Nature of organizations: Context and Components

Dr. Fred Mugambi MwirigiJKUAT

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Introduction

An organization is a social and economic group which distributes tasks for a collective goal.

The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.

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Introduction Contd. A social unit of people, systematically structured and

managed to meet a need or to pursue collective goals on a continuing basis.

All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks.

Organizations should be open systems in that they affect and are affected by the environment beyond their boundaries

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Stages of Organizational Development

Chaos Stability High

Performance

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Stage I: Chaos (Fire-Fighting Mentality)

Crisis/short-term focus Lack of clear direction and goals Shifting priorities Unclear policies and procedures "Us" vs. "them" attitude Blame and lack of ownership Alienated work force

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Stage II: Stability (Back to the Basics)

Clarity of goals and direction Consistency in priorities Well-defined policies and procedures

(technical and personnel) Agreement on roles and responsibilities Basic management processes rewarded and

practiced (goal-setting, performance reviews, etc.)

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Stage III: High Performance

Clear statement of mission that creates sense of esprit de corp.

Well defined values which result in distinctive culture

Respect for people that is a deeply ingrained part of culture

Good communication and information sharing systems

High involvement and empowerment of people Design (work flow, structure, systems) that supports

mission and values7

A Framework for Studying Organizational Dynamics

The Organizational System and the Global Environment

Organizational structure and designOrganizational culture and changeThe learning organization and knowledge managementCultural diversity and international organizational behavior

Individual Level

Individual differences, mental ability, and personalityLearning, perception, attitudes, values, and ethicsIndividual decision making and creativityFoundation concepts of motivationConflict, stress, and well-being

Groups and Interpersonal Relations

Interpersonal communicationGroup dynamics and teamworkLeadershipPower, politics, and influence

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Organizational Components

Goals/objectives Tasks People Structure Equipment Culture

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Types of Organizations

Static Organizations

Dynamic Organizations Adaptive Organizations

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Static Organizations

fixed practices fixed size time doesn't change them

significantly they persist until some new

organization occupies their niche

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Dynamic Organizations

have fixed practices variable size- these organizations vary in

size over time, even though their underlying practices don't change much.

go through a single life cycle, each growing rapidly as it occupies its niche, then declining as its competitors implement better practices that steal away its clients.

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Adaptive Organizations

Variable practices variable size Complex adaptive systems, vary their practices, seeking the constant

improvement that launches life cycle after life cycle, creating new products, services, and processes that hold on to clients generation after generation.

motivate employees to climb adaptation curves Slowly displace dynamic and static organizations in

economic competition

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The transformational model

TransformationTransformation OutputsOutputsInputs Inputs

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Organizational functions

Organizational functions are the activities performed in a firm.

Clustered into functional units namely:1. Marketing2. HR 3. Production R&D4. Finance5. Procurement 6. Other support services

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Organizational Structures

Functional Organizational Structures Product/ activity based structures Geographical structures Matrix structures

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Functional Structures

Functional organizational structures focus on hierarchy and departmentalization of a firm

MarketingProduction Accounts Personnel IT

Board of Directors

Chief Executive

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Functional Structures

Advantages Specialisation – each

department focuses on its own work

Accountability – someone is responsible for the section

Clarity – know your and others’ roles

Disadvantages Closed communication

could lead to lack of focus

Departments can become resistant to change

Coordination may take too long

Gap between top and bottom

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Product/Activity Structures

Imaging andPrinting Group

PersonalSystems Group

EnterpriseSystems Group

HP ServicesHP Financial

Services

Hewlett Packard

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Organisation by Product/ Activity

Advantages Clear focus on market

segment helps meet customers’ needs

Positive competition between divisions

Better control as each division can act as separate profit centre

Disadvantages Duplication of functions

(e.g. different sales force for each division)

Negative effects of competition

Lack of central control over each separate division

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Organisation by Geography

AmericasHouston, Texas

Europe, Middle East, AfricaGeneva, Switzerland

Asia PacificHong Kong

Hewlett Packard

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Organisation by Geography

Advantages Serve local needs better Positive competition More effective

communication between firm and local customers

Disadvantages Conflict between local and

central management Duplication of resources

and functions

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Matrix Structure

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Matrix OrganizationAdvantages Is oriented towards end

results Professional identity is

maintained Pin-points product-profit

relationship

Disadvantages Conflict in organization

authority exists Possibility of disunity of

command exists Requires manager effective

in human relations high bureaucratic costs two boss role can create

conflict

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Other Challenges of Matrix Organizations

1.State of conflict between functional and project managers

2.Role conflict, role ambiguity, role overload leading to stress

3.Imbalance in power

4.Time-consuming meetings

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How to Make Matrix Structures Effective

Define objectives clearly Clarify roles. Authority and responsibilities of managers and

team members Influence based on knowledge & information and not on rank Balance power of project and functional managers Provide an experienced manager to head project-leadership Install cost ,time, quality controls-deviations Reward project managers team members fairly

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Types of Organizational Interdependence

Pooled Interdependence Sequential Interdependence Reciprocal Interdependence

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Pooled Interdependence

Each organizational department or business unit performs completely separate functions.

While departments may not directly interact and do not directly depend on each other in the pooled interdependence model, each does contribute individual pieces to the same overall puzzle.

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Sequential Interdependence

Occurs when one unit in the overall process produces an output necessary for the performance by the next unit.

Example of sequential interdependence is an assembly line.

Scheduling and planning an organization’s resources in a sequential interdependence model is essential to efficient operations

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Reciprocal Interdependence

Similar to sequential interdependence in that the output of one department becomes the input of another, with the addition of being cyclical.

In this model, an organization’s departments are at their highest intensity of interaction.

Reciprocal models are the most complex and difficult to manage

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End

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