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What is an Organization?

 Definition
Chapter One  . Social entity
 . Goal-directed
 . Designed as deliberately structured and
Organizations and coordinated activity system
Organization Theory  . Linked to the external environment

Linked to the external


environment
Designed as deliberately structured
and coordinated activity system

formal organization is that


kind of cooperation among
men that is conscious,
deliberate, purposeful"
Barnard (1938)

Types of Organizations Importance of Organizations


 large and small organizations.  Bring together resources to achieve desired
goals and outcomes
 manufacturing and service  Produce goods and services efficiently
organizations,  Facilitate innovation
 for- profit and nonprofit  Use modern manufacturing and
organizations. information technologies

 Public and private organizations

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Importance of Organizations
(cont’d) Organization Theory in Action
 Topics
 Adapt to and influence a changing
environment  Current Challenges
 Create value for owners, customers and  Global Competition
employees  Ethics and and Social Responsibility
 Accommodate ongoing challenges of  Speed of Responsiveness
diversity, ethics, and the motivation and  The Digital Workplace
coordination of employees  Diversity

An Open System
Perspectives on Organizations and Its Subsystems
Environment

Raw Materials Transformation

 Open Systems People


Information
Products
resources Input Output and
 Organizational Configuration Financial Services
resources
Process

Production,
Boundary Boundary
Subsystems Spanning
Maintenance,
Spanning
Adaptation,
Management

Five Basic Parts of an Dimensions of organisation


Organization design
Top
Management
 Two types of organisation dimensions:
 Structural – provides labels to describe
Middle
the internal characteristics of an
Technical Administrative
Support Management Support
organisation.
 Contextual dimensions – characterise
the whole organisation organisation,
Technical Core including its size, technology, environment
and goals. They describe
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.

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Structural and Contextual Interacting Contextual and Structural Dimensions of
Organisation Design
Dimensions
 Structural  Contextual
Goals and
Dimensions Dimensions Strategy
Environment Size
 Formalisation 1. Size
 Specialisation 2. Organisation
Culture Technology
 Hierarchy of technology Structure
1. Formalization
authority 3. Environment 2. Specialization
 Centralisation 4. Goals and Strategy 3. Hierarchy of Authority
4. Centralization
 Professionalism 5. Culture 5. Professionalism
6. Personnel Ratios
 Personnel ratios

Performance and Effectiveness


Outcomes
 The organization must learn to be efficient—using
the least amount of resources to achieve its goals, as
well as effective—the degree to which an
organization actually achieves its goals.
 In doing this, the company must consider its
stakeholder who are any group within or outside
the organization that has a stake in the organization’s
performance.
 Typical stakeholders include employees, customers,
creditors, management, government, unions, the
community, suppliers, and owners and stockholders.

The Evolution of Organization The Evolution of Organisation


Theory and Design Theory and Design
 Historical Perspectives Scientific Management –
• Pioneered by Taylor
 Contemporary Organization Design
• Decisions about organisations and job design
should be based on precise, scientific study of
 Effective Performance versus the individual situations
Learning Organization
• Focus is on measurement – about every
movement

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The Evolution of Organisation The Evolution of Organisation
Theory and Design Theory and Design
 Administrative Principles  The Hawthorne Studies
 Looked at the design and functioning of the  Chicago electricity company
organisation as a whole. Characterised by rules.
 Positive treatment of employees improved
 Work pioneered by Fayol
their motivation and productivity
 Gave rise to bureaucractic organisation – which
emphasised designing and managing organisations on  Gave rise to human relations and
an impersonal, rational basis through such elements as behavioural approaches
clearly designed authority and responsibility, formal
recordkeeping, and uniform application of standard
rules

The Evolution of Organisation


Theory and Design Changing Paradigms
 Contingency theory  A paradigm is a shared mindset that represents a
 Organisations are obviously not alike fundamental way of perceiving, conceptualising
 Contingency means that one thing depends on other and understanding the world. Our beliefs and
things, and for the organisation to be effective, there understandings direct our patterns of behaviour
must be a ‘goodness of fit’ between their structure and  A changing environment means that approach to
the conditions in the external environment. organisations is constantly changing – examples
 Important to consider that organisations are shifting include:
structure all the time – decades characterised by  Learning organisation
different types of organisations- 70s – conglomerates,  The ‘global’ organisation
80s – small is better, 90s –globalisation – 00s –  The ‘virtual’ organisation
dotcoms – virtual organisations

Two Organization Design Approaches

Mechanical System Design Natural System Design

Vertical Horizontal
Structure Structure

Routine Rigid Organizational Change Empowered Adaptive


Tasks Culture in the Service of Roles Culture
Performance

Formal Competitive Shared


Collaborative
Systems Strategy Information Strategy

Stable Environment Turbulent Environment


Efficient Performance Learning Organization

Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)

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