Modern trends in management:

Managing organisations in the knowledge revolution era

Dr. K. Kuhathasan, CEO, Cenlead

What are the major trends in managing organisations today?

One trend is the change from formal, hierarchical structures to more process-based structures. This trend is called task-based management. Traditionally, a common form of organisational structure was the functional hierarchy, where individuals with common expertise and responsibilities were grouped together in departments.

For example, a group of marketing analysts would report to a marketing manager who would report to the Director of marketing.

Under a task-based management structure, companies organise individuals with diverse skills into work teams. The work teams may be responsible for one or more major business processes (such as product development).

Other teams may be brought together to focus on a specific project or problem, and then disbanded and reassembled into different teams to work on new projects. This constant reorganization has certain drawbacks, but one of the primary advantages is the ability to draw upon expertise from different functional areas without the usual communication difficulties.

Timely information

To achieve organisational responsiveness, managers have to minimise the uncertainty that exists in their environments. The key to minimising uncertainty is having accurate and timely information about the critical aspects of the environment.

In turbulent (rapidly changing) environments, the quantity of data and the speed at which the data changes are such that managers cannot keep track of all meaningful events without information technology. Information technology has become a strategic tool for companies to keep pace with their environment.

Information technology helps companies by, for example, tracking the tastes and desires of customers through point-of-sale (POS) systems, by allowing management to stay in close touch with suppliers through electronic matching of production schedules, and by providing flexibility to the production process through computers, manufacturing systems.

Having a fast response capability is critical in today's markets, where products and services have shorter and shorter life cycles, and where customers' tastes change quickly. Organisational responsiveness

The primary objective of managers in an organisation is to maintain the organisation as a viable entity. General Systems Theory identifies the areas to which managers should devote their resources, energy, and time to ensure maximum responsiveness. When it comes to assessing organisational responsiveness, managers need to ask the following questions:

1. Are inputs available?

2. Are outputs accepted?

3. Is the transformation process efficient and flexible?

4. Is decision making effective?

5. Is information about our internal operations and external environment accurate and timely?

Transformation Process

The transformation process is the series of activities that organisations use to turn into outputs. The transformation process is the key to the long-term survival of an organisation.

Developing a process that is flexible and efficient, and that produces goods and/or services that represent value to the organisation's customers, is a critical strategic concern for management.The transformation process includes the activities involved in making, packaging, and delivering a product or service.

Decision-making

The primary criteria we are concerned with when we look at the decision-making subsystem of an organisation is its effectiveness. Effectiveness means making the right decisions.

Right decisions about what? Well, decisions about what products to make or what services to provide, and in what quantity. Decisions about how to price those products and services and whether or not to enter specific markets. Decisions about how to manufacture products or how to offer services.

The decision-making subsystem is the subsystem in charge of understanding the past and looking at the future. It is the subsystem that positions the organisation in its environment and "reinvents" the organisation.

Role of IT

Information technology plays a critical role in supporting the decision-making function in organisations. From sales reports to inventory management systems, to performance appraisal systems to customer databases,I/T provides the input to the decision-making subsystem.

Effective decision making is impossible, on a consistent basis without timely and-accurate information. More and more, effective decision-making means making timely decisions.

As the amount of information increases and the sources of that information are spread around the globe, quick analysis of business threats and opportunities is possible only with I/T support in collecting, transmitting, and understanding data.

Group decision-making

Most decision-making in organisations occurs in teams. Seldom does a manager make a decision without input from other members of the organisation, clients, and/or suppliers.

When individuals in a team are asked to take decisions, the decision, the decision situation becomes more complex. It is no longer appropriate to consider each decision-maker as an individual unit; we now have to consider issues such as group dynamics. Just as individual biases can affect individual decision-making, group characteristics can influence group decision-making.

The process of group decision-making is also similar to that of individual decision-making. For convenience, we can divide the process into four general phases:

1. Inception of a project (e.g., choice of goals). This phase includes collecting information.

2. Solution of technical issues (e.g., deciding on how the tasks will be accomplished, such as group roles).

3. Resolution of conflict (e.g., resolving conflicts of viewpoints and interests.

4. Execution of the performance requirement of the project.

New trends

The structure of a company refers to the way employees are organised, and is formalised by job functions and reporting relationship. The traditional view of organisational structure is that of a hierarchy.

A bureaucracy in an organisation with a high degree of formality in job descriptions and communication flows. Bureaucracies may be efficient in terms of internal information processing, but they are rigid and slow to change.

In some organisations, including bureaucracies, most of the decision-making is centralised at the top. In others, the decision-making is decentralised, which means that employees at lower levels of the organisations can make decisions on their own.

Information technology, by allowing centralised information to be displayed simultaneously in multiple locations wherever and whenever it is needed, has had a tremendous impact on reshaping organisational structures.

An organisation may be structured around functions (marketing, finance, etc.), geographic region, product supplied, and so on.

In contrast to a functional view of organisational structure, a process view recasts the structure of the organisation as a series of processes performed to fulfil a customer need. This approach to organising work brings about greater integration across functions. Some organisations have become very flexible in their structure, creating and dissolving teams and organisational units by assigning individuals to projects as required.

Through electronic communications, virtual organisational units have emerged. These units do not have a physical location; they exist only as set of relationships in cyberspace. When customers, suppliers, and/or competitors as also involved, virtual organisations are created.

New roles for managers

The use of process and team-based structures has led to new roles for managers. Rather than viewing him/herself as a traditional boss who makes decisions alone and then controls subordinates as they complete assigned tasks, team-based managers share information and invite others to join in decision-making.

Information technology can be used in numerous ways to facilitate these new roles, through applications such as centralised databases, group decision support systems, and advanced communication systems.