organizations and organization theory
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Organizations and Organization Theory. Some Definitions. Organization : A consciously coordinated social entity, with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goals or a set of goals - PowerPoint PPT PresentationTRANSCRIPT
Organizations andOrganization Theory
Some Definitions Organization:A consciously coordinated social entity, with a relatively
identifiable boundary, that functions on a relatively continuous basis to achieve a common goals or a set of goals
Structure: defines complexity, formalization and centralization of the organization
Design is concerned with constructing and changing an organization’s structure to achieve the organizations goals
Organization theory: is a discipline that studies the structure and design of organizations. It refers to both descriptive (how organizations are actually structured) and prescriptive (how to improve upon it for better effectiveness) aspects
Perspectives on Organization Open system Life cycle Organizational configuration
Transformation
Process
An Open System and Its Subsystems
Environment
Raw MaterialsPeopleInformation resourcesFinancial resources
Input
SubsystemsBoundarySpanning
Production,Maintenance,Adaptation, Management
BoundarySpanning
Products andServices
Output
Characteristics of an Open system Environment awareness Feedback Cyclical nature Negative entropy Steady State Movement toward growth & expansion Balance of Maintenance & Adaptive activities Equifinality
Importance of Systems Perspective A frame work for conceptualizing organizations Enables us to see organization in totality with
interdependent parts Prevents employees from seeing their jobs as
isolated elements of the organization Helps to gain insight as to why organizations resist
change
Life cycle Perspective Entrepreneurial Stage: formative stage, creativity
high, maintaining a steady supply of resources a challenge
Collectivity Stage: maintains the innovation, communication informal, high commitment
Formalization & Control Stage: rules established, stable structure, emphasis on efficiency
Elaboration of Structure Stage: more complex structure, diversified markets, decentralization
Decline Stage: high employee turnover, increased conflict, centralization
Organization Configuration:Five Basic Parts of an Organization
TopManagement
TechnicalSupport
Technical Core
AdministrativeSupport
MiddleManagement
Source: Based on Henry Mintzberg, The Structuring of Organizations (Englewood Cliffs, N. J.: Prentice-Hall, 1979) 215-297; and Henry Mintzberg, “Organization Design: Fashion or Fit?” Harvard Business Review 59 (Jan. – Feb. 1981): 103-116.
Organization Theory in Action Current Challenges
Global Competition Ethics and and Social Responsibility Speed of Responsiveness The Digital Workplace Diversity
Importance of Organizations
Bring together resources to achieve desired goals and outcomes
Produce goods and services efficiently Facilitate innovation Use modern manufacturing and information
technologies
Importance of Organizations Importance of Organizations (cont’d)
Adapt to and influence a changing environment Create value for owners, customers and
employees Accommodate ongoing challenges of diversity,
ethics, and the motivation and coordination of employees
Dimensions of Organization Design Structural Contextual
Goals and Strategy
Environment Size
Culture TechnologyStructure
1. Formalization2. Specialization3. Hierarchy of Authority4. Centralization5. Professionalism6. Personnel Ratios
Early Contributions Bible: delegation, only unusual cases to be
sorted by higher authority Simple hierarchy: Pope-Cardinal-Archbishop-
Bishop-Parish Division of labour: Adam Smith (1776)
Contributions made in this Century: Type 1 Theorists
Organizations are closed systems There for goal achievement F. Taylor and Scientific Management
1. Scientific determination of a workers job
2. Managers plan & supervise and workers execute
3. Differential motivation Looked at lowest level of work in the organization
Type 1 Theorists Fayol: Principles of Organization Max Weber & Bureaucracy
1. Division of labor
2. Authority
3. Hierarchy
4. Formal selection procedure
5. Rules & regulation (formalization)
6. Impersonal relationship
Type 1 Theorists Ralph Davis and Rational Planning1. Primary objective of a business firm is economic
service2. Economic service is generated by the product or
service the organization produces3. The job of management is to group the activities in
such a way so as to generate a structure4. Therefore the structure of the organization is
contingent upon the organization’s objectives
Type 2 Theorists Also called the human relations school Believed in the social nature of organizations Organizations are made of both tasks and people Elton mayo and Hawthorne Studies (1924-27) Chester Barnard and Cooperative System1. Organization are a combination of work and people
challenged that authority flew from top to bottom2. Believed that authority should be defined in terms of the
response of the subordinate
Type 2 Theorists McGregor and Theory X & Y Warren Bennis (flexible adhocracy) and downfall
of Bureaucracy1. Bureaucracy (centralized decision making,
impersonal submission to authority, div. of labor) now replaced by decentralized democratic structures organized around flexible groups
2. Position power was being replaced by expertise power
Type 3 Theorists Contingency Approach (1960s) Conflict between mechanistic (type I) and humanistic
approach (type II) led to the synthesis called the contingency approach
Simon: focus on the environmental conditions under which organizations function
Katz & Kahn: also focused on environment - structure relationship
Importance to technology: works of Perrow, Woodward showed the importance of technology in determining structure
Type 4 Theorists March, Simon :challenged the rational model
of decision making and argued that decision makers selected the satisfactory alternative only
Pfeffer: focused on power coalitions (organizational designs that favour the self interest of those in power) and inherent conflict over goals.
Two Organization Design Approaches
VerticalStructure
RoutineTasks
RigidCulture
CompetitiveStrategy
FormalSystems
HorizontalStructure
AdaptiveCulture
EmpoweredRoles
CollaborativeStrategy
SharedInformation
Organizational Changein the Service of
Performance
Mechanical System Design
Natural System Design
Stable EnvironmentEfficient Performance
Turbulent EnvironmentLearning Organization
Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)