Nature of Organisational Processes

The system continually has to make this choice: it can either continue to exploit a known process and make it more productive, or it can explore a new process at the cost of being less efficient.

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Facilitator and Course Coordinator:

Vinayshil Gautam PhD, FRAS(London)(Founder Director IIM K; Leader Consulting Team IIM S)

A Al_Sager Chair Professor and First Head,

Management Department, IIT D

Chairman, DKIF

Perspective The processes within an organization can be

classified using various criteria as they vary from -

Decision making, to Planning, to Organization Design and Structuring,to Staffing, to Directing, Motivating and Communicating, and also to Controlling,

all of which are totally different but equally significant as a process within an organization.

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Perspective

However, for the purpose of this discussion we shall focus on:

Planning and Decision making, Organization design and work flow, Communication and Information flow

PLANNING AND DECISION MAKING

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Planning

Planning is the most basic function of management, being concerned with the conscious determination of the courses of action required to achieve predetermined objectives

It is also viewed as decision making since it as to decide in advance about: What is to be done? When it is to be done? By whom it is to be done? How it is to be done?

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The Planning Process Crystallize the opportunity or problem Securing and analyzing necessary information Establishing planning premises and constraints Ascertaining alternative courses of actions or

plans Selecting the optimum plan Determining derivative plans Fixing timing of introduction Arranging future evaluation of effectiveness of

the plan

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Types of Plans

Classifying based on time dimension Short-term (Plans extending generally upto

1 year) Long-term (Plans of more than one year)

Classifying based on functions Production planning Marketing planning Sales planning and so on

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Types of Plans

Another way of classifying is dividing them into – Objectives or goals, Strategies and tactics, standards, budgets, policies, procedures, programmes, rules, and methods.

Decision making

Decision making is the cognitive process leading to the selection of a course of action among alternatives.

Every decision making process produces a final choice. It can be an action or an opinion.

It begins when we need to do something but we do not know what.

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Decision making

Therefore, decision making is a reasoning process which can be rational or irrational, and can be based on explicit assumptions or tacit assumptions.To decide means to cut-off or in practical content, to come to a conclusion.

Decision making Process

There are 3 time aspects of a decision: Past in which the problems were

developed and information collected Present where alternatives have to be

evaluated and selected Future where decisions will be carried out

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Steps:Define and crystallize the problemSecure and analyze pertinent factsDevelop alternative solutions or courses of actionDecide upon the best solution or the optimum course of actionConvert the Decision into effective action

Decision making Process

Types of decision

Organizational decisionsPersonal decisionsBasic or non-programmed

decisionsRoutine or programmed decisionsGroup decisions

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techniques in decision making

Managers at various levels use several techniques for decision making, some of them are:

SWOT Analysis - Evaluation by the decision making individual or organization of Strengths, Weaknesses, Opportunities and Threats with respect to desired end state or objective.

Analytic Hierarchy Process - procedure for multi-level goal hierarchy

Buyer decision processes - transaction before, during, and after a purchase

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techniques in decision making

Decision trees Program Evaluation and Review Technique (PERT) Critical path analysis Critical chain analysis Force field analysis - analizing forces that either

drive or hinder movement toward a goal Grid Analysis - analysis done by compairing the

weighted averages of ranked criteria to options. A way of comparing both objective and subjective data.

Linear programming - optimization problems in which the objective function and the constraints are all linear

Min-max criterion Model (economics)- theoretical construct of economic

processes of variables and their relationships Monte Carlo method - class of computational

algorithms for simulating systems Morphological analysis - all possible solutions to a

multi-dimensional problem complex Constrained optimization Paired Comparison Analysis - paired choice analysis Pareto Analysis - selection of a limited of number of

tasks that produce significant overall effect

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techniques in decision making

Satisficing - In decision-making, satisficing explains the tendency to select the first option that meets a given need or select the option that seems to address most needs rather than the “optimal” solution.

Scenario analysis - process of analyzing possible future events

Six Thinking Hats - symbolic process for parallel thinking

Strategic planning process - applying the objectives, SWOTs, strategies, programs process

Ubiquitous command and control is a concept for dynamic decision making based on "agreement between an individual and the world", and "agreements between individuals

techniques in decision making

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Styles and methods of decision making

Positional Style Combinational Style

• Non-deterministic

• A positional goal and

• A formation of semi-complete linkages between the initial step and final outcome.

• Deterministic

• A very narrow, clearly defined, primarily material goal, and

• A program that links the initial position with the final outcome.

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Styles and methods of decision making

The positional style is better as compared to combinational as it serves to:

a) create a predisposition to the future development of the position;

b) induce the environment in a certain way;c) absorb an unexpected outcome in one’s

favor;d) avoid the negative aspects of unexpected

outcomes.

A two-fold approach to decision making

Functional theory to evaluate the quality of group decision-making (Gouran and Hirokawa, 1983, 1996)

Bona fide group studies, in natural settings; preferably longitudinal (Putnam and Stohl, 1990; Stohl and Holmes, 1993)

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How is this achieved?

Through the use of various decision-making tools and techniques throughout all forms of planning: investigation, analysis, implementation, and assessment

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According to functional Theory: Groups must meet five functions during interaction Problem Analysis: Given the information available to it,

a group needs to arrive at an accurate (i.e. reasonable) understanding of (a) the nature of the problem, (b) the extent and seriousness of the problem, (c) the likely cause(s) of the problem, and (d) the possible consequences of not dealing effectively with the problem.

Establishment of evaluation criteria: A group must recognize the specific standards that the choice must satisfy to be judged acceptable by evaluators of that decision.

Generation of alternative solutions: A group must generate, or be aware of, a number of appropriate and feasible alternative choices among which an acceptable choice is assumed to exist.

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Evaluation of positive consequences of solutions: Given the information available to it, a group needs to be fully cognizant of the relative merits of all available alternatives.

Evaluation of negative consequences of solutions: Given the information available to it, a group needs to be fully cognizant of the relative disadvantages associated with each alternative choice .

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According to functional Theory: Groups must meet five functions during interaction

Bona fide group perspective

Two characteristics that underlie a bona fide group are permeable and fluid boundaries and interdependence with context. The idea of “groupness” itself and the social processes that form and sustain a group rest on a continual negotiation of borders, boundaries, and arenas.

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Stohl and Holmes discussed the misconceptions of functional theorists: Decision quality is an objective

characteristic or attribute that is apparent at the time of the production of a decision.

Relevant task communication takes place within meetings and not outside of the small group context.

Group action is non-simultaneous and meaningfully sequenced. 25

Stohl and Holmes proposed

Two additional classes of functions to add to those developed by functional theorists:

Embeds the decision in ongoing group life (historical functions)

Accomplishes the embedding of a decision in a permeable context (institutional functions).

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ORGANIZATION DESIGN AND WORK FLOW

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Organization design

Organization design involves the creation of roles, processes, and formal reporting relationships in an organization.

It can also be defined as: Developments in or changes to the structure of organizations

One can distinguish between two phases in an organization design process: Strategic grouping, which establishes the overall

structure of the organization (its main sub-units and their relationships), and

Operational design, which defines the more detailed roles and processes. 28

A framework for Organization design: aligning structures

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What is a workflow system?

Bridge between “real world” and “virtual world”

Real world - contains the organization’s structure, physical goods, employees, and other organizations

The virtual world contains the organization’s computerized infrastructure, including its applications and databases.

Workflow - The computerized facilitation or automation of a business process, in whole or part.

Workflow Management System - A system that completely defines, manages and executes “workflows” through the execution of software whose order of execution is driven by computer representation of the workflow logic.

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Workflow system

Workflow models represent the organization’s design in a visible way.

The workflow runtime interprets the workflow design. The combination of model visibility and organizational

execution tied to the model facilitates both a top-down and a bottom-up evolution of the organization’s computerized infrastructure.

Workflow models tie the data flow, organizational charts, and flowcharts together.

Workflow models are also defined across organizational boundaries to facilitate trading between organizations.

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Nature of Organizations

Rational - Collective oriented to pursuit of relatively specific goals and exhibiting relatively highly formalized social structures (e.g., a business).

Natural - Collective whose participants share a common interest in the survival of the system and who engage in collective activities, informally structured, to service this end (e.g., a religion or charity).

Open - Coalition of shifting interest groups that develops goals by negotiation; the structure of the coalition, its activities, and its outcomes are strongly influenced by environmental factors (e.g., a standards organization).

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Continuum of Workflow Systems

Messages are the means of communication between the organizational employees, and between the organization and its customers and suppliers.

Work items coordinate the receipt of the message with the organizational employee who carries out the work specified by the message.

Business rules automate the decision process used in assigning and executing a work item.

Flowcharts specify the organizational plan for how work flows through an organization.

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Messages in workflow

Need to deal with any type of message coming into the organization

Can be routed to the correct employee for processing

Can also be routed to a workflow

Annotations are added to a message as it is processed

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Work Flow Analysis Managers perform work flow analysis in order to examine how

work creates or adds value to the ongoing processes in a business.

Work flow analysis looks at how work moves from the customer (the demand source) through the organization to the point at which the work leaves the organization as a product or service for the customer (to meet the demand).

Work flow analysis often reveals that some steps or jobs can be combined, simplified, or even eliminated.

In other cases, it results in the reorganization of work so that teams rather than individual workers are the source of value creation.

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Work Flow Analysis Business Process Reengineering

Business Process Reengineering (BPR) is different from restructuring in that its focus is not just on eliminating layers of management, but rather a fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in costs, quality, service, and speed. Uses work flow analysis to identify a company’s core

processes involved in producing its product or delivering its service to the customer.

Then the company organizing its human resources around those core processes to improve organizational performance.

Through this analysis, jobs are identified that can be eliminated or recombined to improve company performance.

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Business process reengineering Steps in reengineering core processes:

Identify core processes. Map core processes in respect to workflows. Evaluate all tasks for core processes. Search for ways to eliminate unnecessary

tasks or work. Search for ways to eliminate delays, errors,

and misunderstandings. Search for efficiencies in how work is shared

and transferred among people and departments.

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Work Flow Analysis Business Process Reengineering

Proponents Allows for reinventing a company by making it ‘lean

and mean’

Critics Hammer of ‘Champy and Hammer’ actually says "don't

automate; obliterate."  To many critics, reengineering’s greatest weakness is its lack of a human side, or its depersonalization.

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Work Items

A work item specifies a task that needs to be carried out by an organizational worker The worker is identified by his or her role work item is identified by a message the role is identified by a queue the system initiates the work item and usually

waits until its completion. A workflow system’s task is to coordinate with all

the outstanding work items

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Tasks Synchronizing - Multiple work items are

usually modeled as a parallel split and a parallel join

Timeouts - Workflow instances can wait forever for the completion of a work item

Managing workflow instance memory - A workflow system is simultaneously processing a large number of workflow instances

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Work Flow Diagrams Model Internal and external entities and flow of

data (typically in documents) between them simple technique for identifying the overall

system, the major entities in the system Workflows are allowed between internal entities

and between internal and external entities. All workflows must be labeled. Many workflows are

documents, in either soft or paper forms. No workflows are allowed between external

entities.

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Example Delta Products Corporation is a major vendor of office

supplies, furniture and equipment. Delta’s sales representatives call on customers to take orders. The sales rep write up the orders and turn them in to a sales order processing (SOP) clerk at the regional center. If the order items are in stock, the SOP clerk prepares a picking slip and packing list for each order. If any of the ordered items are out of stock, the SOP clerk completes an out of stock Notice forms, which notes the number of customer requiring the items and forwards it to Purchasing. A Purchasing clerk then completes a purchase order, which is mailed to a supplier. The SOP clerk notes back-ordered items on the customer’s order and forwards a copy of annotated customer order to Accounts receivable, where a A/R clerk prepares an invoice and sends it to the customer. The SOP clerk also forwards a picking slip and packing list to the warehouse, where stock price pickers fill the order, placing ordered items into boxes along with the packing list. The boxed items and packing list are held for delivery, usually via UPS.

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SalesRep

SOPClerk

Purchasing

AccountReceivable

Warehouse

Customer

UPS

Supplier

Packing List

Packing Slip/Packing List

PurchaseOrder

Out of StockNotice Form

Written Sales Order

Product Information

Orders

Invoice

AnnotatedCustomer Order

Delta Products WFD

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Organizational level Workflow Diagram

Customers

UPS

Supplier

Sales OrderProcessingDeaprtment

Invoice

Packing List

Sales Calls

Order Purchase Order

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Production Release Workflow – Headquarters of Department of energy, USA

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Communication and information flow

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Communication

Communication can be understood as the passing of information in humans, animals, computers, or any other cognitive entity. In a broader sense communication can refer to almost any type of movement, be it matter, energy, force or some effect. Space and time might be the only things that can't themselves be communicated.

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Information flow

Different in different forms of organizations based on their organizational structure, e.g. a bureaucratic organization has strictly hierarchical information flow, restricted in nature; a boundaryless or flatter organization would have lateral information sharing with a common pool of information

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Communication structures

Upward channelsDownward channelsLateral or diagonal channelsNetwork or communication netsGrapevine (informal)

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Failure of communication and information flow

The semantic blockIntentional blocksOrganizational blocksStatus blocksFaulty expressions and translationsFaulty listening

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Information sharing in an empowered organization

The possession of knowledge and withholding it from others is a way to maintain a system of domination. On the other hand, in an empowering organization, processes are in place that ensure a wide-spread sharing of information. Information moves from closely guarded at the top to openly shared throughout the organization suggests that, to be empowered, employees need two kinds of information: (1) information about the organization’s mission and goals; and (2) information about their performance

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Information sharing in an empowered organization

In empowering organizations, information is no longer the property of individuals, but now belongs to the entire group. All the operating teams work in concert with each other and have access to the information they need to meet team and process goals. Teams are given information about sales, backlogs, inventory, staffing needs, productivity, costs, quality, and other data, and each team regularly shares information about its part of the build-to-order process with the other teams.

Such an organization will be more prone to learn because, as information is more openly shared, the organization will begin to function less on the basis of opinion and bias and more on the basis of facts. Systems must be in place, therefore, that enable a wide spectrum of people access to both general information about the organization and also specific information about the performance of their particular department or team.

Information audit

In order to know the information needs at various levels, organizations have started doing information audits. This also ascertains the information flow networks and gaps and methodology to overcome such problems so that proper information flow exists within organizations

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Information audit - Definition It is a process

• That tends to:• Identify an organization’s information needs

and resources.• Identify information flow and networks;

internal, external, formal & informal.

• In order to:• Create a realistic portrait of the current

situation.• Optimize communication level and

information assets.• Market the information / communication

services and enhance the profile of information / communication professionals within the organization. 54

A Strategic Information Audit (SIA) is a process that :

Will identify : Executives’ strategic information needs, Strategic information resources, flow and

networks; internal, external, formal & informal. In order to:

Create a realistic portrait of the current situation, Develop a GAP analysis, Design or optimize a BI/CI program aligned with

the organization’s strategic needs, Optimize all information and intelligence assets

Strategic information audit

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SIA Continuous Cycle

Strategic Needs

Identification

Structural Review

ProcessesReview

Gap Analysis

Report and Recommendat

ions

Current Situation

Ideal Situation Optimization

Implementati

on

Ongoing Feedback Process

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REFERENCES

“Alternative designs of human organizations” – Nitish R De, Sage Publications, Delhi, London, 1984

“Management” , 8/e - John R. Schermerhorn, Jr., John Wiley and Sons Inc., New York

“Management Process”, 4/e - R. Davar, Progressive corporation Pvt. Ltd, Bombay, 1978

“Structure and Process of Organizations: A systems approach” – Arlyn J. Melcher, Prentice Hall Inc., Ney Jersey, 1976

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REFERENCES

“Organization and management of information processing systems” – L.K. Albrecht, Macmillan Publishing, London, New York, 1973

“Organizational decision making” – Shull, Jr., Delbecq, Cummings, Mc GrawHill Book Co., 1970

ACM QUEUE Magazine – March 2006

THANKS

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