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Human Resources

Shamrock Organization: How it Works, Advantages and Disadvantages 

By Ahmad Nasrudin ·

Shamrock Organization How it Works, Advantages and Disadvantages 

Table of Contents

What’s it: The Shamrock Organization is a model organization with three workforce groups and forms like a shamrock leaf. The three have a main body and are connected, forming a single entity.

Although it tends to be theoretical, this model can be considered when managing human resources by considering organizational effectiveness and costs. Management can group and motivate and reward according to their group in the organization.

What are the three groups of employees in the shamrock organization?

An academic and management expert, Charles Handy, coined the term in his book “The Age of Unreason.” He argued for job enrichment as a way to meet the needs of employees instead of supervising them as under a tall structure.

Handy believes most jobs are contract or short-term jobs instead of lifelong jobs. So, instead of hiring all employees as permanent workers, he suggests contracting out less essential jobs to specialists who can work more productively and efficiently. He then divided the employees within the organization into three groups:

  1. Core worker
  2. Contract worker
  3. Temporary worker

The three groups have different expectations. They should also be managed and rewarded differently. For example, only core workers enjoy compensation and facilities like traditional permanent jobs.

Then, occasionally, a fourth group is included in the model. They are customers. However, that only applies to some companies. They are included in the model only if they are deemed to be doing certain jobs which the company should be doing. Take a furniture store like IKEA as an example. You may have to assemble the parts when you buy furniture before using them. Assembling should be the company’s job because you buy the furniture intact. But, you do it yourself because the company sells it unassembled.

Core worker

Core workers represent the first group. They work permanently and represent highly trained professionals. They form senior management, which is the brain of the organization. Or they are specialists or other key workers.

Core workers are essential for the survival and growth of the organization. Their knowledge and skills determine the organization’s core competencies. In addition, they govern and determine what a company does and what business it runs. For example, senior managers manage operations, define goals and objectives, and develop strategies.

Their relationship is more like professional partners than between superiors and subordinates as in conventional companies.

Then, core workers get a salary as compensation. In addition, they enjoy permanent contracts because their presence determines the organization’s survival.

Contract worker

Contract workers represent the second (leaf) group. They include self-employed professionals and contractors on a project basis. Again, they may be people who have worked for the organization. But, now, they provide contractual services to organizations. 

The organization contracts and outsources work to them to concentrate on its core competencies.

Contract workers are tied up on a semi-permanent basis. Since their job carries a risk of insecurity for the organization, they must work according to the guidelines that have been set by the core workers. However, they have the flexibility and decision-making authority to complete the project.

Rewards to this group are based on performance rather than salary like core workers. Thus, they are motivated to give their best to get the contractual reward. This compensation system is important not only to save costs but also to ensure a quality contract output.

Temporary worker

The third group is flexible workers. They do non-essential routine work. However, they are not bound by a permanent contract but instead work as part-time or temporary workers.

And this group is quite close to the organization and committed to it. This closeness is important to ensure they do the job to a high standard.

Temporary workers have experienced short tenures. And they have no career path or scope for development within the company. They are generally compensated based on their time working in the organization (paid per hour).

What are the advantages and disadvantages of the shamrock organization?

Saving costs is one of the advantages of the shamrock organization. Organizations place workers according to their roles and contributions. And they get paid accordingly. For example, those less essential to the organization are not placed on the permanent payroll.

However, organizing and grouping jobs can be problematic. Usually, it is difficult to define it clearly. Another weakness of the shamrock organization is low motivation and poor quality of work as some workers are only contracted or work part-time. And they have no job security.