Welcome to all the students of Welcome to all the students of Organization Theory and Organization Theory and

DesignDesign

InstructorInstructor

Mr. M. S. Halder, MBAMr. M. S. Halder, MBA

Chairperson, BBA Department, Chairperson, BBA Department, BASCBASC

Chapter 1 Chapter 1 OrganizationOrganization

Organizations have been in existence since Organizations have been in existence since the dawn of civilization, but modern the dawn of civilization, but modern organizations differ from earlier ones in organizations differ from earlier ones in several respects. As organizations are several respects. As organizations are always in tune with environmental always in tune with environmental demands, their shapes are vastly different demands, their shapes are vastly different from those of the past and are likely to from those of the past and are likely to change further in future, as can be seen change further in future, as can be seen from the Opening Spotlight. Modern from the Opening Spotlight. Modern organizations are large in size and complex organizations are large in size and complex in nature. They meet the greater variety of in nature. They meet the greater variety of individual and social needs. individual and social needs.

Characteristics of Characteristics of OrganizationOrganization

1. large size1. large size2. Complexity2. Complexity3. Mutually agreed purpose3. Mutually agreed purpose4. Pattern of behaviors4. Pattern of behaviors5. Continuing system5. Continuing system6. Differentiation6. Differentiation7. Coordination7. Coordination8. Conscious rationality8. Conscious rationality9. Import-Conversion-Export9. Import-Conversion-Export10. Interaction with the other systems10. Interaction with the other systems

Def. of Org.Def. of Org.1.1. Pfiffner and SherwoodPfiffner and Sherwood, “Org. is the , “Org. is the

pattern of ways in which large pattern of ways in which large numbers of people, too many to have numbers of people, too many to have intimate face to face contact with all intimate face to face contact with all others, and engaged in a complexity others, and engaged in a complexity of tasks, relate themselves to each of tasks, relate themselves to each other in the conscious, systematic other in the conscious, systematic establishment and accomplishment of establishment and accomplishment of mutually agreed purposes.”mutually agreed purposes.”

2. Schein, “the rational coordination of 2. Schein, “the rational coordination of the activities of a number of people the activities of a number of people for the achievement of some for the achievement of some common explicit purpose or goal, common explicit purpose or goal, through division of labor and through division of labor and function, and through a hierarchy of function, and through a hierarchy of authority and responsibility.”authority and responsibility.”

3. Bakke, “a continuing system of 3. Bakke, “a continuing system of differentiated and coordinated human differentiated and coordinated human activities utilizing, transforming, and activities utilizing, transforming, and welding together a specific set of a welding together a specific set of a human, material, capital, ideational, human, material, capital, ideational, and natural resources into a unique and natural resources into a unique problem-solving whole engaged in problem-solving whole engaged in satisfying particular human needs in satisfying particular human needs in interaction with other systems of interaction with other systems of human activities and resources in its human activities and resources in its environment.environment.

Types of Org.Types of Org.

1. Mutual benefit associations1. Mutual benefit associations

2. Business concerns2. Business concerns

3. Service organizations3. Service organizations

4. Commonweal organizations4. Commonweal organizations

1. Mutual benefit association1. Mutual benefit association

These are associations which These are associations which come up voluntarily for the come up voluntarily for the benefit of their members. For benefit of their members. For examples, clubs, labor unions, examples, clubs, labor unions, political parties, and so on.political parties, and so on.

All members therein have equal rights. All members therein have equal rights. Nevertheless, these organizations are Nevertheless, these organizations are faced with the problem of maintaining faced with the problem of maintaining internal democratic process. Though all internal democratic process. Though all members, males more than females, members, males more than females, middle-aged more then younger or older middle-aged more then younger or older ones, minorities more than majority ones, minorities more than majority groups and homogeneous groups more groups and homogeneous groups more than heterogeneous ones, tend to belong than heterogeneous ones, tend to belong to such associations and participate more to such associations and participate more actively in them. actively in them.

2. Business concerns2. Business concerns

The prime beneficiaries are the owners The prime beneficiaries are the owners or the managers. No business or the managers. No business organizations will ever function, if organizations will ever function, if the benefits to go someone other the benefits to go someone other than the owners or managers. It than the owners or managers. It may simultaneously benefit labor or may simultaneously benefit labor or customers also, but such an customers also, but such an organization will not survive for long organization will not survive for long if the owners are being deprived of if the owners are being deprived of the benefit.the benefit.

3. Service organization3. Service organization

The prime beneficiaries in this The prime beneficiaries in this case are the clients or those who case are the clients or those who come in contact, that is, public in come in contact, that is, public in contact. These organizations contact. These organizations include schools, hospitals, mental include schools, hospitals, mental health clinics, etc. Such health clinics, etc. Such organizations have a problem of organizations have a problem of providing professional service providing professional service within the existing administrative within the existing administrative procedures.procedures.

4. Commonweal 4. Commonweal organizationsorganizations

The prime beneficiary is the The prime beneficiary is the public at large or the whole public at large or the whole society. Examples include the society. Examples include the army, police department, fire army, police department, fire fighting department, and so fighting department, and so on.on.

Chapter 2 Chapter 2 Organization and its Organization and its external environmentexternal environment

Environment TypologyEnvironment Typology

1.1. The General EnvironmentThe General Environment

2.2. The Task EnvironmentThe Task Environment

1. The General Environment1. The General Environment

EconomicEconomic LegalLegal Natural ResourcesNatural Resources TechnologicalTechnological EducationalEducational PoliticalPolitical CulturalCultural DemographicDemographic SociologicalSociological GovernmentalGovernmental EcologicalEcological

2. The Task Environment2. The Task Environment

CompetitorsCompetitors CustomersCustomers SuppliersSuppliers WorkforceWorkforce

Functional Departments and Functional Departments and the task environmentthe task environment

Organizational Department Relevant External Environment1. Finance and Accounting Shareholders, creditors, debtors,

professional bodies.

2. Purchasing Vendors, suppliers

3. Research and Development New scientific knowledge and technology, professional bodies

4. Manufacturing Vendors, suppliers, customers, regulatory bodies

5. Marketing Customers, competitors

6. Human Resource Unions, life insurance agencies, potential employees

7. Legal Shareholders, regulatory agencies, courts, professional bodies

Chapter 3 Chapter 3 Organizational Organizational GoalsGoals

An organizational goal is something An organizational goal is something which an organization seeks and which an organization seeks and something towards which its something towards which its resources and efforts are directed.resources and efforts are directed.

Org. goal include the objectives, Org. goal include the objectives, purposes, mission, standards, purposes, mission, standards, quotas, and targets which the quotas, and targets which the organization is striving for.organization is striving for.

A religious organization may be A religious organization may be formed with the purpose of formed with the purpose of propagating a particular faith, a propagating a particular faith, a military organization has defense of military organization has defense of the nation as its goal, an educational the nation as its goal, an educational institution may come up for providing institution may come up for providing education, a hospital for treating education, a hospital for treating patients, and a business organization patients, and a business organization to earn profits.to earn profits.

Nature of GoalsNature of Goals

1. Most organizations pursue multiple goals.1. Most organizations pursue multiple goals.

2. In view of limited resources, goals are 2. In view of limited resources, goals are assigned priorities. In short-run and long-assigned priorities. In short-run and long-run.run.

3. Even among the short-run goals, some goals 3. Even among the short-run goals, some goals are weighted more highly than others. It is are weighted more highly than others. It is important to decide whether we want to important to decide whether we want to pursue the goal of profitability or increase pursue the goal of profitability or increase in market share in the immediate future.in market share in the immediate future.

4. Various workers have different 4. Various workers have different expectation from the organizationexpectation from the organization

5. The employment of resources indicates 5. The employment of resources indicates the actual goals pursued which may the actual goals pursued which may be different from the official goalsbe different from the official goals

6. There is a limit to the attainment of 6. There is a limit to the attainment of some goals such as increase in market some goals such as increase in market share.share.

7. Goals are ends and not means.7. Goals are ends and not means.8. Goals can be either open-end or closed-8. Goals can be either open-end or closed-

ended. Open-end goals do not contain a ended. Open-end goals do not contain a statement to indicate when they can be statement to indicate when they can be said to have been achieved. They are said to have been achieved. They are vague, ill-defined and difficult to measure vague, ill-defined and difficult to measure such as the goal of attaining excellence in such as the goal of attaining excellence in research. Closed-end goals have content, research. Closed-end goals have content, a level, a measure or indicator, and a time a level, a measure or indicator, and a time boundary for completion. They are specific boundary for completion. They are specific in nature.in nature.

9. Social responsibility has become an 9. Social responsibility has become an important goal.important goal.

Functions of organizational Functions of organizational GoalsGoals

1. The term “goal” has acquired a 1. The term “goal” has acquired a variety of meanings and is used to variety of meanings and is used to connote but related things. These connote but related things. These can be are follows:can be are follows:

2. Goals of an organization 2. Goals of an organization provide legitimacy to its provide legitimacy to its existence.existence.

3. Goals provide the motive 3. Goals provide the motive force to organizational force to organizational activityactivity

Goals serve as the starting Goals serve as the starting point for organizational activity point for organizational activity

Means

Sub-Goals

Sub-Means

Sub-Sub-Goals

Sub-Sub-Means etc.

4. Goals help in coordinating decisions 4. Goals help in coordinating decisions and decision makers.and decision makers.

5. Organizational performance is also 5. Organizational performance is also judged in terms of goals.judged in terms of goals.

6. Goals act as a set of constraints that 6. Goals act as a set of constraints that an organization must satisfy.an organization must satisfy.

Chapter 4Chapter 4 Organization Organization StructureStructure

The term “structure” is highly The term “structure” is highly abstract as operating structure is abstract as operating structure is different from a planned one.different from a planned one.

Formal structure refers to the Formal structure refers to the followings:followings:

1. The pattern of formal relationships 1. The pattern of formal relationships and duties.and duties.

2. The activities or tasks assigned to 2. The activities or tasks assigned to different departments and people in different departments and people in the organizationthe organization

3. Coordination of these activities tasks3. Coordination of these activities tasks

4. The hierarchical relationships within 4. The hierarchical relationships within the organization the organization

5. The policies, procedures, standards, 5. The policies, procedures, standards, evaluation systems, and so on, that evaluation systems, and so on, that guide the activities and relationships guide the activities and relationships of people in the organization.of people in the organization.

Some concepts related to org. Some concepts related to org. structurestructure

1. The Pyramid – When the volume of 1. The Pyramid – When the volume of work expands and the number of work expands and the number of persons employed in any persons employed in any organization increases, it becomes organization increases, it becomes difficult for any leader to control the difficult for any leader to control the activities of all individuals and activities of all individuals and therefore, they are organized in the therefore, they are organized in the form of departments and sections. A form of departments and sections. A number of persons are appointed to number of persons are appointed to take charge of these departments take charge of these departments and sections and assist the leader.and sections and assist the leader.

Vertical Elaboration

HorizontalElaboration

2. Unity of Direction- When division of work 2. Unity of Direction- When division of work takes place, all related activities are put takes place, all related activities are put together in a particular department. Every together in a particular department. Every dept. and section attempts to specialize in dept. and section attempts to specialize in the activity assigned to it. This is how unity the activity assigned to it. This is how unity of direction is achieved.of direction is achieved.

3. Unity of Command- Each person in a 3. Unity of Command- Each person in a subordinate level is made accountable to subordinate level is made accountable to the next higher level and he is accountable the next higher level and he is accountable only to one superior. This approach is only to one superior. This approach is necessary because it protects the integrity necessary because it protects the integrity of both the superior and the subordinate.of both the superior and the subordinate.

4. Chain of Command- As a subordinate report 4. Chain of Command- As a subordinate report to one boss, who, in turn, reports to his own to one boss, who, in turn, reports to his own boss and like this, a chain of command boss and like this, a chain of command develops in which orders or commands flow develops in which orders or commands flow downwards and information travels downwards and information travels upwards. This chain of commands keeps all upwards. This chain of commands keeps all levels informed as to what is happening in levels informed as to what is happening in the organization. It gives them an the organization. It gives them an assurance that no one will skip levels and assurance that no one will skip levels and undermine the superior’s confidence.undermine the superior’s confidence.

5. Authority- An individual 5. Authority- An individual performs the job assigned to performs the job assigned to him by the organization with him by the organization with the help of the authority the help of the authority granted to him by the granted to him by the organization for the discharge organization for the discharge of his duties.of his duties.

Authority diminishing

AuthorityIncreasing

A

B

C

6. Delegation of Authority- A position 6. Delegation of Authority- A position holder having authority to control holder having authority to control the affairs of his organization the affairs of his organization establishes his contact with the establishes his contact with the employees. He specifies their jobs employees. He specifies their jobs and keeps a check on what they are and keeps a check on what they are doing and how they are doing it. doing and how they are doing it.

AuthorityResponsibility

Accountability

What can be delegated?What can be delegated?

All matters which are repetitive in nature, All matters which are repetitive in nature, routine tasks, and matters of concern to one routine tasks, and matters of concern to one subordinate element alone can be easily subordinate element alone can be easily delegated. There are certain problems which delegated. There are certain problems which have to be tackled at the top like overall have to be tackled at the top like overall profit goals and budgeting, financing, major profit goals and budgeting, financing, major facilities and other capital expenditures, facilities and other capital expenditures, important new product programs, major important new product programs, major marketing policies, basic personnel policies marketing policies, basic personnel policies and the development and compensation of and the development and compensation of managerial personnel.managerial personnel.

How far it can be How far it can be delegated?delegated?

Delegation can go down to the Delegation can go down to the lowest level. It depends upon various lowest level. It depends upon various factors such as willingness of the factors such as willingness of the superior to delegate, confidence in superior to delegate, confidence in subordinates, their competence, and subordinates, their competence, and so on.so on.

To delegate authority, a To delegate authority, a superior must do the superior must do the

followings:followings: Clear responsibilityClear responsibility Commensurate authorityCommensurate authority Development of subordinatesDevelopment of subordinates Adequate controlsAdequate controls

7. Centralization7. Centralization

it means consistent reservation of it means consistent reservation of authority at certain limited points to which authority at certain limited points to which all matters pertaining to a particular all matters pertaining to a particular problem have to be referred to. Authority problem have to be referred to. Authority is not delegated to different levels. People is not delegated to different levels. People are asked to do defined jobs, but any are asked to do defined jobs, but any problems arising in the course of problems arising in the course of performance are reported to the higher performance are reported to the higher levels which alone have the right to take levels which alone have the right to take decisions.decisions.

8. Decentralization 8. Decentralization

it is an extension of it is an extension of delegation. This delegation delegation. This delegation is throughout the is throughout the organization. Several organization. Several respects are follows:respects are follows:

it places decision-making authority at a it places decision-making authority at a point where there is knowledge of local point where there is knowledge of local problemsproblems

it helps develop mangers at an early it helps develop mangers at an early stage.stage.

It motivates managersIt motivates managers It focuses on business performance; andIt focuses on business performance; and It permits more time for top It permits more time for top

management to concentrate on policy-management to concentrate on policy-making and creative innovation.making and creative innovation.

Centraliza-tion ofAuthority

Decentrali-zation of Authority

9. Formalization 9. Formalization

Whatever may be the type of structure Whatever may be the type of structure an organization has and in whichever an organization has and in whichever way it distributes authority, way it distributes authority, organizations tend to be formalized. organizations tend to be formalized. “Formalization implies that “Formalization implies that organization relationship and activities organization relationship and activities have been authenticated, that is, have have been authenticated, that is, have a stamp of approval of one who is a stamp of approval of one who is authorized.authorized.

Determinants of organization Determinants of organization structurestructure

1. Size1. Size

2. Technology2. Technology

3. Environment3. Environment

4. Strategies and Goals4. Strategies and Goals

Designing an organization Designing an organization structurestructure

1. Identification of goals and sub-goals1. Identification of goals and sub-goals

2. grouping of activities2. grouping of activities

3. span of supervision3. span of supervision

Seven Structural Seven Structural ConfigurationsConfigurations

Adapted from Henry Mintzberg

Configuration Prime Coordinating

Mechanism

Key Part of Organization

Type of Decentralization

Entrepreneurialorganization

Direct supervision Strategic apex Vertical and horizontal centralization

Machine organization

Standardization of work processes

Techno-structure Limited horizontal decentralization

Professional organization

Standardization of skills

Operating core Horizontal decentralization

Diversified organization

Standardization of outputs

Middle line Limited vertical decentralization

Innovative organization

Mutual adjustment Support staff Selecteddecentralization

Missionary organization

Standardization of norms

Ideology Decentralization

Political organization

None None Varies.

Chapter 5 Chapter 5 Authority, Status, Authority, Status, Power, and PoliticsPower, and Politics

Definition Definition

It may be defined as the “decision-It may be defined as the “decision-making” right. When a right to take a making” right. When a right to take a decision in a regard to a particular decision in a regard to a particular matter is vested in a particular matter is vested in a particular position, that position is said to position, that position is said to possess the said authority.possess the said authority.

Types of AuthorityTypes of Authority

1. Traditional Authority1. Traditional Authority

2. Charismatic Authority2. Charismatic Authority

3. Legal Authority3. Legal Authority

StatusStatus

Def.Def. It is a case of perception of how It is a case of perception of how

people look at a position in relation people look at a position in relation to other position in the same to other position in the same organization, and even of how organization, and even of how society in general looks at it.society in general looks at it.

Types of STATUSTypes of STATUS

There are two types of status. There are two types of status.

1. Formal- refers to the rank of people 1. Formal- refers to the rank of people as designated by the authority as designated by the authority structure of an organization.structure of an organization.

2. Informal-refers to the social rank 2. Informal-refers to the social rank which others accord to a person which others accord to a person because of their feelings towards himbecause of their feelings towards him

Two types of factors

1.1. InternalInternal

2.2. ExternalExternal

Internal Factors External Factors

Organizational rank Occupational prestige

Job itself Organizational image

Differences in abilities or skills or knowledge

Prestige of the industry that the organization is engaged in

Material worked on Education

Working condition Age

Pay Sex

Seniority Race, etc.

PowerPower

DefinitionDefinition

1. Power is personal, political and 1. Power is personal, political and acquired by individuals.acquired by individuals.

2. Power is, in fact, one’s ability to 2. Power is, in fact, one’s ability to influence others’ behaviors.influence others’ behaviors.

3. According to Wolfe, “Power is, 3. According to Wolfe, “Power is, therefore, the potential ability of therefore, the potential ability of one person to induce forces on one person to induce forces on another person towards movement another person towards movement or change in a given direction.or change in a given direction.

Sources of PowerSources of Power

There are two types of power are There are two types of power are therethere

1. Interpersonal sources of power1. Interpersonal sources of power

2. Structural and situational sources of 2. Structural and situational sources of powerpower

Interpersonal Sources of PowerInterpersonal Sources of Power

1. Legitimate power1. Legitimate power

2. Reward2. Reward

3. Coercive3. Coercive

4. Expert4. Expert

5. Referent5. Referent

Structural and Situation Structural and Situation Sources of PowerSources of Power

1. Knowledge as power1. Knowledge as power2. Resources as power2. Resources as power3. Decision making as power3. Decision making as power4. Networks as power4. Networks as power5. Power of lower level 5. Power of lower level

employeesemployees

Forms of PowerForms of Power

Suggested from Goldhammer and Suggested from Goldhammer and ShilsShils

1. Force1. Force

2. Domination2. Domination

3. Manipulation3. Manipulation

PoliticsPolitics

1.1. Politics is the process whereby power is Politics is the process whereby power is acquired, transferred and exercised upon acquired, transferred and exercised upon others to influence their behavior to suit others to influence their behavior to suit the interests of the person who influence.the interests of the person who influence.

2.2. Politics or politicking is endemic to every Politics or politicking is endemic to every organization and every level.organization and every level.

3.3. People play politics either to serve their People play politics either to serve their individual interests, or organizational individual interests, or organizational interests, or both.interests, or both.

Nord suggestion 4 postulates Nord suggestion 4 postulates of powerof power

1.1. Org. composed of coalitions competing Org. composed of coalitions competing with one another for resources;with one another for resources;

2.2. Each coalition seeking to protect its Each coalition seeking to protect its own interests;own interests;

3.3. Unequal distribution of powerUnequal distribution of power

4.4. The exercise of power within The exercise of power within organizations having impact of power organizations having impact of power within the larger social system.within the larger social system.

Lasswell said thatLasswell said that

Politics has a problem of who gets Politics has a problem of who gets what, when, and how, imply the use what, when, and how, imply the use of power for allocation of scarce of power for allocation of scarce resources.resources.

Pfiffner said thatPfiffner said that

If power is a force to influence If power is a force to influence events, politics involves those events, politics involves those activities or behaviors through which activities or behaviors through which power is developed and used in power is developed and used in organizational settings.organizational settings.

Chapter 6 Organizational Chapter 6 Organizational CultureCulture

1. According to Taylor, "Culture … is 1. According to Taylor, "Culture … is that complex whole which includes that complex whole which includes knowledge, belief, art, morals, law, knowledge, belief, art, morals, law, custom, and any other capabilities custom, and any other capabilities and habits acquired by man as a and habits acquired by man as a member of society.member of society.

2. According to Herskovits, “that part 2. According to Herskovits, “that part of the total setting that includes the of the total setting that includes the material objects of human material objects of human manufacture, techniques, social manufacture, techniques, social orientations, points of view, and orientations, points of view, and sanctioned ends, which are the sanctioned ends, which are the immediate conditioning factors immediate conditioning factors underlying behavior.”underlying behavior.”

3. According to Aviel, 3. According to Aviel, “ Culture as a way “ Culture as a way of life, the sum of life, the sum total of one’s total of one’s philosophy, beliefs, philosophy, beliefs, norms, values, norms, values, morals, habits, morals, habits, customs, art, and customs, art, and literature.literature.

4. According to Lahiry, “Culture as a 4. According to Lahiry, “Culture as a set of unwritten rules that embodies set of unwritten rules that embodies the dos, don’ts and shouldn't of the the dos, don’ts and shouldn't of the organization and tells its members organization and tells its members how to interact with others and how to interact with others and approached tasks in order to fit and approached tasks in order to fit and meet the firm’s expectations.meet the firm’s expectations.

5. According to Vein, 5. According to Vein, Hunt, “ Culture Hunt, “ Culture takes years to takes years to develop. It is done develop. It is done covertly rather than covertly rather than overtly, by example overtly, by example rather than by rather than by prescription, prescription, informally rather informally rather than formally.than formally.

Dimensions of CultureDimensions of Culture

1.1. Nature of peopleNature of people

2.2. Relationship with natureRelationship with nature

3.3. Interpersonal relationshipInterpersonal relationship

4.4. Achievement orientationAchievement orientation

5.5. Time orientationTime orientation

6.6. Concept of spaceConcept of space

1. Nature of people1. Nature of people

What do people of a What do people of a particular culture particular culture think of human think of human beings-as honest or beings-as honest or dishonest, dishonest, trustworthy or trustworthy or untrustworthy, untrustworthy, good or bad? good or bad? People have a way People have a way of thinking about of thinking about other people.other people.

2. Relationship with nature2. Relationship with nature

How do people of a How do people of a particular culture particular culture view relationship view relationship between people between people and the and the environment? Is environment? Is there control over there control over nature or a nature or a subordination to it?subordination to it?

3. Interpersonal relationship3. Interpersonal relationship

Do people stress Do people stress individualism or individualism or collectivism? Are collectivism? Are they individual-they individual-oriented or group-oriented or group-oriented?oriented?

4. Achievement orientation4. Achievement orientation

Do people prefer Do people prefer activity to being activity to being where they are? where they are? Are they Are they achievement-achievement-oriented or leisure-oriented or leisure-seeking?seeking?

5. Time orientation5. Time orientation

Do they think of the Do they think of the past or of the past or of the future? Some future? Some cultures continues cultures continues to bask under the to bask under the glory of their past glory of their past without paying without paying much attention to much attention to their present or the their present or the future.future.

6. Concept of space6. Concept of space

How do people vies How do people vies space? Should we space? Should we sit close to each sit close to each other or at a other or at a distance? Should distance? Should there be a hall or there be a hall or private cabins for private cabins for officials to sit?officials to sit?

Chapter 7 Decision MakingChapter 7 Decision Making

1.Decision making is commonly 1.Decision making is commonly referred to as choosing between referred to as choosing between alternativesalternatives

2. It is a process of specifying the 2. It is a process of specifying the nature of a particular problem nature of a particular problem and selecting among available and selecting among available alternatives in order to solve it.alternatives in order to solve it.

3. It is an essential human activity that 3. It is an essential human activity that pervades all management functions in pervades all management functions in organizations.organizations.

4. The important thing is to look at how 4. The important thing is to look at how individuals and groups attempt to identify individuals and groups attempt to identify problem areas, examine various potential problem areas, examine various potential solutions to problems, and select the solutions to problems, and select the most suitable solution in a particular most suitable solution in a particular situation.situation.

Types of DecisionsTypes of Decisions

1. Personal and 1. Personal and Organizational Organizational decisionsdecisions

2. Basic and 2. Basic and Routine decisionsRoutine decisions

3. Programmed 3. Programmed and Non-and Non-programmed programmed decisions.decisions.

1. Personal and Organizational 1. Personal and Organizational decisionsdecisions

Personal decisions are to achieve Personal decisions are to achieve personal goals and organizational personal goals and organizational decisions are to achieve the decisions are to achieve the organizational goals.organizational goals.

Ex. A manager may decide to join a Ex. A manager may decide to join a university programmed to brighten his university programmed to brighten his career prospects in his present career prospects in his present organization or elsewhere. It is purely his organization or elsewhere. It is purely his personal decision, but when he comes personal decision, but when he comes back after the completion of the course back after the completion of the course and does his job, he is serving and does his job, he is serving organizational goals with improved skills.organizational goals with improved skills.

2. Basic and Routine decisions2. Basic and Routine decisions

Basic decision are unique, one-time Basic decision are unique, one-time decisions involving long-term decisions involving long-term commitment or resources. Ex. Plant commitment or resources. Ex. Plant location, organization structure, location, organization structure, product line and so on.product line and so on.

Routine decisions are highly repetitive, Routine decisions are highly repetitive, everyday decisions, often taken at everyday decisions, often taken at lower levels, such as a supervisor lower levels, such as a supervisor assigning a worker from one job to assigning a worker from one job to another on a particular day or a another on a particular day or a salesman deciding his schedule for salesman deciding his schedule for visits.visits.

3. Programmed and Non-3. Programmed and Non-programmed decisions.programmed decisions.

This brings to the fact This brings to the fact that some decisions in that some decisions in every organization are every organization are quiet routine or quiet routine or repetitive in nature repetitive in nature and every and every organization has organization has developed standard developed standard operating procedures operating procedures to handle such to handle such decision problems.decision problems.

People come and go, People come and go, but irrespective of but irrespective of the incumbents in the incumbents in particular positions particular positions in the organization, in the organization, the same the same procedures are procedures are followed day in and followed day in and day out throughout day out throughout the organization.the organization.

Programmed Programmed decisions are decisions are routine and routine and repetitiverepetitive

Non-programmed Non-programmed decisions are decisions are unique and one-unique and one-shotshot

Managerial Decisions based on Managerial Decisions based on problem complexity and problem complexity and

outcome uncertainoutcome uncertain

The Decision Making The Decision Making ProcessProcess

Recognition of the decision problem

Diagnosis of the problem

Problem Solution

Problem Formulation

Generation of alternatives and Consequences thereof

Choice of the most suitable alternative

Decision Implementation

Evaluation of follow-up of the Decision

Decision making under Decision making under different conditions of different conditions of

knowledgeknowledge 1. Certainty1. Certainty 2. Risk2. Risk 3. Uncertainty3. Uncertainty

1. Certainty1. Certainty

Occurs when Occurs when complete complete information information about about alternatives and alternatives and consequences consequences thereof is thereof is available.available.

2. Risk2. Risk

Occurs when a Occurs when a particular action particular action may lead to ore may lead to ore than one than one potentialpotential outcome, but the outcome, but the relative probability relative probability of each outcome is of each outcome is fairly known.fairly known.

3. Uncertainty3. Uncertainty

Occurs when an Occurs when an action may lead to action may lead to more than one more than one potential outcome potential outcome and their relative and their relative probabilities are probabilities are unknown. unknown.

Techniques for Decision Techniques for Decision MakingMaking

1. Brainstorming1. Brainstorming 2. Synectics 2. Synectics 3. Nominal Group Technique3. Nominal Group Technique 4. Delphi Technique4. Delphi Technique 5. Devil’s Advocate5. Devil’s Advocate 6. Dialectical Inquiry6. Dialectical Inquiry 7. Quality Circles and Quality Teams7. Quality Circles and Quality Teams 8. Self-Managed Teams8. Self-Managed Teams 9. Group Decision Support System (GDSS)9. Group Decision Support System (GDSS) 10. Creativity and Innovation10. Creativity and Innovation

1. Brainstorming1. Brainstorming It is a techniques which helps in It is a techniques which helps in

storming brains. The belief is that when storming brains. The belief is that when people interact in a free and people interact in a free and uninhibited atmosphere, they will uninhibited atmosphere, they will generate creative ideas.generate creative ideas.

The chief merit of this technique is that The chief merit of this technique is that every member of the group gets a every member of the group gets a chance to stretch his/her imagination chance to stretch his/her imagination to the wildest extent possible and to the wildest extent possible and contribute to decision making by contribute to decision making by bringing in newer ideas.bringing in newer ideas.

2. Synectics2. Synectics Synectics is derived from a Greek Synectics is derived from a Greek

word meaning “the fitting together of word meaning “the fitting together of diverse elements”.diverse elements”.

It is a technique in which diverse It is a technique in which diverse elements are put together so that elements are put together so that the problem can be viewed from the problem can be viewed from different angles.different angles.

3. Nominal Group Technique3. Nominal Group Technique

Members are asked to list their own Members are asked to list their own solutions to the problem silently and solutions to the problem silently and independently after giving due independently after giving due thought to it over a period of time, thought to it over a period of time, say ten to fifteen minutes.say ten to fifteen minutes.

7-10 individuals with different 7-10 individuals with different backgrounds and training are backgrounds and training are brought together and familiarized brought together and familiarized with the problem.with the problem.

4. Delphi Technique4. Delphi Technique It is based on the use of questionnaire It is based on the use of questionnaire

for eliciting opinions and it overcomes for eliciting opinions and it overcomes the need for any face-to-face the need for any face-to-face interaction.interaction.

These questionnaires are completed These questionnaires are completed independently by experts at distant independently by experts at distant places.places.

But it is time consuming also.But it is time consuming also.

5. Devil’s Advocate5. Devil’s Advocate This follows the popular saying:" Keep a critic by This follows the popular saying:" Keep a critic by

your side”. This critic brings out negative your side”. This critic brings out negative aspects of your point of view and helps improve aspects of your point of view and helps improve your decision provided you are an open-minded your decision provided you are an open-minded person.person.

This method helps the individual as well as the This method helps the individual as well as the organization.organization.

It helps the individual to develop presentation It helps the individual to develop presentation and debating skills. At the same time, the and debating skills. At the same time, the organization increases the probability of organization increases the probability of creative solutions to problems and reduces the creative solutions to problems and reduces the probability of groupthink probability of groupthink

6. Dialectical Inquiry6. Dialectical Inquiry It is nothing but putting forth two It is nothing but putting forth two

opposing views which bring out the opposing views which bring out the benefits and limitations of both sets benefits and limitations of both sets of ideas.of ideas.

But it must be seen that it does not But it must be seen that it does not create a win-lose situation. create a win-lose situation.

The chief merit of DDM (Dialectical The chief merit of DDM (Dialectical Decision Method) is that members Decision Method) is that members arrive at a compromise and believe arrive at a compromise and believe that they have made the decision.that they have made the decision.

7. Quality Circles and Quality 7. Quality Circles and Quality TeamsTeams

QC are small groups that voluntarily QC are small groups that voluntarily meet to provide input for solving meet to provide input for solving quality or production problems.quality or production problems.

Managers often listen to Managers often listen to recommendations from quality recommendations from quality circles and implement the circles and implement the suggestions.suggestions.

8. Self-Managed Teams8. Self-Managed Teams

QC and QT usually emphasize quality QC and QT usually emphasize quality and production problems, whereas and production problems, whereas self-managed teams are more self-managed teams are more broadly focused.broadly focused.

They even cover problems like work They even cover problems like work scheduling, job assignments and scheduling, job assignments and staffing.staffing.

These teams possess authority in the These teams possess authority in the organization's decision-making organization's decision-making processprocess

9. Group Decision Support 9. Group Decision Support System (GDSS)System (GDSS)

A revolution in decision making has A revolution in decision making has come about with the development of come about with the development of support systems.support systems.

These support systems use These support systems use computers, decision models, and computers, decision models, and technological advances to remove technological advances to remove communication barriers, structure the communication barriers, structure the decision process and generally direct decision process and generally direct the group’s discussionthe group’s discussion

10. Creativity and Innovation10. Creativity and Innovation

Equally important is that organizations Equally important is that organizations compete not with products but with people.compete not with products but with people.

Ideational resource is now at a high Ideational resource is now at a high premium.premium.

Both individual and organizational Both individual and organizational influences affect the creative process.influences affect the creative process.

In order to induce creativity and innovation, In order to induce creativity and innovation, one important step, among various one important step, among various techniques used for generating techniques used for generating alternatives, is to reduce barriers to alternatives, is to reduce barriers to creativity and innovative thought and creativity and innovative thought and action.action.

Chapter 8 BureaucracyChapter 8 Bureaucracy

Bureaucracy is the connecting link Bureaucracy is the connecting link between the mandators of the between the mandators of the organization and the workers.organization and the workers.

It is the concept that there must be It is the concept that there must be systematic and orderly policy and systematic and orderly policy and rules must exist within the rules must exist within the organization.organization.

Characteristics of Characteristics of BureaucracyBureaucracy

1. Division of Work1. Division of Work 2. Hierarchy of Authority2. Hierarchy of Authority 3. Maintain Formal, Written Documents 3. Maintain Formal, Written Documents

and Extensive Filing Systemand Extensive Filing System 4. Procedures, Rules and Regulations4. Procedures, Rules and Regulations 5. Expert Training5. Expert Training 6. Impersonality of Interpersonal 6. Impersonality of Interpersonal

RelationsRelations 7. Rational Programme of Personnel 7. Rational Programme of Personnel

AdministrationAdministration

Max WeberMax Weber

1. Division of Work1. Division of Work

This process of division of work goes This process of division of work goes on till the job of an individual on till the job of an individual becomes highly specific and each becomes highly specific and each individual is performing only a individual is performing only a limited task.limited task.

2. Hierarchy of Authority2. Hierarchy of Authority

Every organization which is an entity Every organization which is an entity of scale of possesses a hierarchical of scale of possesses a hierarchical system.system.

Every level is supervised by the next Every level is supervised by the next higher level except, of course, the higher level except, of course, the top.top.

3. Maintain Formal, Written 3. Maintain Formal, Written Documents and Extensive Filing Documents and Extensive Filing

SystemSystem

A bureaucratic organization has an A bureaucratic organization has an elaborate and extensive filing elaborate and extensive filing system. system.

As far as possible, all decisions are As far as possible, all decisions are formally recorded.formally recorded.

4. Procedures, Rules and 4. Procedures, Rules and RegulationsRegulations

A bureaucratic organization obtains A bureaucratic organization obtains clarity in operating processes clarity in operating processes through the developing of through the developing of procedures, rules, and regulationsprocedures, rules, and regulations

5. Expert Training5. Expert Training

It is a process It is a process provide with expert provide with expert training in order to training in order to effect qualitative effect qualitative and quantitative and quantitative improvements in improvements in their performance.their performance.

6. Impersonality of 6. Impersonality of Interpersonal RelationsInterpersonal Relations

Emotions and sentiments interfere Emotions and sentiments interfere with rationality and objectivity and with rationality and objectivity and promote nepotism and favoritism.promote nepotism and favoritism.

Therefore, in a bureaucracy Therefore, in a bureaucracy interpersonal dealings are formal, interpersonal dealings are formal, impersonal and wholly devoid of impersonal and wholly devoid of emotions and sentiments.emotions and sentiments.

7. Rational Programme of Personnel 7. Rational Programme of Personnel AdministrationAdministration

All recruitment to the organization is All recruitment to the organization is made on the basis of the made on the basis of the achievement criteria rather than the achievement criteria rather than the ascriptive criteria.ascriptive criteria.

What an individual is capable of What an individual is capable of doing or what achievements he doing or what achievements he already has, rather than who he is, already has, rather than who he is, decides his selection or promotion.decides his selection or promotion.

Assignment on July 2, 2008Assignment on July 2, 2008

Find out how to bring “remedy for Find out how to bring “remedy for evils of Bureaucracy”evils of Bureaucracy”

Case study solutionCase study solution

1. Defining the problems of the case1. Defining the problems of the case 2. Characters of the case2. Characters of the case 3. Main factors which make the case in 3. Main factors which make the case in

problemproblem 4. Answer all the questions in the case4. Answer all the questions in the case 5. Choose the alternative solutions5. Choose the alternative solutions 6. Each solutions analyze by SWOT6. Each solutions analyze by SWOT 7. Find out the best solution7. Find out the best solution 8. Find out how to implement and evaluate 8. Find out how to implement and evaluate

the solved alternatives.the solved alternatives. 9. Synopsis9. Synopsis 10. Gist of the case in brief.10. Gist of the case in brief.