lecture 1 overview of organization theory

8/3/2019 Lecture 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

Life cycle perspective


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What is an Organization An organization is a consciously coordinated social entity

with a relatively identifiable boundary, that functions on arelatively continuous 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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What is an Organization Structure Organization structure defines how tasks are to be allocated,

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

Organization structure can be described as having threecomponents: complexity, formalization, and centralization

Complexity considers the extent of differentiation within theorganization. This includes

- Degree of specialization or division of labor

- The number of levels in the organization hierarchy

- The extent to which the organizations units are

dispersed geographically

Formalization: The degree to which an organization relies onrules and procedures to direct the behavior of employees

Centralization Considers where the locus of decision making

authority lies


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What is Organization Design

Term Organization Design represent the

management side of organization theory

Organization design is concerned withconstructing and changing an organizations

structure to achieve organizations goals


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What is Organization Theory

It is the discipline that studies the structure

and design of organization

Refers to both the descriptive and

prescriptive aspects of the discipline

It describes how organizations are actually

structured and offers suggestions on how

they constructed to improve their

effectiveness


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Contrasting OB and OTD OB takes a micro view- emphasizing individuals and small

groups

OB focuses on behavior in organizations and a narrow set

of employee performance and attitude variables

employee productivity, absenteeism, turnover, and job

satisfaction OTD takes macro perspective.

Its unit of analysis is the organization itself or its primary

subunits

OT is concerned not only with employee performance andattitudes but with overall organizations ability to adapt

and achieve its goals


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Five Basic Parts of an organization

1. The operating core Encompasses those members the operators whoperform the basic work related to the production ofproducts and services

The operators perform four prime functions

1. They secure the inputs for production ( in manufacturingfirm the purchasing department buys the raw materialsand the receiving department takes it in the door)

2. They transform the inputs into outputs

3. They distribute the outputs

4. They provide support to input, transformation ,functionsoutput


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Five Basic Parts of an organization2. The Strategic Apex

Those people who are charged with overall responsibilityfor the organization the chief executive officer, any othertop-level managers whose concerns are global

- Included here are those provide direct support to topmanagers ( secretaries, assistants)

- In some organizations strategic apex includes the executivecommittee( because its mandate is global even if theyrepresent specific interests)

- In some organizations it includes Chief Executive Office two or three individuals who share the job of chiefexecutive

They are charged with ensuring 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 Parts of an organization Strategic apex (contd.)

Three main functions of Strategic Apex1. Supervision:

- The extent to which an organization depends on thismechanism of coordination, it is the managers ofstrategic group and the middle line who affect it

- Among the managerial roles associated with directsupervision are:

i. Resource Allocator:

- design of the structure it self

- the assignment of people, resources and task

- issuing of work orders- the authorization of major decisions made by theemployees


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Five Basic Parts of an organizationStrategic apex (contd.)

ii. Disturbance handler- resolution of conflict

iii. Monitor

- review of employees activities

iv. Disseminator

transmission of information to the employees

v. Leader - staffing of the organization

- motivating and rewarding employees

2. Management of organization boundary conditions, its relationship withits environment

i. Spokes person

- informing influential persons about the activities of theorganization

ii. Liaison

- develop high level contact for the organization


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Five Basic Parts of an organizationiii. Monitor

- tap those for information

iv. Negotiator

- when major agreements must be reached with outside parties

v. Figurehead

- carrying out ceremonial duties

3. Development of organizational strategy

Strategies must be considered as a mediating force between theorganization and its environment

Strategy formulation involves interpretation of environment anddevelopment of consistent patterns of streams of organizationaldecisions

In entrepreneur role search for effective ways to carry out the mission

In general strategic apex takes the widest, most abstract perspective ofthe organization

Work at this level is generally characterized by minimum ofrepetition, standardization, considerable discretion, and relatively longdecision making cycles


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Five Basic Parts of an organization3. The Middle Line

The strategic apex is joined to the operating core by a chain of middle-line managers with formal authority

The chain runs from the senior managers just below the strategic apexto first line supervisors

In the hierarchy middle manager performs a number of tasks in theflow of direct supervision above and below him

Collects feedback, information on the performance of his own unitsand passes some of this up to managers above him

Intervenes in the flow of decisions

Flowing up are disturbances in the unit, proposals for change,decisions requiring authorization

Flowing down are resources that he must allocate, rules and plans thatmust elaborate, and projects that he must implement

Has boundary conditions to manage, horizontal one related to theenvironment of his own unit

- environment may include other units within the organization as wellgroups outside the organization


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Five Basic Parts of an organization Middle line (contd.)

In general middle line managers perform all the managerialroles of the chief executive but in context of his unit:

i. must serve as a figure head for his unit

ii. Lead its members

iii. Develop a network of liaison contacts

iv. Monitor the environment of his unitv. Transmit some of the information he receives to

his unit, up the hierarchy and outside the chain ofcommand

vi. Allocate resources within his unit

vii. Negotiate with outsidersviii. Initiate strategic change

ix. Handle exceptions and conflicts


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Five Basic Parts of an organization Middle line (contd.)

Managerial jobs shift in orientation as they descend

in the chain of authority

Jobs become more detailed and elaborated, less

abstract, more focused on the work flow itselfSuperiors

Analysts

outsiders

Subordinates

Support

staff

Other middle

line managers

The line manager in

middle


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Five Basic Parts of an organization

Middle line (contd.)

Line manager is in the middle of forces

Some times these forces become so great that

especially those of analyst to institutionalize his

job by imposition of rules on the unit that theindividual in the job can hardly be called a

manager at all, in the sense of being really being

in charge of an organizational unit

This is common at the level of first line supervisor


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Five Basic Parts of an organization4. The Technostructure:

Analyst and their supporting staff who serve the organization byaffecting the work of others

These analysts are removed from the operating work flow

They may design it, plan it, or train people who may do it, but donot do it themselves

Technostructure is affective only when it can use the analyticaltechniques to make the work of others more effective

The analyst focus their attention directly on the design andfunctioning of structure and affect standardization

These control analysts are of three types:

i. Work Study analyst: industrial engineers, who standardize workprocesses

ii. Planning and control analyst: long-range planners, budget analyst,and accountants, who standardize out puts

iii. Personnel analyst: trainers and recruiters, who standardize skills


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Five Basic Parts of an organization The Technostructure (contd.):

In a fully developed organization, the techno structure may performat all levels of hierarchy

i. At the lowest level of manufacturing firm analyst standardize theoperating work flow of by scheduling production, carrying time andmethod studies of the operators work, and instituting systems ofquality control

ii. At the middle level they seek to standardize intellectual work of theorganization, by training middle level managers, carry outoperations research studies of informational task

iii. On behalf of strategic apex they design strategic planning systemand develop financial systems to control the goals of major units

While analyst exist to standardize the work of others their ownwork is coordinated through mutual adjustments

Standardization of skills does play a part in this coordination Analyst spend a great deal of their time in informal communications


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Five Basic Parts of an organization5. Support staff:

Specialized units, that exist to provide support to the organization

outside the operating workflow Most often they are lumped together with technostructure and labeled

as staff that provides advice to management

These support units are most decidedly separate from technostructure

They are not preoccupied with standardization and they cannot belooked upon primarily as advice givers ( although they may do some of

that too), they have distinct function to perform The support units can be found at various levels of the hierarchy

depending on the receivers of the service

In most manufacturing firms, public relations and legal council; arelocated at the top, since tend to serve the strategic apex only

At the middle levels are found the units that support decision making

there such as industrial relations, pricing and research anddevelopment

At the lower level are found units with more standardized work, thatakin to the work of operating core such as cafeteria, mailroom,reception, payroll


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What is Organization Theory

It is a discipline that studies the structureand design of organizations

It refers to both descriptive and prescriptiveaspects of an organization

It describes how organizations are actually

structured and offers suggestions on howthey can be constructed to improve theireffectiveness


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The Biological Metaphor Metaphor is a popular device for making

comparison

Like living organisms:

- organizations grow,

- pass through predictable stages of development- undergo predictable transitions

- deteriorate if energy they put out isnt replacedby new inputs

Describing organizations as system andproceeding through a life-cycle provides aninsight into their makeup


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The Systems Perspective

Definition of a System A system is a set of interrelated and interdependent partsarranged in a manner that produces a unitary whole

They take inputs, transform them, and produce some outputs

Every system is characterized by two diverse forces:

differentiation and integration In a system specialized functions are differentiated whichreplace diffuse global patterns

In order to maintain unity among differentiated parts and forma part of complete whole, every system has a reciprocal

process of integration

Supra-system: Organizations are made up of parts orsubsystems they are themselves subsystems within a largersystem

The classification of supra-system, system and subsystemdepends on the unit of analysis


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Types of Systems

Closed system- Has rigid , impenetrable boundaries and

close it self to the external environment

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

Open system

- Imports energy from the environment,process it and provides its output to theenvironment.


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Inputs OutputsTechnology

Systems

procedures

Processing

Feedback

System Theory


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Characteristics of Open Systems

1. Subsystems or components2. Holism, Synergism, Gestalt: The whole is not just sum

of its parts: the system can only be explained in totality

3. Input transformation output model

4. System boundaries5. Negative entropy

6. Steady state , dynamic equilibrium and Homeostasis:open system attain a state in which system remain in

dynamic equilibrium through continuous inflow ofmaterials, energy and information

7. Feedback


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Characteristics of open system

8. Hierarchy: A system is composed of

subsystems of a lower order and is also a part

supra-system

9. Internal Elaboration: open systems appear to

move in the direction of greater differentiation,

elaboration, higher level of organization

10. Multiple goal seeking

11. Equifinality


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Organizational Subsystems

Perform five essential functions:1. Boundary spanning:

Handle input output transaction

2. Production system

Produces product and service outputs

3. MaintenanceSmooth operations and upkeep of the organization

4. Adaptation

scans the environment for problems, opportunities, andtechnological development

5. ManagementDirecting and coordinating other subsystems.

Provides direction, strategy, goals and policies for the entireorganization


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Life Cycle Perspective Lifecycle refers to a pattern of predictable

change Organizations have lifecycles whereby they

evolve through a standardized sequence of

transitions as they develop over time There are distinct stages through which

organizations proceed

The stages follow a consistent pattern

The transition from one stage to another arepredictable rather than random occurrences


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Life Cycle Stages

1. Entrepreneurial Stage: (Infancy)- Goals tends to be ambiguous

- Creativity is high

- Acquiring and maintaining a steady supply ofresource

2. Collective Stage

- Continues the innovation of next stage

- Organization mission is clarified

- Communication and structure remains essentiallyinformal

- Members put in long hours and demonstrate highcommitment to the organization


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Life Cycle Stages4. Elaboration of Structure Stage:

- Organization diversifies its products or service markets- Management searches for new products and growthopportunities

- Organization structure becomes more complex andelaborated

- Decision making is decentralized5. Decline Stage

- Shrinking of markets as result of competition orother environmental forces

- Management looks for ways to hold markets and

new opportunities- Employee turnover increases

- Conflicts increases within organization

- New people assume leadership to arrest the decline

- Decision making is centralized


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FrameWork for analyzing Organization Theory

Determinants of

organization

structureStrategy

Organization Size

Technology

Environment

Power and control

Organization

Structure

Organization

DesignDesign Options

Bureaucracy

Adhocracy

Applications

Managing theenvironment

Managing organization

Change

Managing organization

conflictManaging organization

Culture

Managing organizational

evolution

Organizational

effectiveness

lecture 1 overview of organization theory

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