is more difficult to handle than initiating changes in a state's constitution. Machiavelli
main reason for having a constitution is to define the laws, rules and
which the organization operates.
Types of constitution:
Virtually all organizations have to be legally constituted in some way
and each category will be subject to different laws and taxation regimes.
Some examples of constitutions follow: Sole traders (Plumber,
accountant, artist), Partnerships (Legal and accountancy firms), Charities
(Oxfam, hospices, churches), Private companies (Small businesses,
residents' groups) Public companies (IBM, Marks & Spencer, Shell), Government
agencies (Food Standards, Racial
Equality), Government departments (Social Security, Ministry of Defence),
Public Services (BBC, National Health Service), Local government (City councils, county councils), Mutual
(Financial funds, betting syndicates), Franchises (Burger
King, Budget Rent-a-Car), Co-operatives (Groups of fishermen or
craftsmen), Illegal organizations (Cartels, crime syndicates). Each
form of constitution is subject to its own peculiar legal framework, taxation
regime and disclosure and accountability rules. What
is right at a particular time is not necessarily appropriate five years later,
as for example with a private company finding that it needs additional finance which only
a public company would have access to.
It is often fashionable to change a constitution - mutuality often giving
way to company status, as with the
fashion for financial institutions to
convert from mutual societies (owned by the ‘members’, who may be employees
or customers) to public companies (owned by shareholders, who provide finance
and receive profits). The reason usually
given for this change is to encourage greater growth, diversification and access
to funds, but it could be that the senior executives want to appear more
successful and justify higher salaries.
effects of a constitution:
The type of constitution affects other elements in the model.
For example, a charity does not have owners as such but trustees; it is
limited in obtaining financial resources (since it cannot raise funds on the
stock market); and its financial results are not geared to making a profit but
showing that it has been prudently managed. All
managers in the organization should be aware of what its constitution is and
under which laws and constraints it operates. >>>