The course outline suggests that this course is the first exposure to the study of management for students in the Faculty of Technology.

However, each student would have been exposed to management in some form or the other before, be it home management, family

management, school, class, clubs etc.

For us to examine CONCEPTS IN ORGANISATION THEORY AND DESIGN, we must define the terms, MANAGERS AND

ORGANISATIONS, since :Managers work in organisations.

Managers

Managers get things done through other people. They make decisions, allocate resources, and direct the activities of others to attain goals. Managers also do their work in organisations. (Robbins 1996)

Organisations

Organisations are consciously coordinated social units composed of two or more people, that function on a relatively continuous basis to achieve a common goal or set of goals. (Robbins 1996)

The people who oversee the activities of others and who are responsible for attaining goals in these organisations are their managers (also called lead hand, foreman, supervisor etc)

Organisations are social entities that are goal directed and are designed as deliberately structured and coordinated activity systems and are linked to the internal environment.

Social entities- coming together as people

Goal directed- exists for a purpose

Why organisations- for structural orders, for getting greater efficiency.

What is organisational

structure?

An organisational structure defines how job tasks are formally divided grouped, and coordinated. (Robbins 1996)

Managers need to address six key elements when they design their organisations’s structure.

The key questions The answer is provided by

1. To what degree are tasks subdivided into separate jobs?

Work specialization

2. On what basis will jobs be grouped together?

Departmentalization

3. To whom do individuals and groups report?

Chain of command

4. How many individuals can a manager effectively and ineffectively direct?

Span of control

5. Where does decision-making authority lie?

Centralization and decentralization

6. To what degree will there be rulesand regulations to direct employees and managers.?

Formalization

WORK SPECIALIZATION

By the late 1940’s most manufacturing jobs in industrialized countries were being done with high work specialization.

Henry Ford became rich and famous by building automobiles in an assembly line.

Work specialization (or division of labour) is the degree to which tasks in the organization are subdivided into separate jobs.

Advantages of work

specialization

Employees allowed to specialize thus allowing efficiency

Specialist/technical (highly skilled) employees only do tasks accordingly

Training cost reduced

Labour cost reduced (pay based on skill required)

High skilled employees not working below skill level

Employee’s skills at performing a task successfully increased through repetition

Less time is spent in changing tasks

By the 1960’s increased evidence showed some disadvantages of specialization- boredom, fatigue, stress,

low productivity, poor quality, increased absenteeism and turnovers.

To counter this, it was discovered that JOB ENRICHMENT rather than JOB ENLARGEMENT was best.

•JOB ENRICHMENT- is the vertical expansion of jobs.

•JOB ENLARGEMENT- is the horizontal expansion of jobs.

Job enrichment involves but is not limited to job involvement and job rotation.

Job involvement is the degree to which a person identifies with his or her job, actively participates in it, and considers his or her performance important to self-worth.

Job rotation is the periodic shifting of a worker from one task to another.

Managers today should not see work specialization as obsolete nor an unending source of increased productivity, but rather recognize the economics it provides in certain types of jobs and the problems it creates when it’s carried too far.

DEPARTMENTALIZATION

Jobs divided up through work specialization should then be grouped together so common tasks can be coordinated. The basis by which jobs are grouped together is called DEPARTMENTALIZATION.

Methods of

Departmentalization

FUNCTIONS PERFORMED

Departmentalization by function can be used in all types of organizations. Only the functions change to reflect the organization’s objectives and activities e.g. engineering, manufacturing, personnel and purchasing specialist can be placed into common departments in a manufacturing plant.

Advantage- obtaining efficiencies and effectiveness by putting like specialists together

Efficiency- the ratio of effective output to the input required to achieve it

Effectiveness- achievement of goals

DEPARTMENTALIZATION BY PRODUCT

In very large organizations (manufacturing/service) departmentalization types of product is common. A petroleum manufacturing firm may choose to have fuels, lubricants and waxes, and chemicals under the authority of vice president who is a specialist in and responsible for, everything having to do with his or her product line. Each of these departments would have its own manufacturing and marketing group.

Advantage- increased accountability for product performance

DEPARTMENTALIZATION BY GEOGRAPHY

Often times very large global and high mass of volume product/service organizations choose to departmentalize by geography or territory.

Advantage- easy access to supply or service

- control of viability

DEPARTMENTALIZATION BY PROCESS

Process departmentalization can be used for processing customers as well as products. By product, Reynolds Metals aluminum tubing plant is organized into five departments : casting; press; tubing; finishing; and inspect, pack and ship. By customers we can have validation, appreciation, and documentation, process- checking, payment-finance.

Advantage- use of specific skills

DEPARTMENTALIZATION BY CUSTOMER

This category of departmentalization is driven by the particular type of customer the organization seeks to reach or the type that seeks the company products or services e.g. in office supply- retail, wholesale etc

Advantage- customers have common sets of problems in the department.

Finally, every large organization may have more than one or all of the methods of departmentalization.

Three decades ago, the chain of command concept was a basic cornerstone in the design of organizations. Today with multitasking, more effective communication and flexibility in authority and responsibility far less importance is placed in chain of command.

The chain formed by managers from the highest to the lowest that clarifies who reports to whom.

It answers two questions:

1. Who do I go to if I have a problem? And

2. Whom am I responsible for?

Chain of command

In discussing chain of command, Authority, Responsibility and Unity of Command must be examined.

Authority- refers to the rights inherent in a managerial position to give orders and expect the orders to be obeyed. To facilitate coordination, each managerial position is given a place in the chain of command and each manager is given a degree in order to meet his or her responsibility.

The unity of command principles helps preserve the concept of an unbroken line of authority. It states that a person should have one and only one superior to whom he or she is directly responsible.

If the unity of command is broken, a subordinate might have to cope with conflicting demands or priorities from several superiors.

However, times have changed and so has the basic tenents of organization designs. Today with the trend towards empowering employees and advancements in computer technology, chain of command and its supporting systems have substantially less relevance.

Span of control

The span of control is the number of subordinates a manager can efficiently and effectively direct. This issue is important because, to a large degree, it determines the number of levels and managers an organization has. All things being equal, the wider or larger the span, the more efficient the organization.

Wider Span vs Small Span

1. Obviously wider spans are more efficiently in terms of cost.

2. However at some point wider spans reduce effectiveness.

3. When the span becomes too large, employee performance suffers because supervisors no longer have the time to provide the necessary leadership and support.

4. By keeping the span of control small (five or six employees) a manager can maintain close control.

5. Small spans are expensive because they add levels of management.

6. Vertical communication in the organization is made more complex by small span.

7. Additional levels of hierarchy slows down decision making and tend to isolate upper management.

8. Small span of control often times encourage overly tight supervision and discourage employee autonomy.

Organization Design- is a process in which managers develop or change their organization’s structure.

Three of the more common designs found in use are: the simple structure, the bureaucracy and the matrix structure.

Excellent organizations are characterized by five (5) design attributes:

Simple form and less staffEmpowerment to increase entrepreneurship Horizontal structure and collaborationA balance between financial and non financial measures

of performanceThe use of electronic technology and e-commerce

The recent trend is towards longer spans of control accompanied by employee training which leads to greater competence and less dependence on supervisors which result in reduced costs, cut overheads, speed up decision making, increase flexibility, get closer to customers, and empower employees.

Centralization and

Decentralization

The best possible understanding of the centralization and decentralization is the invention of the Regional system in Guyana.

Centralization- is the degree to which decision making is concentrated to a single point in the organization.

Decentralization- is where decision discretion is pushed down to lower-level employees or groups

An organization characterized by centralization is an inherently different structural animal from one that is decentralized.

Action can be taken more quickly to solve problems

More people provide input into decisions

Employees are less likely to feel alienated from those who make the decisions that affect their work lives.

Consistent with recent management efforts to make organizations more flexible and responsive, there has been a marked trend toward decentralizing decision making.

“We used to manage from the top, like an army, now we’re trying to create entities that drive themselves”- Renato Riverso former IBM Europe’s chairman

Formalization

Formalization refers to the degree to which jobs within the organization are standardized.

Standardization not only eliminates the possibility of employees engaging in alternative behaviours, but it even removes the need for employees to consider alternatives. If a job is highly formalized, then the job incumbent has a minimum amount of discretion over what is to be done, when it is to be done, and how he or she should do it.

Employees handle the same input in exactly the same way produce consistent and uniform output receive explicit job descriptions receive lots of organizational rules receive clearly defined procedures

When formalization is low, job behaviours are relatively non programmed and employees have a great deal of freedom to exercise discretion in their work. The degree of formalization can vary widely between organization and within organization.

Dimensions of organization

design

To understand further we need to look at the dimensions that describe specific organizational traits. These two dimensions describe organizations much the same way that personality and physical traits describe people.

Structural dimensions- this provides labels to describe the internal characteristics of an organization and create a basis for measuring and comparing organizations.

1. Formalization- reflected by the number of ? Documentation within the organization e.g. Miss Kim lessons vs ABC nursery vs UG. Documentation includes procedure, job description, regulations, policy manuals- generally describing behaviour and activities (see also previous notes).

2. Specialization- (see previous notes)

3. Hierarchy or authority- describes who reports to whom and the span of control for each manager. The number of subordinates any manager can efficiently control depends primarily on the duties and abilities of the subordinates.

4. Centralization- organizational decisions that might be centralized or decentralized include purchasing equipment, establishing goals, choosing suppliers, setting prices, hiring employees and deciding marketing territories (see previous notes).

5. Professionalism- is the level of formal education and training of employees. ? When employees require long period of training to hold jobs in organizations.

6. Personnel ratios- refers to the deployment of people to various functions and departments e.g. admin to ?, clerical to ?

Contextual dimensions- characterize the whole organization i.e its goals and strategy etc which describe the organizational setting that influences and shapes the structural dimensions. Contextual dimension represents both the organization and the environment. It can be envisioned as a set of overlapping elements that underline an organization’s structure and work processes and include :

1. Size- which is the organization’s magnitude as reflected in the number of people in the organization. Other measures such as total sales or total assets also reflects magnitude ??? Give no indication of human (social system) e.g. an aircraft ? Company. Size can be measured.

2. Organizational technology- refers to the tools, techniques, and actions used to transform inputs into outputs. It concerns how the organization actually produces the products and services it provides for customers-computer aided, manufacturing, advanced information systems, internet etc

3. The environment- includes all elements outside the boundary of the organization. Key elements include the industry ,government, customers, suppliers and the financial community. Other organizations are often the environmental element that affects the organization the most.

4. The organization’s goals and strategy define the purpose and competitive techniques that set it apart from other organizations. A company’s intents are written down as goals-enduring statement. Goals and strategies define the scope of operations and the relationships with employees, customers and competitors. A strategy is the plan of action that describes resource allocation and activities for dealing with the environment and for reaching organization’s goals. The scope of operations is defined by its goals and strategies which shows the relationship with employees, customers and competitors.

5. An organization’s culture is the underlying set of key values, beliefs, understanding, and norms shared by employees. The provide the glue to hold organization’s members together and may include ethical behaviour, commitment to employees, efficiency, or customer service. It is unwritten but can be observed in its stories, slogans, pride, ceremonies, dress and office layout.

To understand and evaluate organizations, one must examine both structural and contextual dimensions. These dimensions of organizational design interact with one another and can be adjusted to accomplish the purpose/importance of organizations (which are) to :

1. Bring together resources to achieve desired goals and outcomes (effectiveness)

2. Produce goods and services efficiently3. Facilitate innovation4. Use modern manufacturing and computer based technology5. Adapt to and influence a changing environment6. Create value for owners, customers and employees7. Accommodate ongoing challenges of diversity, ethics and the motivation

and coordination of employees.

Theee

Goals and Strategy Size

Environment

CultureTechnolog

y

Structure1. formalization2. specialization3. hierarchy of

authority4. centralization

5. professionalism

6. personnel ratios

The organization

Management- Science or

ArtA reasonable question is- whether management is a science or an art. The

complexity inherent in the manager’s job dictates that effective managers must blend both science and art.

Management as science- Management problems and issues can be approached in ways that are

rational, logical, objective and systematic Managers can gather and use data, facts and objective information Use of quantitative models and decision- making techniques to arrive at

“correct” decisions Technical, diagnostic and decision making skills are especially important

when practicing the science of management.

Management as Art

Despite the fact that managers make decisions and solve problems based on science, they often times use INTUITION, EXPERIENCE, INSTINCT and personal insights.

“objective facts” (scientific) may prove to be wrong.

Use of CONCEPTUAL, COMMUNICATION, INTERPERSONAL and TIME-MANAGEMENT skills to decide between multiple course of action that look equally attractive.

Thus, managers must blend an element of intuition and personal insight with hard data and objective facts.

What is management?Management is a set of functions directed at efficient and effective utilization of resources in the pursuit of organizational goals. (Griffin 2000)By EFFICIENT, we mean using resources and successfully implementing them.

Successful organizations are both efficient and effective Managers face a variety of interesting and challenging situations The average executive works upwards of sixty hours a week Managers face increased complexities thanks to globalization,

domestic completion, government regulation, shareholder pressure, rapid change, unexpected disruptions, and both minor and major crises

Managers have opportunities to make differences

Kinds of managers

The different kinds of managers in organizations can be differentiated by level and by area. Managers can be differentiated by levels or areas.

Level of ManagementThere are three (3) distinct levels of management- top, middle and first line. Top managers are the relatively small set of senior executives who manage

the overall organization- e.g. titles found in the group include president, vice president and chief executive officer (CEO).

Top managers:• Create the organization’s GOALS, OVERALL STRATEGY and

OPERATING POLICIES• Officially represent the organization to the external environment e.g.

government officials and executives of other organizations make decisions about activities such as acquiring other companies, investing in research and development, entering or abandoning markets, and building new plants and office facilities.

Middle managers is the relatively large set of managers responsible for implementing the policies and plans developed by top managers and for supervising and coordinating the activities of first line managers.

Middle management titles include plant manager, operations manager, and division head.

Middle managers such as plant managers tasks may include inventory management, quality control, equipment failures, and minor union problems.

First line managers are managers who supervise and coordinate the activities of operating employees.

Common titles for first line managers are coordinator and office manager

Often the first step for employees who enter management from the ranks of operating personnel

They oversee the day-to-day operations They spend a large portion of their time supervising the

work of subordinates

Levels of Management

Top Managers

Middle Managers

First Line Managers

Areas of Management

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Op

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Areas of management

Regardless of their levels, managers may work in various areas within an organization.

Marketing managers works in areas related to marketing function by getting consumers and clients to buy the organization’s products of services. Tasks include new product development, promotion and distribution.

Financial managers deal primarily with an organization’s financial resources, cost management and investments.

Operations managers are concerned with creating and managing the systems that create an organization’s products and services. Typical responsibilities include production control, inventory control, quality control, plant layout and site selection.

General managers are not associated with any specialty, but tend to be generalists. They often serve as administrative managers and cover all function areas of management

Human resources managers are responsible for hiring and developing employees. They are typically involved in planning, recruiting and selecting employees, training and development, designing compensation benefit system, appraisals and discipline.

The Evolution of

Management

• The history of management theory is a study in contradiction-society concerned with effective practice of management for thousands of years vs the scientific study dates only from the 19th century.

• Many different theories that relate to parts of the management process but no unified general theory of management has yet emerged.

Why study history and

theory?THEORY Both history and theory are useful to the practicing manager. Karl E Weick (researcher) suggests that as people get closer to their goals they are

increasingly motivated to work harder to reach them (observation of people walking on an escalator)- every day observation provides a theory that explains behaviour in certain situations.

Management definition is practiced in real world as useful management theories. Organizations apply different theory of management Today a mixture of the theory is found best? Theory helps us by organizing information and providing a systematic framework for

action. A theory is simply a blueprint or road map to guide the manager towards

achievement of the organization’s goals.

HISTORY Two of the first true management pioneers were Robert

Owen (1771-1858)- employer well being and Charles Babbage (1791-1871)- efficiency of production.

The study of the industrial revolution, the early labour movement, the Great Depression and the railroads, oil and steel industry gives us a good insight to management.

The first discipline devoted to commerce was economics-which generally assumed that managerial practice was efficient.

The Classical Management

Perspective

The classical management perspective is the first important idea to emerge (early 20th century). It consists of two distinct branches-scientific management and administrative (organization) management.

Scientific Management The father of scientific management and four (4) others: Frederick W Taylor

(1856-1915), Frank Gilbreth (1868-1924), William Gilbreth (1878-1972), Henry Gantt (1861-1919) and Harrington Emerson (1853-1931).

Scientific management is concerned with the management of work and workers- (individually productivity)

The concern was productivity Taylor observed soldiering-employees deliberately working at a pace slower

than their capabilities.

Steps in Scientific

Management

Develop a science for

each element of

job to reduce old

rule of thumb

methods.

Scientifically select

employees and then

train then do the job as

describes in Step 1.

Supervise employees

to make sure they follow the prescribed

methods for implementi

ng their jobs.

Continue to plan the work but

use workers to

actually get the work done.

Taylor believed(and it was proven) that managers who followed his guidelines would improve the efficiency of their workers.

N.B- His detractors (labour) argued that scientific management was just a device to get more work from each employee and reduce the number of workers.

Administrative Management

Focuses on managing the total organization

Main contributors Henri Fayol (1841-1925) with support of Lyndall Urwick (1891-1983), and Max Weber (1864-1920).

Fayol developer- management functions

Urwick- advanced the functions of planning, ongoing and controlling as he integrated scientific management with Fayol and other administrative management theorist (synthesis and integration work of others.

Max Weber was noted for his work on bureaucracy.

Assessment of the classical perspective

Focus serious attention on the importance of effective management and helped pave the way.

Concepts developed are still in use. Job specialization, time and motion studies are still in use.

Human element of organization ignored.

The Behavioural Management Perspective

Early advocates of classical management perspective viewed organizations and jobs from a mechanistic point of view.

The Behaviour management perspective placed much emphasis on individual attitudes and behaviours and on group processes and recognized the importance of behavioural processes in the workplace.

Stimulated by industrial psychology i.e. the practice of applying psychological concepts to industrial settings.

Advocate Mark Parker Follett (adult education & vocational guidance) who believed that organizations should become more democratic in accommodating employees and managers.

Hugo Munsterburg (1863-1916) German psychologist suggested that psychologists could make valuable contributions to managers in the area of employee selection and motivation.

Work of Elton Mayo (1880-1949)

The Hawthorne studies at western electric- Chicago Hawthorne plant (1927-1932)

i. Manipulating illumination in a group and comparing productivity in groups without change (production went up in both)

ii. Piecework incentive pay plan (however workers informally established an acceptable level of output) over produced- ‘note busters’ and under producers-‘chiselers’.

iii. Other studies led Mayo and his associates to conclude that the human element was much more important than previous theorists felt.

Human Relations Movement

Grew from the Hawthorne studies and was popular for many years-workers respond primarily to the social context of the workplace-social conditioning, group norms and interpersonal dynamics.

Manager concern leads to increased satisfaction: resulting in improved performance.

Abraham Maslow- Hierarchy of Needs, Douglas McGregor- Theory X,Y

Maslow-people must satisfy five group of needs in order. These are psychological, security, belongingness, esteem and self-actualization.

McGregor- Theory X: workers pessimistic and negative, consistent with scientific management. Theory Y: positive view of workers; representing the assumptions that HR advocates made.

N.B Contemporary theorists (have noted the work of Munsterberg, Mayo, Maslow, McGregor etc) and opined that many of the assertions were simplistic and inadequate. Today OB draws-psychology, sociology, anthropology, economics and medicine.

The behavioural perspective has and continues to change managerial thinking.

Quantitative Management Perspective

• The third major school of management (WWII)- Gov’t and scientists helped the military in efficiency and effectiveness.

• Used the mathematical approach of Taylor and Gantt

• The approach is concerned with applying quantitative techniques to management

• Focuses on decision making, economic effectiveness etc. The quantitative approach has two (2) branches :management science and operations management.

Management Science-focuses specifically on the development of mathematical models.

The basic level is focus of models, equations and similar representation of reality-computer simulations. The simulations give precise information and avoids the cost of many test ?????

Operations Management is less mathematical and statistically sophisticated and can be applied directly to managerial situations. It is a form of applied managerial science. It is also concerned with helping the organization produce its products and services more efficiently.

N.B Like all other management perspectives, the quantitative perspective has made significant contributions, but it also has certain limitations.

The upside are-decision making tools and techniques, planning and control and the overall organizational processes. But, the assumptions may not be realistic, they cannot account for individual behaviours and attitudes, and it retards the development of other management skills.

Contemporary Management Theory

Recognizing that the classical, behavioural and quantitative approaches to management are not necessarily contradictory or mutually exclusive is important

o They are specific but complement each other

o All 3 are important and should be appreciated

o Contemporary management theory (systems and contingency) perspective builds from the three system perspectives.

o Important contemporary management theory

o By viewing organizations as system managers can better understand the importance of their environment and the level of interdependence among subsystems within the organization

o Managers must understand how their decisions affect and are affected by other subsystems within the organization.

Inputs from the

environment: material, human,

financial and information

inputs.

Transformation process:

technology, operating systems,

administrative systems and

control systems.

Outputs into the environment:

products/services, profit/losses,

employee behaviours and

information systems

System- an interrelated set of elements functioning as a whole

Open system- an organizational system that interact with its environment

Closed system- an organizational system that does not interact with its environment

Subsystem- a system within another system

Synergy- two or more subsystems working together to produce more than the total of what they might produce working alone

Entropy- a normal process leading to design

The Contingency Perspective

A noteworthy addition to management thinking is the contingency perspective

The classical behavioural and quantitative approaches are considered UNIVERSAL PERSPECTIVE (one best way)

Contingency perspective that organizations are unique and thus no universal way

Hence appropriate managerial behaviour in a given situation depends on or is contingent on unique elements in that situation.

CONTEMPORARY MANAGEMENT ISSUES AND CHALLENGES:

DOWN SIZING

DIVERSITY AND THE NEW WORK FORCE

INFORMATION TECHNOLOGY

NEW WAYS OF MANAGING

GLOBALIZATION

ETHICS AND SOCIAL RESPONSIBILITY

MANAGING QUALITY

SERVICE ECONOMY

Managers as agents of changeChange always has an unsettling effect upon an organization.

Hardly any area of activity is immune to change. Change is inevitable in an organization. To manage any organization effectively in these contemporary times, managers must understand change.

Organization change is any substantive modification to some part of the organization. Thus change can involve virtually any aspect of an organization: work schedules, bases for departmentalization, span of management, machinery, organization design, people themselves etc

Change in an organization may have effects extending beyond the actual area where the change is implemented. It is also not uncommon for multiple organizations change activities to be going on simultaneously.

Forces for change

The basic reason for change is that something relevant to the organization either has changed or is going to change. Thus the accommodation (change) must be made. Forces for change may be external