OTSD For Presentation Prof. Vivekanand Pawar

8/3/2019 OTSD For Presentation Prof. Vivekanand Pawar

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Organization Theory

And Structure Design

By Prof. Vivekanand Pawar


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By Prof. Vivekanand Pawar 2

What is an Organisation?

An Organisation is consciouslycoordinated social entity, with a

relatively identifiable boundary,that functions on relativelycontinuous basis to achieve a

common goal or set of goals.


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What is an Organisation?

A Consciously coordinated social entity

People or group of peoples interaction. Co-ordinate means Management.

Relatively identifiable boundary thatdifferentiates who is and who is not a part of theorganization. Boundary not always clear; can

change over a period of time. Has both explicit &implicit contracts.

Functioning on a continuous basis havingsome continuing bond regular employee orvisit once a while.

Achieve a set of common goals achievedeither individually or though group effort.


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Organisational Life Cycle

2. Collectivity stage

Informal communication

and structure

High Commitment

3. Formalization and

control stage

Formalization of rules

Stable structure

Emphasis on efficiency

4. Elaboration-of-

structure stage

More complex

structure

Decentralization

Diversified markets

5. Decline stage

High employee turnover

Increased conflict

Centralization

1.Entrepreneurial stage

Ambiguous goals

High Creativity


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Importance of Organisations

Bring together resources to achieve desired goalsand outcomes.

Produce goods and services efficiently.

Facilitate innovation.

Use of modern manufacturing and informationtechnologies.

Adapt to and influence a changing environment.

Create value for stakeholders.

Accommodate ongoing challenges of diversity,ethics, social responsibility, and the motivationand coordination of employees.


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Five basic Parts of anOrganisation

Middle

Management

TopManagement

Technical

SupportAdministrative

Support

Technical Core


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Five basic Parts of anOrganisation

Technical Core (Operating Core): do the work

Top Management (Strategic Apex) : executiveleadership

Middle Management (Middle Line) : mechanism ofsupervision

Technical Support (Technostructure) : technicalfacilitation

Administrative Support (Support Staff) : servicefacilitation


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Organisation Structure

Organization Structure defines the manner in whichtasks are allocated; who reports to whom and the formalcoordinating mechanisms and interaction pattern that willbe followed.

The three elements of organization structure are:

Complexity : extent of differentiation within theorganization

Formalization : extent to which an organization relieson rules & regulations

Centralization : where the locus of decision making lies

f i d


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Structures of Organic andMechanistic Organizations

Organic Mechanistic

High Complexity

Low Centralization

Low Formalization

Low Standardization

High Person Specialization

High Task Specialization

Low Complexity

High Centralization

High Formalization

High Standardization

Low Person Specialization

Low Task Specialization


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Organisation Design

Organisation Design emphasizes the management side oforganization theory. Organization is concerned withconstructing and changing an organizations structure toachieve the goals of the organization.

It is extremely important to know how to design anorganization.


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Interacting Contextual and StructuralDimensions

Goals and

StrategyEnvironment Size

Culture TechnologyStructure

1. Formalization

2. Specialization

3. Hierarchy of Authority4. Centralization

5. Professionalism

6. Personnel Ratios


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Organisation Theory

Organisation Theory is a disciplinethat studies the structure and design ofan organization.

It describes how organizations areactually structured and offers

suggestions on how they can beconstructed to improve its effectiveness.


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Contrasting OT, OB, OD, and HRM

Macro View Micro View

Theory

Practice

OBOT

HRMOD


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Some Applications of Organization Theory

Structuring activities and designing organizationalprocesses to:

Strategy/Finance : Support goal achievement andperformance monitoring.

Marketing : Align the organization & its brand strategy.

Information Technology : Align information flows withwork processes and outcomes.

Operations : Support supply chain management.

Human Resources : Provide a basis for HRM

activities, organizational development and change.

Communication : Design effective communicationprocesses.


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The Systems Perspective

A system is a set of interrelated and inter-dependent parts arranged in a manner

that produces a unified whole.

Every system is characterized by two

diverse forces; differentiation and

integration.


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Types of System

Closed System that which totally ignoresthe effect of environment on the system; one

that receives no energy from an outside

source and from which no energy is released

to it surroundings.

Open System that which recognizes the

dynamic interaction of the system with its

environment


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Basic Open System


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An Industrial Organization as an Open System

INPUTSMaterials

LaborCapital

TECHNICALPROCESSING CORE

(Transformation ofRaw material intofinished product)

OUTPUTS

FinishedProducts

CUSTOMERS

Government

FinancialInstitutions

Labor Force

Suppliers

Receipt ofRevenue

Payment toCreditors

Wages

Repayment ofLoans

Consumer Advocacy

Lobbyin

g

Regulat

ions


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Characteristics of An Open System

Environment awareness: Recognition ofinterdependency between the system and itsenvironment. Changes in the environment can one ormore attributes of the system, and conversely,change in the system affect its environment.

Feedback: Open systems continuously receivedinformation from their environment. This helps thesystem to adjust and allows correction to rectifydeviation from its specific course.

Cyclical character: Open systems are cycles ofevents. The systems outputs furnish the means fornew inputs that allow for repetition of cycle.


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Characteristics of An Open System

Negative entropy: entropy is the propensity of a system to run

down or disintegrate. A closed system, as it does not receiveinputs from environments will run down over a period of time.Whereas an Open system can repair, maintain its structureand avoid death.

Movement towards growth: As the system becomes more

complex, it moves to counteract entropy and move towardsgrowth.

Balance of maintenance & adaptive activities: Maintenanceactivities ensure that various subsystems are in place; and thetotal system is in accordance with the environment; whileadaptive activities are necessary to adjust over time tovariations and internal and external demands.

Equifinality: This means an organization can achieve itsobjectives with varied inputs and transformation process.


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Learning Objective

To understand .

1. The importance of organizationaleffectiveness.

2. The relative importance of Strategy, Sizeof organization, Technology, Environmentand power control in determining the

structure of the organization.


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Learning Objective

3. To know different forms of excellence.

4. To learn the strategies to manage:

The environmentOrganizational change

Organizational conflict

Organizational culture

Organizational evolution

Framework for Analysing


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Framework for AnalysingOrganization Theory

Determinantsof Organisation

Structure :Strategy

OrganisationSizeTechnologyEnvironmentPower-control

OrganisationStructure

OrganisationDesigns

DesignOptions

BureaucracyAdhocracy

Applications :

Managing the EnvironmentManaging OrganisationalChangeManaging OrganisationalConflictManaging OrganisationalCultureManaging Organisational

Evolution

OrganisationalEffectiveness


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Course Content

1. Evolution of the Organizational Theories.

2. Determinants of Organization Structure:

Strategy

Organization Size

Technology

Environment

Power-control


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Course Content

3.Organization Structure, Design andOrganizational Effectiveness.

4. Applications:

Managing the Environment

Managing Organizational Change

Managing Organizational Conflict

Managing Organizational Culture

Managing Organizational Evolution.


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Course Content

With special reference to :

Impact of mergers, Acquisition andglobalization on organizational structure.

Managing dynamic processes decisionmaking, conflict, power and politics.

Learning Organizations, Virtual

organizations, boundary-lessorganizations, network Organizations,organizational design for change andinnovation.


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Course Content

5.Keys to Organizational Excellence

6. Forms of Excellence


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Course Content

7. Review of Research Related to OrganizationalDesigns for excellence (some examples) :

Viable and effective organizational designs of firms P.N. Khandwalla

In search of Excellence T. Peters

Designing and managing human resource systems Uday Pareek

Survival strategies in a Hostile Environment

-W. Hall


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List of Books to refer

Stephen P. Robbins, Organization Theory-

Structure, Design and Applicatons

Hatch Mary Jo & Cunliffe Ann L. OrganizationTheory Modern, Symbolic, and Postmodern

perspectives, Oxford University Press.

Hall Richard H. Organizations Structures,Processes and outcomes, Prentice Hall of India.

Khandwalla Pradip N. Organizational designsfor excellence, Tata Mc Graw Hill PublishingCompany Ltd.


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Teaching Learning Process

Classroom discussion

Case study method

Review of related literature

Group Projects and Presentations.


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Evaluation

1. Internal Assessment ( 40 Marks).

Attendance and class participation (20 marks).

Group Research Projects to critically evaluate

the structure and design of the chosenorganization.

Group presentation of the same.

Group research presentations on review ofresearch related to organizational design forexcellence.


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Evaluation

2. External Assessment:

Term End UniversityExam. (60 Marks)

E l i f C Th


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Evolution of Contemporary Theory

Type 1 Closed Rational Mechanical Efficiency. 1900

1930.

The Type 1 theorists, also known as the classicalschool, developed universal principles or models

that would apply in all situations. As noted

previously, each essentially perceived

organization as closed systems created to achieve

goals efficiently.


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Type 1: Closed Rational Mechanical Efficiency

Frederick Taylor & Scientific ManagementFredrick Taylor was a mechanical engineer by

background & he strongly believed that worker

output was only about one-third of what was

possible. He set out to correct the situation byapplying the scientific method to jobs on the shop

floor. His desire to find the one best way in

which each job should be done would be part of

what today we would call the issue of work design.


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Accordingly, he proposed 4 principles of scientific

management, that, he argued, would result in significant

increases in productivity: (1) the replacement of rule-of-

thumb methods for determining each element of a

workers job with scientific determination; (2) the

scientific selection of training of workers; (3) thecooperation of management & labor to accomplish work

objectives, in accordance with the scientific method; & (4)

a more equal division of responsibility between managers

& workers, with the former doing the planning &supervising, & the latter doing the execution.


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At the same time the Frenchman Henri Fayol was

consolidating the principles of organization. Thoughthey were writing at the same time, Fayols &

Taylors foci were considerably different. Fayol

sought to develop general principles applicable to all

managers at all levels of the organization & todescribe the functions a manager should perform.

Taylor focused on the lowest level in the organization

shop level management & accordingly proposed 14

principles that he argued were universally applicable& could be taught in schools & universities. We shall

be discussing the said 14 principles in the topic of

Organizational Structure.


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The third contribution made by Type 1

theorists was the ideal-type organizationstructure proposed by the German sociologist,

Max Weber. He developed a structural model

that, he argued, was the most efficient meansby which organizations can achieve their

ends. He called this ideal structure

bureaucracy.


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It was characterized by division of labor, a

clear authority hierarchy, formal selectionprocedures, detailed rules & regulations, &

impersonal relationships.

The final contribution of the Type 1 theorists

is the rational-planning perspective which

was best expressed in the work of RalphC.Davis.


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He stated that the primary objective of a

business firm is economic service. Nobusiness can survive if it doesnt provide

economic value. The economic value is

generated by the activities members engage into create the organizations products or

services.

1 C i i ffi i


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These activities then link the organizations

objectives to its results. It is themanagements job to group these activities

together in such a way as to form the structure

of the organization. Davis concluded,therefore, that the structure of the

organization is contingent (dependent) upon

the organizations objectives.


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Type 2: Closed Social People & Human Relations

Type 2. Closed Social People & Human

Relations. 19301960.

The common theme among Type 2 theorists

is recognition of the social nature of

organizations. These theorists, who arefrequently referred to as forming the human

relations school, view organizations as made

up of both tasks & people. Type 2 theoristsrepresent a human counterpoint to Type 1s

machine view.

C S i & i


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The second stage in contemporary (modern-day)

organization theory began with a set of experiments

undertaken at Western Electric Companys

Hawthorne Works in Cicero, Illinois between 1924

& 1927. These studies which would eventually bewidely expanded & would carry on through the early

1930s were initially devised by Western Electric

industrial engineers to examine the effect of various

illumination levels on worker productivity.

T 2 Cl d S i l P l & H R l i


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Control & experimental groups were established.

The experimental group was presented with varying

intensity of illumination, while the controlled unit

worked under constant illumination intensity. The

engineers had expected individual output to bedirectly related to the intensity of light. However,

the light level was increased in the experimental

unit, output rose for each group. To the surprise of

the engineers, as the light level was dropped in theexperimental group, productivity continued to

increase in both.

T 2 Cl d S i l P l & H R l i


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In fact, a productivity decrease was observedin the experimental group only when the light

intensity had been reduced to that of

moonlight. The engineers concluded that

illumination intensity clearly was not directly

related to group productivity, but they could

not explain the behavior they had witnessed.

T 2 Cl d S i l P l & H R l ti


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Merging the ideas of Taylor, Fayol, & Weber with

the results from the Hawthrone studies led to the

conclusion that organizations are cooperative

systems. They are composed of tasks & people that

have to be maintained at an equilibrium state.Attention only to technical jobs or the needs of

people who do the jobs sub optimizes the system. So

managers need to organize around the requirements

of the tasks to be done & the needs of the peoplewho will do them.



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The notion that an organization is acooperative system is generally credited to

Chester Barnard. He presented his ideas in

The Functions of the Executive, in which he

drew upon his years of experience with

American Telephone & Telegraph, including

the presidency of New Jersey Bell.



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One of the most frequently mentionedcontributions from Type 2 theorists is

Douglas McGregors thesis that there are two

distinct views of human beings : Theory X &

the other basically positiveTheory Y.



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After reviewing the way managers dealt withemployees, McGregor concluded that a

managers view of the nature of human

beings is based on a certain grouping of

assumptions & that he or she tends to mold

his or her behavior toward subordinates

according to these assumptions.



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Under Theory X, 4 assumptions are held by

managers:

Employees inherently dislike work &, whenever

possible, will attempt to avoid it.

Since employees dislike work, they must be coerced,controlled, or threatened with punishment to achieve

desired goals.

Employees will shirk responsibilities & seek formal

direction whenever possible.

Most workers place security above all other factors

associated with work & will display little ambition.



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In contrast to these negative views of human

beings, McGregor listed 4 assumptions that

he called Theory Y:

Employees can view work as being as natural

as rest or play.

Human beings will exercise self-direction &

self-control if they are committed to the

objectives.



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The average person can learn to accept, even

seek, responsibility.

Creativity-that is, the ability to make good

decisions-is widely dispersed throughout the

population is not necessarily the sole province

of those in managerial functions.



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In his theory, McGregor argued that Theory Y

assumptions were preferable & that they

should guide managers in the way they

designed their organizations & motivated

their employees.



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The strong humanistic theme of the Type 2 theoristsculminated with a eulogy to the passing of

bureaucracy. Warren Bennis, for example, claimed

that bureaucracy, centralized decision making,

impersonal submission to authority, & narrowdivision of labor was being replaced by

decentralized & democratic structures organized

around flexible groups. Influence based on authority

was giving way to influence derived from expertise.



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By Prof Vivekanand Pawar 54


The strong humanistic theme of the Type 2 theoristsculminated with a eulogy to the passing of

bureaucracy. Warren Bennis, for example, claimed

that bureaucracy, centralized decision making,

impersonal submission to authority, & narrowdivision of labor was being replaced by

decentralized & democratic structures organized

around flexible groups. Influence based on authority

was giving way to influence derived from expertise.

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OTSD For Presentation Prof. Vivekanand Pawar