ORGANISATIONAL DESIGN AND DEVELOPMENT by : DR. T.K. JAIN AFTERSCHO ☺ OL centre for social entrepreneurship sivakamu veterinary hospital road bikaner 334001 rajasthan, india FOR – PGPSE / CSE PARTICIPANTS [email_address] mobile : 91+9414430763
My words..... My purpose here is to give an introduction of organisational design and development. I welcome your suggestions. I also request you to help me in spreading social entrepreneurship across the globe – for which I need support of you people – not of any VIP. With your help, I can spread the ideas – for which we stand....
What is organisation ? Group of people working together for common purpose under a well organised format and systems Harold Levitt (1965) said that there are 4 components that make an organisation : 1 task 2. structure 3. technology 4 (the most important ) people
Is organisation a system ? Yes, system has input, process and output system has negative entropy, dynamic homeostatis, and permeable boundaries organisations are like living system. There are two types of systems – open and close. Organisations have to be open system to grow and survive.
What is the difference between open and close system? There are two types of systems – open and close. Organisations have to be open system to grow and survive. There is no system of feedback in closed system. Open systems have permeable boundaries, they change themselves as per feedback and they welcome outsiders. These systems are dynamic systems. Organisations must be open systems
What is negative entropy ? Entropy = depreciation / decay / depletion organisations have NEGATIVE entropy – it means they have systems, which fight with the decay and depreciation. Organisations are able to survive because they are able to recover from their decay.
What is feedback mechanism ? Organisations received feedback from environment. They are changing themselves with the feedback that they receive open system perspective says that organisations must constantly update themselves through the feedback process. There are two types of feedback processes - internal interface and exernal interface – both help the organisation in its rejuvenation
What is 7s model of organisation ? (McKinsey Model) The art of Japanese Management by Richard Pascale and Anthony and Athos talked about 7 S then Tom Peters and Robert Waterman talked about it in their book : In search of Excellence in 1978. There are 7 components which are inter-related and inter-connected in every organisation
7 S Skill style staff strategy systems superordinate goals (beyond one s personal goals) structure
What are the factors that affect an organisational design ? Environment technology culture strategy goals policies
What are the key findings of Lawrence and Lorsch Study ? In their book organisation and environment, they talked about 6 important factors relating to organisational design : 1. formal hierarchy 2. standardised processes / rules etc. 3. departmentation 4. comittees / cross functional teams 5 human relations training 6. individuals and groups
What are the classification of organisations on the basis of flexibility and adaptibility ? Mechanistic v/s organic organisations Mechanistic organisations are little bit closed organisations, working on strick rules and regulations giving little freedom to individuals. Organic organisations are dynamic, flexible, adaptive, changing and learning organisations. They give encough freedom for creativity and innovations
Difference between mechanistic and organic structure ? There are 5 factors that differentiate : hierarchy, rules, span of control, coordination , division of labour. There is strick and tall hierarchy, strict rules, formal control system, narrow span of control, formal coordination, and precise division of labour in mechanistic structure (just opposite in organic structure)
What are the dimensions of organisational environment ? There are 2 main dimensions : 1. level of complexity in the environment 2. level of dynamism / flexibility / changes / turbulance in the environment
What is the relation between strategy and organisational design ? Design must match strategy. We have 3 types of strategies : 1. cost leadership – it is useful in highly turbulant and dynamic & complex environment 2. focus : it is useful in stable environment with identified set of markets, which are differentiable 3. differentiation : it is useful in dynamic environment, but in less complex business conditions
What are the factors that contribute to organisational effectiveness ? There are many factors that contribute to effectiveness : quality of management long term vision inovations corporate culture financial soundness
Difference between effectiveness and efficiency ? Ability to achive goals is called effectiveness ability to generate higher level of input -output ratio gives efficiency efficiency gives you more output effectiveness enables you to do the right things
What is line structure ? Line means those in authority line denotes responsibility line denotes accountability staff on the other hand denotes advisory role both line and staff must work in close coordination (there is a possibility of conflict between line and staff)
What is the difference between project and matrix organisation ? Project organisation is for achieving a specific objective in a given time framework here people are grouped together for a specific project and thus there is a separate organisation structure for project. It disbands with the completion of project Matrix organisation combines functional and project structure. Each person remains part of functional organisation also and works in project also. There is a dual authority system in matrix (row and column)
What is virtual organisation structure ? Virtual structure means a structure which is based on internet people are spread out all over the world and they work in a loosely connected structural format. Virtual structure symbolises modern structures, where people are able to connect without having physical proximity
What is inverted pyramid ? Organisations are denoted by pyramidical organisational structures. In these pyramids, CEO and general managers are at the top and workers are at the bottom. Inverted pyramid is just opposite of these pyramids. Here CEO is at the bottom. At the top we have our customers and our workers Who give suggestions, which percolate down to CEO, who try to implement them. It is just another approach to look at organisations.
What is flat v/s horizontal organisations ? Flat organisation : it is the organisation without hierarchy. It is based on the concept of equality of people. There are no bosses here. People work in collegial work environment and there is an egalitarian work culture Horizontal organisation = it is similar to flat organisation but opposite of vertical / pyramidical organisational structure
What is formal v/s informal structure ? Formal structure represents rules and regulations Informal organisation evolves out of the needs of people. It represents friendship / collaboration / support of people. Informal organisations are truly the people organisation. For ideal functioning, there should not be much gap between formal and informal organisation.
What is the difference between centralisation and decentralisation ? Centralisation = where decision making is undertaken by people at the top level. There is little freedom across the organisation decentralisation = here we have plenty of freedom and autonomy to people and there is a lot of scope for people to be creative and try out their innovative approaches. Decision making is spread out at the field level itself.
What is the difference between product and divisional structure ? Product structure is one where organisation is divided on the basis of products. Divisional structure is similar to product structure. Here we use criteria like geography, product, customer etc. To divide the organisation in different divisions. Railways in India is divided in divisional organisation structure (on the basis of geographic factors).
What is boundary less organisation ? When organisations extend themselves beyond their boundaries, they are called boundary-less organisations. They enbed their suppliers and customers in their own network. They are flexible, adaptive and just like amoeba. They change their shape and embrace others in their network very fast.
What are the different approaches to design organisation ? 1. beurocratic 2. contingency 3. behavioural model
. beurocratic approach Rules, systems, procedure and hierarchy are most important factors
Contingency approach Design depends on situation factors like technology, environment, size etc. Play imprortant role as decision variables
Behavioural approach Informal and formal relations between people becomes important and organisation is designed on the basis of human relations here basic approach is to develop teams and build superstructure on teams
Growth / stages in the growth of organisation Organisation passes through different stages :. birth growth matuity decline design depends on the stage of organisation
What are the classifications given by Mintzberg (1979 in teh book : the structuring of organisations ) There are 5 types : 1. simple structure 2. machine bureaucracy 3. professional bureaucracy 4. divisional form 5 . adhocracy
What are the differentiating factors as per Mintzberg ? Factors like : formalisation, centralisation, technology, environment, lateral communication, coordination etc.
Description of different designs : 1. simple structure - useful for small organisations 2. machine bureaucracy – strict rules, formal systems 3. professional bureaucracy – useful for large corporations, based on merits 4. divisional form – very large and multi product / multi geographic organisations 5 . adhocracy - like a matrix structure – for high technology complex work systems
How to do restructuring ? There are many factors in restructuring : 1. factors like technology 2. customer relationship 3. financial compulsions (non profit units may be branched out) 4. innovation / new product launch
How do companies restructure ? 1. set up parallel structures 2. acquiring a runing business / takeover / merger / acquisition 3. branch off 4. committee set up / matrix / groups for innovations / etc.
How to transform culture ? Restructuring requires cultural transformation also – how - rotation of people, team building workshops , task forces, committees, learning organisations, informal communication, training and development, collective decisions about vision etc.
Can we really forecast demand ? Demand is dependent on many factors like market trend, competition, business environment We cant predict exact demand. But using statistical tools, we can estimate demand, which can help us in production planning.
What are the methods for demand forecasting ? Delphi Nominal group technique opinion poll Moving average method Trend analysis Time series analysis
What is DELPHI ? Here we invite different experts and take their opinion and they finally try to find an average of their ideas. We again intimate the experts about the average opinion, and give them an opportunity to revise their forecast. Delphi is useful when you want to have an overall subjective assessment about complex business environment. All the experts are distant and they dont know each other, therefore each one tries to give the best possible estimate
What is Nominal Group Technique? It is similar to Delphi, but here we ask experts to sit together and explain their perspective to others so that others can also give their opinion. People frame their estimates individually, but thereafter they give justification for their opinion.
What is opinion poll method ? Here we collect information about the issue from people using opinion poll. We may take interview, we may collect data using questionnaire, or we may organise meeting / conference to find opinion of people. Variants of opinion poll are : focus group discussion – which is used in marketing to know about consumer opinions
Intuition method This is traditional method intuition = personal opinion on the basis of one's experience intuition is not just a hunch. It is based on experience, and past understanding. We can take our decision on the basis of intuition, if we have considerable experience in that sector
What is moving average method ? Here we take moving average of either 3 days or 5 days or 7 days and try to forecast using this moving average. We may also use smoothing to remove exceptional fluctuations Moving average is a case where data can be used to forecast on the basis of past trend
Example of moving average : Period data 3 year moving average 2001 300 2002 400 400 2003 500 434 2004 400 500 2005 600 600 2006 800 700 2007 700
What is smoothing ? Here we use the past data to smooth the data. Here we use the past data to predict the future
Time series or stockastic models Stockastic means where we are using time as an independent variable and predict demand using this variable.
What is a trend ? There are 4 components of trend : 1. secular trend 2. cyclical fluctuation 3. seasonal fluctuation 4. random / irregular variations
What is secular trend It is overall trend that continues for a long period of time. It is having long time perspective
What is cyclical fluctuation? It represents fluctuations due to economic cycles like boom, recession etc. These fluctuations last for a few years
What is seasonal variation ? It is due to seasonal components like summer, winter, monsoon, or some other such factors which have impact for a few months
What is random variation? These are beyong prediction they happen by chance
Causal / econometrics models These models use cause -effect relationship to predict demand. In these models, we try to estimate demand using an econometric models – here we try
What are the types of trends and cycles ? 1. linear trend = there is constant rate of change (it is a straight line) 2. parabolic trend = a varying rate of change 3. exponential / logarithmic trend = a constant % rateof change 4 S shape : slow initial growth, then fast growth and then again slow growth – showing S shape
What is autocorrelation ? Correlation of a variable with itself (with a time lag) is called auto (self) – correlation this can be used to identify the impact of seasonality. If Auto-correlation is zero, it denotes that data are random. If data has seasonality, there will be autocorrelation – which can be identified. We have to remove the component of autocorrelation to identify the trend line
Box Jenkins Model This model was developed in 1976. It can help you in demand forecasting. It uses two types of methods : 1 AR (auto regressive model ) 2. moving average method
contd... Data in a series are of two types : 1. stationary (fixed around mean) 2. non-stationary (data are not fixed around mean). Box Jenkins model convert non-stationary trend into stationary trend, thus prediction is possible.
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