Chapter OneOrganizations andOrganization Theory

Case: IBM Built in 1911Mid 1960s, IBM introduced mainframe computers 5 new factories and thousands of new jobs. too bureaucratic (workforce: 407,000)IBMs mistake: - not taking advantage of a new technology IBM invented in 1970s (microprocessorfor PC)- no-layoffs policy was no longer working

Case: IBM (contd)Failure to respond to customers, suppliers, and competitors in the fast-paced external environment. Inability to coordinate departments and design control systems that promoted efficiencySlow decision makingOutmoded corporate cultureResulting:More than 140,000 workers lost their jobsIBM stock fell from $176 to $40Gave up its no-layoffs policy

Case: IBM (contd)IBM today- CEO: Louis V. Gerstner, Jr. created a culture that accommodate opportunities, minimize bureaucracy, he isnt afraid of change. If the organization doesnt work right one way, well change it.- Products: PCs, mainframes, midsize computers- Profit doubled, share prices recovered

Organization Theory in ActionCurrent ChallengesGlobal competitionOrganizational renewalStrategic AdvantageEmployee RelationshipDiversityEthics and social responsibility

Two Organization Design Paradigms

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

What is an Organization?DefinitionOrganizations are (1) social entities that (2) are goal directed, (3) are designed as deliberately structured and coordinated activity systems, and (4) are linked to the external environment.

Elemen kunci: orang dan hubungannya satu dengan yang lain.

Importance of OrganizationsBring together resources to achieve desired goals and outcomesProduce goods and services efficientlyFacilitate innovationUse modern manufacturing and computer-based technology

Importance of Organizations (contd)Adapt to and influence a changing environmentCreate value for owners, customers and employeesAccommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees

Organizations as SystemsUntuk memahami organisasi secara keseluruhan, organisasi perlu dipandang sebagai sebuah sistem. A system is a set of interacting elements that acquires inputs from the environment, transforms them, and discharges outputs to the external environment.

An Open System and Its SubsystemsTransformation

ProcessEnvironment

Raw MaterialsPeopleInformation resourcesFinancial resourcesInputSubsystemsBoundarySpanningProduction,Maintenance,Adaptation, ManagementBoundarySpanningProducts andServicesOutputNote: Boundary spanning handles input and output transactions, they are responsible for exchanges with the environment.

Dimensions of Organization DesignDimensi struktural: menggambarkan karakteristik internal suatu organisasi

Dimensi kontekstual: menggambarkan setting organisasional yang mempengaruhi dan membentuk dimensi struktural

Dimensions of Organization DesignStructural Dimensions1. Formalization2. Specialization3. Standardization4. Hierarchy of authority5. Complexity6. Centralization7. Professionalism8. Personnel ratios

Contextual dimensions1. Size2. Technology3. Environment4. Goals and Strategy5. Culture* Ketigabelas dimensi saling tergantung satu sama lain

Organization Chart Illustrating the Hierarchy of Authorityfor a Community Job Training ProgramBoard of DirectorsAssistant Executive Directorfor Human ServicesExecutiveCommitteeExecutiveDirectorAdvisoryCommitteeDirectorEconomic Dev.Assistant Executive Directorfor Community ServiceDirectorReg. PlanningDirectorHousingDirectorCriminal JusticeDirectorFinanceDirectorAAADirectorCETASecretaryLeadCounselLeadCounselAsst. DirectorFinanceRecordsClerkSecretaryAdm. AsstPayroll ClerkSecretaryMIS SpecialistStaff ClerkAdm. Asst.AlcoholCoord.PublicInfoCoord.Account. ContractFiscalManagerCETACouns.Devs.Title II D&VI&VIICETAPlannerHousingCoord.CETACouns.Devs.Title IIABCCETAIntake&OrientCETACouns.Devs.YouthIV ProgramSpec.AAA ProgramPlannerAAALevel 1Level 2Level 3Level 4Level 5

Characteristics of three Organizations TECHNOLOGY Manufacturing Retailing Government Service SIZE (#employees) 4,200 200,000 35

What is Organization Theory?A way of thinking about organizationsA way to see and analyze organizations more accurately and deeply, based on patterns and regularities in organizational design and behavior (Daft, 1998, p.21)

What Organization Theory Can DoFor organization managers: OT provides significant insight and understanding to help them become better managers. OT identifies variables and provides models so managers know how to diagnose and explain what is happening around them and thus can organize for greater effectiveness. OT can make a manager more competent and more influentialFor those who will not be managers: to appreciate and understand more about the world around them

Levels of AnalysisExternal environment (interorganizational set/community

Organization level of analysis

Group level of analysis

Individual level of analysis

Organization BOrganization COrganization DDepartment A Department B Department C Organization A

Levels of Analysis (contd)Organization theory focuses on the organizational level of analysis but with concern for groups and the environment (a macro approach)

Organizational behavior focuses on the individuals within organizations as the relevant units of analysis (a micro approach)

FrameworkPart 1 Introduction to OrganizationsOrganizations and Organization TheoryPart 2 The Open SystemStrategic Management and Organizational EffectivenessThe External EnvironmentPart 3 Organization Structure and DesignTechnologyOrganization size, life cycle, and declineFundamentals of Organization StructureContemporary Designs for Global CompetitionPart 4 Organization Design ProcessInnovation and ChangeInformation Technology and Organizational ControlOrganizational Culture and Ethical ValuesPart 5 Managing Dynamic ProcessesDecision-Making ProcessesPower and PoliticsInterdepartmental Relations and ConflictPart 6 Strategy and Structure for the FutureInterorganizational RelationshipsToward the Learning Organization

Five Basic Parts of an OrganizationTopManagementTechnicalSupportTechnical CoreAdministrativeSupportMiddleManagementSource: 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.

Organizational Dimensions High Formalization1 - 45 - 67 - 10Low Formalization High Specialization1 - 4 5 - 67 - 10Low Specialization Tall Hierarchy1 - 4 5 - 67 - 10Flat Hierarchy Product Technology1 - 4 5 - 67 - 10Service Technology Stable Environment 1 - 4 5 - 67 - 10Unstable Environment Strong Culture1 - 4 5 - 67 - 10Weak Culture High Professionalism1 - 4 5 - 67 - 10Low Professionalism Well-Defined Goals1 - 4 5 - 67 - 10Poorly-Defined Goals Small Size1 - 4 5 - 67 - 10Large Size Modern1 - 4 5 - 67 - 10PostmodernWorkbookActivity

IBM High Formalization1 - 45 - 67 - 10Low Formalization High Specialization1 - 4 5 - 67 - 10Low Specialization Tall Hierarchy1 - 4 5 - 67 - 10Flat Hierarchy Product Technology1 - 4 5 - 67 - 10Service Technology Stable Environment1 - 4 5 - 67 - 10Unstable Environment Strong Culture1 - 4 5 - 67 - 10Weak Culture High Professionalism1 - 4 5 - 67 - 10Low Professionalism Well-Defined Goals1 - 4 5 - 67 - 10Poorly-Defined Goals Small Size1 - 4 5 - 67 - 10Large Size Modern1 - 4 5 - 67 - 10Postmodern

WorkbookActivity