HANDY CULTURAL TYPOLOGY

An organization is a setup where individuals (employees) come together to work for a common goal. It is essential for the employees to work in close coordination, deliver their level bests and achieve the targets within the stipulated time frame for the smooth functioning of the organization.

Every organization has certain values and follows some policies and guidelines which differentiate it from others. The principles and beliefs of any organization form its culture. The organization culture decides the way employees interact amongst themselves as well as external parties. No two organizations can have the same culture and it is essential for the employees to adjust well in their organization’s culture to enjoy their work and stay stress-free.

Several models have been proposed till date explaining the organization culture, one of them being the Charles Handy model.

According to Charles Handy’s model, there are four types of culture which the organizations follow:

1. Power

• There are some organizations where the power remains in the hands of only few people and only they are authorized to take decisions.
  They are the ones who enjoy special privileges at the workplace. 
• They are the most important people at the workplace and are the major decision makers. 
• These individuals further delegate responsibilities to the other employees. 
• In such a culture the subordinates have no option but to strictly follow their superior’s instructions. 
• The employees do not have the liberty to express their views or share their ideas on an open forum and have to follow what their superior says. 
• The managers in such a type of culture sometimes can be partial to someone or the other leading to major unrest among others.
  

2. Task Culture

• Organizations where teams are formed to achieve the targets or solve critical problems follow the task culture. 
• In such organizations individuals with common interests and specializations come together to form a team. 
• There are generally four to five members in each team. 
• In such a culture every team member has to contribute equally and accomplish tasks in the most innovative way.
  

       3.  Person Culture

• There are certain organizations where the employees feel that they are more important than their organization. 
• Such organizations follow a culture known as person culture. 
• In a person culture, individuals are more concerned about their own self rather than the organization. 
• The organization in such a culture takes a back seat and eventually suffers.
• Employees just come to the office for the sake of money and never get attached to it. 
• They are seldom loyal towards the management and never decide in favour of the organization. 
• One should always remember that organization comes first and everything else later.
  

4. Role culture

• Role culture is a culture where every employee is delegated roles and responsibilities according to his specialization, educational qualification and interest to extract the best out of him. 
• In such a culture employees decide what best they can do and willingly accept the challenge. 
• Every individual is accountable for something or the other and has to take ownership of the work assigned to him. 
• Power comes with responsibility in such a work culture.
  

LEVELS OF ORGANIZATION CULTURE

LEVELS
Schein suggests there are, in fact, 3 levels on which organizational culture makes its presence felt:

Typical organizational Behaviors form the most observable level of culture, and consist of behavior patterns and outward manifestations of culture, such as perks provided to executives, dress codes, the level of technology utilized (and where it is utilized), and the physical layout of work spaces. Some notable characteristic behaviors may have considerable longevity – such as rites, ceremonies, organizational myths, and “shop talk.”

Values underlie and, to a large extent, determine behavior, but they are not directly observable (as behaviors are). There may be a difference between stated and operating values (the values the organization espouses, and those that are actually “in
use”). Organizational values are frequently expressed through norms–characteristic attitudes and accepted behaviors that might be called “the unwritten rules of the road”–and every employee quickly picks them up.

To really understand culture, we have to get to the deepest level: the level
of Fundamental Assumptions. An organization’s underlying assumptions grow out of values, until they become taken for granted and drop out of awareness.
These levels may be viewed like an iceberg, with the most immediately visible level at the top, while the others are generally submerged or implicit. 

MEANING OF ORGANIZATION CULTURE

Every human being has certain personality traits which help them stand apart from the crowd. No two individuals behave in a similar way. In the same way organizations have certain values, policies, rules and guidelines which help them create an image of their own.

Organization culture refers to the beliefs and principles of a particular organization. The culture followed by the organization has a deep impact on the employees and their relationship amongst themselves.

Every organization has a unique culture making it different from the other and giving it a sense of direction. It is essential for the employees to understand the culture of their workplace to adjust well.

Example- Infosys, Tata,Airtel, MTNL,etc 

TURNAROUND STRATEGY

IN NEWS- 

The Government had approved a Turnaround Plan (TAP) / Financial Restructuring Plan (FRP) for operational and financial turnaround of Air India.  The TAP/FRP provides equity infusion of Rs.30,231 crores upto 2021 subject to achievement of certain milestones.  The Company has made substantial progress in both operational as well as financial areas as per TAP Milestones.  As a part of the turnaround strategy, the company, with the overall support of the government, has initiated a number of steps in order to cut costs and losses.

The Turnaround Strategy is a retrenchment strategy followed by an organization when it feels that the decision made earlier is wrong and needs to be undone before it damages the profitability of the company. Simply, turnaround strategy is backing out or retreating from the decision wrongly made earlier and transforming from a loss making company to a profit making company.

• Times of corporate distress present special strategic management challenges. 
• In such situations, a firm may be in bankruptcy or nearing bankruptcy. 
• Often turnaroundconsultants are brought into the company to devise and execute a plan of corporate renewal, assuming that the firm has enough potential to make it worth saving.
• Before a viable turnaround strategy can be formulated, one must identify the root cause or causes of the crisis. 

According to Dictionary of Marketing (edited by P. H. Collin), Turnaround means ‘making a company profitable again’.

Frequently encountered causes include: 

1. Revenue downturn caused by a weak economy 
2. Overly optimistic sales projections 
3. Poor strategic choices 
4. Poor execution of a good strategy 
5. High operating costs 
6. High fixed costs that decrease flexibility Insufficient resources 
7. Unsuccessful R&D projects 
8. Highly successful competitor 
9. Excessive debt burden 
10. Inadequate financial controls 

Example: Dell is the best example of a turnaround strategy. In 2006. Dell announced the cost-cutting measures and to do so; it started selling its products directly, but unfortunately, it suffered huge losses. Then in 2007, Dell withdrew its direct selling strategy and started selling its computers through the retail outlets and today it is the second largest computer retailer in the world.

There are three phase in turnaround management:

1. Diagnosis of the problem faced by the company.

2. Choosing the appropriate turnaround strategy.

3. Implementation of the strategy.

Features of Turnaround:

1. Turnaround involves restructuring. It involves bringing back the sick industrial unit to its original position. Turnaround is aimed at reversing the trend of declining performance of the business firm.

2. Turnaround is applicable to sick industrial units who are passing through economic and financial distress.

3. Turnaround is a long-term strategy. A sick unit cannot be revived over night. Proper planning and implementation to convert a loss-making unit into a profitable one. It is a lengthy and a time consuming process.

4. A sick unit is not in a position to make optimum utilisation of the resources. Turnaround involves reorganizing of physical, financial and human resources by making optimum utilisation of the available resources.

5. Turnaround require co-operation of all the sections of the society such as shareholders, financial institutions, suppliers, employees, customers etc.

6. Capital is the lifeblood of every business. Turnaround requires money. Finance is required to implement the plans of restructuring. Sufficient finance is required to undertake further production and remove deficiencies of the business.

7. Turnaround is undertaken by both internal experts and outside consultants. A proper skill is required to undertake turnaround strategy.

Essentials of successful turnaround strategy:

Turnaround is a complex action, which requires execution of proper planning and support of various groups such as employees, customers, shareholders, financial institutions etc.

The following are the essentials of successful turnaround strategy:

1. Diagnosing the problem:

This is the first step in the restructuring implementation process. To implement turnaround strategy requires diagnosis of the sickness problem. Exact cause of the business failure is to be identified to frame plans for the revival process. Proper screening helps to trap the root cause of the industrial problem.

2. Proper planning and execution:

Once the evaluation has been completed, the next critical step in a turnaround in turnaround planning. Proper planning is too made regarding resources, time frame and policies to be executed. The sick company needs to hire a Corporate Turnaround Expert with many years of turnaround experience

3. Communication:

Communication is a key factor for success in a business. Turnaround requires rapid response from the shareholders, financial institutions, employees and the company management. Complete, clear and prompt communication is necessary to implement turnaround strategy.

4. Availability of funds:

The key elements of any turnaround are financial restructuring. Lack of investment leads to low crop yield and huge wastages. Availability of adequate funds brings the sick unit back to good health, by implementing sound financial management and control.

5. Co-operation:

Turnaround requires co-operation from various groups of the business such as employees, shareholders, management, investors, suppliers, creditors etc. It mainly requires the support of the employees as their workload increases.

6. Viability of business:

Turnaround should be applicable only if there are chances of revival of business firm. Sometimes business may not have bright future, but the survival of such unit may be difficult in the long run.

In such cases, implementation of turnaround strategy is not viable. In short viability of business is an essential requirement of a good turnaround strategy.

Bounded Rationality Model of Decision Making

Bounded rationality is a term first coined by Herbert Simon. Simon challenged the concept of a rational man in classical and neoclassical economic theories and argued that the rationality of man is bounded by certain limitations. He opined that even though rational thinking, deductive reasoning and logic are good for solving theoretical problems.

They are not so good for practical problem solving where the behavior of the decision-maker and his intellect, information about the problem at hand and the time to solve such a problem may create a scenario where the decision-making may happen under a rationality that is bounded by certain conditions. He argued that in real situations people take decisions on the basis of heuristics rather than rule based optimization methods. He argued that decision-making is bounded by the following limitations.

1. Information

Lack of information or incomplete information leads to sub optimal decisions as the decision-maker is not fully aware of the pros and cons of a decision due to lack of information. Hence, lack of information creates a boundary and hinders the rational choice of the decision-maker.

2. Intellectual Ability/Cognitive Ability

The problem at hand may be so complex that the decision-maker may not be able to comprehend the true nature and complexity of the problem, leading to a sub optimal decision. If the problem would have been comprehensible, the decision-maker would have made a rational choice. This creates a boundary on the otherwise rational choice of the decision-maker.

3. Lack of Time to take Decisions

The lack of time may also lead to suboptimal decisions as in this case the decision-maker does not have time to evaluate all the choices and come to a rational choice. On the contrary, lack of time leads to improper and sub optimal decisions, as one does not have the required time to process the information available.

Meaning of Organisation

Meaning of Organisation

Broadly speaking, the term ‘organisation’ is used in four different senses: as a process, as a structure of relationship, as a group of persons and as a system, as given below which explains Nature of Organization-

1.Organisation as a Process: In this first sense, organisation is treated as a dynamic process and a managerial activity which is essential for planning the utilization of company’s resources, plant an equipment materials, money and people to accomplish the various objectives.

For Detail Note- refer at end

2.Organisation as a Framework of Relationship/Structure- In the second sense organisation refers to the structure of relationships and among position jobs which is created to release certain objectives. The definitions of Henry, Urwick, Farland, Northcourt, Lansburgh and Spriegel Breach, Davis, Mooney and Reily etc., come under this group. For example: According to Mooney and Reily, “Organisation is the form of every human association for the attainment of a common purpose.”

For Detail Note- refer at end

3.Organisation as a Group of persons: In the third sense, organisation is very often viewed as a group of persons contributing their efforts towards certain goals. Organisation begins when people combine their efforts for some common purpose. It is a universal truth that an individual is unable ability and resources. Barnard has defined ‘Organisation’ as an identifiable group of people contributing their efforts towards the attainment of goals.

4.Organisation as a System: In the fourth sense, the organisation is viewed as system. System concepts recognize that organizations are made up of components each of which has unique properties, capabilities and mutual relationship. The constituent element of a system are linked together in such complex ways that actions taken by one producer have far reaching effect on others.

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Louis Allen, “Organization is the process of identifying and grouping work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.” 

• In the words of Allen, organization is an instrument for achieving organizational goals. The work of each and every person is defined and authority and responsibility is fixed for accomplishing the same.

Wheeler, “Internal organization is the structural framework of duties and responsibilities required of personnel in performing various functions within the company… It is essentially a blue print for action resulting in a mechanism for carrying out function to achieve the goals set up by company management”. 

• In Wheeler’s view, organization is a process of fixing duties and responsibilities of persons in an enterprise so that business goals are achieved.

Koontz and O’Donnell, ‘The establishment of authority relationships with provision for co-ordination between them, both vertically and horizontally in the enterprise structure.” 

• These authors view organization as a coordinating point among various persons in the business.

Oliver Sheldon, “Organization is the process so combining the work which individuals or groups have to perform with the facilities necessary for its execution, that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available effort”. 

• Organization helps in efficient utilization of resources by dividing the duties of various persons.

Spriegel, “In its broadest sense organisation refers to the relationship between the various factors present in a given endeavor. Factory organisation concerns itself primarily with the internal relationships within the factory such as responsibilities of personnel, arrangement and grouping of machines and material control. From the standpoint of the enterprise as a whole, organisation is the structural relationship between the various factors in the enterprise”.

• Spriegel has given a wide definition of the organization. He has described it as the relationship among persons, factors in the enterprise. All factors of production are coordinated in order to achieve organisational objectives.

George Terry, “Organising is the establishing of effective authority relationships among selected work, persons, and work places in order for the group to work together efficiently”. 

• According to Terry organisation is the creation of relationship among persons and work so that it may be carried on in a better and efficient way.

C.H. Northcott, ‘The arrangement by which tasks are assigned to men and women so that their individual efforts contribute effectively to some more or less clearly defined purpose for which they have been brought together”.

• According to Northcott the purpose of organisation is to co-ordinate the activities of various individuals working in the organisation for the attainment of enterprise goals.

L.H. Haney, “Organisation is a harmonious adjustment of specialised parts for accomplishment of some common purpose or purposes”. 

• Organisation is the adjustment of various activities for the attainment of common goals.

Keith Davis, “Organisation may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object.”

Chester I. Barnard, “Organisation is a system of co-operative activities of two or more persons.”

[NOTE- No need to learn each definition. As seen in previous year questions UPSC use one of definition and ask  features of Organization or explain, etc. So,One just read so that can answer confidently. Can learn one definition and quoting it, give value addition.]

**Organisation as a Process

As a process, organisation is an executive function. It becomes a managerial function involving the following activities:

(i) Determining activities necessary for the accomplishment of the business objectives,

(ii) Division of work,

(iii) Grouping of inter-related activities,

(iv) Assigning duties to persons with requisite competence,

(v) Delegating authority, and

(vi) Co-ordinating the efforts of different persons and groups.

When we consider organisation as a process, it becomes the function of every manager. Organising is a continuous process and goes on throughout the life-time of an enterprise. Whenever there is a change in the circumstances or material change in situation, new type of activities spring up.

So, there is a need for constant review and re-assignment of duties. Right persons have to be recruited and necessary training imparted to make them competent to handle the jobs.

The process of organisation thus, involves dividing the work in a rational way and integrating the activities with work situations and personnel. It also represents humanistic view of the enterprise since it is the people who are uppermost in the process of integration of activities. Continuous review and adjustment makes it dynamic as well.

** Organisation as a Framework of Relationship/Structure

As a structure, organisation is a network of internal authority and responsibility relationships. It is the framework of relationships of persons operating at various levels to accomplish common objectives. An organisation structure is a systematic combination of people, functions and physical facilities.

It constitutes a formal structure with definite authority and clear responsibility. It has to be first designed for determining the channel of communication and flow of authority and responsibility. For this, different types of analysis have to be done. Peter F Drucker suggests following three types of analysis:

(i) Activities analysis

(ii) Decision analysis

(iii) Relations analysis

A hierarchy has to be built-up i.e., a hierarchy of positions with clearly defined authority and responsibility. The accountability of each functionary has to be specified. Therefore, it has to be put into practice. In a way, organisation can be called a system as well.

The main emphasis here is on relationships or structure rather than on persons. The structure once built is not liable to change so soon. This concept of organisation is, thus, a static one. It is also called classical concept. Organisation charts are prepared depicting the relationship of different persons.

In an organisation structure, both formal and informal organisations take shape. The former is a pre-planned one and defined by the executive action. The latter is a spontaneous formation, being laid down by the common sentiments, interactions and other interrelated attributes of the people in the organisation. Both formal and informal organisations, thus, have structure.

Organisation Theory

Syllabus:

1. Organisation Theory:

Nature and Concept of Organisation; Ex-ternal Environment of Organizations -Technological, Social, Political, Economical and Legal; Organizational Goals - Primary and Secondary goals, Single and Multiple

Goals; Management by Objectives.

.
x

Evolution of Organisation Theory: Classical, Neo-classical and Systems Approach. Modern Concepts Organisation Theory: Organisational Design, Organisational Structure and Organisational Culture. Organisational Design–Basic Challenges; Differentiation and Integration Process; Centralisation and Decentralisation Process; Standardisation / Formalisation and Mutual Adjustment. Coordinating Formal and Informal Organisations. Mechanistic and Organic Structures. Designing Organisational structures–Authority and Control; Line and Staff Functions, Specialisation and Coordination. Types of Organisation Structure –Functional. Matrix Structure, Project Structure. Nature and Basis of Power , Sources of Power, Power Structure and Politics. Im-pact of Information Technology on Organisational Design and Structure.

(Todays article)

The Nature of Organizational Theory

An organization is a collection of people working together under a division of labour and a hierarchy of authority to achieve a common goal. Continuously working together under authority toward a goal implies management. The activities of organized people don’t just happen, but they are managed. Organizational theory is the study of organizational structure. And since all science has as its aim, the understanding, prediction, and control of an end, organizational theory is the process of creating knowledge to understand organizational structure so that we can predict and control organizational effectiveness or productivity by designing organizations. There are four major contributing theories of organizations and management, namely:

 1. Classical Theory. 

2. Human Relations Theory. 

3. Contingency/decision theory, and 

4. Modern Systems Theory. 

1. Classical Theory: (Scientific management theory) Scientific management has been thought of broadly as the application of the scientific method of study, analysis, and problem solving to the organizational problems. 

Scientific management assumptions: 

1. Improved practice will come from the application of the scientific method of analysis to organizational problems. 

2. The good worker is viewed as one who accepts orders, but does not initiate actions. 

  Elements of the classical theory: There are four main elements determined by the classical theory: 1) Principles of management. 2) Concepts of line and staff. 3) Committees. 4) Functions of management. 

1) Principles of management: A principle of management is simply something seen as fundamental. These principles include: 1. Division of work (specialization) which gives higher productivity. 

2. Authority and responsibility: Authority is the right to give orders, while Responsibility is the obligation that individuals have for their actions.

3. Discipline: There must be respect for, and obedience to, the rules and objectives of the organization. 

4. Unity of command: Each member should receive orders from (and responsible to) one supervisor to reduce confusion and conflict. 

5. Unity of direction: The organization is effective when members work together toward the same objectives. 

6. Subordination of individual interest to general interest: The interests of one employee (or group of employees) should not prevail over that of the organization. 

7. Remuneration of personnel: Pay should be fair and good performance should be rewarded. 

8. Centralization: Good balance should be found between centralization and decentralization. 

9. Scalar chain: There is a hierarchy dictated by the principle of unity of command linking all members in the organization from top to bottom. 

10.Order: There is a place for every thing and every person. 

11.Equality: Kindness and justice among workers. 

12.Stability of tenure of personnel: Time is required for an employee to get used to new work and succeed in doing it well.

 13.Initiative: Thinking out and execute plans at all levels. 

14.Esprit de corps (union is strength): Superior performance comes from pride, loyalty, and a sense of belonging. 

2) Line and Staff organizational relationships:

•  The concept of staff persons who assist the managers with primary authority and responsibility (LINE) has developed in response to the development of large and complex organization. 
•  Line officials are those employees with general authority and in the direct chain of command over other employees (subordinates) who accomplish the organizational objectives through their efforts.
• Staff officials are those who provide information, advice, and counsel of experts to line managers.

3) Committees: 

•  Committees provide an organizational structure in addition to the line and staff.
• They can contribute to creativity, communication, motivation, coordination, education, advising, and broad representation of points of view. 
•  Functions of management:
•  One of the most durable contributions of the classical theory is the study of management as a set of functions. 
• There have been many opinions of which management functions are important.
•  Management functions are classified into: planning, organizing, directing, and controlling, or planning, organizing, staffing, directing and controlling.

 2. Human Relations Theory: (Neoclassical theory) ……………………………………. Neoclassical theory was built on the base of classical theory. Assumption of the human relations theory:  The psychological and social aspects of the worker as an individual and his work group ought to be emphasized.  The organization can be defined as "a group of persons with a common objective." Elements of neoclassical theory: 1. Emphasizing differences among individuals and as a result the ways of motivating people are different. 2. Emphasizing the importance of the social aspects of the informal organizations that exists within the structure of the formal organizations. 3. Emphasizing the importance of participative management and decision making. Limitation of the theory: 1. The major limitation is that many of the studies upon which the theory is based have been poorly designed. 2. Limited view of human motivation. 3. No consideration of the environment in which organization function. 

3. Contingency/decision theory: A number of writers in the 1960s focused on the relationship between the organization and its environment particularly in regard to technology. 

 Assumption of the contingency/decision theory: 

• The most effective way to practice management is to take into consideration all the conditions existing in a particular management situation.
•  To choose managerial (leadership) styles and techniques most suitable for these conditions.
•  There is no one best way to manage, rather, many variables in the situation dictate the way in which the problem should be handled. 

Elements of the theory:

 1. The individual. 2. The environment. 3. The existing variables. 

• Contingency management in nursing requires an in-depth knowledge of nursing theory and practice 
•  One must be adept in interpersonal relationships, have facility in communication, and some ability to be flexible. 

4. Modern system theory: Modern system theorists (1970) viewed their approach as a framework for analyzing managerial behavior and effectiveness. The system theory differs from the earlier theories in that it is total in its approach; it includes all the other theories. Assumptions of the theory: There is a theoretical framework for identifying general relationships in the real world. 

Definitions:

• System: An entity that behaves in certain ways because of interactions between and among its individual parts or subsystems. 
• Open system: Is one that interacts with the objects in its environment. ( i.e. the system which receives input from the environment and sends back output). 
• Closed system: Is one complete within itself, neither receiving from nor contributing to any environment.
• Input (structure): Refers to the setting and the resources that are available to be utilized (processed) to achieve the end result. 
• Process: Refers to the actual activities carried out to achieve the end results.
• Output: Refers to the results of the activities performed throughout the process. 

 The chief characteristics of a system model:

1. The system has three main parts: Input, process, and output. 

2. The nature of the central processes is prescribed by the desired goals. 

3. The environment places constrains on the system because it determine what materials are available as well as what happens to the finished product. 

4. There must be a control mechanism which measures the actual output against the desired output, and corrects the deviations.

5. There are alternative processes in order to cope (adapt) with variation (i.e., flexibility is required).