Lecture No 3 Organizational Effectiveness Discipline Social Theory

Lecture No 3 Organizational Effectiveness Discipline: Social Theory and HR Policy Almaty 2017

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Content of the Lecture . 1. Drivers for Organizational Effectiveness. 2. Organizational Design. 3

Key Words Driver(a factor which causes a particular phenomenon to happen or develop) Effective (producing a decided, Marketplace (the arena of commercial dealings) Return on investment (ROI) (a performance measure used to evaluate the efficiency of decisive, or desired effect; successful or achieving the results an investment. ROI measures the amount of return on an investment that one want) Ineffective (not producing any relative to the investment’s cost) significant or desired effect) Efficient (performing or functioning in the best possible manner with the least waste of time and effort) 4

Effectiveness is about doing the right task, completing activities and achieving goals. Being effective is about doing the right things. Efficiency is about doing things in an optimal way, for example doing it the fastest or in the least expensive way. It could be the wrong thing, but it was done optimally. Efficiency increases productivity and saves both time and money. Being efficient is about doing things right. 5

1. Drivers for Organizational Effectiveness. 6

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Organizational Behavior (OB) as science is a field of study aimed at systematic analysis of behavior of individuals and groups in the organization in the course of their joint labor and interpersonal communication with the purpose to understand, forecast and improve performance of organization. The purpose of OB study is application of such knowledge towards improvement of organization's effectiveness. 8

The basic objective of most business organizations is to survive in a competitive market. THE ABILITY TO DO SO CAN BE MEASURED IN TERMS OF PROFIT GROWTH AND RETURN ON INVESTMENT. 9

• Organizational effectiveness is the ability of the organization to obtain and use resources efficiently to attain its goals. • Organizational effectiveness is used to denote organizational success. • The success of organization is defined by the profit it generates (or sales income less the cost of achieving it). • The quality of success is measured by comparing the ability of organization to generate profit with the performance of other organizations in similar industries. 10

Goal approach Behavioral approach Ø Its focus is on the output to figure out the essential operating objectives like profit, innovation and finally product quality Ø In management concepts, a mission is set for the organization. From the mission, organizational goals are derived. The goals set should be attainable & realistic. Goals must be within the organization’s capability. Ø According to this, the extent to which individual and organizational goals are integrated affects the degree of organizational effectiveness. Mc. Gregor Douglas in his book “Leadership and Motivation” wrote that “True integration of goals, when all individuals share the organization goals”. 11

DRIVERS Organizational drivers are the highest level of measure in a business process and are strongly linked to strategic goals of an organization. If the key drivers of an organization are achieved, the organization can be considered to have achieved its overall goal set for that period. Some of the drivers that make organization effective are: ü Strategy ü Processes ü Balanced culture ü Customer orientation ü Leadership 12

STRATEGY sets direction and goal, and gives focus to improvement. It must however be deployed throughout the organization to be effective. PROCESSES need to be mapped analyzed in a methodical way; projects must be managed; problem symptoms traced to root causes; data must be collected before decisions are taken; improvement activity of any kind reported on and coordinated; improvement action measured. Just about everything should be done to a discipline. 13

BALANCED CULTURE means effective, creative management of people. For people to work well - they must be empowered, given direction, measured, and reviewed and success recognized. CUSTOMER ORIENTATION keeps the organization focused on customer needs, reactions and changing requirements. 14

LEADERSHIP ensures that everyone is enthused and supported to work on the strategy, improve processes, serve customers and be active team players. 15

• The process of matching internal resources so that an organization may be able to operate effectively in its “marketplace” clearly suggests identifying and developing its internal resource capability or organizational competence. • HR is a function in the organizations designed to maximize employee performance in service of an employer's strategic objectives. 16

2. Organizational Design. 17

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Key Words Structure (Some sort of orderly arrangement of parts or components) Organization design (combination of differentiation and integration of the organization's operations) Accountability (an obligation or willingness to accept responsibility or to account for one's actions) Clarity (the quality or state of being clear and easily understood) Cohesive (united and working Chart (a sheet of information in together effectively) the form of a table, graph, or diagram) (a future event or circumstance which is possible but cannot be predicted with certainty; unexpected circumstances) Organization chart (defines who does what and hierarchical lines of authority) Contingency 19

Structure Technology Internal Environment OB Key Elements People External Environment 20

People Structure Technology Internal Environment OB Key Elements DRIVERS External Environment 21

Ø Organization design is the process of aligning an organization's structure with its mission. Ø The aim of organization design could be defined as being to optimize the arrangements for conducting the affairs of the business. MISSION: an important goal or purpose that is accompanied by strong conviction. 22

Organization design is combination of differentiation and integration of the organization's operations. Differentiation refers to the subdivision of functional or departmental units, each concentrating on a particular aspect of the organization's operations. Integration refers to the linking of differentiated units to achieve unity of effort in working toward organization's goals. 23

• The process of organizing individuals and groups of people work cooperatively under leadership towards common goal involve design of the structure: – Function – Role – Hierarchy • Organizational structure should meet the following requirements: – It must be low cost and economical; – It should be as simple as possible; – It should permit the development and testing of key future management. 24

Classical Organization Theories Scientific management Focused on getting the best people and equipment, and scrutinizing each production task. Bureaucratic theory Involved establishing a hierarchy to describe the division of labor in a company and recognizing the importance of specialization. Administrative theory Worked to establish a set of management principles that applied to all organizations. Neoclassical Organization Theory Organizations can succeed with a cohesive environment where subordinates are accepting of 25 managerial authority.

Systems Theory Systems theory describes the interrelation of all parts of an organization and how one change in one area can affect other parts. Organizations act as systems interacting with their environment. Any balance is constantly changing as the organization adapts to its changing environment. Contingency Theory Contingency theory deals primarily with conflict. Conflict is unavoidable, but according to contingency theory it is manageable. Organizations evolve to meet their own strategic needs in rational, sequential and linear ways. Adapting to changes in the environment is important to managerial and organizational success. Managers must be able to make decisions contingent on current circumstances. 26

Theories about organizational structure can help with plans for organizational success. These theories may influence how an organization allocates resources. Early theories were overly bureaucratic and have given way to organizational theories that apply to a multitude of dynamic situations. 27

• Structures are usually described in the form of an organization chart. • Organization charts convey organizational structures to employees. • This places individuals in boxes that denote their job and their position in the hierarchy and traces the direct lines of authority (command control) through the management hierarchies. Defines who does what and hierarchical lines of authority. 28

Daniel Craig Mc. Callum (1815 -1878), a Scottish-born American railroad engineer, is known as one of the early pioneers of management. He set down a set of general principles of management, and is credited for having developed the first modern organizational chart (visualization of the organizational tree). His principles included division of responsibilities, power proportional with responsibilities, and a reporting system. 29

• Helps top management identify talent that needs to be added to the company. • Ensures there are enough human resources within the company to accomplish the goals set forth in the company’s annual plan. • Responsibilities are clearly defined. • Avoid unnecessary overlapping or duplication of work. • Establish lines of communication that are built into the structure. 30

There is no such thing as an ‘ideal’ organization. IT IS ALWAYS DESIRABLE TO HAVE AN IDEAL STRUCTURE IN MIND, BUT IT IS EQUALLY DESIRABLE TO MODIFY IT TO MEET PARTICULAR CIRCUMSTANCES. 31

3. What is a Strategy? 32

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Ø From Greek στρατηγία stratēgia, “art of troop leader”. Ø Strategy was originally a term applied to warfare; it was defined as ‘the art of planning and directing larger military movements and the operations of war’. 34

Ø Modern business strategy emerged as a field of study and practice in the 1960 s; prior to that time, the words "strategy" and "competition" rarely appeared in the most prominent management literature. Ø In business, strategic management is now accepted as the discipline of managing any organization’s resources to achieve long-term objectives. Ø Strategy defines direction and goals. A strategy describes how the ends (goals) will be achieved by the means (resources). Ø Strategy generally involves • setting goals; • determining actions to achieve the goals; • and mobilizing resources to execute the actions. 35

Strategic analysis means measuring the organization’s strengths and weaknesses and the opportunities and threats presented by the environment. 36

Ø Matching the organization’s strengths with opportunities that arise. Ø Analysis of external environment. 37

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Vision The ability to imagine, think about how a country, society, industry, etc. could develop in the future and or plan for this. An aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future. Big picture of what you want to achieve. Mission An important goal or purpose that is accompanied by strong conviction. General statement of how you will achieve the vision. Strategy A high level plan of action to achieve a long-term goal by means of resources. Tactics Means by which a strategy is carried out; planned and ad hoc activities meant to deal with the demands of the moment, and to move from one milestone to other in pursuit of the overall goal(s). Action plan A sequence of steps that must be taken, or activities that must be performed well, for a strategy to succeed. An action plan has three major elements (1) Specific tasks: what will be done and by whom. (2) Time horizon: when will it be done. (3) Resource allocation: what specific funds are available for specific activities. 39

• Leadership • Corporate Strategy Vision Action plan • Who? • What? • When? Mission Strategy Tactics • Strategy of departments 40

MISSION: an important goal or purpose that is accompanied by strong conviction. MISSION STATEMENT: A WRITTEN DECLARATION OF AN ORGANIZATION'S CORE PURPOSE AND FOCUS THAT NORMALLY REMAINS UNCHANGED OVER TIME. GOOD MISSION STATEMENT SHOULD BE CLEAR, MEMORABLE, CONCISE. SOME MIGHT BE INSPIRING. 41

“To create a better everyday for all people impacted by our business” “Mc. Donald’s brand mission is to be our customer’s favorite place and way to eat and drink” 42

“To give people the power to share and make the world more open and connected” “To organize the world’s information and make it universally accessible and useful ” 43

“I plan to contribute to the graduate program by focusing my research on Oscar Wilde’s literature and working closely with a professional in that field”. My goal is to lose 20 pounds over the next three months. I will take every effort necessary to ensure that I meet and, if possible, exceed my goal by making lifestyle changes like eating a healthy diet and exercising daily”. 44