Understanding organizations - - Management theory
- 1. Management Theory & Practice Topic-3 Understanding Organizations
- 2. Understanding Organizations • Relation to Planning: Planning sets the destination while organizing is the method to reach it. • Core of Organizing: Involves purposeful activity to implement plans, focusing on: • Determining, grouping, and structuring activities. • Devising and assigning roles. • Setting accountability for results. • Creating rules and systems for communication, decision-making, and conflict resolution
- 3. Understanding Organizations • Determining, grouping, and structuring activities. • This involves identifying all the tasks that need to be done, grouping similar tasks together, and structuring them in a logical order. • Example: In a marketing department, activities might be grouped into market research, advertising, and sales promotion. • Devising and assigning roles. • This step involves defining specific roles and responsibilities for each task or group of tasks. • Example: Assigning a team member to handle social media marketing, another to manage email campaigns, and another to oversee content creation.
- 4. Understanding Organizations • Setting accountability for results. • Establishing who is responsible for the outcomes of each task or role. • Example: The social media manager is accountable for increasing engagement rates, while the email campaign manager is responsible for improving open and click-through rates. • Creating rules and systems for communication, decision-making, and conflict resolution • Developing protocols and systems to ensure effective communication, streamline decision- making, and resolve conflicts. • Example: Implementing regular team meetings, using project management tools MS Project Manager, setting SOPs, and setting up a conflict resolution process.
- 5. Understanding Organizations • Organizing vs. Organization: • Organizing is a process of coordination. It is an active process of arranging resources and tasks to achieve objectives. • Organization is a social system that operates as an open system, converting inputs to outputs within its environment. It is the social structure within which organizing occurs. • Example: Organizing is like arranging the pieces of a puzzle, while the organization is the completed puzzle that shows the bigger picture.
- 6. Understanding Organizations • Why Organizations Exist • Role of Organizations: • Fulfilling Needs: Organizations exist to meet various needs of individuals and society, such as providing goods, services, employment, and social interaction. • Achieving Objectives: They help in achieving specific goals, whether they are economic, social, cultural, or environmental. • Coordination and Efficiency: Organizations bring together resources (people, capital, technology) in a coordinated manner to achieve efficiency and effectiveness. • Innovation and Growth: They foster innovation by providing a structured environment for creativity and development, leading to growth and advancement.
- 7. Introduction to Organization • Types of Organizations • Profit Organizations: • Purpose: To generate profit for owners and shareholders. • Examples: Sole trader, partnership, private limited companies, public limited companies, etc. • Non-Profit Organizations: • Purpose: To serve a social cause or community need without the primary goal of making profits. • Examples: Charities, foundations, NGOs. • Government Organizations: • Purpose: To provide public services and regulate various aspects of society. • Examples: Federal, state, and local government agencies.
- 8. Organization Structure • Developing Field: • The study of organisation structures is continuously evolving. • Influences include classical theorists, Weber’s theory of bureaucracy, and the contingency school. • Recent contributions by Henry Mintzberg offer fresh perspectives on organisational design. • Definition by Mintzberg (1979): • “The sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination between them.” • Emphasizes the balance between differentiation (specialisation) and integration (coordination).
- 9. Key Questions in Organisation Structures 1. Specialisation of Roles: Determining the extent to which roles should be specialised to enhance efficiency and expertise. Example: In a tech company, having specialised roles like software developers, UX designers, and data analysts. 2. Standardisation vs. Discretion: Balancing standardisation of processes with allowing discretion and empowerment to employees. Example: Standardising coding practices while allowing developers creative freedom in problem-solving. 3. Formality: Deciding the level of formality in processes and interactions within the organisation. Example: Formal dress codes and meeting protocols versus a more casual, flexible approach. Military vs a tech firm. 4. Levels of Authority: Establishing the number of hierarchical levels to ensure effective management and communication. Example: A flat structure with few levels versus a tall structure with multiple management layers. 5. Centralisation vs. Decentralisation: Determining the extent to which decision-making should be centralised at the top or decentralised across the organisation. Example: Centralised strategic decisions with decentralised operational decisions.
- 10. Handy’s Four Structures • Web Structure: • Explanation: Centralised power in the hands of a few key individuals. • Example: A small startup where the founder makes most of the decisions. • Greek Temple: • Explanation: Based on functional specialisms and defined roles, typical of bureaucracies. • Example: A government agency with departments like finance, HR, and operations. • Net: • Explanation: Matrix organisation with project teams coordinated by line and functional units. • Example: A consulting firm where employees work on multiple projects across different teams. • Cluster/Galaxy: • Explanation: Independent and self-supporting individuals, common in professional practices. • Example: A law firm where each lawyer operates independently but shares resources.
- 11. Mintzberg’s Five Segments • Strategic Apex: • Explanation: Comprises the chief executive and directors responsible for overall strategy. • Example: The CEO and board of directors in a corporation. • Middle Line: • Explanation: Operational management that links the strategic apex to the operating core. • Example: Regional managers in a retail chain. • Operating Core: • Explanation: Employees directly involved in producing goods and services. • Example: Factory workers in a manufacturing company. • Technostructure: • Explanation: Functional specialists and advisors who provide technical support. • Example: IT support and financial analysts. • Support Staff: • Explanation: Provide corporate services and support functions. • Example: HR, legal, and administrative staff.
- 12. Mintzberg’s Five Configurations • Simple Structure: • Explanation: Minimal structure, often found in small or new organisations. • Example: A startup with a flat hierarchy. • Machine Bureaucracy: • Explanation: Dominated by technical/specialist priorities, with high standardisation. • Example: A large manufacturing company with strict processes. • Professional Bureaucracy: • Explanation: Dominated by the skills of core staff, with a high degree of autonomy. • Example: A hospital where doctors and nurses have significant decision-making power. • Divisionalised Form: • Explanation: Dominated by products or outputs, with semi-autonomous divisions. • Example: A multinational corporation with separate divisions for different product lines. • Adhocracy: • Explanation: Flexible and adaptive, with shared dominance of core staff and support services. • Example: A tech company focused on innovation and project-based work.
- 13. Mintzberg’s Five Configurations Configuration Prime Coordinating Mechanism Key Part of Organisation Main Design Parameters Contingency Factors Simple Structure (‘non- structure’) Direct supervision Strategic Apex • Centralisation • Organic • Age: young • Technical: simple • Environment: simple/dynamic Machine Bureaucracy Standardisation of work process Techno-structure • Behaviour formalization • Specialisation • Centralisation • Age: old • Size: large • Technical: simple & regulated • Environment: stable/external control Professional Bureaucracy Standardisation of skills Operating core • Training • Horizontal specialization • Decentralisation • Environment: complex • Technical: simple & non-regulated Divisionlised Form Standardisation of outputs Middle line • Unit grouping (markets) • Performance control • Environment: diversified markets • Age/size: old/large • Power: middle managers Adhocracy Mutual adjustment • Support staff • Operating core • Liasion devices • Organic • Unit grouping (functional/markets) • Age: young • Technical: automated • Environment: complex/dynamic
- 14. Key Organisational Variables • Purpose/Goals: • Explanation: The fundamental aims and goals of the organisation. • Example: A non-profit aiming to reduce homelessness. • People: • Explanation: The individuals who make up the organisation. • Example: Employees, managers, and stakeholders. • Tasks: • Explanation: Basic activities required to achieve organisational aims. • Example: Product development, marketing, and customer service. • Technology: • Explanation: Technical aspects of the internal environment. • Example: IT infrastructure, manufacturing equipment. • Culture: • Explanation: Dominant values guiding the organisation. • Example: A culture of innovation and continuous improvement. • External Environment: • Explanation: External market, technological, and social conditions affecting the organisation. • Example: Economic trends, regulatory changes, and social expectations.
- 15. ETZIONI’s Typology • Overview of Amitai Etzioni’s Work: • Background: Amitai Etzioni is a prominent sociologist and professor known for his contributions to organizational theory and socioeconomics. • Focus: His typology categorizes organizations based on the type of power they use and the kind of compliance they elicit from members. • Significance: Provides a framework for understanding how different organizations function and maintain control, helping managers design effective organizational structures.
- 16. Types of Power and Compliance • Etzioni’s Three Types of Power: • Coercive Power: Based on force or threat of force. • Example: Prisons use coercive power to maintain order and discipline among inmates. • Utilitarian Power: Based on material rewards and incentives. • Example: Corporations use salaries, bonuses, and promotions to motivate employees. • Normative Power: Based on symbolic rewards and moral persuasion. • Example: Churches use shared beliefs and values to inspire commitment among members. • Compliance: • Alienative Compliance: Members comply out of fear or coercion. • Example: Prisoners follow rules to avoid punishment. • Calculative Compliance: Members comply for tangible rewards. • Example: Employees work hard to earn bonuses and promotions. • Moral Compliance: Members comply because they believe in the values and goals of the organization. • Example: Volunteers dedicate time to a cause they are passionate about.
- 17. Coercive Organizations • Definition: • Organizations that rely on coercive power to maintain control. • Examples: • Prisons, military boot camps, and some psychiatric hospitals. • Characteristics: • High Levels of Control and Surveillance: Constant monitoring to ensure compliance. • Strict Rules and Regulations: Clear and rigid guidelines that must be followed. • Fear of Punishment: Members comply primarily to avoid negative consequences. • Example: In a prison, inmates follow strict schedules and rules to avoid disciplinary actions.
- 18. Utilitarian Organizations • Definition: • Organizations that use utilitarian power, offering material rewards for compliance. • Examples: • Corporations, factories, and businesses. • Characteristics: • Focus on Productivity and Efficiency: Emphasis on achieving measurable results. • Material Incentives: Salaries, bonuses, and other financial rewards motivate members. • Structured Hierarchies: Clear roles and responsibilities within the organization. • Example: In a corporation, employees work towards targets to earn bonuses and promotions.
- 19. Normative Organizations • Definition: • Organizations that rely on normative power, using symbolic rewards and moral persuasion. • Examples: • Churches, political parties, and volunteer organizations. • Characteristics: • Shared Values and Beliefs: Strong emphasis on a common mission or purpose. • Voluntary Participation: Members join and stay because they believe in the cause. • High Commitment Levels: Members are often deeply committed and willing to go above and beyond. • Example: In a church, members participate in activities and donate time and resources out of a sense of duty and belief in the mission.
- 20. Comparing Types of Organizations Type of Organization Power Type Compliance Type Examples Coercive Coercive Alienative Prisons, military boot camps Utilitarian Utilitarian Calculative Corporations, factories Normative Normative Moral Churches, political parties Coercive Organizations: High control, fear-based Utilitarian Organizations: Material incentives, calculative Normative Organizations: Shared values, moral
- 21. Comparing Types of Organizations Type of Organization Power Type Compliance Type Examples Coercive Coercive Alienative Prisons, military boot camps Utilitarian Utilitarian Calculative Corporations, factories Normative Normative Moral Churches, political parties Coercive Organizations: High control, fear-based Utilitarian Organizations: Material incentives, calculative Normative Organizations: Shared values, moral
- 22. Discussion Points: • How does the type of power used by an organization affect your motivation and behavior? • Can you identify any organizations that use a combination of these power types? • What changes could improve the effectiveness of these organizations?
- 23. Six Box Model • Overview of the Six Box Model: • Developed by Marvin Weisbord in 1976. • A diagnostic framework to analyze and improve organizational effectiveness. • Focuses on six key areas: Purposes, Structures, Relationships, Rewards, Leadership, and Helpful Mechanisms. • Helps identify areas where organizations may face issues and provides a structured approach to address them. • Application: Widely used in organizational development, consulting, and management training to diagnose problems and design interventions.
- 24. The Six Boxes Purposes: The reason for the organization’s existence and its goals. Structures: The arrangement of roles, responsibilities, and authority. Relationships: The quality of interactions among members. Rewards: The incentives and recognition systems in place. Leadership: The style and effectiveness of leadership. Helpful Mechanisms: The tools, processes, and systems that support the organization. Integration: Each box is interconnected, and changes in one area can impact others.
- 25. Purposes • Definition: The fundamental reason for the organization’s existence, including its mission, vision, and strategic objectives. • Importance: Clear purposes align the organization’s efforts and provide direction. • Examples: • Non-Profit Organization: A charity focused on reducing homelessness has a clear purpose of providing shelter and support services. • Corporation: A tech company aims to innovate and lead in the software industry, driving its research and development efforts. • Alignment: Ensuring that all activities and initiatives align with the organization’s purpose is crucial for coherence and effectiveness. • Case Study: A healthcare organization with a mission to provide affordable care must align its services, pricing, and community outreach with this purpose.
- 26. Structures • Definition: The formal arrangement of roles, responsibilities, and authority within the organization. • Impact: Effective structures ensure efficient workflow and clear accountability. • Examples: • Hierarchical Structure: A traditional corporation with multiple management levels. • Flat Structure: A startup with minimal hierarchical levels to promote agility and quick decision-making. • Flexibility: Structures should be adaptable to changes in the environment and organizational needs. • Case Study: A multinational company restructuring to create regional divisions to better address local markets.
- 27. Relationships • Definition: The quality of interactions and communication among members. • Impact: Strong relationships foster collaboration and a positive work environment. • Examples: • Collaborative Culture: A company that encourages teamwork and open communication. • Conflict Resolution: Mechanisms in place to address and resolve conflicts effectively. • Trust and Respect: Building trust and respect among team members is essential for effective relationships. • Case Study: A project team in a tech company using regular stand-up meetings and collaborative tools to enhance communication and teamwork.
- 28. Rewards • Rewards: • Definition: The systems in place to recognize and incentivize employees. • Impact: Effective rewards motivate employees and enhance performance. • Examples: • Financial Incentives: Bonuses, raises, and profit-sharing plans. • Non-Financial Rewards: Recognition programs, professional development opportunities. • Customization: Tailoring rewards to meet the diverse needs and preferences of employees. • Case Study: A sales team motivated by a combination of commission- based pay and public recognition for top performers.
- 29. Leadership • Leadership: • Definition: The style and effectiveness of leadership within the organization. • Impact: Strong leadership provides direction, inspires employees, and drives organizational success. • Examples: • Transformational Leadership: Leaders who inspire and motivate employees to exceed expectations. • Transactional Leadership: Leaders who focus on routine, supervision, and performance. • Adaptability: Effective leaders adapt their style to the needs of their team and the situation. • Case Study: A CEO who leads a company through a major transformation by clearly communicating the vision and engaging employees at all levels.
- 30. Helpful Mechanisms • Definition: • The tools, processes, and systems that support the organization’s operations and strategy execution. • Importance: • Ensure smooth functioning and efficiency. • Facilitate communication, decision-making, and problem-solving. • Examples: • Technology: Use of project management software like Asana or Trello to streamline tasks. • Processes: Standard operating procedures (SOPs) that ensure consistency and quality. • Feedback Systems: Regular performance reviews and feedback mechanisms to improve employee performance. • Innovation: Mechanisms that support innovation, such as idea management systems and innovation labs. • Case Study: A manufacturing company implementing a new ERP system to integrate all business processes and improve efficiency.
- 31. Helpful Mechanisms • Definition: • The tools, processes, and systems that support the organization’s operations and strategy execution. • Importance: • Ensure smooth functioning and efficiency. • Facilitate communication, decision-making, and problem-solving. • Examples: • Technology: Use of project management software like Asana or Trello to streamline tasks. • Processes: Standard operating procedures (SOPs) that ensure consistency and quality. • Feedback Systems: Regular performance reviews and feedback mechanisms to improve employee performance. • Innovation: Mechanisms that support innovation, such as idea management systems and innovation labs. • Case Study: A manufacturing company implementing a new ERP system to integrate all business processes and improve efficiency.
- 32. Integration • Definition: • Integration refers to the alignment and coordination of the six boxes to ensure they work together harmoniously. • Importance: • Ensures that all elements of the organization are aligned with its goals and strategies. • Helps in identifying and resolving conflicts between different areas. • Enhances overall organizational effectiveness and efficiency. • Examples: • Cross-Functional Teams: Teams composed of members from different departments working together on a common project. • Integrated Communication Systems: Platforms like Slack or Microsoft Teams that facilitate seamless communication across the organization. • Balanced Scorecard: A strategic planning and management system that aligns business activities to the vision and strategy of the organization. • Case Study: A tech company using integrated project management and communication tools to ensure all departments are aligned and working towards common goals.