session 1 overview of organization theory

8/19/2019 Session 1 Overview of Organization Theory

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An Overview of Organization

Theory

Chapter 1


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Class Agenda

• Five basic parts of an organization

• Organization Theory

• Biological Metaphor

• The system perspective

• ife cycle perspective


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!hat is an Organization• An organization is a conscio"sly coordinated social entity

with a relatively identifiable bo"ndary# that f"nctions on arelatively contin"o"s basis to achieve a common goal orset of goals

• Consciously coordinated imply management

•Social entity means that the unit is composed of peopleor groups of people who interact with each other

• Organization has a relatively identifiable boundary

• People in organizations have some continuing bond( does not mean life long membership)

• Finally organization exist to achieve something (goals)


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!hat is an Organization $tr"ct"re• Organization str"ct"re defines how tas%s are to be allocated#

who reports to whom# and the formal coordinatingmechanisms and interaction patterns that will be followed

• Organization str"ct"re can be described as having threecomponents& comple'ity# formalization# and centralization

• Comple'ity considers the e'tent of differentiation within theorganization( This incl"des

) *egree of specialization or division of labor

) The n"mber of levels in the organization hierarchy

) The e'tent to which the organization+s "nits are

dispersed geographically• Formalization& The degree to which an organization relies on

r"les and proced"res to direct the behavior of employees

• Centralization Considers where the loc"s of decision ma%ing

a"thority lies


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!hat is Organization Theory

• ,t is the discipline that st"dies the str"ct"re

and design of organization

• -efers to both the descriptive and

prescriptive aspects of the discipline

• ,t describes how organizations are act"ally

str"ct"red and offers s"ggestions on howthey constr"cted to improve their

effectiveness


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!hat is Organization *esign

• Term Organization *esign represent the

management side of organization theory

• Organization design is concerned withconstr"cting and changing an organization+s

str"ct"re to achieve organization+s goals


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Contrasting OB and OT*• OB ta%es a micro view) emphasizing individ"als and small

gro"ps• OB foc"ses on behavior in organizations and a narrow set

of employee performance and attit"de variables .

employee prod"ctivity# absenteeism# t"rnover# and /ob

satisfaction• OT* ta%es macro perspective(

• ,ts "nit of analysis is the organization itself or its primary

s"b"nits

• OT is concerned not only with employee performance andattit"des b"t with overall organization+s ability to adapt

and achieve its goals


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Five Basic 0arts of an organization1( The operating core

• ncompasses those members . the operators . who perform the basic wor% related to the prod"ction of prod"cts and services

• The operators perform fo"r prime f"nctions

1( They sec"re the inp"ts for prod"ction 2 in man"fact"ringfirm the p"rchasing department b"ys the raw materialsand the receiving department ta%es it in the door3

4( They transform the inp"ts into o"tp"ts

5( They distrib"te the o"tp"ts6( They provide s"pport to inp"t# transformation #f"nctionso"tp"t


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Five Basic 0arts of an organization4( The $trategic Ape'

• Those people who are charged with overall responsibility

for the organization . the chief e'ec"tive officer# any othertop)level managers whose concerns are global

) ,ncl"ded here are those provide direct s"pport to topmanagers 2 secretaries# assistants3

) ,n some organizations strategic ape' incl"des the e'ec"tivecommittee2 beca"se its mandate is global even if theyrepresent specific interests3

) ,n some organizations it incl"des Chief 'ec"tive Office .two or three individ"als who share the /ob of chiefe'ec"tive

• They are charged with ens"ring that the organization serveits mission in an effective way# and also it serves the needsof those people who control or otherwise have power overthe organization


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Five Basic 0arts of an organization• $trategic ape' 2contd(3

•Three main f"nctions of $trategic Ape'1( $"pervision&

) The e'tent to which an organization depends on thismechanism of coordination# it is the managers ofstrategic gro"p and the middle line who affect it

) Among the managerial roles associated with directs"pervision are&

i( -eso"rce Allocator&

) design of the str"ct"re it self

) the assignment of people# reso"rces and tas%

) iss"ing of wor% orders

) the a"thorization of ma/or decisions made by theemployees


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Five Basic 0arts of an organization$trategic ape' 2contd(3

ii( *ist"rbance handler

) resol"tion of conflictiii( Monitor

) review of employees activities

iv( *isseminator

transmission of information to the employees

v( eader ) staffing of the organization

) motivating and rewarding employees

4( Management of organization bo"ndary conditions# its relationship withits environment

i( $po%es person) informing infl"ential persons abo"t the activities of theorganization

ii( iaison

) develop high level contact for the organization


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Five Basic 0arts of an organizationiii( Monitor

) tap those for information

iv( 7egotiator ) when ma/or agreements m"st be reached with o"tside parties

v( Fig"rehead

) carrying o"t ceremonial d"ties

5( *evelopment of organizational strategy

• $trategies m"st be considered as a mediating force between theorganization and its environment

• $trategy form"lation involves interpretation of environment anddevelopment of consistent patterns of streams of organizationaldecisions

• ,n entreprene"r role search for effective ways to carry o"t the mission

• ,n general strategic ape' ta%es the widest# most abstract perspective ofthe organization

• !or% at this level is generally characterized by minim"m ofrepetition# standardization# considerable discretion# and relatively longdecision ma%ing cycles


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Five Basic 0arts of an organization5( The Middle ine

• The strategic ape' is /oined to the operating core by a chain of middle)

line managers with formal a"thority• The chain r"ns from the senior managers /"st below the strategic ape'

to first line s"pervisors

• ,n the hierarchy middle manager performs a n"mber of tas%s in theflow of direct s"pervision above and below him

• Collects feedbac%# information on the performance of his own "nits

and passes some of this "p to managers above him• ,ntervenes in the flow of decisions

• Flowing "p are dist"rbances in the "nit# proposals for change#decisions re8"iring a"thorization

• Flowing down are reso"rces that he m"st allocate# r"les and plans thatm"st elaborate# and pro/ects that he m"st implement

• 9as bo"ndary conditions to manage# horizontal one related to theenvironment of his own "nit

) environment may incl"de other "nits within the organization as wellgro"ps o"tside the organization


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Five Basic 0arts of an organization• Middle line 2contd(3

• ,n general middle line managers perform all the managerialroles of the chief e'ec"tive b"t in conte't of his "nit&

i( m"st serve as a fig"re head for his "nit

ii( ead its members

iii( *evelop a networ% of liaison contacts

iv( Monitor the environment of his "nitv( Transmit some of the information he receives tohis "nit# "p the hierarchy and o"tside the chain ofcommand

vi( Allocate reso"rces within his "nit

vii( 7egotiate with o"tsidersviii( ,nitiate strategic change

i'( 9andle e'ceptions and conflicts


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• Managerial /obs shift in orientation as they descendin the chain of a"thority

• :obs become more detailed and elaborated# less

abstract# more foc"sed on the wor% flow itself

$"periors

Analysts

o"tsiders

$"bordinates

$"pport

staff

Other middle

line managers

he line manager in

middle


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• ine manager is in the middle of forces

• $ome times these forces become so great that .

especially . those of analyst to instit"tionalize his

/ob by imposition of r"les on the "nit . that theindivid"al in the /ob can hardly be called a

manager at all# in the sense of being really being

in charge of an organizational "nit

• This is common at the level of first line s"pervisor


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Five Basic 0arts of an organization6( The Technostr"ct"re&

• Analyst and their s"pporting staff who serve the organization byaffecting the wor% of others

• These analysts are removed from the operating wor% flow

• They may design it# plan it# or train people who may do it# b"t donot do it themselves

• Technostr"ct"re is affective only when it can "se the analyticaltechni8"es to ma%e the wor% of others more effective

• The analyst foc"s their attention directly on the design andf"nctioning of str"ct"re and affect standardization

• These control analysts are of three types&

i( !or% $t"dy analyst& ind"strial engineers# who standardize wor% processes

ii( 0lanning and control analyst& long)range planners# b"dget analyst#and acco"ntants# who standardize o"t p"ts

iii( 0ersonnel analyst& trainers and recr"iters# who standardize s%ills


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Five Basic 0arts of an organization• The Technostr"ct"re 2contd(3&

• ,n a f"lly developed organization# the techno str"ct"re may perform

at all levels of hierarchyi( At the lowest level of man"fact"ring firm analyst standardize the

operating wor% flow of by sched"ling prod"ction# carrying timeand method st"dies of the operator+s wor%# and instit"ting systemsof 8"ality control

ii( At the middle level they see% to standardize intellect"al wor% of the

organization# by training middle level managers# carry o"toperations research st"dies of informational tas%

iii( On behalf of strategic ape' they design strategic planning systemand develop financial systems to control the goals of ma/or "nits

• !hile analyst e'ist to standardize the wor% of others their ownwor% is coordinated thro"gh m"t"al ad/"stments

• $tandardization of s%ills does play a part in this coordination

• Analyst spend a great deal of their time in informalcomm"nications


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Five Basic 0arts of an organization;( $"pport staff&

• $pecialized "nits# that e'ist to provide s"pport to the organization

o"tside the operating wor%flow• Most often they are l"mped together with technostr"ct"re and labeledas arelocated at the top# since tend to serve the strategic ape' only

• At the middle levels are fo"nd the "nits that s"pport decision ma%ing

there s"ch as ind"strial relations# pricing and research anddevelopment

• At the lower level are fo"nd "nits with more standardized wor%# thata%in to the wor% of operating core s"ch as cafeteria# mailroom#reception# payroll


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The Biological Metaphor • Metaphor is a pop"lar device for ma%ing

comparison• i%e living organisms&

) organizations grow#

) pass thro"gh predictable stages of development) "ndergo predictable transitions

) deteriorate if energy they p"t o"t isn+t replaced by new inp"ts

• *escribing organizations as system and proceeding thro"gh a life)cycle provides aninsight into their ma%e"p


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The $ystems 0erspective• *efinition of a $ystem

< A system is a set of interrelated and interdependent partsarranged in a manner that prod"ces a "nitary whole=

• They ta%e inp"ts# transform them# and prod"ce some o"tp"ts

• very system is characterized by two diverse forces&differentiation and integration

• ,n a system specialized f"nctions are differentiated whichreplace diff"se global patterns

• ,n order to maintain "nity among differentiated parts and forma part of complete whole# every system has a reciprocal process of integration

• $"pra)system& Organizations are made "p of parts ors"bsystems they are themselves s"bsystems within a largersystem

• The classification of s"pra)system# system and s"bsystemdepends on the "nit of analysis


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Types of $ystems

• Closed system ) 9as rigid # impenetrable bo"ndaries andclose it self to the e'ternal environment

) views systems a self contained andignores the impact of environment onthe system

• Open system

) ,mports energy from the environment# process it and provides its o"tp"t to theenvironment(


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,np"ts O"tp"tsTechnology

$ystems

proced"res

0rocessing

Feedbac%

$ystem Theory


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Characteristics of Open $ystems

1( $"bsystems or components4( 9olism# $ynergism# ?estalt& The whole is not /"st s"m

of its parts& the system can only be e'plained in totality

5( ,np"t . transformation . o"tp"t model

6( $ystem bo"ndaries;( 7egative entropy

@( $teady state # dynamic e8"ilibri"m and 9omeostasis&open system attain a state in which system remain in

dynamic e8"ilibri"m thro"gh contin"o"s inflow ofmaterials# energy and information

( Feedbac%


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Characteristics of open system

( 9ierarchy& A system is composed ofs"bsystems of a lower order and is also a part

s"pra)system

( ,nternal laboration& open systems appear tomove in the direction of greater differentiation#

elaboration# higher level of organization

1D( M"ltiple goal see%ing

11( 8"ifinality


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Organizational $"bsystems• 0erform five essential f"nctions&

1( Bo"ndary spanning&

9andle inp"t o"tp"t transaction

4( 0rod"ction system

0rod"ces prod"ct and service o"tp"ts

5( Maintenance$mooth operations and "p%eep of the organization

6( Adaptation

scans the environment for problems# opport"nities# andtechnological development

;( Management

*irecting and coordinating other s"bsystems(

0rovides direction# strategy# goals and policies for the entireorganization


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ife Cycle 0erspective• ifecycle refers to a pattern of predictable

change• Organizations have lifecycles whereby they

evolve thro"gh a standardized se8"ence oftransitions as they develop over time

• There are distinct stages thro"gh whichorganizations proceed

• The stages follow a consistent pattern

• The transition from one stage to another are predictable rather than random occ"rrences


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ife Cycle $tages1( ntreprene"rial $tage& 2,nfancy3

) ?oals tends to be ambig"o"s

) Creativity is high

) Ac8"iring and maintaining a steady s"pply ofreso"rce

4( Collective $tage

) Contin"es the innovation of ne't stage

) Organization mission is clarified

) Comm"nication and str"ct"re remains essentiallyinformal

) Members p"t in long ho"rs and demonstrate highcommitment to the organization


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Organizational ife Cycle

5( Formalization $tage&

•Characteristics ,nvolves the installation and "se of r"les# proced"res#and control systems

Comm"nication is less fre8"ent and more formal

Top management becomes more concerned withiss"es s"ch as strategy# and planning and leavesoperation of the firm to middle level managers

0rod"ct gro"ps or other decentralized "nits may beformed to improve coordination

,ncentive system based on profits may beimplemented


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ife Cycle $tages6( laboration of $tr"ct"re $tage&

) Organization diversifies its prod"cts or service mar%ets

) Management searches for new prod"cts and growthopport"nities

) Organization str"ct"re becomes more comple' andelaborated

) *ecision ma%ing is decentralized;( *ecline $tage

) $hrin%ing of mar%ets as res"lt of competition orother environmental forces

) Management loo%s for ways to hold mar%ets and

new opport"nities) mployee t"rnover increases

) Conflicts increases within organization

) 7ew people ass"me leadership to arrest the decline

) *ecision ma%ing is centralized

Frame !or% for analyzing Organization Theory


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Frame !or% for analyzing Organization Theory

!eterminants of

organization

structure$trategy

Organization $ize

Technology

nvironment

0ower and control

Organization

$tr"ct"re

Organization

*esign*esign Options

B"rea"cracy

Adh

"pplicationsManaging the

environmentManaging organization

Change

Managing organization

conflictManaging organization

C"lt"re

Managing organizational

evol"tion

Organizational

effectiveness

session 1 overview of organization theory

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