Cordination and Incentive Problem

Essay by xblissUniversity, Master's November 2014

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How are the coordination and incentive problem dealt with?

Answer: Every manager charged with designing the organization has three levers to tackle the coordination and incentive problems namely the architecture, routine and culture.

In terms of architecture, Novartis uses compensation based on performance policies to arrest some incentive problems. Salary growth which depends on associates' individual performance is also used to align the objectives of the associates with the interest of their shareholders and also to create sustainable value for the firm thereby eliminating some incentive problems as well.

In the case of Routine, Novartis make use of the Global Reporting Initiative to make transparent reporting to all subunits. Close collaboration with partners who share a common vision and complementary strength are also a generally accepted way of doing things at Novartis which yield them many successes and solve some coordination problems. They are also known for encouraging associates to focus on achievement through collaboration and innovation.

Finally, Novartis with their performance oriented culture coupled with the responsible approach with integrity based creativity, dedication and performance of it associates are some of the commonly held values and belief in the company. They also believe that equality of opportunities, mutual respect and dignity at work help bring the best out of its employees and associates.

Are units tightly or loosely coupled?

Answer: Novartis units are loosely coupled. All researchers in the various divisions are motivated to focus on discovering new drugs that will change the practice of medicine while investing in maintaining and improving what they do best by producing and delivering the right medicine at the right time to the right patient. The organizational structure is also based on divisional units corresponding to the end product or services provided by the company.

(b) Is there organizational slack?

Answer: Yes. According...