Basics of Organisation (PGCSM03, Dec 2023) PDF

Basics of Organisation Understanding organization Design Post graduate Certification in Strategic Management Session 1 -2 Vijaya . V *Circulated for learning of students of this programme. Not to be shared freely with anybody outside the programme. Session Coverage • What is an Organisation and it...

Basics of Organisation Understanding organization Design Post graduate Certification in Strategic Management Session 1 -2 Vijaya . V *Circulated for learning of students of this programme. Not to be shared freely with anybody outside the programme. Session Coverage • What is an Organisation and its environment? • What are the key elements and different types of structures? • What are the key organisational design? balances of an What is an Organization? Consciously Created • Interaction patterns are pre‐mediated – structure of jobs, functions, responsibilities and authorities A formal organization is a consciously created social • Need for management & co‐ordination entity, with a relatively Social Entity identifiable boundary that • Exists for & is made up of individuals functions on a relatively • More than a random collection of people continuous basis to achieve a Boundary common goal or set of goals • Distinction between members and non‐members • Explicit or implicit contracts between an organization and it’s members Continuous • Members participate with some degree of regularity • On going entity Goals • Achieve something that is otherwise difficult to achieve • Shared purpose (and in the process fulfill individual goals) The Organizational Environment 3-5 Environment and structure -How the Design Challenges Result in Mechanistic and Organic Structures Key elements of Design- Differentiation • The process by which an organization allocates people and resources to organizational tasks • Establishes the task and authority relationships that allow the organization to achieve its goals • Division of labor: The process of establishing and controlling the degree of specialization in the organization • Hierarchy: A classification of people according to their relative authority and rank • Vertical differentiation: The way an organization designs its hierarchy of authority and creates reporting relationships to link organizational roles and subunits • Horizontal differentiation: The way an organization groups organizational tasks into roles and roles into subunits (functions and divisions) 4-4 Key elements of Structure • Role - Set of task-related behaviors required of a person by his or her position in an organization – Authority in a role is the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources – Control in a role is the ability to coordinate and motivate people to work in the organization’s interests • Function: A subunit composed of a group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs For eg- production dept • Division: A subunit that consists of a collection of functions or departments that share responsibility for producing a particular good or service Functional structure Divisional structure Market structure Product Division Structure Product-Oriented Functional Teams in Individual Divisions Matrix Structure • • Matrix structure: People and resources are grouped in two ways simultaneously: • By function • By project or product Two-boss employees: Employees who report to two superiors: the product team manager and the functional manager Multidivisional Structure - Different Structures https://www.godrej.com/for-business.html Different parts of an organization The five basic parts of an Organisation Operating core – Basic work – Secure inputs for production – Transform the inputs into outputs – Distribute the outputs- Sales and distribution – Provide direct support to input, transformation and output functions- Maintenance and inventory Support staff- Support outside the main work flow – infrastructure, Library, canteen, public relations, legal counsel The five basic parts of an organisation Strategic apex• Overall responsibility for organization – CEO- President – Superintendent- Country Head- Executive committee • Ensure Organisation serves its mission effectively • Serves the need of people who control or who own/have power over the organization • Management of organization’s boundary conditions- relationships with environment- spokesperson, liason, negotiate with outside parties • Strategy formulation – Interpretation of environment and form patterns of organization decisions to cope with it The five basic parts of an organisation Middle Line – • Managers & First line supervisors –scalar chain\ Responsibilities are the same as strategic apex within one’s level- Negotiation- handling disturbances - Internal inter relationships Techno structure • Standardization of Work process – Engineering designs, Lean management, Six sigma • Standardization of skills – Training to build uniform competences • Standardization of outputs – Performance control systems Simple structure- Little or no techno structure Control at strategic apex -Direct supervision Eg- Entrepreneurial firm / one product Environment – simple & stable Machine beauracracy Professional beauracracy Control @Technostructure Control @Operational core Standardisation of work- Eg- Mass production Standardisation of Skills / expertiseEg- University Standardisation with Strict Rules &, Clear Professionals in operating core &middle line distinction between line and staff Mutual adjustment- elaborate support staff Environment – simple & stable Environment – complex & stable Divisionalised form Units independent, Control@ middle line Standardisation of output Performance control for markets and products Environment – Multi - diverse Adhocracy Less formalization, organic, mutual adjustment Market based, product based teams Environment – Dynamic & complex Administrative adhocracy Operating adhocracy Operating core truncated from others Innovations for clients Selective decentralization – R&D companies Eg- Consulting and gaming companies Adhoc decisions made for projects Key elements of Design- Differentiation and Integration • Integration is the process of coordinating various tasks, functions, and divisions so that they work together and not at cross-purposes • Types of mechanisms are | Hierarchy of authority | Direct contact | Liaison roles | Task force | Teams | Integrating roles | Integrating departments | Key elements of Design- Centralization and Decentralization of Authority • Centralized organization: Organizational setup in which the authority to make important decisions is retained by managers at the top of the hierarchy • Decentralized organization: An organizational setup in which the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy Key elements of Design- Standardization and Mutual Adjustment • Standardization: Conformity to specific models or examples that are considered proper in a given situation – Defined by rules and norms • Mutual adjustment: The compromise that emerges when decision making and coordination are evolutionary processes and people use their judgment rather than standardized rules to address a problem Organizational Design Challenges 4-21