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ORGANISATIONAL SET UP (Formal Informal Organisations)

Purpose of organisations
Organisations exist in order to achieve their aims & objectives and to provide satisfaction for their members Organisations are structures of people Organisations are an integral part of society operating in both public & private sectors

Defining organisations
Farnham & Horton define organisations as: ..social ..social constructs created by groups in society to achieve specific purposes b means of planned & co-ordinated ifi by f l d co- di d activities. These activities involve using human resources to act in association with other inanimate resources in order to achieve the aims of the organisation.

Common factors in organisations

There are at least three common factors in any organisation: People Objectives Structure 4th Factor : Management playing the coordinating role

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Management Key Concepts

Organization: A structure whereby people are working together and coordinating their actions to achieve specific goals.

Goal: A desired future condition that the organization seeks to achieve. Management: The process of using organizational resources to achieve the organizations goals by

Planning, Organizing, Directing/Leading, and Controlling (Ref: Henri Fayol)

3 ELEMENTS OF AN ORGANIZATION

Figure 4.1

The nature of organisations

GOAL

STRUCTURE

PEOPLE & RESOURCES

MANAGEMENT

Approach to organisation theory that stresses the common aspects of organisational life (Watson)
The importance of the creative, critical & situationsituation-defining characteristics of the individuals within the organisation. The varieties of interest and goal among the individuals & groups in the organisation, & the emphasis on conflict & political behaviour. The interactions between the organisation & general environment.

Formal organisations
Schein defines a formal organisation as. the planned, co-ordination of the activities of a conumber of people for the achievement of some common, explicit purpose or goal, through the division of labour & function, & through a hierarchy of authority & responsibility

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Basic components of an organisation

Figure 4.3

Formal organisations
Formal organisations are: Deliberately planned and created Concerned with the co-ordination of activities coHierarchically structured with stated objectives Based on certain principles such as the specification of tasks and defined relationships of authority & responsibility

Basic components of an organisation

Operational core the direct performance of the technical or productive operations and the carrying out of actual task activities Operational support concerned indirectly with the technical or productive process but closely related to the actual flow of operational work

Basic components of an organisation

Organisational support the provision of services for the whole organisation, including the operational core but usually outside the actual flow of operational work Top management concerned with the broad objectives and policy & strategic decision making Middle management concerned with the cocoordination & integration of activities & providing links with operational support staff

Private enterprise & public sector organisations sector Private Public

Owned & financed by individuals, partners, or shareholders accountable to their owners or members. Main aim is of a commercial nature such as profit, return on capital employed, market standing or sales levels Created by government

Characteristic features of service organisations

The consumer is a participant in the service process Services cannot be stored, they are time-perishable & if timethey are not used they are lik l to b wasted h d h likely be d Services are less tangible & more difficult to explain or communicate

Do not generally have profit as their goal but have a political purpose
Fitzsimmons & Sullivan

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Characteristic features of service organisations

Benefits derived from services tend to be associated with feelings or emotions Work activities are people-oriented people Measurement of output is difficult & there is unlikely to be a single, important criterion by which to measure effective performance

Differences between products & services

Fitzsimmons & Sullivan

Source: Reproduced with permission from John Macdonald, Service Is Different, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

Table 4.1

Differences between products & services

Types of organisational authority

Traditional organisations - legitimised by custom and longlong-standing beliefs in the natural right to rule Charismatic organisations legitimised by belief in the personal qualities of the leader Bureaucratic organisations authority is based on the law of formal rules & procedures and on impersonal principles
Source: Reproduced with permission from John Macdonald, Service Is Different, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

Table 4.1

Classifying organisations by major purpose

Economic Protective Associative Public service Religious Political Educational Military Voluntary

Classifying organisations according to main beneficiaries

Mutual-benefit associations the membership Mutual Business concerns owners Service organisations client group Commonwealth organisations public at large

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Alternative classification genotypic function

Productive Maintenance Adaptive Managerial or political
Katz & Khan

Figure The open systems model of 4.4 organisations

Inputs

Transformation process
Comfortable & safe environment for customer businesses Design of systems Selling of systems expertise Provision of quality service

Company products Factored products Staff Technology

Management/sales/ technical expertise Finance Subcontractors Customers

Transformation process
Project management of customer order Site presence Innovation Internal & external communication Invoiced sales

Outputs

Satisfied and committed staff Reputation for excellence Installations that are fit for purpose Satisfied customers

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Organisational goals
Market leadership Growth Profitability To be the best in field To invest in our people To be professional

The Value Chain Concept

A Typical Company Value Chain (Internal)

Primary Activities and Costs

Identifies the separate activities and business processes performed to design, produce, market, deliver, and support a product / service Consists of two types of activities

Inbound Logistics

Operations

Outbound Logistics

Sales and Marketing

Service

Profit Margin

Primary activities Support activities

Product R&D, Technology, Systems Development Human Resources Management General Administration Support Activities and Costs

The Value Chain System (External)

Upstream Value Chains A Company Own Value Chain Downstream Value Chains

Measures of achievement
Repeat business Customer feedback Staff appraisal Free of charge work Volume of work Relationship with stakeholders

Activities, Costs, & Margins of Suppliers

Internally Performed Activities, Costs, & Margins

Activities, Costs, & Margins of Forward Channel Allies & Strategic Partners

Budgets
Buyer/User Value Chains

Margin performance

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Environmental influences on organisations

Figure 4.6

PESTEL ANALYSIS Political, Economics, Socio-cultural, technological, Environmental, and Legal Influences Socio-

Organisations as socio technical systems

The sub systems of these organisations include: Goals and values Technical Psychological Structure Managerial

Alternative sub systems

Human / social Administrative / structural Informational / decision making Economic / technological
Hersey & Blanchard

Kast & Rosenzweig

Contingency models of organisations

Adopts an ifthen approach if A number of situational factors influence organisational performance If certain situational factors exist, then certain organisational and managerial variables are most appropriate

Technology
The physical aspects of machines, equipment, processes & work layout (machine technology) involved in the transformation or conversion process The actual methods, systems & procedures involved (knowledge technology) in carrying out the work of the organisation & transforming or converting inputs into outputs

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Information technology
Has prompted more procedures of work Has demanded new patterns of work organisation Affects the nature of individual jobs, formation & structure or work groups Led a move away from large-scale, centralised largeorganisations to smaller working units Allows people to work more on their own Requires changes in the nature of supervision

The informal organisation

The informal organisation arises from: the interaction of people working in the organisation their psychological and social needs the development of groups with their own relationships and norms of behaviour, irrespective of those defined within the formal structure

The formal & informal organisation

Figure 4.9

The formal organisation

Organisation charts Spans of control Job definitions & descriptions Production efficiency Policies & procedures

Source: Source: Reproduced with permission from Kenneth Lysons, Organisational Analysis, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997. Management,

The informal organisation

Personal animosities & friendships Grapevines Group norms & sentiments Informal leaders Prestige & power structures Emotional feelings, needs & desires Effective relationships Personal & group goals

Table Comparing formal & informal 4.2 organisations

Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

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Comparing formal & informal organisations

Table 4.2

Comparing formal & informal organisations

Table 4.2

Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

Organisations of the future

Organisations are living organisms that are constantly evolving. Ulrich suggests that with the changing and dynamic contextual factors -

Rise of organisational democracy

There is a demand for alternative organisational practices and a far reaching transformation has already begun based on the idea that management as a system fails to open the heart or free the spirit t f il t th h t f th i it The age of management is coming to an end and the real push for the future is for more authentic human relationships and the humanisation of organisations as crucibles for personal growth and development
Cloke & Goldsmith

the essence of organisations has shifted and will

continue to shift from focusing on structure to capability.

The following group assignment will be evaluated

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First Exercise

Second Exercise

Third Exercise

PROCEDURE

Submit your group report to the instructor by end of week 6

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