ESSAY-3; ORGANISATIONAL ANALYSIS

(DISCLAIMER: This case is not based on researched facts. Case details are fictional and designed for discussion purposes. The case is meant to highlight the lessons drawn from the course on Organisational Analysis, solely as a basis for class discussion. Any resemblance to actual organisations, people or situations is incidental. It is not intended to serve as endorsements, source of primary data, or illustration of effective or ineffective management.)

CASE: There are two companies A and X, both of comparable size (few billion dollars) that are in similar business in a growing economy. Over the last decade and a half post economic boom and increased globalisation, both companies have seen comparable success. While both have been subjected to new practices and norms, with their exposure to global settings, their degree of adoption in the country itself is different. Globally, the companies are subject to compliances and norms from their customers and therefore have to adopt more or less similar practices. Within the domestic economy these firms serve two types of customers- one government and semi-government and the other private corporations. While one type of customer is easily managed and is not very strict in terms of enforcing contractual compliances, there are delays in payments and dues are not cleared promptly. As this type of customer is not strict in deducting fines very often, it also does not like to pay for its own obligations on time. The officials of this type of customer expect occasional gifts and gratifications from time to time. The other type of customer is very strict and prompt in deductions as well as payments. This type of customer has strict guidelines and procedures in the contract and enforces them diligently. At the same time, the customer rewards efficient execution of projects with accelerated payments and benefits such as various concessions in obligations. While company A is more comfortable with type 1 customers, X shows a preference for type 2 customers. The nature of the industry is such that many normative and regulatory institutions exist and influence the organisational fields. This renders the setting perfect for studying the application of neo-institutional theory. While the legal and statutory compliances in terms of labour laws, medical cover, etc are common, the industry has seen recent surge in stricter norms in terms of safety, health and environment. We can begin with looking for the indicators of institutional isomorphism. In terms of offices of senior management, located at the larger cities, there is considerable evidence of isomorphism in both the companies, as is across the industry. The offices of Company As senior management and staff are located in a building where almost all the offices look alike. The offices of company X are also similar. However, there is a clear difference in the way the operational sites are organised, warehouses stocked and the field or site offices are laid out. Here Company X looks similar at all locations, whereas within Company A there is considerable variation. It may be pertinent to note that when in Company A, a senior executive mandated that all site offices be collocated with the warehouse and have a similar layout and feel, even after more than an year close to 40% of the site offices where away from the warehouse. This can be seen as an example of defying as a management strategy within Company A. However, this may probably be better explained by the organisational culture perspective. We now look at the organisational elements pertinent to the case and compare them for companies A and X with the neo-institutional theory perspective in mind. Technology: Both the companies manufacture certain parts (similar) and also offer a service along with it. The nature of the service is such that the companies perform these in difficult environments in remote

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locations. The work requires subcontracting and certain special skills in which the workers needed to be trained. Managing subcontractors is critical for both the companies. Company A has a very loose style of managing these subcontractors, where a particular regional manager has personal relations with some subcontractor who only work for him and so on. Not only this, any attempt to centralise control of the subcontractors is thwarted by the regional mangers under some pretext or the other. Company X on the other hand treats all subcontractors the same, follows centralised policies and guidelines and is forthright and transparent in its dealings with them. Participants: The main participants in both companies are senior and middle (regional) management, supervisors and workers, customers and subcontractors. Goals: The companies aspire to grow into market leaders, be highly profitable and remain attractive to investors. Social Structure: While both companies have a hierarchical structure, company A has social structures which were not exactly aligned along official structure. This is based on the prolonged association of certain people within the organisation with each other. Company X on the other hand follows a structure that is relatively flexible and adapts to suit work requirements, however, lacks any superimposing unofficial structures. Environment: The environment was dynamic and constantly changing. The growth market demanded that companies evolve into a more global culture, both for private as well as government and semigovernment customers. Management Strategy: One can broadly infer and will be discussed subsequently that from the neo-institutional theory perspective, Company A has chosen the strategy of compromising and manipulating, Company X has chosen the strategy of acquiescing. These strategies though not always so obvious, generally succeed in describing the behaviour of these companies in relation to their environment. As briefly discussed in the case text, the same companies display institutional isomorphism in their multinational business. Many customers hire their own consultants and this helps bring in the rationalized myths (though in some cases not so mythical). This is an example of experts acting as rationalizing agents, setting the norms for the product quality and the method by

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which the service is to be rendered. Here we can also see the superimposition of the layers of regulatory, normative and cognitive institutions. The product design and method of service delivery are cognitive institutions. These are taken as a given and any other way of doing things would not be imaginable in this scenario (not so in the domestic operations). The normative institutions that are layered on top of this describe the best practices and set the norms of doing business in remote locations, use of particular kind of gear and vehicles (other than utilitarian requirements). Finally the regulative institutions set the rules and standards for the products and services to be delivered. These are enforced through inspections. The multinational business differs in with the domestic business for Company A much more than for Company X. While the operations of Company X display some form of institutional isomorphism, in case of Company A this is largely absent. The regulatory enforcement in the domestic market is relatively weak in certain pockets. Also, the operations of Company A are such that the adherence to norms depends on regional mangers alone. Strengths and Weaknesses While the management strategies of Company A and X are largely explained by this theory, it does not account for power of individuals. There are many examples of pockets of excellence in Company A, which is largely sue to managerial efforts and the power and influence of select regional managers. These pockets are being used by the management as grounds to show case promising practices that can develop into best practices and rolled across the organisation. Another critique of the theory would be the failure to acknowledge the fact that some degree of isomorphism can also happen due to rolling out of best practices (as in Company X). This would be explained both by rational theories: logic of consequence as well as logic of appropriateness. In both cases the best practices are prescribed among organisations and sometimes many of these even become mere hygiene factors, thereby inducing institutional isomorphism. Another weakness of this theory is that it does not deliberate much on varying management strategy to bring out a particular result that may be desirable for the management. If this framework could be used to offer a prescriptive tool, it would be considerably more useful. For example, we could say that Company A should change and become more like Company X. While this is obvious from a rational perspective or the logic of consequence perspective, the management strategies offered by NIT seem to be working fine and may not require a change. Prescriptions for Management Management of organisations can be seen in the light of NIT for the cases where compliances and regulatory conformance are necessary. In cases where there is institutional isomorphism in industry, it would be pertinent to take a good look at the rational myths and decide whether these need to be continued or done away with. While the theory does prescribe certain management strategies, it suggests that the strategy of defying results in the failure of the organisation. However, in some cases this would be more inline with the overall strategy of the organisation. In that case defiance may make sense and a temporary setback may result in long-term gain.

ESSAY-3; ORGANISATIONAL ANALYSIS

The case discussed here highlights the positive effects that institutional isomorphism can have and this should definitely form a part of the perspective of the management if organisations in any industry. They may then take a considered decision whether they want to adhere to such an isomorphism or avoid its trappings. The lecture does compare NIT to the theory of appropriateness, although such conformance may admittedly be mythical in nature. This theory also offers some insights from the perspective of regulators and industry bodies. The management of these organisations must inspect their roles as rationalising agents and be conscious of the same. They can then modify their behaviour according to the desired effect that they perceive they must have in the organisational field. This offers such institution a framework to shape the organisational field according to their end goals, through various regulatory of normative tools at their disposal.