Nature of Organisational Processes

1. Nature of Organisational Processes Facilitator and Course Coordinator: Vinayshil Gautam PhD, FRAS(London) (Founder Director IIM K; Leader Consulting Team IIM S) A Al_Sager Chair Professor and First Head, Management Department, IIT D Chairman, DKIF The system continually has to make this choice: it can either continue to exploit a known process and make it more productive, or it can explore a new process at the cost of being less efficient.

2. Perspective • The processes within an organization can be classified using various criteria as they vary from - Decision making, to Planning, to Organization Design and Structuring, to Staffing, to Directing, Motivating and Communicating, and also to Controlling, all of which are totally different but equally significant as a process within an organization.

3. Perspective • However, for the purpose of this discussion we shall focus on: • Planning and Decision making, • Organization design and work flow, • Communication and Information flow

4. PLANNING AND DECISION MAKING

5. Planning • Planning is the most basic function of management, being concerned with the conscious determination of the courses of action required to achieve predetermined objectives • It is also viewed as decision making since it as to decide in advance about: • What is to be done? • When it is to be done? • By whom it is to be done? • How it is to be done?

6. The Planning Process • Crystallize the opportunity or problem • Securing and analyzing necessary information • Establishing planning premises and constraints • Ascertaining alternative courses of actions or plans • Selecting the optimum plan • Determining derivative plans • Fixing timing of introduction • Arranging future evaluation of effectiveness of the plan

7. Types of Plans • Classifying based on time dimension • Short-term (Plans extending generally upto 1 year) • Long-term (Plans of more than one year) • Classifying based on functions • Production planning • Marketing planning • Sales planning and so on

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

9. Decision making • Decision making is the cognitive process leading to the selection of a course of action among alternatives. • Every decision making process produces a final choice. It can be an action or an opinion. • It begins when we need to do something but we do not know what.

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

11. Decision making Process • There are 3 time aspects of a decision: • Past in which the problems were developed and information collected • Present where alternatives have to be evaluated and selected • Future where decisions will be carried out

12. Decision making Process • Steps: • Define and crystallize the problem • Secure and analyze pertinent facts • Develop alternative solutions or courses of action • Decide upon the best solution or the optimum course of action • Convert the Decision into effective action

13. Types of decision • Organizational decisions • Personal decisions • Basic or non-programmed decisions • Routine or programmed decisions • Group decisions

14. techniques in decision making Managers at various levels use several techniques for decision making, some of them are: • SWOT Analysis - Evaluation by the decision making individual or organization of Strengths, Weaknesses, Opportunities and Threats with respect to desired end state or objective. • Analytic Hierarchy Process - procedure for multi-level goal hierarchy • Buyer decision processes - transaction before, during, and after a purchase

15. techniques in decision making • Decision trees • Program Evaluation and Review Technique (PERT) • Critical path analysis • Critical chain analysis • Force field analysis - analizing forces that either drive or hinder movement toward a goal • Grid Analysis - analysis done by compairing the weighted averages of ranked criteria to options. A way of comparing both objective and subjective data.

16. techniques in decision making • Linear programming - optimization problems in which the objective function and the constraints are all linear • Min-max criterion • Model (economics)- theoretical construct of economic processes of variables and their relationships • Monte Carlo method - class of computational algorithms for simulating systems • Morphologicalanalysis - all possible solutions to a multi-dimensional problem complex • Constrained optimization • Paired Comparison Analysis - paired choice analysis • Pareto Analysis - selection of a limited of number of tasks that produce significant overall effect

17. techniques in decision making • Satisficing - In decision-making, satisficing explains the tendency to select the first option that meets a given need or select the option that seems to address most needs rather than the “optimal” solution. • Scenario analysis - process of analyzing possible future events • Six Thinking Hats - symbolic process for parallel thinking • Strategic planning process - applying the objectives, SWOTs, strategies, programs process • Ubiquitous command and control is a concept for dynamic decision making based on "agreement between an individual and the world", and "agreements between individuals

18. Styles and methods of decision making Combinational Style Positional Style • Deterministic • A very narrow, clearly defined, • primarily material goal, and • A program that links the initial • position with the final outcome. • Non-deterministic • A positional goal and • A formation of semi-complete • linkages between the initial step • and final outcome.

19. Styles and methods of decision making The positional style is better as compared to combinational as it serves to: a) create a predisposition to the future development of the position; b) induce the environment in a certain way; c) absorb an unexpected outcome in one’s favor; d) avoid the negative aspects of unexpected outcomes.

20. A two-fold approach to decision making • Functional theory to evaluate the quality of group decision-making (Gouran and Hirokawa, 1983, 1996) • Bona fide group studies, in natural settings; preferably longitudinal (Putnam and Stohl, 1990; Stohl and Holmes, 1993)

21. How is this achieved? • Through the use of various decision-making tools and techniques throughout all forms of planning: investigation, analysis, implementation, and assessment

22. According to functional Theory: Groups must meet five functions during interaction • Problem Analysis: Given the information available to it, a group needs to arrive at an accurate (i.e. reasonable) understanding of (a) the nature of the problem, (b) the extent and seriousness of the problem, (c) the likely cause(s) of the problem, and (d) the possible consequences of not dealing effectively with the problem. • Establishment of evaluation criteria: A group must recognize the specific standards that the choice must satisfy to be judged acceptable by evaluators of that decision. • Generation of alternative solutions: A group must generate, or be aware of, a number of appropriate and feasible alternative choices among which an acceptable choice is assumed to exist.

23. According to functional Theory: Groups must meet five functions during interaction • Evaluation of positive consequences of solutions: Given the information available to it, a group needs to be fully cognizant of the relative merits of all available alternatives. • Evaluation of negative consequences of solutions: Given the information available to it, a group needs to be fully cognizant of the relative disadvantages associated with each alternative choice .

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

25. Stohl and Holmes discussed the misconceptions of functional theorists: • Decision quality is an objective characteristic or attribute that is apparent at the time of the production of a decision. • Relevant task communication takes place within meetings and not outside of the small group context. • Group action is non-simultaneous and meaningfully sequenced.

26. Stohl and Holmes proposed • Two additional classes of functions to add to those developed by functional theorists: • Embeds the decision in ongoing group life (historical functions) • Accomplishes the embedding of a decision in a permeable context (institutional functions).

27. ORGANIZATION DESIGN AND WORK FLOW

28. Organization design • Organization design involves the creation of roles, processes, and formal reporting relationships in an organization. • It can also be defined as: Developments in or changes to the structure of organizations • One can distinguish between two phases in an organization design process: • Strategic grouping, which establishes the overall structure of the organization (its main sub-units and their relationships), and • Operational design, which defines the more detailed roles and processes.

29. A framework for Organization design: aligning structures

30. What is a workflow system? • Bridge between “real world” and “virtual world” • Real world - contains the organization’s structure, physical goods, employees, and other organizations • The virtual world contains the organization’s computerized infrastructure, including its applications and databases. • Workflow - The computerized facilitation or automation of a business process, in whole or part. • Workflow Management System- A system that completely defines, manages and executes “workflows” through the execution of software whose order of execution is driven by computer representation of the workflow logic.

31. Workflow system • Workflow models represent the organization’s design in a visible way. • The workflow runtime interprets the workflow design. • The combination of model visibility and organizational execution tied to the model facilitates both a top-down and a bottom-up evolution of the organization’s computerized infrastructure. • Workflow models tie the data flow, organizational charts, and flowcharts together. • Workflow models are also defined across organizational boundaries to facilitate trading between organizations.

32. Nature of Organizations • Rational - Collective oriented to pursuit of relatively specific goals and exhibiting relatively highly formalized social structures (e.g., a business). • Natural - Collective whose participants share a common interest in the survival of the system and who engage in collective activities, informally structured, to service this end (e.g., a religion or charity). • Open - Coalition of shifting interest groups that develops goals by negotiation; the structure of the coalition, its activities, and its outcomes are strongly influenced by environmental factors (e.g., a standards organization).

33. Continuum of Workflow Systems • Messages are the means of communication between the organizational employees, and between the organization and its customers and suppliers. • Work items coordinate the receipt of the message with the organizational employee who carries out the work specified by the message. • Business rules automate the decision process used in assigning and executing a work item. • Flowcharts specify the organizational plan for how work flows through an organization.

34. Messages in workflow • Need to deal with any type of message coming into the organization • Can be routed to the correct employee for processing • Can also be routed to a workflow • Annotations are added to a message as it is processed

35. Work Flow Analysis • Managers perform work flow analysis in order to examine how work creates or adds value to the ongoing processes in a business. • Work flow analysis looks at how work moves from the customer (the demand source) through the organization to the point at which the work leaves the organization as a product or service for the customer (to meet the demand). • Work flow analysis often reveals that some steps or jobs can be combined, simplified, or even eliminated. • In other cases, it results in the reorganization of work so that teams rather than individual workers are the source of value creation.

36. Work Flow Analysis Business Process Reengineering Business Process Reengineering (BPR) is different from restructuring in that its focus is not just on eliminating layers of management, but rather a fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in costs, quality, service, and speed. • Uses work flow analysis to identify a company’s core processes involved in producing its product or delivering its service to the customer. • Then the company organizing its human resources around those core processes to improve organizational performance. • Through this analysis, jobs are identified that can be eliminated or recombined to improve company performance.

37. Business process reengineering • Steps in reengineering core processes: • Identify core processes. • Map core processes in respect to workflows. • Evaluate all tasks for core processes. • Search for ways to eliminate unnecessary tasks or work. • Search for ways to eliminate delays, errors, and misunderstandings. • Search for efficiencies in how work is shared and transferred among people and departments.

38. Work Flow Analysis Business Process Reengineering • Proponents • Allows for reinventing a company by making it ‘lean and mean’ • Critics • Hammer of ‘Champy and Hammer’ actually says "don't automate; obliterate."  To many critics, reengineering’s greatest weakness is its lack of a human side, or its depersonalization.

39. Work Items • A work item specifies a task that needs to be carried out by an organizational worker • The worker is identified by his or her role • work item is identified by a message • the role is identified by a queue • the system initiates the work item and usually waits until its completion. • A workflow system’s task is to coordinate with all the outstanding work items

40. Tasks • Synchronizing - Multiple work items are usually modeled as a parallel split and a parallel join • Timeouts - Workflow instances can wait forever for the completion of a work item • Managing workflow instance memory - A workflow system is simultaneously processing a large number of workflow instances

41. Work Flow Diagrams • Model Internal and external entities and flow of data (typically in documents) between them • simple technique for identifying the overall system, the major entities in the system • Workflows are allowed between internal entities and between internal and external entities. • All workflows must be labeled. Many workflows are documents, in either soft or paper forms. • No workflows are allowed between external entities.

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

43. Product Information Delta Products WFD Sales Rep Written Sales Order Orders Customer Annotated Customer Order SOP Clerk Account Receivable Invoice Out of Stock Notice Form Packing Slip/ Packing List Packing List Purchasing Warehouse UPS Purchase Order Supplier

44. Organizational level Workflow Diagram Sales Calls Customers Supplier Sales Order Processing Deaprtment Order Purchase Order Invoice Packing List UPS

45. Production Release Workflow – Headquarters of Department of energy, USA

46. Communication and information flow

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

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

49. Communication structures • Upward channels • Downward channels • Lateral or diagonal channels • Network or communication nets • Grapevine (informal)

50. Failure of communication and information flow • The semantic block • Intentional blocks • Organizational blocks • Status blocks • Faulty expressions and translations • Faulty listening