2011.02.cesa politics 02
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WEEK TWO
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Boundary/Environment
7. Adaptation and Change
8. Technology
9. Communication
Types of Organizations
Service Production Governmental/Regulatory Professional Advocacy Fund Raising Religious Communal Total
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals:
Unrealized state that org members deem desirable
-- mission, products, services . . .
OT: Challenge for orgs = Multiple goals (especially when they are at cross-purposes)
Organizational Characteristics: Cornerstones of Organizational Theory
1. Goals:
Unrealized state that members deem desirable -- mission, products, services . . .
Challenge = Multiple goals (esp when at cross-purposes)
Resolution: Top management must
(a) achieve balance between competing goals
(b) clearly define and communicate goals
Why?
Design and maintenance of the organization
Coordination
Motivate members, increase identification w/the organization
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
Type(s) of activity needed to accomplish goals (jobs)
Primary (line) versus secondary (staff) work
OT: How should these functions relate?
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
Power = ability to influence successfully through individual factors
knowledge, skills, money, personality . . .
Authority = influence through official recognition by/role in organization
OT: What is relationship between these for organizational effectiveness?
(e.g., leadership versus ‘managership’)
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
Success/opportunities --> org growth (including size of org)
More members --> assigned to subunits & tasks (delegation)
Delegation --> role elaboration (variance in jobs)
Increased size and role elaboration --> org complexity
(formalization in written rules, policies, procedures)
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
Role elaboration --> how units to be formed/fit together
Decisions about form/fit --> org design (structure/process)
Structure - e.g., hierarchical work arrangements
Process - e.g., deciding work flow
Design decisions --> work and unit differentiation
Differentiation must be balanced by integration
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design (con’t)
OT: What are the structures and processes
that organizations utilize to promote integration?
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design (con’t)
OT Integration mechanisms?
mission, power & authority, control systems, job design, selection & training, reward systems, performance appraisal & feedback, job rotation, CFTs, site visits, socialization processes, retreats, strategic planning,
communication (meetings, f-to-f, org wide strategic)
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Environment
= all groups, norms, and conditions w/which org must deal
-- critical to org’s inputs and for org’s outputs
-- must have boundaries though which inputs/outputs pass
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Environment
-- critical to org’s inputs and for org’s outputs
-- must have boundaries though which inputs/outputs pass
MANAGING INPUTS: market research, IS security, sales reports, legal counsel, planners’ & analysts’ activities
MANAGING OUTPUTS: PR releases, distributions systems, trade agreements, non-compete clauses/contracts
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Environment
7. Adaptation and Change
Orgs exist in turbulent environments w/ discontinuous change
OT: How do orgs build in flexibility to deal
w/ actual and potential environments?
Mechanisms?
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Environment
7. Adaptation and Change
Mechanisms to deal w/ actual and potential environments?
strategic planning, internal task forces, consultants,
philosophy, human resources, diversity initiatives, new product development, globalization, marketing plans, strategic internal and external communication
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Boundary/Environment
7. Adaptation and Change
8. Technology
= The art and science employed in production/distribution
of the organization’s goods and services
Examples?
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Boundary/Environment
7. Adaptation and Change
8. Technology
Examples?
QWL, CPI, 360 Feedback, Six Sigma, Change Mngt,
Plant Optimization, Inventory Controls, Tracking systems
Organizational Characteristics: Cornerstones of Organizational Theory (OT)
1. Goals
2. Work
3. Power and Authority
4. Size and Complexity
5. Design
6. Boundary/Environment
7. Adaptation and Change
8. Technology
9. Communication
a) Often treated only as information transmission in OT
b) Or as integration mechanism (coordination, cooperation)
c) But also is symbolic exchange and sense making
Apply the organizational Characteristics to case
Case One
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How Does an Organization Create Value?
Value creation takes place at three stages: input, conversion and output Inputs: include human resources,
information and knowledge, raw materials, money and capital
Conversion: the way the organization uses human resources and technology to transform inputs into outputs
Output: finished products and services that the organization releases to its environment
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Figure 1 – 1: How An Organization Creates Value
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Why Do Organizations Exist? To increase specialization and the
division of labor To use large-scale technology
Economies of scale: cost savings that result when goods and services are produced in large volume
Economies of scope: cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks
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Why Do Organizations Exist? (cont.) To manage the external environment
Pressures from the external environment make organizations the favored mode for organizing productive resources
To economize on transaction costs Transaction costs: the costs associated
with negotiating, monitoring, and governing exchanges between people who must cooperate
To exert power and control
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Figure 1-3: Why organizations exist
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Organizational Theory, Design, and Change: Some Definitions
Organizational theory: the study of how organizations function and how they affect and are affected by the environment in which they operate
Organizational structure: the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals
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Some Definitions (cont.)
Organizational culture: the set of shared values and norms that control organizational members’ interactions with each other and with suppliers, customers, and other people outside the organization
Organizational design: the process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve its goals
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Some Definitions (cont.)
Organizational change: the process by which organizations move from their present state to some desired future state to increase their effectiveness
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Figure 1-4: Relationships Among Organizational Theory, Structure, Culture, Design and Change
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Importance of Organizational Design and Change
Dealing with contingencies Contingencies are events that might occur
and must be planned for Gaining competitive advantage
The ability to outperform other companies because of the capacity to create more value from resources
Core competences: skills and abilities in value creation
Strategy: pattern of decisions and actions involving core competences that produces a competitive advantage
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Importance of Organizational Design and Change (cont.)
Managing diversity Differences in the race, gender, and
national origin of organizational members have important implications for organizational culture and effectiveness
Promoting efficiency, speed, and innovation The better organizations function, the more
value they create
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Consequences of Poor Organizational Design
Decline of the organization Talented employees leave to take
positions in growing organizations Resources become harder to acquire Resulting crisis impels managers to
change organizational structure and culture
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How Do Managers Measure Organizational Effectiveness?
Control: external resource approach Method evaluates how effectively an
organization manages and controls its external environment
Innovation: internal system approach Method allows managers to evaluate how
effectively an organization functions and operates
Efficiency: technical approach Method evaluates how efficiently an
organization converts a fixed amount of resources into finished goods and services
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Table 1-1: Approaches to Measuring Effectiveness
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Measuring Effectiveness: Organizational Goals
Official goals: guiding principles that the organization formally states in its annual report and in other public documents
Mission: goals that explain why the organization exists and what it should be doing
Operative goals: specific long- and short-term goals that guide managers and employees as they perform the work of the organization