Organizational Structure

Dr. Mandi came up with another topic "Organizational Structure"

I have seen companies spending extravagant amount of time and money changing their organization structure. Infosys Ltd redesigned its organization structure realigning its services around four verticals - BFSI, ECS, Retail and Manufacturing. It makes complete sense since the company wants to present a uniform and consistent deal to its clients and avoid the problems of multiple deals across different offerings. But this was the same company which was split across Geographies in the late 90's. By 2003, the geographies were merged and company was realigned based on respective delivery units. Gradually the whole company was re jigged across six different verticals. Come 2007 and five horizontal units were embedded within these verticals. Finally just a year back, it was realigned on the lines of four verticals with most of the horizontal business units being merged to respective verticals. So coming back to the question. Why does companies spend so much of their money and time on re-jigging their organization structure?

One word answer - because it is that important to the success of the firm. While the strategic decisions are taken by the top line management, it is the effectiveness of the organization structure which translates this strategy into successful implementation.

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment. 

What are the 4 basic elements of Organization Structure ?

a) Span of Control: Number of people directly reporting to the next level in the hierarchy.

b) Centralization: Degree to which formal decision authority is held be a small group of people, typically those at the top of the organizational hierarchy.

c) Formalization: Degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms.

d) Departmentalization: Organizational charts that specifies how employees and their activities are grouped together.

How does the Organizational Structure affect the organization ?

Organizational structure affects organizational action in two big ways. 

a) Provides the foundation on which standard operating procedures and routines rest. 

b) Determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.

TYPES OF ORGANIZATIONAL STRUCTURES

a) Functional Organization

This type of organizational structure:

•  - Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS. 
•   - This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.
•  - Mainly used by the smaller firms that offer a limited line of products.
•  - Makes supervision easier as each manager must be expert in only a narrow range of skills. It also helps to group a particular set of people with the specialized kind of skill set.
•  Disadvantages :
•    i) As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions.
•    ii) Harder to judge performance because which department to blame when a new product fails.
•    iii) Difficult to coordinate the functions of members of the entire organization as each department may have difficulty working with other departments in a unified way to achieve organizational goals.

b) Product/Market/Divisional Organization

  - Brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.

  - Can follow three patterns as described above:

    i) DIVISION BY PRODUCT

ii) DIVISION BY GEOGRAPHY

iii) DIVISION BY CUSTOMER 

c) Matrix Organization:

One example of Matrix Organization in real life example is the Organization structure of Accenture. 

This organizational method is more common in the consulting world and has the following characteristics:

• Each worker is assigned to two bosses in two different hierarchies. The first hierarchy is the executive aspect and is there to get projects completed using the resources that the company has.
• The second kind of hierarchy in the matrix structure is the functional aspect and its purpose is to train employees in industry specific knowledge. At Accenture this functional aspect is also a matrix and is made up of five industry-based operating groups and three capability groups.

Goodbye till the next blog..................

Organizational Culture

It was one Class when I entered Late and I saw Dr. Mandi performing his daily rituals of opening his shoes.
He introduced another commonly heard topic Organizational Culture.

What is Organizational Culture??

Organisational culture is a system of shared values and beliefs about what’s important and appropriate in an organisation; it also includes feelings and relationships internally and externally. Every organisation’s values are supposed to be unique and are widely shared and reflected in daily practice, relevant to the company purpose and strategy. It’s important for organisations of different size and level to create the kind of environment or culture where the positive managerial patterns of listening, coaching, guiding, involving and problem-solving are actively encouraged and reinforced. This is where the policy of the Human Resources department is critical as it reflects and reinforces organisational values and culture.

Changing organisational culture

Focusing on building and sustaining an organisational culture is a way of showing that people are the organisation’s most valuable asset. But sometimes a change is required for better efficiency and productivity.

Companies which have embraced organisational culture change see a positive increase in their employee engagement, attraction of new customers and boosting their revenues. Other aspects influenced by effective culture change include:

• Greater employee retention
• Customer satisfaction
• Reduction in operating costs, etc.

Over the last decade the interest in organisational culture has grown quickly. Changing a culture is a large-scale undertaking because every organization’s culture comprises an interlocking set of goals, roles, processes, values, communication practices, attitudes and assumptions; these are the organisational tools needed to be put into play for great results.

Employee engagement is central to what the organizational culture is...

The fact that employee engagement can draw a line between staff morale and quality of output should see it being central to many companies’ future plans. A business is only as good as it its output and if it produces too few goods or a poor quality service, it can have a draining effect on the business. Quite often there is nothing more than can be done from an automated point of view with respect to improving output, which means that issues could lie with the workforce. This is where businesses need to develop a good relationship with their employees to find out if there is anything that can be done to improve the working environment.

Some of the Employee Engagement Awards or Practices which must be introduced in every industry are :-

• Best Kaizen Award
• Star Performer of the Month in every Department
• Instant Recognition Award in the Form of Mail by Boss
• Specialized Program for Accelerated Career
• Sales Achievement Linked Award

See You in the next Blog..... Happy Blogging!!!

Management Terms - I

Today let us focus on some of the commonly used terms and theories in an organization.

What is Theory Z ???

Theory Z is the name applied to the so-called "Japanese Management" style popularized during the Asian economic boom of the 1980s. It was proposed by Dr. William Ouchi. Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. This theory assumes that employees are disciplined, can be trusted to do their job, and want to build happy and intimate working relationships with their subordinates, peers and superiors. They value a working environment where family, cultures, traditions and social institutions are regarded as equally important as the work itself.

Characteristics of the Theory Z

• Long-term employment and job security
• Collective responsibility
• Collective decision-making
• Slow evaluation and promotion
• Moderately specialized careers
• Concern for a total person, including their family

Another important term is Job Rotation.

Job rotation is a method used for employee development. Job rotation gives the employee the opportunity to develop skills in a variety of changing jobs. In job rotation, employees will make lateral moves the majority of the time, but job rotation can also involve a promotion. 

The key to successful job rotation is 

• Job Rotation must start with an end goal.
• Job rotation must be carefully planned.
• Employees are able to assess whether the job rotation is achieving the goals.
• Both the employee and the organization need to benefit from the job rotation.
• A mentor, internal trainer, or supervisor is provided at each step of the job rotation plan.
• Written documentation, an employee manual, or online resource enhances employee learning.

Job rotation is a big motivator 

• Job rotation keeps the employee interested in his work as he gets different job profiles and his work does not become monotonous.

• One of the other major advantage of job rotation is that it gives an employee a chance to learn a lot more than he normally would. He becomes multi-skilled and this is an asset that is always helpful.

• For example, if an employee falls sick or is on leave and can’t report to work and if there is a shortage of staff on a particular day, then thanks to the practice of job rotation, an organization has enough skilled manpower to replace the employee temporarily and take up his job. Many organizations use job rotation as a tool to curb absenteeism. 

• Goal setting is very necessary in job rotation. This would help in convincing an employee that this policy would be for his own benefit and they would stand to gain a lot from it.

• Job rotation ensures that an employee does not feel ‘stressed’ out from the job, as this is a major issue that HR teams face today. To develop a good job rotation program the organization must assess its needs and requirements. This kind of a program can be used either for promotion or succession planning. Whatever the need be, it should be clearly identified before making such a program so as to help the organization know in which direction it is moving.

• Job rotation programs are known to help an organization develop management talent as well as it help in improving its competitive advantage over its rivals. It is a known fact that for an organization to succeed it is of paramount importance to ensure that the top management is very skillful and is aware of the happenings in the industry.

 Goodbye for today!!! See you in the next blog.... Till then Happy Reading!!

Three Monks - Management Lesson

Let's carry on with our Lessons....

Three Monks 

Three Monks is a Chinese animated feature film produced by the Shanghai Animation Film Studio. The film was one of the first animations created as part of the rebirth period. It is also referred to as The Three Buddhist Priests.

Three monks is a famous story in China. On the high mountain there is a temple. There is a long distance from the temple to the river which is located at the foot of the mountain. One monk used to live there. He had to walk a long way to fetch water, but he did it everyday. One day, another monk appeared in the temple. Now who’s to fetch water became a regular argument between them. Luckily they found a solution : they carried water together. Then the 3rd monk became a member of the temple, which brought complexity, because they all thought the others should go and get water. They suffered from thirst, but nobody still did not want to move until … a mouse ate the candle, and the flame started to burn down their temple. They worked together and transported water from the river and finally saved their temple. Since then they understood the old saying "unity is strength" and began to live a harmonious life. The temple never lacked water again.

Management Lessons

Productivity

We know that productivity = output/ inputWe can see that when one monk was carrying two bucket the productivity (output/input) is 1 but when 1 bucket is carried by two monk then the energy per unit share by each monk is 1/2 (as they a equally sharing the load of bucket) due to which the productivity increases to 2. it overall means that when we are working in a team than total productivity increases.

Innovation

When the monastery is on fire they realise that it is better to think in terms of team goals rather than individualistic goals. The monk at the bottom fills the buckets, the middle monk works on pulley system and the third monk at the top douses the fire with water in the bucket. This shows how a difficult inspires ingenious solutions. 

Responsibility

This story teaches a gentle, humorous lesson about responsibility. Three monks allow personal pride to interfere with the performance of daily tasks, each believing that the other two should be the ones to go downhill to fetch water. When a fire breaks out, however, they understand how silly they have been and work together to save the temple.

Smart Goal Setting

Continuing with the series of discussions on the course of Principles of Organization and Management.

Today's Concept - Smart Goal Setting

What is SMART ??

S = Specific

M = Measurable

A = Attainable

R = Relevant

T = Time Bound

Specific

The first term stresses the need for a specific goal over and against a more general one. This means the goal is clear and unambiguous; without vagaries and platitudes. To make goals specific, they must tell a team exactly what is expected, why is it important, who’s involved, where is it going to happen and which attributes are important.

A specific goal will usually answer the five "W" questions:

• What: What do I want to accomplish?
• Why: Specific reasons, purpose or benefits of accomplishing the goal.
• Who: Who is involved?
• Where: Identify a location.
• Which: Identify requirements and constraints.

Measurable

The second term stresses the need for concrete criteria for measuring progress toward the attainment of the goal. The thought behind this is that if a goal is not measurable, it is not possible to know whether a team is making progress toward successful completion. Measuring progress is supposed to help a team stay on track, reach its target dates, and experience the exhilaration of achievement that spurs it on to continued effort required to reach the ultimate goal.

A measurable goal will usually answer questions such as:

• How much?
• How many?
• How will I know when it is accomplished?

Attainable

The third term stresses the importance of goals that are realistic and attainable. While an attainable goal may stretch a team in order to achieve it, the goal is not extreme. That is, the goals are neither out of reach nor below standard performance, as these may be considered meaningless. When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. The theory states that an attainable goal may cause goal-setters to identify previously overlooked opportunities to bring themselves closer to the achievement of their goals.

An attainable goal will usually answer the question:

• How: How can the goal be accomplished?

Relevant

The fourth term stresses the importance of choosing goals that matter. A bank manager's goal to "Make 50 peanut butter and jelly sandwiches by 2:00pm" may be specific, measurable, attainable, and time-bound, but lacks relevance. Many times you will need support to accomplish a goal: resources, a champion voice, someone to knock down obstacles. Goals that are relevant to your boss, your team, your organization will receive that needed support.

Relevant goals (when met) drive the team, department, and organization forward. A goal that supports or is in alignment with other goals would be considered a relevant goal.

A relevant goal can answer yes to these questions:

• Does this seem worthwhile?

• Is this the right time?

• Does this match our other efforts/needs?

• Are you the right person?

Time Bound

The fifth term stresses the importance of grounding goals within a time frame, giving them a target date. A commitment to a deadline helps a team focus their efforts on completion of the goal on or before the due date. This part of the SMART goal criteria is intended to prevent goals from being overtaken by the day-to-day crises that invariably arise in an organization. A time-bound goal is intended to establish a sense of urgency.

A time-bound goal will usually answer the question:

• When?
• What can I do six months from now?
• What can I do six weeks from now?
• What can I do today?

Then Dr. Mandi taught us about the Pygmalion effect.

The Pygmalion effect, or Rosenthal effect, is the phenomenon in which the greater the expectation placed upon people, the better they perform.The effect is named after Pygmalion, a play by George Bernard Shaw.

An example of the Pygmalion effect is in groups. If there are two groups, one group thought that their teacher was "good", the other group thought he was "not good". The teacher treated both groups the same, but the group with a positive expectations had better outcomes than the others; Simply because those with positive expectations made them perform better than other students.

The Pygmalion effect is also an important instrument in management theory. It makes managers be aware, that the success of their employees depends not only on qualification, personal qualities or working environment. Manager always has to believe in his people and expect them to achieve the best results. In such case the subordinates will always feel this trust and demonstrate their best skills and abilities in their work.

Goodbye for now... More Lessons coming up.... 

Lesson Two - Craftsmanship and Modern Organization

Enough of introduction... Lets get on to the Lesson...

What is Craftsmanship??

The craftsman focuses on the product, which he or she has invented or developed. He possesses a specific skill that originates from a trade or craft. Craftsmen tend to operate as sole traders or at least in small businesses. They are often characterized as loners.

What is Organization??

An organization is a social entity with a common goal and linked to a social environment. In a modern organization the focus is on deskilling the process so that a complex task is broken into small parts and these small parts can be done by any individual with no particular skills required. Therefore modern organization do not require any craftsman. Craftsmanship takes more time to complete a job. 
In modern organization as parallel work are performed so time is saved. The interdependency in the organisation is much more than craftsmanship where a single person do all the work independently.

3 E's of Excellence 

Businesses have a tendency to focus on one the 3 E's.

The 3 E’s of management which are required to be achieved by any organization are   –

      1)    Effectiveness

      2)    Efficiency
      3)    Excellence

• Efficiency - Doing things as smoothly as possible, trying to eliminating processes and activities that do not add value to the product. It is measurable
• Effectiveness - Doing things as perfect as possible, making sure the end result is what the customer wants. It is not quantifiable.

Efficiency plus effectiveness will tend towards a premium strategy, giving the customer a smooth delivery of what they want                                                                                                                          

We can relate Excellence with effectiveness and efficiency directly.

Excellence = Effectiveness x Efficiency

Effectiveness is doing the right things and Efficiency is doing the things in right manner

                                                                          

First Management Theory Learnt - Theory X and Theory Y

Another go at Blogging!!

Second Class with Professor Mandi... This time he brought some wooden cubes with him and distributed those in the class. A student was asked to come out and build a tower with those wooden cubes. He built 16 cubes tower. Commendable!!!

Then Professor Mandi propounded the Theory of X & Y. Theory X & Y was an idea devised by Douglas McGregor in his 1960 book " The Human Side of Enterprise ".
Theory X is assumed to be authoritarian style where the individuals are considered that they dislike work, are shy and require constant coercion to perform. Management's role is to direct and control these employees.
Theory Y on the other hand is participative style of management which assumes that people will exercise self-direction and self-control in the achievement of organisational objectives to the degree they are committed. It is management's main task to maximize that commitment.

There are four possible conditions for working of workers and managers.

Condition 1 - Theory X assume LAZY workers as LAZY and make them work.
In this condition Manager will drive to bring out the worker from the comfort zone and make them work hard. Workers may revolt but to a lesser extent and it will not benefit the organization very much.
Condition 2 - Theory X assume NOT LAZY workers as LAZY and make them work.
This condition may result in losing of good employees. Managers fail to identify the true potential of the employee. Performing employees do not like to be told often by Boss. This will be really detrimental to the organization's growth. 

Condition 3 - Theory Y assume LAZY workers as NOT LAZY and make them work.

This is the worst condition. All the work will be delayed. Both will together bring downfall to the organization.

Condition 4 - Theory Y assume NOT LAZY workers as NOT LAZY and make them work.

This is the best condition and a Win-Win situation for the organization. Both will together work for the progress of the organization and take the organization to new heights.

In my Experience in the organization where I worked, there was a hard working employee but his Boss used to often give bad feedback about his work and used to overload him with work. He was given too many crucial value engineering projects. When he resigned all of a sudden it was a big loss to the company as he was working on a crucial project and it was very difficult to replace his skill set so fast. Project was delayed by an enormous extent and provided to be a big loss to the organization.

Looking forward to the next session.... Till then Happy Learning and Happy Blogging!!!