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To define the structure, organization, design and related theories
By BEHSHAD MEHRABI
1. GENERAL2. Dimensions of Organizational Structure3. Strategy4. The size of Organization5. Technology6. Enviroment7. Types of organizational structures
Abstract
Objective :To define the structure, organization, design and related theories
Some basic definitions
The organization is a social phenomenon that consciously coordinated with certain boundary for the purpose or objectives, based on a series of works on permanent basis.
سازمان پدیده ای اجتماعی به شمار می آید كه به طور آگاهانه هماهنگ شده و دارایحدود و ثغور نسبتا مشخصی بوده و برای تحقیق هدف یا اهدافی، بر اساس یك
سلسله مبانی دائمی فعالیت می كند.
• The Conscious :
Implies that Management
• Social phenomenon
Individuals or groups that are interacting with each other
• Boundary
Members from non-members distinctive
What is structure? we define the structure as components of the organization which is formed with:
I. Complexity
II.Formalization
III.Centralization
What is organization theory?
Is a major that studies the structure and organization design. Organization theory to both describe and prescribe the course deals.
organizational behavior
Organizational behavior, attitude and lacking
respect to matters on individuals and small groups are emphasized. Behavior within organizations, performance, and employee attitudinal variables such as employee productivity, absenteeism at work, shift work and job satisfaction focused.
Biological metaphors
The organization phenomena such as trees, animals or human beings (which we'll assume that you're reasonably offered by them) that they are living and has life.
The definition of a system:
System consists of interconnected
components are configured and linked together to form a single whole, separate from the elements. Societies are a system. Cars, plants and the human body are also examples of the types of systems. In these systems, the data are obtained then modified and converted to produce those outcomes.
Types of systems:Usually systems have been classified into open and closed systems.
Completely closed system
System, which receives no external source of energy, does not emit out any energy .
Open systems
this system has dynamic interaction with environment.
Features of open system:
All the system include three elements of inputs, processes and outputs. Systems receive materials, energy, information, human resources and so on, and convert to the goods, services, resources, waste, etc
ORGANIZATION THEORY, STRUCTURE AND DESIGN- ( OTSD )
How an Organization Creates Value
Organization’s Inputs
Raw materials
Money and capital
Human resources
Information and knowledge
Customers of service organization’s
Organization’s Environment
Shareholders
Suppliers
Distributors
Government
Competitors
Organization’s Conversion Process
Machinery
Computers
Human skills and abilities
Organization’s Outputs Finished goodsServicesDividendsSalariesValue for stakeholders
Lifecycle perspective
. Organizations are born and grow and eventuallyDie. Every day, new organizations arise, at the same time hundreds are dismissed and do not operate .
Lifecycle steps:
1. Entrepreneurs
2. the initial formation
3. formalization and control
4. Complex structure
5. Decline
Objective :Understanding the dimensions of organizational structure
Complexity : which consists of three aspects:
1. Vertical - how deep
2. Horizontal - how wide
3. Geographic - how spread
• Formalization :degree to which rules and procedures are
spelt out in the organization. : So that staff roles are defined by means of official documents
• Centralization : which implies where decisions are made
in the organization
FACTORS WHICH AFFECT STRUCTURE
1. STRATEGY
2. ORGANISATION SIZE
3. TECHNOLOGY
4. ENVIRONMENT
Strategy can be defined as the determination of the basic long-term goals and objectives of the enterprise, and the adoption of courses of action and allocation of resources necessary for carrying out the goals.
There are three strategy dimensionsA. Innovation StrategyB. Cost Minimization StrategyC. Imitation Strategy Innovation Strategy emphasizes to introduction of New products and services.Cost Minimization Strategy emphasizes tight cost controls,Avoidance of unnecessary innovation or marketing expenses, And price cutting.Imitation Strategy seeks to move into new products or new Markets only after their viability has already been proven.
Strategy
IMPACT OF STRATEGY ON STRUCTUREFrom the above definition the question which arises is whether strategy is premeditated or it just emerges. There are two views viz.Planning Mode : describes strategy as a plan or explicit set of guidelines developed in advance. Managers identify where they want to go ; and then they develop a systematic and structured plan to get there. This was the dominant thinking until recently.
Evolutionary Mode :which is a recent perspective says that Strategy is not necessarily a well-thought-out and systematic plan .The advantage of the evolutionary mode is that of being able to cope with both static and dynamic strategies.
EnvironmentalFactors
&Organizational
Factors
Strategy Structure
IMPACT OF STRATEGY ON STRUCTURE
Chandler’s Strategy –structure thesisAlfred Chandler –a Harvard historian has published his work in the early 60s with extensive research of large American companies during The period 1909 and 1959. He said, “ A new strategy required a new orat least refashioned structure if the enlarged enterprise was to be operated
efficiently…. Unless structure follows strategy, inefficiency results.”(a) Backward integration(b) Creating product groups if the variety of products was large(c) Realizing financial, technological and personnel economies of growth and size cannot be realized
Time 1 1+1 1+2
Product Diversification Low HighStrategy
Structure Simple Functional Divisional
IMPACT OF SIZE ON ORGANIZATIONAL STRUCTURE
As an organization grows there is bound to be an impact on its structure.Generally, large organizations- those employing 2000 or more employeestend to be :(a) More Specialized(b) More Departmentalized(c) Have more vertical levels(d) More rules and regulations when compared to smaller organizations.Furthermore, size affects structure at a decreasing rate for e.g. anorganization of 2000 employees is as it is fairly mechanistic and anaddition of another 500 employees will not have any impact. But an organization of 300 employees if it adds another 500 employees will have a substantial impact in terms of developing a more mechanisticstructure
IMPACT OF SIZE ON ORGANIZATIONAL STRUCTURE
Increased Size
GreaterDifferentiationBetween Units
Greater Div.Of Labour(Job Spln.
Within units)
More Levelsin the
Hierarchy
Less needfor IntraunitCoordination
More need forInterunit
Coordination
Larger Unit Size
MoreFormalisationof Behaviour
More use ofPlanning Control
Systems
Structure moreBureaucratic
(Unskilled variety)
Objective :To define the technology and earlier research, theories and technologies relation with structure
Technology
Information, equipment, techniques and processes needed to transform inputs to outputs is defined as Technology.
Woodward Technology Classification:
1- Small-batch: Production is based on the order (eg order to tailor clothes)
2- Mass Production: products produced in large batches (eg, refrigerator manufacturing companies)
3- Continuous-proc : Continuously automated manufacturing process with maximum complexity (such as oil refineries and chemical)
IMPACT OF Technology ON ORGANIZATIONAL STRUCTURE(base on Woodward Classification):
StructuralCharacteristics
Small-batch Mass Production Continuous-proc
Proportion of skilled workers
High Low High
Complexity Low High Low
Formalization Low High Low
Centralization Low High Low
Knowledge-based technologies: Woodward Classification is base on producing companies but Less than half of the organizations are producer so another
Classification was introduced by Charles Peru .
Two basic dimensions of knowledge-based technology
1) Variability of Duty : Exceptions are related to diversifications
2) Analyzability : capability of analyzing the problems and finding solution
Art and Industrial(3) Non-repetitive(4)
Repetitive(1) Engineering(2)
DiversificationLow High
Low
High
Analyzability
Repetitive
Non-repetitive
Classification Technology of Peru
Classification Technology of Peru
1) Repetitive :With very few Exceptions and easy to analyzing like Bank cashier
2)EngineeringWith several Exceptions and easy to analyzing like tax Accounting
3)Art and IndustrialWith very few Exceptions and complex to analyzing like Serviceman
1)Non-repetitiveWith Several Exceptions and complex to analyzing like researchers
• Environment : composition of the agencies or the forces that
affect the function of organizations and organization have little control or no control at all. (Factors outside the organization)
• General environmentAll factors that affect the organization,
However, the dependence of the organization is not clear Such as economic factors. Political. Social. Culture. Ecological status.
• Private environment: Part of the environment that are directly related to the organization include customers. Competitors. Institutions .... in achieving its goals .its Unique and with specific environmental conditions will be change d.
• Organization Domain : Range of products , services and markets which will be influenced by organization.
Environmental Unreliability
All Environments based on "environmental Unreliability " are different. some are statics and others are dynamic and it’s a threat to the effectiveness of the organization so managers are seeking to way to minimize it
Statics Environment : Private environment with Few change in forces
Without new competitor and low competition.
without New technological barriers .
Pressure groups have little activity.
Dynamic Environment : Government regulations which affecting working conditions are
changing rapidly.
New competitors are emerging regularly
Absorbing raw material is difficult and Consumers' tastes are changing
Environmental Uncertainty
Mechanistic Structure Organic Structure
Simple structure Complex Structure
Low differentiation High Differentiation
Low Integration High Integration
Centralized Decision- Making Decentralized Decision-Making
Standardization Mutual Adjustment
LOW HIGH
Two types of structures were introduced by Burns and Stalkerz
THREE DIMENSIONAL MODEL OF THE ENVIRONMENT
Stable
Dynamic
Scarce
Complex
Abundant
Simple
Objective :Understanding the common elements of the organizations and types of deferent structures
MiddleLine
SupportStaffTechno-
structure
The Five parts of the Organization
Operative Core
Strategic Apex
Structure in Fives- Manufacturing Firm
VPsOper & Mktg.
Plant Mgrs RSMsForemen RSMs
Purchasing Assemblers Machine Salespersons Shippers Agents Operators
(OC)
(SS)
Strategic Planning.ControllerPersonnel TrainingOperations ResearchProduction SchedulingWorks StudyTechnocratic clerical staff
Legal CounselPublic RelationsIndustrial RelationsResearch & Devlpt.PricingPayrollReceptionMailroomCafeteria
Board of Directors President (SA)Executive CommitteePresident’s staff
(TNS)
(ML)
DIAGRAM OF AN ORGANIZATION
1. OPERATING CORE- operators who perform the basic work of producing the products and rendering the services
2. STRATEGIC APEX- High level managers
3. Middle Line is created between the Strategic Apex and the Operators. 4. ANALYSTS- they are required for facilitating coordinating of work through the process of standardization.
5. SUPPORT STAFF- role is not standardized but is to provide indirect services. More in the nature of administrative support.
Deferent structures
The synthesis achieved through the following:
1. Simple Structure: based on Direct Supervision in which the Strategic Apex is the key part2. Machine Bureaucracy: based on standardization of work processes in which Technostructure is the key part.3. Professional Bureaucracy : has the standardization of skills in which the Operating Core is the key point.4. Divisionalized Form : based on standardized output, in which the Middle Line is the key part.5 Adhocracy : based on Mutual Adjustment in which Support Staff (sometimes with the Operating Core) is the key part.