Org Design Chapter 1

Organizational theory in Action

Topics

Current Challenges

· Globalization

· Ethics and Social Responsibility

· Speed of Responsiveness

· Digital workplace

· Diversity

Purpose of this chapter

The purpose of this chapter is to explore the Nature of organizations and organizational theory today.

What is an Organization

Definition

Organizations are social entities, that are goal directed, Are described as deliberately Structured and coordinated activity systems, and Are linked to the external environment. It is not buildings but it is the people that make an organization. Even though managers structure things, businesses often work towards Teamwork and horizontal coordination.

Types of Organizations

· Large versus small

· Products versus services

· Non- Profit versus profit

While non- profits have many things similar to profit organizations there are many differences as well.

· Income from governments and donations instead of sales.

· Bolton line is people served and must be done as inexpensively as possible.

· Stakeholders are more diverse.

Importance of Organizations

Organizations are relatively new having started in the late 19th century. What do they provide?

· Bring together resources to achieve desired goals and outcomes

· Produce goods and services efficiently

· Facilitate innovation

· Use modern manufacturing and information technologies

· 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.

Perspectives on Organizations

Open Systems

No system can ever be a true closed system. If it was it would not produce anything for anyone. Many organizations treat their systems as closed, thinking they can control the environment. In reality a firm must be an open system and deal with the amount mo matter how complicated it may be. Organizations need be viewed as a system, a set of elements that interact as well as take inputs from the environment transform them and send them back to the environment the outputs. Systems consist of sub systems. Like:

· Boundary Spanning - exchanges with outside environment.

· Production - produce products And services

· Maintenance - upkeep of organizations physical and human elements

· Adaptation - does the organizational changes.

· Management- CO-ordinates And directs the other Subsystems

Organizational Configuration

As defined by Henry Mitzberg:

· Technical Core - people who do the basic work.

· Technical Support- helps organization adapt to environment by looking for opportunities Generally R and D is in this group

· Administrative Support - upkeep of organization both physical and human.

· Management - Management has two types. Middle Management and top management. Top management provides direction. Middle management provide implementation of there direction.

In reality many of these Categories overlap to some degree.

Dimensions of Organizational Design

Structural Dimensions

· Formalization - involves the amount of written documentation in an organization, the more, the more formalized

· Specialization - the degree to which jobs are done by all employees or just a hand full of special ones

· Hierarchy of authority - Who reports to whom, and what span the managers have, it can be narrow or wide

· Centralization - the level and the quality of decisions that can be made at various levels, centralized or decentralized

· Professionalism - the level of education/training needed to do a job, more education needed, more professional

· Personnel ratios - refers to the administrative, clerical and professional staff ratios, number of employees in a classification divided by total number of employees

Contextual Dimensions

· Size - number of people in the organization (or for parts of it), assets or sales can be included as well but do not reflect the human element

· Organizational technology - the things that are used to transform inputs to outputs

· Environment - elements outside the organization (governments, customers, other organizations, etc.)

· Goals and strategy - defines scope of operations and the relationship with employees, customers, and competitors

· Culture - underlying key values, benefits, understandings and norms

These dimensions allow us to measure and analyze characteristics of an organization.

Performance and Effectiveness Outcomes

We do not study these for efficiency but effectiveness, the degree to which an organization achieves its goals. To do this, clear goals and strategies for reaching them are needed. Different stakeholders have different goals so this is often not easy. In fact, often they may conflict in areas like unions and management.

The Evolution of Organization Theory and Design

Historical Perspectives

Late 19th and early 20th century is when modern era of management started as then was little need of it till industrial revolution. In the Classical perspective firms ran like a well oiled machine.

Efficiency is Everything

Taylor taught that scientific management be used. This involved studying processes to be done, do them more efficient, and with the right people and pay.

How to Get organized

Here the focus on is on how the firm is organized. This would be the bureaucracy. This was needed at the start of the industrial age.

What about people

Hawthorne study proved that positive treatment of people gave excellent returns. This was ignored till the 70's and 80's. In order for a firm to remain competitive, it needed to change and these studies led the way to the changes.

Don't Forget the Environment

Firms have to develop a contingency attitude. What works for one company or even a part of one will not always work for all others.

Contemporary Organization Design

Though the bureaucratic style is prevalent, for a firm to be a success it will need for change. There will need to be a move from mechanical to a natural design. No longer can companies be thought of as machines but be thought of as controlled chaos. They well need to change to more flexible hierarchies from the structured ones that exist now.

Efficient Performance versus the Learning Organization

From Vertical to Horizontal Structure

While it is more efficient in a vertical hierarchy of a mechanical organization, it does not allow for a rapid response to change quickly. A learning organization has a flatter hierarchy. In some Cases there is none at all.

From Routine to Empowered Roles

In place of doings standard narrowly defined work tasks, employees need to be empowered to make choices.

From Formal Control to Shared Information

Rather than information to control workers, workers need to control the information.

From Competitive to Collaborative strategy

Traditional organizations impose strategy but a learning organization empowers its workers to contribute. It may even come from suppliers, customers, or even competitors.

From Rigid to Adaptive Culture

If a culture becomes fixed then it can not respond to Challenges. A learning firm is more fluid. Each person becomes a valued contributor to the organization.

No organization is a perfect example of a learning organization, Bat many are leaning that way.

Framework for the Book

Levels of Analysis

Systems are nested within systems but one must be the primary focus. The individual human being is the Cornerstone Of the organization. Next the group or the department is the focus. One more level is the organization itself. Lastly organizations may group together. This is part of the environment. We will focus on the organization as well or the other parts to a lesser degree. While people are looked at, we do not study organizational behavior.

Parts of the Book

Plan of Each Chapter