Chapter One

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Chapter One
Organizations and Organization Theory
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GROUPS 398J
GROUP 2 Bender, James E. Rakov, Maria Mitchell,
Joshua E. Mielnik, Pawel Grewal,
Davinder Florescu, Alexandra G Madter, James
GROUP 3 Zhang, Peizi Abdulla, Nazim
A. Kulmatitski, Nikolay Beaudry, Andrea Snively,
Jonathan Virgo, Andrew
GROUP 4 Tsoulogiannis, Peter Miller,
Kayla-Lynn Dehbonehie, Aryan Hong, Anthony Chiu,
Edith L. Neely, Jason Fernandes, Avinash
GROUP 1 Coulombe, Marc Sayal, Pankaj Ning,
Jing McCrory, Stuart English, Matthew Ly,
Linda Yousefi, Sara
GROUP 5 Borshchiver, Mariya Green, Richard Siu,
Jenny W. Pigeon, Kelly Bonan, David Khaper, Manju
GROUP 6 Qi, Shinan Jahnke, Jodi Rakovitis,
Jason Pender, Sara Zhao, Yuan Arneja, Rineet
GROUP 7 Solarz, Karen Yates, Natasha L. Mendoza,
Jaclyn Natarajan, Maya Tahardi, Jessica Xie, Wei
GROUP 8 Paul, Adam R. Walkin, Cary S. Bedi,
Sajanpreet Ho, Stephanie Li, Ting T. Dittrich,
Geoffrey
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Organization Theory in Action

• Current Challenges
• Globalization
• Ethics and Social Responsibility
• Speed of Responsiveness
• The Digital Workplace
• Diversity

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What is an Organization?

• Definition?
• Importance of Organizations

Bring together resources to achieve desired goals
and outcomes Produce goods and services
efficiently Facilitate innovation Use modern
manufacturing and information technologies
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Importance of Organizations

• Importance of Organizations (contd)
• 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

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Perspectives on Organizations

• Open Systems
• Organizational Configuration
• Technical Core
• Technical Support
• Administrative Support
• Top Management
• Middle Management

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An Open System and Its Subsystems
Environment
Transformation Process
Raw Materials People Information
resources Financial resources
Products and Services
Output
Input
Production, Maintenance, Adaptation, Management
Boundary Spanning
Boundary Spanning
Subsystems
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Dimensions of Organization Design

• Structural Dimensions
• Contextual Dimensions
• Performance and Effectiveness Outcomes

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Five Basic Parts of an Organization
Top Management
Technical Support
Administrative Support
Middle Management
Technical Core
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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Organization Chart Illustrating the Hierarchy of
Authority for a Community Job Training Program
Board of Directors
Executive Committee
Advisory Committee
Level 1
Executive Director
Assistant Executive Director for Human Services
Assistant Executive Director for Community Service
Level 2
Director Economic Dev.
Director Reg. Planning
Director Housing
Director Criminal Justice
Director Finance
Director AAA
Director CETA
Level 3
Lead Counsel
Lead Counsel
Asst. Director Finance
Public Info Coord.
CETA Couns. Devs. Title II D VIVII
CETA Couns. Devs. Title II ABC
CETA Intake Orient
CETA Couns. Devs. Youth IV
Contract Fiscal Manager
Program Spec. AAA
Program Planner AAA
Alcohol Coord.
Account.
CETA Planner
Housing Coord.
Level 4
Records Clerk
Level 5
Secretary
Secretary
Adm. Asst
Payroll Clerk
Secretary
MIS Specialist
Staff Clerk
Adm. Asst.
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The Evolution of Organization Theory and Design

• Historical Perspectives
• Contemporary Organization Design
• Effective Performance versus the Learning
  Organization

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Two Organization Design Approaches
Organizational Change in the Service
of Performance
Source Adapted from David K. Hurst, Crisis and
Renewal Meeting the Challenge of Organizational
Change (Boston, Mass. Harvard Business School)
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KEYWORDS FOR CHAPTER 1
Organizations A system, in general, is a set of
interrelated elements that acquires inputs from
the environment, transforms them, and discharges
outputs to the external environment. Closed
system does not depend on its environment, but
focuses on running things efficiently Open
systems must interact with the environment to
survive, and managers realize they must pay close
attention to what is going on with their
customers, suppliers, and competitors. Subsystems
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KEYWORDS (contd) Henry Mintzbergfive
interrelated parts Technical core of people
who do the basic work of the organization
Technical support creates innovations in the
technical core with employees such as engineers
and researchers Administrative support is
responsible for smooth operation and upkeep of
the organization, including its human resources
Top management provides direction, strategy,
goals, and policies for the organization
Middle management is responsible for
implementation and coordination at the
departmental level.
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KKEYWORDS (contd) Structural Dimensions
Formalization pertains to the amount of written
documentation in the organization
Specialization is the degree to which
organizational tasks are subdivided into separate
jobs Hierarchy of authority describes who
reports to whom and the span of control
Centralization refers to the hierarchical level
that has authority to make a decision
Professionalism is the level of formal
education and training of employees Personnel
ratios refer to the deployment of people to
various functions and departments.
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KEYWORDS (CONTD) Contextual Dimensions Size is
the organization's magnitude as reflected in the
number of people in the organization Organization
al technology refers to the tools, techniques,
and actions used to produce the organizations
products or services Environment includes all
elements outside the boundary of the organization

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KEYWORDS (contd) Historical Perspectives Frederi
ck Taylor-scientific management-1898,
Administrative principles - Fayol.
Bureaucracy Authority -Responsibility -Record-
keeping Hawthorne Studies Contingency theory
-There is not one best way to manage, and
instead, the correct management approach varies
for an Internet firm versus a large processing
plant.
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KEYWORDS (contd) The learning organization
promotes collaboration so everyone is engaged in
identifying and solving problems, enabling the
organization to continuously experiment, improve,
and increase capability. Five
elements Structure moves from vertical to
horizontal Tasks move from routine to empowered
roles Systems move from being formal and
controlled to sharing of information Culture
changes from rigid to adaptive Strategy moves
from competitive to collaborative
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• DISCUSSION QUESTIONS
• What is the definition of organization? Briefly
  explain
• each part of the definition.
• What is the difference between an open system and
  a
• closed system? Can you give an example of a
  closed
• system? How is the stakeholder approach related
  to this
• concept?
• 3. Explain how Mintzbergs five basic parts of
  the
• organization perform the subsystem functions. If
  an
• organization had to give up one of these five
  parts, which
• one could it survive the longest without?
  Discuss.

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4. What is the difference between formalization
and specialization? Do you think an organization
high on one of these dimensions would also be
high on the other? 6. What does contingency
mean? What are the implications of contingency
theories for managers? 7. What are the primary
differences between an organization designed for
efficient performance and one designed for
learning and change? Which type of organization
do you think would be easier to manage? 8. Why
is shared information so important in a learning
organization as compared to an efficient
performance organization? Discuss how an
organizations approach to information-sharing
might be related to other elements of
organization design, such as structure, tasks,
strategy, and culture. .
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• DISCUSSION QUESTIONS
• What is the definition of organization? Briefly
  explain each part of the definition.
• ANSWER An organization is a
• (l) social entity that is
• (2) goal directed
• (3) deliberately structured activity system, with
  a
• (4) link to the external environment.

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• What is the difference between an open system and
  a closed system? Can you give an example of a
  closed system? How is the stakeholder approach
  related to this concept?
• ANSWER
• The difference is in the relationship with the
  external environment. An open
• system has an exchange relationship with the
  environment and must import
• energy from the environment to survive.
• A closed system would be completely autonomous
  and would not need external
• resources. In a sense, there is no such thing as
  a closed system, although some
• managers in organizations that are insufficiently
  tuned in to their environments act
• as if they were in a closed system.
• However, any system which is completely closed
  off would eventually die. Some
• machine systems, such as a satellite with a
  nuclear reactor, come close to being
• closed systems because they will last for years
  without energy from the
• environment.
• The stakeholder approach illustrates that
  organizations are open systems and are
• influenced by external stakeholder groups
  interacting with the internal stakeholder

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3. Explain how Mintzbergs five basic parts of
the organization perform the subsystem functions.
If an organization had to give up one of these
five parts, which one could it survive the
longest without? Discuss. ANSWER Relate the
subsystems Boundary spanning Production,
maintenance Adaption Management
To the five parts of Mintzbergs framework
Technical core, top management Middle
management Technical support Administrative
support.
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4. A handful of companies on the Fortune 500 list
are more than 100 years old, which is rare. What
organizational characteristics do you think might
explain 100 year longevity? ANSWER Companies
that maintain longevity must be flexible. This
includes flexibility with organizational
structures and ongoing relationships with
employees and the external environment. The
ability of organizations to offer competitive
pricing and bring together resources in an
innovative manner and over time contributes to
its success. Scientific management played a
role in this and the Hawthorne studies
contributed the understanding that positive
treatment of workers contributed to their
longevity with the organization which decreased
turnover and maximized expertise among the labour
pool.
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• What is the difference between formalization and
  specialization? Do you think an organization high
  on one of these dimensions would also be high on
  the other? Discuss.
• ANSWER
• Formalization pertains to the amount of written
  documentation used to direct the
• organization, including procedures, job
  descriptions, and policy manuals.
• Specialization pertains to the extent to which
  tasks are subdivided so that each
• employee performs only a narrow set of
  activities.
• Generally, these characteristics are associated
  so that an organization would tend
• to be high or low on both. As an organization
  becomes large, for example, tasks
• would become more specialized. Formalization
  would then be required to provide
• rules and regulations to specify specialization.
  A few organizations may deviate
• from this relationship, but generally an
  organization high on one characteristic will
• tend to be high on the other.

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6. What does contingency mean? What are the
implications of contingency theories for
managers? ANSWER Contingency means that one
thing depends on other things, and therefore for
an organization to be effective there must be a
good fit between its internal structure and its
external environment. There are no universal
principles that apply to every organization in
every situation. There is not one best way.
Contingency means that "it depends." Thus,
managers should diagnose their unique situation
before deciding on the management approach to
take.
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• What are the primary differences between an
  organization designed for efficient performance
  and one designed for learning and change? Which
  type of organization do you think would be easier
  to manage?
• The organization designed for efficient
  performance is more traditional
• in its top down orientation as opposed to the one
  designed for learning
• that is geared to collaboration so that everyone
  is engaged in identifying
• and solving problems.
• Major differences can be seen in the chart that
  follows. In the
• discussion on which type of organization is
  easier to manage, point out
• that differences in perspective may reflect
  differences in natural style
• preferences.
• For example, a student who would truly enjoy the
  challenge of an
• Environment known to be turbulent and of managing
  with high levels of
• ambiguity might find the learning organization to
  be easier to manage.

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• Why is shared information so important in a
  learning organization as compared to an efficient
  performance organization? Discuss how an
  organizations approach to information-sharing
  might be related to other elements of
  organization design, such as structure, tasks,
  strategy, and culture.
• Shared information and collaboration is the basis
  for horizontal workflow between
• employees and from employees to customers,
  suppliers, and others in the
• environment. By sharing information, all
  employees become the eyes and ears
• which prevent rigidity in culture that might
  otherwise lure management into
• complacency.