n
What is also important is creating a conducive regional
\nenvironment to enhance the space for SMEs to enter business: they
\nshould not face barriers such as monopolies.<\/p>\n
The cost of raw materials and their availability, and the cost
\nof land and sites for business must be within reasonable limits.
\nSluggishness in business as a result of the crisis has resulted
\nin drastic increases in the rate of unemployment. Therefore, the
\ngovernment and the business world must empathize with these
\nunemployed people by forging cooperation to empower SMEs, as this
\nsector absorbs a significant proportion of the workforce.<\/p>\n
The writer is an economic observer and assistant manager at
\nthe Ernst & Young Consulting firm in Jakarta.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/reengineering-of-organizations-1447893297",
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"sponsor": "Okusi Associates",
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