Informal organization

INFORMAL ORGANIZATION

ENVIRONMENT OF AN ORGANIZATION

ORGANIZATIONAL GROWTH/CHANGE & DECLINE


The behind-the-scenes network is called the informal organization because it is based on voluntary personal relationships rather than on formal authority.


Advantages:Belonging to this sort of informal

network within the organization greatly enhances the individual employee’s reward, expert and referent power.

Accordingly, managers need to build support in the informal organization when trying to introduce changes such as computer system.


Advantages:Managers are advised to monitor grapevine communication quietly through trusted grapevine participants and take steps to correct any seriously misleading information that occasionally comes along.


Disadvantage:This second organization can

seriously hamper a manager who tries to pretend it does not exist and is responsible for much of the resistance to change that managers encounter when implementing new programs and techniques.


Organizations are open systems that continuously interact with outside environment. The macro-environment of business today has considerable impact on the internal operations of the organization, especially if the organization is a big one.


System A set of objects, each of which possesses certain attributes and certain interconnections with other parts of the system.


Supra System Is the environment in which the organization operates: other companies in its industry, the marketplace, its stockholders, the government, the communities surrounding its facilities, the social culture in which it functions and so on.


Specific Environment General Environment Customers: It is the customer who absorbs

organizational outputs. They represent potential uncertainty to an organization, their taste can change, they can become dissatisfied with organization’s product or service

Competitors: Organizations cannot afford to ignore its competitors. Managers must be prepared to respond to competitors policies regarding pricing new products, services offered and other incentives it is giving to customers

Suppliers: Any party that provides input for the business. E.g financial institutions are provider of money, colleges are suppliers of human resources Managers need to have steady and and reliable flow of inputs to meet the goals

Pressure groups: Managers must recognize the special interest groups that attempt to influence organization

Stakeholder:Any party that is affected by organization’s decisions and policies and that can influence organization

• Economic conditions: It includes the impact of economic factors like Interest rates, inflation, changes in disposable income and the stage of general business cycle e.g when consumer’s incomes fall their confidence about job security declines, they will postpone purchasing anything that is not necessary

Political/legal conditions: Federal, state and local government influence what org can and cannot do

Socio-cultural conditions: Managers must adapt their practices to the changing expectations of the society and their life style

Demographic Conditions: Trends in the physical characteristics of population such as gender, age, level of education, income, geographical location

Technological: It is changing the ways the org are operating, so businesses must address this issue and its impact on performance of organization.


Subsystem, or individual system, consists of the people in the organization and their behaviour.


Consider the example below:

Figure I. System Chart of Roosevelt High School


System

The system into which this evaluation tool was incorporated

was Roosevelt High School. Roosevelt High School is the

Engineering and Technology Learning Center of the HIDOE.

The advancement of technology in education is one of the

goals of the school. One particular goal is to increase critical

thinking skills and cognitive evaluation of the World Wide

Web. The principal and administration, other teachers and

faculty, librarians, and parents directly affect the progress

and development of ideas by providing support to the

students in their endeavors.


Supra-systemThe suprasystem is the HIDOE. The HIDOE is divided into two main divisions, one of which deals with the incorporation of technology into curriculum. Effective and efficient use of technology to enhance learning was the overall goal of this division. It was believed that this project could add to that particular goal. Also included in the supra-system were the technology coordinators who work with the teachers, and students to provide access to the Web and other computer applications for completion of student research projects.


Sub-systemThe sub-system consisted of students and teachers in three distinct classrooms in three different subject areas.

Source: http://www2.hawaii.edu/~nguyen/web/method.htm

ETHICAL AND SOCIAL RESPONSIBILITIES

Social responsibility is an ethical theory, in which individuals are accountable for fulfilling their civic duty; the actions of an individual must benefit the whole of society. In this way, there must be a balance between economic growth and the welfare of society and the environment. If this equilibrium is maintained, then social responsibility is accomplished.


What it Means to be Socially Responsible and Ethical?

The theory of social responsibility is built on a system of ethics, in which decisions and actions must be ethically validated before proceeding. If the action or decision causes harm to society or the environment then it would be considered to be socially irresponsible.


What it Means to be Socially Responsible and Ethical?

Moral values that are inherent in society create a distinction between right and wrong. In this way, social fairness is believed (by most) to be in the “right”, but more frequently than not this “fairness” is absent. Every individual has a responsibility to act in manner that is beneficial to society and not solely to the individual.


When Do Social Responsibility and Ethics Apply?

The theory of social responsibility and ethics applies in both individual and group capacities. It should be incorporated into daily actions/decisions, particularly ones that will have an effect on other persons and/or the environment. In the larger, group capacity, a code of social responsibility and ethics is applied within said group as well as during interactions with another group or an individual.


Businesses have developed a system of social responsibility that is tailored to their company environment. If social responsibility is maintained within a company than the employees and the environment are held equal to the company’s economics. Maintaining social responsibility within a company ensures the integrity of society and the environment are protected.

Often, the ethical implications of a decision/action are overlooked for personal gain and the benefits are usually material. This frequently manifests itself in companies that attempt to cheat environmental regulations. When this happens, government interference is necessary.

MEASURE OF SOCIAL PERFORMANCE

A model for evaluating total corporate social responsibility is presented in Exhibit 4.7. The model indicates that total corporate social responsibility can be subdivided into four primary criteria: economic, legal, ethical, and discretionary responsibilities. These four criteria fit together to form the whole of a company’s social responsiveness. Managers and organizations are typically involved in several issues simultaneously, and a company’s ethical and discretionary responsibilities are increasingly considered as important as economic and legal issues. Social responsibility has become an important topic on the corporate agenda in the light of corporate scandals, concerns about globalization, and a growing mistrust of business.


Example of Filipino companies who advocate Corporate Social Responsibility

- ABS-CBN – Lingkod Kapamilya/Bantay Kalikasan

- GMA – Kapuso- San Miguel Corporation – San Miguel

Foundation- 7-11 – Supplemental Feeding Program/Balik

Eskwela- Smart Communications – Kabalikat


Economic ResponsibilityThe first criterion of social responsibility is economic

responsibility. The business institution is, above all, the basic economic unit of society. Its responsibility is to produce the goods and services that society wants and to maximize profits for its owners and shareholders.

Economic responsibility, carried to the extreme, is called the profit-maximizing view, advocated by Nobel economist Milton Friedman. This view argues that the corporation should be operated on a profit-oriented basis, with its sole mission to increase its profits so long as it stays within the rules of the game


Legal ResponsibilityAll modern societies lay down ground

rules, laws, and regulations that businesses are

expected to follow. Legal responsibility defines what society deems as important with respect to appropriate corporate behavior. Businesses are expected to fulfill their economic goals within the legal framework.


Ethical ResponsibilityEthical responsibility includes

behaviors that are not necessarily codified into law and may not serve the corporation’s direct economic interests.


Discretionary ResponsibilityDiscretionary responsibility is purely

voluntary and is guided by a company’s desire to make social contributions not mandated by economics, law, or ethics. Discretionary

activities include generous philanthropic contributions that offer no payback to the company and are not expected.

ORGANIZATIONAL GROWTH/CHANGE AND DECLINE

Organizational change often follows an evolutionary pattern of gradual growth and decline

Change is inevitableMost common forces for change include: New competitors, innovations in technology, new company leadership, evolving attitudes toward work


Larry Greiner (Professor of Management and Organization in the Marshall School of Business at the University of Southern California. ) contends that every organization has an ideal structure that corresponds to its stage in the growth process


Each new stage is preceded by a period of transition called a growth crisis

The six phases of organisational growth (adapted from Greiner, 1998).

Growth through Creativity

First stageAt birth, organizations are loose in structure and informal

Creative energies will help to carry organization through its birth process

With growth, nature of problems changes

Growth through Direction

Second stageFormalization is introduced by professional managers

Bureaucratization occurs in departments to manage organization

Specialized divisions are created

Growth through Delegation

Third stageThe crisis of autonomy is overcome by delegating greater decision-making power to middle- and lower-level managers, with top level managers focusing on long-range, strategic planning

A crisis of control are created

Growth through Coordination

Fourth stageThe crisis is resolved via greater coordination between departments

Consultants may be hired to assess the extent of coordination needed and to suggest ways of improving efficiency and reducing redundancy

The crisis of red tape

Continued Growth through Collaboration

Fifth stageSimplification of programs, and

reliance on self-control and social norms eventually solve crisis of red tape

Goal is to teach managers how to cope with the organization’s structure without giving in to impulse to create additional structure, to collaborate

Growth Through Alliances

Sixth StageGreiner's recently added sixth phase

suggests that growth may continue through merger, outsourcing, networks and other solutions involving other companies.

Managing Organizational Decline

Factors that can lead to decline: Atrophy, loss of efficient processes, loss of

competitive drive Self complacency Changes in societal values and consumer tastes Insufficient external resources Vulnerable state caused by inexperienced

managers, cash flow problems, economic downturns, etc

Skills to Manage Decline

Similar to those necessary to manage growth

Skills include: Ability to seek creative solutions Willingness to innovate Tactful management of conflict

Factors that Lead to Organizational Success

Focus on customers and their needsAdapt the structure to the needs of their

missionsManagers are oriented to problem solving, with

avoidance of “paralysis through analysis” mentally

Commitment to organization’s original area of expertise, “sticking to one’s knitting”

Stress a single value, e.g, delivering good service, etc.

Improve performance by achieving agreement or consensus of employees

Factors that Lead to Failure

Environmental factors may catch organizations off guard

Too dependent on suppliers and/or single customer

Inadequate control mechanisms Management factors, e.g., tendency to

overanalyze, or wait too long in making decisions, outdated expertise

Intergroup conflicts

Informal organization

Education

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