chapter 1

PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

Organization Theory

Structure, Design, and Applications

Organization Theory

Structure, Design, and Applications

Third Revised EditionThird Revised Edition

Stephen P. Robbins and Mary MathewStephen P. Robbins and Mary Mathew

C H A P T E R

1C H A P T E R

1PART I: INTRODUCTION: WHAT’S IT ALL ABOUT?PART I: INTRODUCTION: WHAT’S IT ALL ABOUT?

An OverviewAn Overview

After reading this chapter, you should be able to:

Define organization theory Compare organization theory and organizational

behavior Explain the value in studying organization theory Describe the systems perspective Describe the life-cycle perspective Discuss how systems and life cycles are part of the

biological metaphor

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What is an OrganizationWhat is an Organization

An organization is a consciously coordinated social entity, with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or a set of goals.

What is Organization Structure?What is Organization Structure?

It defines how task are to be allocated, who reports to whom and the formal coordination mechanisms and interaction patterns that will be followed.

Organization structure has three components:1. Complexity2. Formalization3. Centralization

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Components of Organization StructureComponents of Organization Structure

Complexity: It considers the extent of differentiation within the organization.

Formalization: The degree to which an organization relies on rules and procedures to direct the behavior of the employees is formalization.

Centralization: It considers where the locus of decision - making authority lies.

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Features of an OrganizationFeatures of an Organization

1. It has a relatively identifiable boundary.

2. People in the organization have some continuing bond.

3. Organization has a goals and to attain it they set a mission.

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What is a Organization Design?What is a Organization Design?

Organization design is concerned with constructing and changing an organization’s structure to achieve the organization’s goals.

It to have a smooth flow of the system without any ambiguity in functions.

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Organization TheoryOrganization Theory

It is a discipline that studies the structure and design of organizations. It describes how organizations are actually structured and offers suggestions on how they can be constructed to improve their effectiveness. It studies the organization at a macro level.

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Contrasting Organization Theory and Organization Behavior

Contrasting Organization Theory and Organization Behavior

Organizational Behavior takes a micro view – emphasizing individuals and small groups.

» OB focuses on the behavior in organizations, employees performance, and attitude

Organizational Theory takes a macro perspective. Its unit of analysis is organization itself or its primary sub units

» OT is concerned not only with the performance of employee and attitude but overall organizations ability to adapt & achieve its goals

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Why Study Organization Theory?Why Study Organization Theory?

To know how organizations operate from a scientific point of view and then use the knowledge for constructing and changing an organizations structure to achieve the organizations goals.

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Ten Different Ways of Glancing at OrganizationsTen Different Ways of Glancing at Organizations

1. Organizations have been conceptualized in numerous ways

2. Rational entities in pursuit of goals3. Coalitions of powerful constituencies4. Open system5. Meaning producing systems6. Loosely coupled system7. Political system8. Instruments of domination9. Information processing units10.Psychic prisons11.Social contracts

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The Systems PerspectiveThe Systems Perspective

A systems perspective offers important insights into the working of an organization.

A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole.An organization has divisions, departments and like units separated out to perform specialized activities. At the same time, in order to maintain unity among the differentiated parts and form a complete whole, every energy system has a reciprocal process of integration.

It is achieved through devices such as coordinated levels of hierarchy; supervision, rules, procedures & policies.

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Types of SystemsTypes of Systems

Closed system. It would be the one that receives no, enclosed, and sealed off from the outside world. energy from an outside source and from which no energy is released to its surroundings. A closed system would not depend on its environment; it would be autonomous.

Open System. An open system interacts with and adapts to the environment by consuming resources and exporting product and services to it. Because of its interdependence with various elements issues involved are more complex in nature.

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An Industrial Organization Open Process

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Input Transformation Process

Output Customers

Environment

PeopleRaw materialsInformationFinancial resources

Finished Products

Transforming of raw material into Finished products.

Government

Financial Institutions - loans

Labor Force - Wages

Suppliers – Pay credicators

Characteristics of an Open SystemCharacteristics of an Open System

All systems have three activities—inputs, transformation process and outputs

1. Environment awareness2. Feedback3. Cyclical character4. Negative Entropy5. Steady state6. Movement toward growth and expansion7. Balance of maintenance and adaptive

activities8. Equifinality

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Importance of the Systems PerspectiveImportance of the Systems Perspective

For managers and future managers, the systems perspective permits seeing the organization as a whole with interdependent parts – a system composed of subsystems.

It helps all managers to identify and understand the environment in which their system operates.

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The Life Cycle PerspectiveThe Life Cycle Perspective

A life cycle refers to a pattern of predictable change. By applying it to an organization, we are saying that their are distinct stages through which organizations proceed, that the stages follow a consistent pattern and that the transitions from one stage to another are predictable rather than random occurrences.

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Life Cycle StagesLife Cycle Stages

1. Entrepreneurial stage. The organization is in its infancy. Goals tend to be ambiguous. Creativity is high.

2. Collectivity stage. Organizations mission is clarified. Communication & structure within the organization remain informal.

3. Formalization and control stage. Organization structure is stabilized with rules and procedures being imposed. Organization exists beyond the presence of any one individual.

4. Elaboration of structure stage. It diversifies its products and services in the market. Decisions are decentralized

5. Decline stage. As a result of competition its products demands decreases. Management looks for alternatives to sustain and development of new product. 1–18

Organization Life Cycle

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Ti

Entrepreneur Stage

1)Ambiguous goals2)High Creativity

Collective Stage

1 Informal Communication2) High commitment

Formalization & Control

Stage

1)Rules &Structures Formalized

2) Emphasis on Efficiency

Elaboration of Structure

1)Complex Structures2)Decentralisation3)Market Diversified

Decline

1)Emp turnover2)IncreasedConflicts