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.
1
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.
2
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
3
PLANNING AND DECISION MAKING
4
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?
5
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
6
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
7
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.
8
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.
9
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.
10
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
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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
12
Types of decision
 Organizational
decisions
 Personal decisions
 Basic or non-programmed
decisions
 Routine or programmed decisions
 Group decisions
13
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
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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.
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techniques in decision making
 Linear programming - optimization problems in
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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
Morphological analysis - 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
16
tasks that produce significant overall effect
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
17
Styles and methods of decision making
Positional Style
Combinational Style
• Non-deterministic
• Deterministic
• A positional goal and
• A very narrow, clearly defined,
primarily material goal, and
• A formation of semi-complete
linkages between the initial step • A program that links the initial
position with the final outcome.
and final outcome.
18
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.
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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)
20
How is this achieved?
 Through the use of various decision-
making tools and techniques throughout
all forms of planning: investigation,
analysis, implementation, and
assessment
21
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.
22
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 .
23
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.
24
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.
25
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).
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ORGANIZATION DESIGN AND
WORK FLOW
27
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:
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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
28
roles and processes.
A framework for Organization design:
aligning structures
29
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.30
Workflow system
 Workflow models represent the organization’s design
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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 topdown 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.
31
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).
32
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.
33
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
34
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
35
source of value creation.
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.
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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.
36
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.
37
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.
38
Work Items
 A work item specifies a task that needs to be
carried out by an organizational worker
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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
39
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
40
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.
41
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,
42
usually via UPS.
Product Information
Sales
Rep
Delta Products WFD
Orders
Written
Sales Order
Customer
Annotated
Customer Order
SOP
Clerk
Account
Receivable
Invoice
Out of Stock
Notice Form
Packing Slip/
Packing List
Packing List
Warehouse
UPS
Purchasing
Purchase
Order
Supplier
43
Organizational level Workflow Diagram
Sales Calls
Customers
Supplier
Order
Sales Order
Processing
Deaprtment
Purchase
Order
Invoice
Packing
List
UPS
44
Production Release Workflow – Headquarters
of Department of energy, USA
ePME PROPOSAL WORKFLOW PROCESS - HEADQUARTERS
RECEIVE
PROPOSAL
FROM LAB OR
SITE OFFICE
ASSIGN
PROPOSAL
REVIEW TEAM
Headquarters
Admin
Proposal sent back to
admin to change team
The HQ Admin assigns
user(s) to fill the
Program Manager,
Budget Reviewer(s) and
Top Official
roles for the workflow in
the HQ Organization
Proposal stays in
pending state until HQ
Program Manager
makes another selection
PROGRAM MANAGER PLACES
PROPOSAL IN PENDING STATUS
PROGRAM MANAGER
REVIEWS PROPOSAL
(HQ PM Review)
Headquarters
Program
Manager
PROPOSAL IS PLACED IN LAB REPOSITORY IN
DECLINED STATE AND DECLINATION EMAIL SENT TO
TEAM MEMBERS FOR ALL LEVELS
Program Manager decides to fund,
decline or place in a pending status
SEND BACK
TO PI/ADMIN
IN LAB FOR
REWORK
Returned for rework
PROGRAM MANAGER
MAKES DECISION ON
PROPOSAL
SEND BACK TO PM
SEND BACK
TO PI/ADMIN
IN LAB FOR
REWORK
PROGRAM MANAGER WANTS
TO FUND PROPOSAL
End
Declinations are:
Not Going to Consider for Funding
Funds not Available
Rejected with No Review
Concur
Proposal stays in
pending state until
another selection is
made
Headquarters
Top
Official
Pending states are Pending
Waiting for Available Funds and
Pending Waiting for Offline
Resolution of an Issue
Pending
Declines
TOP OFFICIAL
MAKES DECISION
ON PROPOSAL
Top Official gives final
funding approval for
proposal
(PendingSend Back to the Lab for Rework)
Wants to Fund
TOP OFFICIAL PLACES PROPOSAL
IN PENDING STATUS
Pending states are Pending Waiting for
Available Funds and Pending Waiting for
Offline Resolution of an Issue
DECLINES
PROPOSAL
PROPOSAL IS PLACED IN LAB REPOSITORY IN
DECLINED STATE AND DECLINATION EMAIL SENT TO
TEAM MEMBERS FOR ALL LEVELS
End
FINAL
APPROVAL
PROPOSAL IS PLACED IN LAB REPOSITORY IN
APPROVED STATE AND APPROVAL EMAIL SENT TO
TEAM MEMBERS FOR ALL LEVELS
End
APPROVE SUBJECT TO
BUDGET REVIEW
Returns to Top Official when done
Headquarters
Budget
Reviewer
BUDGET REVIEWER
REVIEWS PROPOSAL MAKES CHANGES IN
B&R CODES IF
NEEDED
Top Official wants to fund proposal and sends to Budget
Reviewer for review of dollars and B&R codes
45
Communication and information
flow
46
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.
47
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
48
Communication structures
 Upward channels
 Downward channels
 Lateral or diagonal channels
 Network or communication nets
 Grapevine (informal)
49
Failure of communication and
information flow
 The semantic block
 Intentional blocks
 Organizational blocks
 Status blocks
 Faulty expressions and translations
 Faulty listening
50
Information sharing in an empowered
organization
The possession of knowledge and withholding it
from others is a way to maintain a system of
domination. On the other hand, in an
empowering organization, processes are in
place that ensure a wide-spread sharing of
information. Information moves from closely
guarded at the top to openly shared throughout
the organization suggests that, to be
empowered, employees need two kinds of
information:
(1) information about the organization’s mission
and goals; and
(2) information about their performance
51
Information sharing in an empowered
organization
In empowering organizations, information is no longer the
property of individuals, but now belongs to the entire group. All
the operating teams work in concert with each other and have
access to the information they need to meet team and process
goals. Teams are given information about sales, backlogs,
inventory, staffing needs, productivity, costs, quality, and other
data, and each team regularly shares information about its part
of the build-to-order process with the other teams.
Such an organization will be more prone to learn because, as
information is more openly shared, the organization will begin to
function less on the basis of opinion and bias and more on the
basis of facts. Systems must be in place, therefore, that enable a
wide spectrum of people access to both general information
about the organization and also specific information about the
performance of their particular department or team.
52
Information audit
 In order to know the information needs
at various levels, organizations have
started doing information audits. This
also ascertains the information flow
networks and gaps and methodology to
overcome such problems so that proper
information flow exists within
organizations
53
Information audit - Definition
 It is a process
•
That tends to:
• Identify an organization’s information needs
•
•
and resources.
Identify information flow and networks;
internal, external, formal & informal.
In order to:
• Create a realistic portrait of the current
situation.
• Optimize communication level and
information assets.
• Market the information / communication
services and enhance the profile of
information / communication professionals
within the organization.
54
Strategic information audit
 A Strategic Information Audit (SIA) is a
process that :
 Will identify :
 Executives’ strategic information needs,
 Strategic information resources, flow and
networks; internal, external, formal & informal.
 In order to:
 Create a realistic portrait of the current situation,
 Develop a GAP analysis,
 Design or optimize a BI/CI program aligned with
the organization’s strategic needs,
 Optimize all information and intelligence assets
55
SIA Continuous Cycle
Current
Situation
Ideal Situation
Structural
Review
Optimization
Report and
Recommendat
ions
Strategic
Needs
Identification
Gap
Analysis
Implementati
on
Processes
Review
Ongoing Feedback Process
56
REFERENCES
 “Alternative designs of human organizations” –
Nitish R De, Sage Publications, Delhi, London,
1984
 “Management” , 8/e - John R. Schermerhorn, Jr.,
John Wiley and Sons Inc., New York
 “Management Process”, 4/e - R. Davar,
Progressive corporation Pvt. Ltd, Bombay, 1978
 “Structure and Process of Organizations: A
systems approach” – Arlyn J. Melcher, Prentice
Hall Inc., Ney Jersey, 1976
57
REFERENCES

“Organization
and management of
information processing systems” – L.K.
Albrecht, Macmillan Publishing,
London, New York, 1973
 “Organizational decision making” –
Shull, Jr., Delbecq, Cummings, Mc
GrawHill Book Co., 1970
 ACM QUEUE Magazine – March 2006
58
THANKS
59