Tuesday, September 20, 2011

Organization Theory - 8

In the last blog, we defined a lot of terms. In today's blog we take a hypothetical situation and try to understand this better.

ABC Pvt Ltd is a company founded by Amit and his friend Bala. The company was set up just a few months back, and both Amit and Bala are heading the company and intend to take it great heights. The basic work of the company is into manufacturing mixer grinders. They have set up a factory in Peenya Industrial area and have currently employed 4 people, all are from have an electrical diploma and one of them is the supervisor who has prior work experience. Amit works on getting new business for the company while Bala manages the day to day operations of the company. Both Bala and Amit spend around 2 hrs a day catching up on the activities of the day and taking very important decisions relating to the direction of the company.

Let us now sit back and look at the story in a bit more detail.

The number of people in the organization is 6 (including the 2 founders). The hierarchy is pretty low since there is one supervisor, to whom 3 workers report and the other aspects are taken care by the Founders. We could look at the hierarchy pictorially as follows
(A + B)
(w + w + w)

Thus we see that this simple structure enables the founders to have a very close look at the day to day operations. Since the supervisor reports directly to the founders, who take the decision about the organization there is almost negligible delay in making decisions. There are certain operational decisions which the supervisor himself can take. From this we clearly understand that the organization is having a simple structure with sufficient autonomy given to the supervisor - which also indicates that there is delegation of the activity by the founder. The nature of the work suggests that there is little difference in the activity of the workers. To enhance the speed, formalization is done away with and the flexibility is high.

Thus we see that even a simple organization like ABC Pvt Ltd could be used to understand the various variables. Now it would be an interesting part to look at your own company and make an estimate of these things!

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