Module IV: Individual in the Organization

Organizational Structure

• It is the formal system of tasks & authority relationships that control how people co-ordinate their actions & use resources to achieve organisational goals.

Types of Organisational Structure

• Functional Structure• Place Structure• Product Structure• Multidivisional Structure

Functional Structure

• Oldest & most commonly used• When it is used, the organisation is

departmentalized on the basis of functions it needs to perform to reach its objectives.

• The activities or functions of all these departments are co-ordinated by the Chief Executive of the organisation.

• This approach helps reduce errors & lowers costs.

• Functional structure is easily understood by the employees.

• It eliminates duplication. There is only one marketing department for the entire enterprise, only one production department & so on.

• Problem – Horizontal integration across functional departments often becomes difficult as the organisation increases the number of geographic areas served & the range of goods & services provided.

Place structure

• Popularly called the geographic area structure.• Popularly used by Multinational Corporations which

need to be responsive to local needs.• In the US, soft drinks have less sugar than in S.

America, so the manufacturing process must be slightly different in these two locals.

• Problems – lack of communication among divisions & diffusion of technology is slow as innovations generated in one division (area) may not be adopted quickly by others.

Product structure

Multidivisional structure

• Referred as M- form• Tasks are organised by divisions on the basis of the

product or geographic markets in which the goods or services are sold.

• Divisional heads are primarily responsible for day-to-day operating decisions within their units.

• Freed from these routine activities, top level executives concentrate on strategy issues - allocating resources to various divisions, assessing new business to acquire etc

Organisations for future

Matrix structure

Networked structure

• Also called Modular Organisation. • It is a cluster of different organisations whose

actions are co-ordinated by contracts & agreements rather than through a formal hierarchy of authority.

• It offers flexibility & innovation.

VIRTUAL ORGANISATION

• Enables individuals separated by distance and/ or time to work together towards a common goal.

• Use computers for communication• Employees of virtual organisation respond

quickly to changing customer demands with customised products & services available at any time & place.

• Employees are interdependent.

• Managers delegate authority & responsibility to employees while providing them with a clear vision of the organisation’s goals.

Characteristics of virtual organisation

• A reliance for their functioning & survival upon the medium of cyberspace.

• No readily identifiable physical form.

Learning organisation

• In the competitive environment, only a learning organisation will survive.

• Its abilities to learn, create, & utilize knowledge faster than its rivals & quicker than the environment changes – will provide tomorrow’s corporation a competitive edge.

• A learning organisation is understood as the one that has developed the capacity to adapt & change.

• Learning organisations – constantly learn.

Characteristics of learning organisation

• System Thinking• Personal mastery• Mental models• Building shared vision• Team Learning

Need for learning organisation

Only it can - • Survive tomorrow’s knowledge based

economy• Manage tomorrow’s intense global

competition.• Cope with tomorrow’s rapid fire technological

changes.• Handle tomorrow’s demanding market

Team based designs

• Organisations are made up of teams. • Instead of organising jobs in the traditional,

hierarchical fashion by having a long chain of individuals perform parts of a task, team based organisations have flattened hierarchies.

Boundaryless organisations

• This designs presents a picture of chaos, chains of command are eliminated, spans of control are unlimited, & empowered teams replace rigid departments.

• Eg – GE envisioned a boundaryless organisation for its $ 60 bn empire.

• Such a design is hardly sustainable.

Strategic alliances

• These are co-operative agreements between firms that go beyond normal company – to- company dealings.

• Such co-operative agreements involve joint research efforts, technology sharing, joint use of production facilities, marketing one another’s products or joint manufacture of components.

• Comprises of - a) Shared management agreement – All the

alliance partners actively participate in managing the alliance.

b) Assigned arrangement – A partner holding a major stake in the alliances assumes primary responsibility for managing its affairs.

c) Delegated arrangement – Alliance partners create a separate entity to manage the alliance.

Built 2 change (b2change organisation)

• Strategising – Describes how an organisation achieves priority to the needs of end users. When customers demand change, organisation’s responses should also change.

• Creating value – Asks the following questions – what do we need to learn, how do our capabilities need to evolve, what do we need to do better so that we can add value in the future ?

• Designing – Organisations need to be designed & management practices need to be identified to realise the strategic intent.

Structure decisions

Structure decisions

• Organisations must make important structure decisions –

a) Whether or not to use staff expertsb) Whether the organisation will be structured

in a flexible or rigid way.c) How the authority will be distributed.

centralising & decentralising authority, Formal & informal organisations

Organisational culture

definition

• Organisational culture has been defined as the philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes & norms that knit an organisation together & are shared by its employees.

Characteristics

• Individual initiative• Risk tolerance• Direction• Management support• Control

• Identity• Reward system• Conflict tolerance• Communication patterns

Cultural dimensions – levels of culture

National Culture

• Dominant culture within the political boundaries of the nation state.

• Dominant national culture usually represents culture of the people with the greatest population or the greatest political or economic power.

• Formal education is given & business is usually conducted in the language of the dominant culture.

Business culture

• Represents norms, values, beliefs, that pertain to all aspects of doing business.

• Business culture tells people the correct, acceptable ways to conduct business in a society.

Occupational cultures

• They are the norms, values, beliefs, and expected ways of behaving of people in the same occupational group, regardless of which organisation they work for.

• Eg – physicians, lawyers, accountants

Organisational culture

• Organisational culture has been defined as the philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes & norms that knit an organisation together & are shared by its employees.

Mechanistic culture

• It exhibits the values of bureaucracy & feudalism.

• This sort of culture resists change & innovation.

Organic culture

• Formal hierarchies of authority, departmental boundaries, formal rules & regulations, & prescribed channels of communications are frowned upon.

• In problem situations, the persons with expertise may wield far more influence than the formal boss.

• The culture stresses on flexibility, consultation, change & innovation.

• Autoritarian & Participative cultures• Dominant & sub – cultures• Strong, weak & unhealthy cultures

How is culture created ?

• External adaptation & survival• Internal integration - establishment &

maintenance of effective working relationship among the members of the organisation.

Cultural artifacts

• Refers to stories, rituals, ceremonies, language, symbols & statements of principles.

• Also called observable aspects of culture

stories

• Stories about past corporate incidents serve as powerful social prescriptions of the way things should (or should not ) be done.

• As they are told & retold, stories give meaning & identity to organisational members & are specially helpful in orienting new employees.

• Stories about the CEO• Stories about getting fired• Stories about how the company deals with

crisis situations. • Stories whether lower level employees can

rise to the top

language

• The language of the workplace speaks highly about the organisation’s culture.

• Organisations, over time, often develop unique terms to describe equipment, offices, key personnel, suppliers, customers, or products that relate to its business.

• Eg – MMB (Monday Morning Blues), Pronto – Now, quickly, Promo- Promotion

• New employees are overwhelmed with the jargon, after 6 months on the job, have become fully part of their language.

Structure & symbols

• The size, shape, location & age of buildings might reveal organisation’s culture.

Statement of principles

Strategies for sustaining culture

• Selecting & socialising employees• Actions of founders & leaders• Culturally consistent rewards• Managing the cultural network• Maintaining a stable workforce

Effects of culture

Changing organisational culture

• 3 approaches1. Behavioural approach2. Competing values approach3. Deep assumptions approach

DIFFICULTIES IN CHANGING

Guidelines for changing

• Formulate a clear strategic vision• Display top management commitment• Model cultural change at the highest levels• Restructure the organisation to support the

new culture• Select & socialize new comers & terminate

deviants• Develop ethical & legal sensitivity

Organizational Design

definition

• Organisational Design is the process by which managers select & manage elements of structure so that an organisation can control the activities necessary to achieve its goals

• It is a task that requires managers to strike a balance between external pressures from the organisation’s environment & internal pressures.

• Organisational design is important, inorder to – a) Deal with contingency (A possibility that must be

prepared for) b) Gaining competitive advantagec) Managing diversityd) efficiency & innovation

Key factors in organisational design

• Environment – degree of complexity, degree of dynamism (whether environmental characteristics remain same or change), richness (amount of resources available to support an organisation)

• Business Strategy – low cost,differentiation (based on providing customers with something that is unique & makes the organisation’s product/ service distinctive from its competitors, focused

• Technology – technological complexity• Internal Contingency factors – goals ,size , employees

CONSEQUENCES OF POOR ORGANISATIONAL DESIGN