Chapter One

Organizations and Organization Theory

What is an Organization?
b

Definition: 1. Social entity 2. Goal directed 3. Designed as deliberately structured and coordinated activity systems 4. Linked to the external environment

What is an Organization?
b Importance of Organizations

Bring together resources to achieve desired goals and outcomes Produce goods and services efficiently Facilitate innovation Use modern manufacturing and computerbased technology

b Importance of Organizations (contd)

Adapt to and influence a changing environment Create value for owners, customers and employees Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees

An Open System and Its Subsystems

Environment
Raw Materials People Information resources Financial resources Transformation Input Process
Boundary Spanning Production, Maintenance, Adaptation, Management Boundary Spanning

Output

Products and Services

Subsystems

Five Basic Parts of an Organization

Top Management

Technical Support

Middle Management

Administrative Support

Technical Core
Source: 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.

Organization Chart Illustrating the Hierarchy of Authority for a Community Job Training Program

Board of Directors Advisory Committee Executive Committee Executive Director Assistant Executive Director for Community Service Director
Economic Dev.

Level 1

Level 2

Assistant Executive Director for Human Services Director Director

Finance

Level 3

Director
Reg. Planning

Director
Housing

Director
AAA

Director
CETA

Criminal Justice

Public Info Coord.

Asst. Director Finance

Lead Counsel

Lead Counsel

Level 4 Level 5

Housing Coord.

Alcohol Account. Coord.

Program Spec. AAA

Contract Fiscal Manager

Program Planner AAA

CETA Intake & Orient

CETA Couns. Devs. Title II ABC

CETA Couns. Devs. Youth IV

CETA Couns. Devs. Title II D &VI&VII

CETA Planner

Secretary

Records Clerk

Secretary

Adm. Asst

Payroll Clerk

Secretary

MIS Specialist

Staff Clerk

Adm. Asst.

Goals and Strategy Environment Size

Culture Structure
1. 2. 3. 4. 5. 6. Formalization Specialization Hierarchy of Authority Centralization Professionalism Personnel Ratios

Technology

Characteristics of three Organizations

F o r m a ll ii z a t ii o n Forma zat on S p e c iia lliiz a t iio n Spec a zat on 50 50 C e n t r a lliiz a t iio n Centra zat on C o n ff ii g u r a t ii o n Con gurat on ( % n o n w o r k ff ll o w (%nonwork ow p e r s o n n e ll) personne ) 100 100

0 0

W .. L .. G o r e & W L Gore & A s s o c ii a t e s Assoc ates

W a ll -- M a r t Wa Mart

State Arts State Arts Agency Agency

TECHNOLOGY SIZE (#employees)

Manufacturing 4,200

Retailing 200,000

Government Service 35

Two Organization Design Paradigms

Mechanical System Paradigm
Vertical Structure Organizational Change in the service of performance and survival

Natural System Paradigm

Horizontal Structure

Routine Tasks

Rigid Culture

Empowered Roles

Adaptive Culture

Formal Systems

Competitive Strategy

Shared Information

Collaborative Strategy

Stable Environment Efficient Performance

Turbulent Environment Learning Organization

Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Cha nge(Boston, Mass.: Harvard Business School)