CORPORATE MANAGEMENT in ACTION Sessions 3 & 4. Organizational System Factors: Soft & Hard CORPORATE MANAGEMENT IN ACTION - CMA 1

Chapter Objectives Sessions 3 & 4. Organizational System Factors: Soft & Hard Define Organizational System Factors Understand Hard Factors and Soft Factors Evaluate the impact of those factors on the organization CORPORATE MANAGEMENT IN ACTION - CMA 2

Organizational System Factors System Factors Organizational system is affected by a collection of organizational factors that affect the overall performance at various levels Hard & Soft Factors Factors affecting organizational systems are divided into two main categories: i.Hard Factors: factual and easy to identify; can be found in strategy plans, organization charts, etc… ii.Soft Factors: human-related factors; difficult to identify; relate to perception, psychology, character, ego, satisfaction, etc…; highly impact performance. CORPORATE MANAGEMENT IN ACTION - CMA 3

Organizational System Factors McKinsey “7-S” Model McKinsey: organizational system is affected by 7 main categories of factors:  Strategy  Structure  Systems  Style / Culture  Staff  Skills  Superordinate goals CORPORATE MANAGEMENT IN ACTION - CMA 4

“HARD” System Factors 1. STRATEGY A set of plans set out in line with the organizational vision and mission in order to achieve organizational goals i.Business Level Strategy ii.Corporate Level Strategy (explained in Session 2) CORPORATE MANAGEMENT IN ACTION - CMA 5

“HARD” System Factors 2. STRUCTURE Organization Structure: represented by organization chart that defines:  formal reporting relationships  levels in hierarchy  spans of control  Departmentalization CORPORATE MANAGEMENT IN ACTION - CMA 6

“HARD” System Factors 2. STRUCTURE Forms of Organization Structure: many forms…  Functional Structure (flat structure)  Divisional Structure  Geographical Structure  Matrix Structure  Horizontal Structure / Product Line Structure  Hybrid Structure CORPORATE MANAGEMENT IN ACTION - CMA 7

“HARD” System Factors 2. STRUCTURE Organizational Structure variants & dimensions Joint Ventures, Licensing agreements, Strategic, Alliances, Consortia, Virtual organizations, Work Teams…. Work Teams: Team members from different departments Task oriented Save time Effective communication, cooperation, and trust: very crucial for success. CORPORATE MANAGEMENT IN ACTION - CMA 8

“HARD” System Factors 3. SYSTEMS: Organizational Systems organize work transactions in line with work procedures  Operational Systems: communication, approvals, task process, etc…  Management Systems: reporting procedures, decision making, …  Financial Systems: budgeting, cost control, expenditure planning, etc…  HR Systems: compensation, rewards, job descriptions, succession plans, …  Management Information Systems CORPORATE MANAGEMENT IN ACTION - CMA 9

“SOFT” System Factors 4. STYLE / CULTURE: Organizational culture: dominant values, beliefs and norms initiated by primary owners and shaping organization life Inherited but not written: difficult to change Culture: Symbols, Ceremonies, Stories, Behaviors, Language, Dress Underlying Roots: Values, Assumptions, Beliefs, Attitudes, Feelings, … CORPORATE MANAGEMENT IN ACTION - CMA 10

“SOFT” System Factors 5. STAFF: Human Resource Management: Staff / human resources are the most important organizational resource.Staff / human resources are the most important organizational resource. Managing staff: job descriptions, compensation systems, career development, training, staff communication and cooperation, hierarchy, empowerment, …Managing staff: job descriptions, compensation systems, career development, training, staff communication and cooperation, hierarchy, empowerment, … CORPORATE MANAGEMENT IN ACTION - CMA 11

“SOFT” System Factors 6. SKILLS: Competencies Training & Development to enhance skills and competenciesTraining & Development to enhance skills and competencies Competencies: affect performanceCompetencies: affect performance Core competencies: strategic advantageCore competencies: strategic advantage CORPORATE MANAGEMENT IN ACTION - CMA 12

“SOFT” System Factors 7. Superordinate Values / Shared Values: Guiding concepts, fundamental ideas around which a business is builtGuiding concepts, fundamental ideas around which a business is built simple, usually stated at abstract levelsimple, usually stated at abstract level have great meaning inside the organization, although outsiders may not understand themhave great meaning inside the organization, although outsiders may not understand them FADI MAJZOUB (2013) CORPORATE MANAGEMENT IN ACTION - CMA 13

Organizational System Evaluation System Evaluation Organizational system performance: evaluated through evaluation of both Hard and Soft Factors Efficient system depends on Equilibrium of performance of all factors System problems can be caused by a problem in any of the system factors or a combination of factor problems Soft factors have very significant impact on performance Managers / leaders overlook soft factors Corporate governance: maintains success of factor performance CORPORATE MANAGEMENT IN ACTION - CMA 14