Module 1- Part 2

Functions of Management
1. Planning – Concept, Nature, Types, Analysis
2. Management by objectives (MBO)
3. Organization Structure – Concept, Structure, Principles,
Centralization, Decentralization, Span of Management;
Organizational Effectiveness.
[3] Organization Structure –
Organizational Effectiveness
 Organizational Effectiveness
The ability of an organization to maximize its performance within a
competitive external environment is its organizational effectiveness.
Effectiveness is achieved when organizational resources are optimally utilized
by creating suitable structures, processes and systems, culture and people
fully aligned to the organization’s business purpose and direction.
Every organization working in a highly competitive environment aspires to
excel by improving its effectiveness. For this a clear purpose and direction
is a must.
– A high performance organization is enormously valuable, yet few achieve it and many do
not even try.
– Organizations are complicated and multi-dimensional, yet few have identified the
culture they need to develop and actively work towards it.
– Even high performance organizations must evolve, yet few rigorously assess
organizational health over time.
 Guidelines for Organizational Effectiveness
• The lines of authority should be clearly stated and should run from top to bottom
of the organization.
• Each person in the organization should report to only one boss.
• The responsibility and authority of each supervisor should be established clearly
and in writing
• The higher managers are responsible for the acts of their subordinates
• The number of levels of authority should be as few as possible.
• The authority and responsibility should be delegated as far down the hierarchical
line as objectively possible.
• The principle of specialization should be applied wherever possible.
• The line function and staff function should be kept separate.
• The span of control should be reasonable and well established.
• The organization should be simple and flexible.
 Organizational Culture factor
• It is a set of norms, values and assumptions that are available to staff and
is thus inseparable from action and process.
• It is a learned set of rules written and unwritten that instructs individuals
about working effectively with each other and with their environment.
• It is the most crucial and difficult organizational attribute to change as it is
long lasting compared to all other physical attributes of the organization.

An organization culture according to Schein Edgar develops in response to 2

major challenges which are external adaptation and survival & internal
integration.
Organizational culture is affected by 3 levels of attributes.
– The facilities, furnishings, offices, visible awards, dress codes and visible employee
interaction
– The organization slogans, stories, mission statements and values that are expressed
repeatedly
– The organization’s underlying and tacit assumptions that are not cognitively identified in
daily employee interactions
 Organization life Cycles

The organization is in its initial stage with ambiguous goals and high creativity level
Entrepreneurial
Stage
Collectivity Innovation continues and the organization mission is clarified.
Stage Employees are committed to organization goals and have informal
communication.
Formalization Here organizational rules and procedures are put
in place as the organization structure is more
& Control e stabilized. Innovation takes a back seat with
Stage emphasis on stability and efficiency.
Products and services are diversified and decision
Making is decentralized at this level. The structure Elaboration of
becomes more complex with multiple departments Structure Stage
and multiple relationships. Decline Stage

At this stage management looks for new ideas

to maintain market position and look for new
opportunities .
 Organizational Effectiveness Criteria

Organizational
Effectiveness

Where the Where the

organization is organizatio
Corporate n will be
Goals:-
Quantitative
Qualitative
Evaluation of Planning and
individuals and execution of
groups’ performances action
based on certain sequences for
criteria groups and
individuals
 Organizational Effectiveness Criteria
Quantitative criteria Qualitative criteria
Quantitative criteria for evaluating Some vital Qualitative criteria are:-
organizational effectiveness are:- • Job satisfaction
• Productivity • Motivation
• Efficiency • Morale
• Control
• Profit
• Conflict/cohesion
• Quality • Flexibility/adaptation
• Accidents • Goal consensus
• Growth • Role and norm congruence
• Absenteeism • Managerial and inter personal skills
• Information management and communication
• Turnover
• Readiness
• Dividend payment • Utilization of environment
• Earning per share • Value of human resources
• Participation and share influence
• Training and development
• Emphasis on achievement
Qualitative objectives have to be converted into quantitative objectives
as much as possible
 Characteristics of Effective Organization
• Providing sustained leadership
• Driving effective decisions
• Focusing people on performance
• Aligning the front line
• Driving a high performance culture
 High Performance Organization
PARAMETERS YARDSTICK

Values Clear Leadership Cohesive

Behavior Leadership
& Goals Vision

Management Value added

Processes Processes
Decision Crisp
Making Decision

Consiste
Customer
Deep Focus
High
Talent Measure &
Meritrocracy Quality
Talent Incentives

Frontline
Fit Capacity to Continuou
Support
Performance High Change Evaluation
Culture Performance