Revised Session 1-2 Organization Structure & DesignAn Introd

8/8/2019 Revised Session 1-2 Organization Structure & DesignAn Introd

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Organization Structure & Design : Anintroduction

Organization : A consciously coordinated socialentity, with a relatively identifiable boundary,that functions on a relatively continuous basis toachieve a common goal or set of goals

1. Consciously coordinted Management

2. Social entity Need for coordinating theinteraction patterns of people

3. Relatively identifiable boundary Distinguishmembers from non-members dynamic

implicit/explicit contract between members andorganization

4. Continuing bond Not life long membership When members participation with some

regularity Eg: Sears sales executive vs.National Organization for Womens member


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Organization (contd..)

5. Goals : Attainment more efficient through group

effort Full endorsement of goals not necessary Defn implies general agreement withorganization mission

Organization Structure:

Need for formal coordination of interactionpatterns of members

Structure defines: How tasks to be allocated,

who reports to whom, formal coordinatingmechanisms and interaction patterns to befollowed

Structure has three components:


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1. Complexity: extent of differentiation: degree ofspecialization (division of labor), number oflevels, extent of dispersion of unitsgeographically

2. Formalization: Degree of reliance on rules and

procedures to direct behavior In someminimum standardized guidelines, in others allkinds of regulations ( can/can not do acts )

3. Centralization: Considers where the locus of

decision-taking authority lies highcentralization vs. decentralization two ends ofa continuum position of organization on itdetermines the kind of structure that exists


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Organization Design:

Management side of organization theory Concerned with constructing and changing

organizations structure to achieve goals beginswith end goal means/plan to achieve goal

blueprint is organization chartOrganization Theory:

Discipline that studies organization structure anddesign both descriptive and prescriptive aspects ofdiscipline

How they are actually structured, restructured toimprove effectiveness


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Organization Theory vs. Organization Behavior:

OB: Micro view emphasis on individuals/smallgroups performance, attitude variables productivity, absenteeism, turnover, jobsatisfaction etc individual: perception, values,learning, motivation, personality group topics:

roles, status, leadership, power, communication,conflict

OT: Macro perspective units of analysis

organization itself or its primary subunits focuson behavior of organizations uses broaderdefinition of organizational effectiveness overallorganizational ability to adapt and achieve goals


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OB/OT overlap OB: conflict people centric, OT:design centric issue not right/wrong emphasis ondifferent levels of organizational analysis

Why study OT:

Organizations dominant/all pervasive forms of currentlife birth in a hospital to rest in a mortuary

Intuitive theories of organizations vs. systematic study (

looking at relationships, attributing causes/effects,basing conclusions on scientific evidence) from gutfeeling to scientific study

Managers to know how organizations work, that

knowledge based on scientific evidence, useknowledge to construct/change structure to achievegoals

Study of IT may not be exciting but pragmatic captivein a course no value addition but means to an end


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The Biological Metaphor:

Metaphor a popular device for making comparisons

Extremely useful in gaining insights into workings oftwo phenomena one understood fairly well, the otherunknown

Comparing organizations with living organizations

some do not agree organizations are born, needcontinual nourishment for survival, but no natural death

Therefore biological metaphor is not perfect

However increasingly popular conceptual frameworkfor understanding organizations

Birth Growth predictable stages of development series of predictable transitions then deterioration ifenergy put out out not replaced by new inputs


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Ten Different Ways of Looking at Organizations:

1. Rational entities in pursuit of goals

2. Coalition of powerful constituencies

3. Open systems : input-output transformation systemsthat depend on environment for survival

4. Meaning-producing systems: artificially created

entities goals/purposes symbolicallycreated/maintained by management

5. Loosely coupled systems: relatively independentunits pursue dissimilar even conflicting goals

6. Political systems: composed of internalconstituencies seek control over decisionprocesses to enhance position


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7. Instruments of domination: members placed intojob boxes constrain what they can do, withwhom to interact given a boss who has authority

over them8. Information-processing unit: interpret

environment, coordinate activities, facilitatedecision making by processing informationhorizontally/vertically through a structural hierarchy

9. Psychic prisons: constrain members through jobdescriptions, departments, divisions, standards ofacceptable/unacceptable behaviors whenaccepted, become artificial barriers that limit

choices10. Social contracts: Organizations composed of

sets ofunwritten agreements whereby membersperform certain behaviors in return forcompensation


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The Systems Perspective:

System: set of interrelated andinterdependent parts arranged in a mannerthat produces a unified whole societies,automobiles, plants, human bodies

Inputs -> Transformation Process ->Outputs

System

Environment


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Interrelationship of parts within the system

System characterized by two diverse forces:differentiation and integration divisions,departments, like units separated out to performspecialized activities

Reciprocal process of integration to maintain unityamong differentiated parts and form complete whole

Integration achieved through: coordinated levels ofhierarchy; direct supervision; and rules, proceduresand policies

Concepts ofsupra system, system, subsystem:eg KIIT, IBAT SOM, Areas such as OB/HRD;Finance, Mkting etc


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Types of Systems:

C

losed vs.

Open Closed: self-contained ignores effects of

environment no energy received fromoutside nor given out More idealistic than

practical little contemporary applicability

Open: dynamic interaction of system withenvironment bank as an example

deposits -> loans & other investments-> useprofits for maintenance, growth, dividends,taxes shows active interaction withenvironment


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An Industrial Organization as an Open System

InputsMaterials

Labor

Capital

Technical ProcessingCore

(Transformation of RMs

into FGs)

Outputs

Finished

Products

Customers

Government

Financial institutions

Labor Force

Suppliers

Receipt of Revenues

Lob

bying

LobbyingRegulations

Consumer

Advocacy

Loan repayments

Wages

Payment

to creditors

Eg: General Motors migration

from a closed to open system

Can sell anything to

environment focus


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Open System : Characteristics :-

1. Environmental awareness:

system/environment interdependency concept ofboundary between system and environment physical and/or psychological( thru symbols: titles,uniforms, indoctrination rituals

Eg: Chryslers bankruptcy in early 1980s createdby environment( aggressive foreign competition,oil price hike in 1970s, US interest rate hikes tocheck inflation) product line (large, expensive,gas guzzling cars) hit hard FORD/GM: of huge

sales volume, comfortable cash position to investbillions of $ to retool & go in for small cars

Chrysler environment two way relationship suppliers, Michigan state, workers union, federalgovt (loan guarantees) came to rescue


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2. Feedback:

Receipt of environmental information systemadjusts initiated corrective action to rectifydeviation, modify course of action

Eg: Chryslers turnaround strategy effective

reading of feedback from customers fuelefficient k-cars, attractive convertibles, caravanwagons, rigorous quality control

3. Cyclical character: The outputs provide means

for new inputs that allow repetition of cycle Adequate revenues to pay off creditors, suppliersfor perpetual maintenance of cycle and survival


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4. Negative entropy: entropy -> propensity ofsystem to run down/disintegrate closed systemdue to no import of energy from environment fast

disintegrates open system repairs itself,maintains its structure, avoids death, growsbecause imports more than it expends

5. Steady state: even constant flow of new inputsinto system and a steady outflow, on balance the

character of the system remains the same6. Movement toward growth and expansion:

steady state characteristic descriptive ofsimple/primitive open systems withcomplexity/move to counter entropy, opensystems move toward growth/expansion not acontradiction of steady-state thesis systemquantity changes, quality remains same do moreof same thing than pursue new/innovativeactivities (colleges/varsities)


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7. Balance of maintenance and adaptiveactivities:

Open systems seek to reconcile two, oftenconflicting activities maintenance/adaptiveactivities counter rapid change effect

Maintenance: subsystems in balance, system inaccord with environment seeksstability/preservation of status quo purchase/maintenance, overhaul of machinery;recruitment/training; provision/enforcement ofrules/procedures

Adaptive: focuses on change through planning,market research, new-product development etc

Both essential for survival


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8. Equifinality:

A system can reach the same final state fromdiffering initial conditions and a variety of paths

Can accomplish objectives with varied inputs andtransformation processes

Helps consideration of variety of solutions to agiven problem than to seek some rigid optimal

solutionImportance of Systems Perspective : Help

conceptualize organization: whole withinterdependent parts jobs not static, isolatedelements appreciate organization/environmentinterface organization as stable patterns andactions within boundaries why they resistchange alternative inputs/processes to reachgoals glaring limitation is its abstractness


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Life-Cycle Perspective:

Organizations are born, grow and eventually die

Refers to a pattern of predictable change stages follow a consistent pattern transitionfrom one to another predictable not randomchance occurrences

Life-Cycle Stages: a five-stage model

1. Entrepreneurial Stage: formation stage of PLC infancy goals ambiguous creativity high needs steady supply of resources to move tonext

2. Collectivity Stage: innovation continues nowmission clarified communication/structureessentially informal long hours of work highcommitment to organization


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3. Formalization and control stage:

Formalization of rules - Stable structure -Emphasis on efficiency

4. Elaboration-of-Structure stage:

More complex structure Decentralization -

Diversified markets5. Decline stage: High employee turnover

Increased Conflict Centralization

Organizations not necessarily pass through five

stages stages no correlation with chronologicalage of organization

Perspective helps us appreciate organizations asdynamic entities promotes effectiveness


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Organization Theory:Aooroximatetime frame

1900-1930 1930-1960 1960-1975 1975-?

SystemsPerspective

Closed Closed Open Open

EndsPerspective

Rational Social Rational Social

Central

Theme

Mechanical

efficiency

People and

humanrelations

Contingenc

y designs

Power and

politics

Theoreticalclassification

Type I Type II Type III Types IV


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Type I Theorists:

Frederick Taylor and Scientific Management:1911 Principles of Scientific Management one best way to do a job issue of workdesign application: supervisory level

Four Principles of Scientific Management:

1. Scientific determination of workers job, notdependence on rule-of-thumb methods

2. Scientific selection/training of workers

3. Cooperation of management and labor toaccomplish work objectives

4. More equal division of responsibility : Mangers:Planning, supervising; Workers: Execution


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Henri Fayol and Principles of Organization:research based on experience as working

executive principles apply to all levels ofmanagement

14 Principles:

1. Division of work, 2. Authority, 3. Discipline,4. Unity of command, 5. Unity of direction, 6.

Subordination of individual interests toorganizations interests, 7. Remuneration, 8.

Centralization, 9. Scalar chain, 10. Order, 11.Equity, 12. Stability of tenure of personnel, 13.Initiative, 14. Esprit de Corps


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Max Weber and Bureaucracy:

Ideal structure called bureaucracy to achieve ends characterized by division of labor, clear authorityhierarchy, formal selection, detailedrules/regulations, impersonal relationships

design prototype for todays large organizations

Ralph Davis and Rational Planning:

Structure logical outcome of organizations

objectives firms objective economic service economic value creation through activites likeproduction/services Mgt to group these activitiesto form structure


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Type II Theorists: social nature of organizations humanrelations school organizations as tasks + people

Elton Mayo and the Hawthorne Studies:

Western Electric Company, Hawthorne Works, Cicero Effecton illumination of light intensity on productivity effect ofgroup piecework incentive pay system on productivity grouppressure, acceptance, concomitant security more significantpredictors of output organizational humanism include

effects on work groups, employee attitudes, manager-employee relationships in organization design

Chester Barnard and Cooperative Systems:

The Functions of the Executive experience from AT & T,President, New Jersey Bell Organizations are cooperative

systems composed of tasks/people to be maintained atequilibrium state matching task requirements with peoplesneeds informal organization authority in terms ofsubordinates response managers to facilitatecommunication stimulate them to high levels of effort


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Douglas McGregor: Theory X-Theory Y:

Theory X : dislike work, attempt to avoid it

must be coerced, controlled, threated to achievedesired goals shirk responsibilities and seekdirection security as topmost priority, noambition

Theory Y: work as natural as rest or play commitment to objectives elicit self-direction/control average person learns toaccept/seek responsibility creativity widelydispersed, not prerogative of managers alone

Participative decision making,responsible/challenging jobs creation, developinggood group relationships attributed to McGregor


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Warren Bennis and the Death of Bureaucracy:

Bureaucracys centralized decision making,impersonal submission to authority, narrowdivision of labor being replaced bydecentralized, democratic structures organized

around flexible groups Authority based influence to expertise influence

Flexible adhocracies the emerging ideal

organizational form Movement from one extreme to other just in ifty

years time


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Type III Theorists:

Neither mechanistic nor humanistic solution rightfor all occasions Thesis + antithesis=Synthesisis contingency approach

Herbert Simon and Principles of backlash:

Classical principles are just proverbs onecontradicted the other

He argued OT to go beyondsuperficial/oversimplified principles To studyconditions where competing principles areapplicable

Katz and Kahns Environmental Perspective:

Open systems perspective environment-structure relationship contemporary research onorganization derives a lot from this


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The case for Technology:

1960s Joan Woodward, Charles Perrow,James Thompson Technology as the

determinant of appropriate structure contemporary relevance

The Aston Group and Organization size:

Relationship between size and structure smallvs. large organization help managers takedesign decisions as organizations grow

Type 4 Theorists:

Most recent theory focuses on political natureof organization

March and Simons cognitive limits t rationality:

Most decision makers select satisfactory

alternatives that are just good enough


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Only in exceptional cases they go for optimal alternatives

Called for a revised model of OT different from the rational-cooperative model

The revised model will recognize the limits of decisionmakers rationality acknowledge presence of conflictinggoals

Pfeffers Organizations as Political Arenas:

His theory encompasses power coalitions, inherent conflictsover goals, organizational design decisions favoring self-interest of those in power

Control becomes an end rather than means to rational goals Design decision reflection of power struggles by diverse

coalitions

View currently very much in vogue


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Organizational Effectiveness

Organization Theory definition ofeffectiveness: Proper organizationstructure

Which organization structure will leadto/improve effectiveness

1950s: Effectiveness the degree to

which an organization realized its goals(ambiguities in this: whose goal; ST/LT;official goals or actual goals etc)

Documents

Revised Session 1-2 Organization Structure & DesignAn Introd