Organizations and Organization Theory

1. Organizations andOrganization Theory

2. 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

3. Perspectives on Organization • Open system • Life cycle • Organizational configuration

4. An Open System and Its Subsystems Environment Transformation Process Raw Materials People Information resources Financial resources Products and Services Input Output Production, Maintenance, Adaptation, Management Boundary Spanning Boundary Spanning Subsystems

5. Characteristics of an Open system • Environment awareness • Feedback • Cyclical nature • Negative entropy • Steady State • Movement toward growth & expansion • Balance of Maintenance & Adaptive activities • Equifinality

6. 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

7. 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

8. Organization Configuration:Five Basic Parts of an Organization Top Management Technical Support Administrative Support Middle Management Technical Core 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.

9. Organization Theory in Action • Current Challenges • Global Competition • Ethics and and Social Responsibility • Speed of Responsiveness • The Digital Workplace • Diversity

10. 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

11. 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

12. Dimensions of Organization Design • Structural • Contextual

13. The Organization Goals and Strategy Environment Size Culture Technology Structure • Formalization • Specialization • Hierarchy of Authority • Centralization • Professionalism • Personnel Ratios

14. 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)

15. Contributions made in this Century: Type 1 Theorists • Organizations are closed systems • There for goal achievement • F. Taylor and Scientific Management • Scientific determination of a workers job • Managers plan & supervise and workers execute • Differential motivation • Looked at lowest level of work in the organization

16. Type 1 Theorists • Fayol: Principles of Organization • Max Weber & Bureaucracy • Division of labor • Authority • Hierarchy • Formal selection procedure • Rules & regulation (formalization) • Impersonal relationship

17. Type 1 Theorists • Ralph Davis and Rational Planning • Primary objective of a business firm is economic service • Economic service is generated by the product or service the organization produces • The job of management is to group the activities in such a way so as to generate a structure • Therefore the structure of the organization is contingent upon the organization’s objectives

18. 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 System • Organization are a combination of work and people challenged that authority flew from top to bottom • Believed that authority should be defined in terms of the response of the subordinate

19. Type 2 Theorists • McGregor and Theory X & Y • Warren Bennis (flexible adhocracy) and downfall of Bureaucracy • Bureaucracy (centralized decision making, impersonal submission to authority, div. of labor) now replaced by decentralized democratic structures organized around flexible groups • Position power was being replaced by expertise power

20. 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

21. 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.

22. Natural System Design Mechanical System Design Vertical Structure Horizontal Structure Routine Tasks Rigid Culture Empowered Roles Adaptive Culture Formal Systems Competitive Strategy Shared Information Collaborative Strategy Stable Environment Efficient Performance Turbulent Environment Learning Organization Two Organization Design Approaches Organizational Change in the Service of Performance Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)