An Introduction to Organisations

and Organisation Effectiveness

Organisational Behaviour : Organisations
and Organising
MBA (Full Time)
Term I

What Are These

What Are These

Another view..

An inside view.

Viewing from the inside or is it

outside

Fundamental Learnings
As businesses evolve, organisations emerge.
Both grow to become dependent on each other
the achievement of business outcomes is
dependent on organisational effeciency and
effectiveness. At the same time organisation
design, system and process need to be
continuously adapted to business needs.

This is how it happens

What is this evolution

Business Evolves

Scale of operations - Volume

Expanse of operations variety, diversity
(geography, product, businesses)

This creates a need for

an orderliness a defined
way in which operations are
conducted
An arrangement
An organised relationship
between different dimensions
and different parts within this
arrangement

As a result of this evolution

More activities
More dimensions

More people
Specialisation of tasks
Structure and hierarchies

Operating a Business can thus be thought of as being

different from Managing a Business Organisation
Operating a Business
Can be understood as the frontending activity e.g. Mcdonald
Eatery
Is a numbers game- top & bottom
line
Is about the immediate
Business is operated as a personal
asset/wealth
Fewer roles, concentrated
authority in few individuals
The focus, hence, is commercial
and transactional activity

Business Organisation
BO is a social entity a corporate
citizen
Focus is on long term sustenance
of business hence beyond the
numbers game
Concern for ways of doing
business structure, systems and
process
Multiple roles, distributed
authority
The focus is on professionalism
(scientific and objective
knowledge) in conducting the
operations
The difference is subtle, a mindset in how the activities are managed

Business and Organisation

Therefore BUSINESS and ORGANISATION need to be
understood as two separate entities
This difference can also be viewed as two separate
perspectives of managing a business two different
approaches - one is about the activities of doing business and
the second one is about building the organisation also while
simultaneously engaging in activities that are business related.
Managing a business could thus be different from managing a
business organisation.
Business is essentially about products and services, markets,
customers, competition, technology; Organisation is systems,
structure and process.

Defining Organisations
Organisations are social entities that are goal directed,
are designed as deliberately structured and
coordinated activity systems and are linked to the
external environment.
Key element is people, their interaction with each other
for performing the different functions and the planned
efforts for designing structures and systems to
coordinate various activities to achieve the purpose.

Where shall we place these..

And these

And these..

And these..

Types of Organisation
Large and Small
For profit and Not-for profit
Product and service

Defining Organisations (2)

An organisation is a consciously coordinated social
entity, with a relatively identifiable boundary, that
functions on a relatively continuous basis to achieve a
common goal or set of goals.
Once again, the key element is conscious coordination a deliberate plan, social entity it is
made up of people and their relationships, relatively
continuous long term sustenance, common set of
goals there is a purpose for which the organisation
is set up.

What is an Organization?
Organization: a tool used by people to
coordinate their actions to obtain something
they desire or value
Entrepreneurship: identify opportunities to
satisfy needs, and then gather and use
resources to meet those needs

Why do we have Organisations? (1)

Bring together resources to achieve desired goals and
outcomes
Produce goods and services efficiently
Facilitate innovation
Use of contemporary technology
Enable adapting to the environment and also
influence the environment
Create value for stakeholders
Accommodate challenges in the environment, from
time to time.
Source : Daft: Organisation Theory, Change and Design

Why do we have Organisations? (2)

An Organization creates value by

enabling the conversion of inputs into
outputs
Inputs: include human resources,
information and knowledge, raw materials,
money and capital
Conversion: the way the organization uses
human resources and technology to
transform inputs into outputs
Output: finished products and services that
the organization releases to its environment

How an Organization Creates Value

The end goal of any organisation is

thus
Effectiveness achieving its purpose and
objectives
Efficiency the manner of achieving (is
reflected in the unit cost of production, cycle
time of operations, the element of waste and
defective product/service, and so on)

Organisation Theory
Organisation Theory is a discipline that studies the
structure and design of organisations . It describes
how organisations are actually structured and offers
suggestions about how they can be constructed to
improve their effectiveness.
It has its own body of knowledge. This knowledge is
about understanding the design and managing the
design so as to effectively manage the organisation
for achieving business goals.

Individual & Group Behaviour and

Organisation Behaviour
Individual and Group Behaviour

Organisation Behaviour

Has a micro view

Has a macro perspective.

Emphasis is on individuals and small

groups

Speaks about the organisation itself or its

sub-units

Concerns itself with the processes within

an organisation and the broader concept of
effectiveness deals with collectivities

Also speaks about the impact of individual

behaviour (as a collectivity) e.g. culture,
flexibility

Talks about the overall organisations

ability to adapt and achieve its goals
hence is concerned also with the
environment

Concerns itself with the task of managing

and how managers can shape organisations

Looks at a narrow set of employee

behaviours and attitudes such as those
related to absenteesm, productivity,
turnonver, job satisfaction
Concerns itself with individuals and their
individual behaviour as managers

Perspectives About Organisations

System Perspective
Open V/s Closed System
Life Cycle

The System Perspective

A system is a set of interrelated and
independent parts arranged in a manner that
produces a unified whole.
There is therefore differentiation and integration. Different
parts integrate to form a complete whole.

INPUT

PROCESS

OUTPUT

The Open V/s Closed System

Perspective (1)
Though the organisation is a system it is a subset of a larger system which is the
environment.
An Open system interacts with the
environment taking and giving resources
act, react and interact.
The focus is on adaptability, survival and
ability to be effective in a given environment.

The Open V/s Closed System

Perspective (2)
An open system needs to have sub-units that
enable this interaction with the environment
and facilitate the adaptation process.
The organisation as an open system therefore
comprises of different subsystems that viz.
boundary spanning roles and the operating
processes.
There is a technical core and the supporting
functions (technical support and administrative
support).

Characteristics Of An Open System

Environment awareness
Feedback receive and exchange information
Cyclical character cycle of events
Steady state fewer disturbances because of
the exchange of information
Movement towards growth and expansion
Balance of maintenance and adaptive activities

THE FUNDAMENTAL IDEA IS TO

UNDERSTAND THE
ORGANISATION AS A LIVING
SYSTEM

Figure 4.1: Design Challenge

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Figure 4.1: Design Challenge

(cont.)

34

Figure 4.1: Design Challenge

(cont.)

35

Figure 4.1: Design Challenge

(cont.)

36

Figure 4.1: Design Challenge

(cont.)

37

These are the dimensions that make an

Organisation
Structure who does what work (decision making,
information sharing, distribution of authority) leads to
differentiation, hierarchy
Systems method of carrying out the work, interactions
Processes establishing connectivity, relationship patterns
(decision making, accountability, communication, delegation
& empowerment, etc.)

These dimensions are reflected in

Organisation design the arrangement, the division
of work, the desired relationship between parts of the
organisation
Organisation culture how work and relationships
are managed, the beliefs and the value system, the
philosophy
Organisation processes decision making,
information sharing, conflict management,
distribution of power and authority

This is how the dimensions may be

categorised
Structural Dimensions formalisation, specialisation,
hierarchy, centralisation, professionalism, personnel ratios etc.
(these do not vary greatly from organisation to organisation, is not
dependent on the nature of its business)

Contextual or contingency Dimensions size, technology,

environment, goals and strategy, organisational culture, etc.

Understanding Efficiency and

Effectiveness

What is Organisation Effectiveness

what do organisations try to achieve
Achievement of business goals
Principles and values establish a culture
Corporate Citizenship respect and credibility
An organisations approach to effectiveness is reflected in
the goals it sets for itself

Approaches to Measuring
Organizational Effectiveness
Control: external resource approach
Monitors how effectively an organization manages
and controls its external environment

Innovation: internal system approach

Develops an organizations skills and capabilities to
change, adapt, and improve the way it functions

Efficiency: technical approach

Measures how efficiently an organization converts a
fixed amount of resources into finished goods and
services
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Approaches to Measuring
Effectiveness

Learning Outcomes
What is an organisation? Appreciate the organisation as a
living system
How is an organisation different from business the
significance of knowing this difference; understanding the two
roles entrepreneurs and managers
Why do organisations exist
What is organisation theory as a discipline
The need for studying organisation theory
Understand different perspectives of viewing an organisation
and Organisation Effectiveness
An introduction to the course

We now move towards action for building an

organisation where we cover
environment awareness
relating with the environment
structuring organisations
designs for adaptability
behvioural processes in organisations