Informal Organisation

Social relationships and groupings.

The ‘grapevine’, ‘bush telegraph’, or informal communication which by-passes the formal reporting channels and routes.

Behavioural norms and ways of doing things, both social and work-related, which may circumvent formal procedures and systems. New members must ‘learn the ropes’ and get used to ‘the way we do things here’.

Power/influence structures, irrespective of organizational authority: informal leaders are those who are trusted and looked to for advice.

Benefits of informal

organisation

Co-operation

Knowledge sharing

Speed

Responsiveness

Employee commitment

Managerial problems of informal organization

Social groupings may act collectively against organizational interest, strengthened by collective power and information networks.

The grapevine is notoriously inaccurate and can carry morale-damaging rumours.

Can become too important in fulfilling employees’ needs.

Informal work practices may ‘cut corners’, violating safety or quality assurance measures.

• compliance

• Internalisation

• Counter-conformity

Individuals may react to group norms in a variety

of ways.

• The issue is not clear-cut

• The individual lacks support for his own attitude

• The individuals is exposed to other members of the group

Some circumference which put strong pressure

on the individual.

• Identification

• Sanctions

Norms may be reinforced in various ways.

STRATEGIC APEX

OPERATING CORE

MIDDLE LINE

TOP MANAGEMENT

Operation / operation

process- MintzbergProfessor of Management Studies, McGill University, Canada

Ensures the organization follows its missionSTRATEGIC APEX• Direct supervision-there’s one person issue instruction

People directly involved in the process of obtaining inputs and converting them into outputs

OPERATING CORE

• Standardisation of skills-in which different work is coordinated by virtue of related training the workers have received

Converts the desires of the strategic apex into the work done by the operating coreMIDDLE LINE• Standardisation of outputs-achieves coordination by specifying results of different work

Analysers, Planners, Personnel analystsTECHNOSTRUCTURE• Standardisation of work processes-achieves coordination by specifying the work process of people carrying out interrelated tasks

Ancillary services, do not plan/standardize productionSUPPORT STAFF• Mutual adjustment-achieves coordination by the simple process of informal communication

DEPARTMENTATION

FUNCTIONAL

FUNCTIONALInvolves grouping together people who do similar tasks

ADVANTAGES

- Expertise is pooled thanks to the division of work into specialist areas.- Its avoid duplication and enables economies of scale- Its facilitates the recruitment, management and development of functional

specialists- It suits centralised business

DISADVANTAGES

- Focuses on internal processes and inputs- Communication problems may arise between different function- Poor co-ordination- Create vertical barriers to information and work flow

ADVANTAGES- There is local decision-making at the point of contact

between the organisation and its customers e.t.c- It may be cheaper to establish area factories/offices

than to service markets from one location

DISADVANTAGES- Duplication and possible loss of economies if scale

might arise- Inconsistency in methods/ standards may develop

across different areas

PRODUCT

Every product is handled by separate management team and the problems faced in the development of a product are carried out by single group of employees working

in that unit

ADVANTAGES- Accountability- Specialisation- Co-ordination

DISADVANTAGES- It increases the overhead costs and

managerial complexity of the organisation- Different product divisions may fail to share

resources and customers

CUSTOMER

An organization may organise its activities on the basis of types of

customer, or market segment

Departmentation by customer is commonly associated with sales

department and selling effort, but it might also be used by a jobbing or

contraction firm where a team of managers may

be given the responsibility of liasingwith major customers

DIVISIONALISATION

DEFINITION : division of a business into autonomous

regions or product businesses , each with own revenue ,

expenditures and asset purchase programmes , and therefore each with its own profit and loss responsibility

Divisional structure :• Some activities are decentralized to

business units or regions

A subsidiary company under

the holding company

A strategic business unit (SBU)

within the larger company, with its

own objectives

Aprofit centreor investment centre withi a

single company

DIVISION

KEY CONDITIONS

EXCESSIVE MANAGEMENT SUPPORT

LARGE ENOUGH TO SUPPORT

PROPER DELEGATED AUTHORITY

‘ARM’S LENGTH’ TRANSACTION SCOPE AND CHALLENGE

POTENTIAL FOR GROWTH

ADVANTAGES AND DISADVANTAGES

ADVANTAGES

• Attention below ‘top level’

• Reduce unprofitable products and activities

• Greater attention to efficiency , lower costs and higher profit

• More authority to junior managers

• Reduce number of levels of management

DISADVANTAGES

• Impossible to identify completely independent products / market

• Limited discretion can be used

• More resource problem

HYBRID STRUCTURE

Involve a mix of functional departmentation , ensuring specialized attention to key functions , example of elements :

• Product organization

• Customer organization

• Territorial organization

THE SIMPLE STRUCTURE / ENTREPRENEURAL STRUCTURE

• The strategic apex exerts a pull to centralize , leading to the simple structure.

• The strategic apex wishes to retain control over decision-making.

• Characteristics :-

1. Wide span of control

2. No middle line

3. Minimal hierarchy

4. No technostructure

5. Imply little formalization / standardization of behaviour

MATRIX AND PROJECT ORGANISATION

ADVANTAGES

• Greater flexibility of people , workflow and decision making , tasks and structure

• Inter-disciplinary co-operation

• Motivation and employee development

• Market awareness

• Horizontal workflow

DISADVANTAGES

• Dual authority

• Conflicting demands / ambiguous roles

• Cost increases

• Slower decision-making

NEW ORGANISATIONFLAT

STRUCTURES

‘HORIZONTAL STRUCTURES’‘CHUNKED’ AND

‘UNGLUED’ STRUCTURES

OUTPUT-FOCUSED STRUCTURES

‘JOBLESS’ STRUCTURES

VIRTUAL ORGANISATION

HOLLOW ORGANISATION

MODULAR ORGANISATION

BOUNDARYLESS ORGANISATION

THE SHAMROCK ORGANISATION

SPAN OF CONTROL

Number of subordinates responsible to a superior

Factors influence: Managers capabilities Nature of the manager’s workload

More non-supervisory work: Narrow the span of control Greater the delegation of authority to

subordinates

TALL AND FLAT ORGANISATION

TALL

FOR:

Narrow control spans

Small groups enable team members to participate in decision

Assist management training and career planning

FLAT

FOR:

More opportunity for delegation

Relatively cheap

Speed up communication

DELAYERING

Reduction of number of management levels from bottom to top

Why:

Information technology

Empowerment

Economy

fashion

OUTSOURCING AND OFFSHORING

Outsourcing:

Contracting out of specified operation or services to an external vendor

Sending work to an external organization

Offshoring:

Involve sending work overseas

To make cheaper labour in overseas markets

SHARED SERVICES APPROACH

Single services centre to provide support function

For delivering the service to agreed

service levels

AIMS:• To enable better

use of resources (lower cost)

CORPORATE STRATEGIES

Definition of CORPORATE : the general direction of the whole organization

CHARACTERISTICS

SCOPE OF ACTIVITIES

ENVIRONMENT

RESOURCES

VALUES

TIMESCALE

COMPLEXITY

CORPORATE STRATEGY

BUSINESS STRATEGY

BUSINESS STRATEGY

BUSINESS STRATEGY

Strategic Business Unit ( SBU )

SBU SBU

FUNCTIONAL STRATEGIES

R & D OPERATIONS MARKETING HRM IT / IS FINANCE

STRATEGIES INVOLVING MANY FUNCTIONS

BUSINESS STRATEGY

Definition of BUSINESS : how the organization or its SBUs tackle particular markets

Definition of BUSINESS STRATEGY : how an organization approaches a particular product market area

FUNCTIONAL / OPERATIONAL STRATEGIES

FUNCTIONAL AREA

PRODUCTION

FINANCE

HUMAN RESOURCES MANAGEMENT

INFORMATION SYSTEMS

R & DMARKETING

THE ANTHONY HIERARCHY

STRATEGIC MANAGEMENT

TACTICAL MANAGEMENT

OPERATIONAL MANAGEMENT

CENTRALISATION

CENTRALISED ORGANISATION : one in which authority concentrated in one place

TWO ways perceptions :

• GEOGRAPHY

• AUTHORITY

ADVANTAGES AND DISADVANTAGES OF CENTRALISATION

PRO CENTRALISATION

• EASIER TO CO-ORDINATE

• WIDER VIEW OF PROBLEMS

• BALANCE INTERESTS OF DIFFERENT FUNCTIONS

• HIGH QUALITY OF DECISIONS

• CHEAPER

• QUICKER CRISIS DECISIONS

• STANDARDISED ORGANISATION-WIDE ( policies , procedures , documentation )

PRO DECENTRALISATION

• AVOIDS OVERBURDENING

• IMPROVES MOTIVATION

• GREATER AWARENESS OF LOCAL PROBLEMS

• FASTER DECISION MAKING AND RESPONSE

• DEVELOP SKILLS

• SEPARATE SPHERES OF RESPONSIBILITY

• COMMUNICATION TECHNOLOGY