Chapter One

Organizations and
Organization Theory

2000
South-Western College Publishing
Cincinnati, Ohio
Daft, Organization Theory and Design 7/e

1-1

Organization Theory in Action

Topics
Current Challenges

Global competition
Organizational turbulence
E-commerce
Managing knowledge and information
Diversity
Ethics and social responsibility
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What is an Organization?
Definition
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
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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
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An Open System
and Its Subsystems
Environment
Transformation

Raw Materials
People
Information
resources
Financial
resources

Input

Subsystems

Boundary
Spanning

Output

Products
and
Services

Process
Production,
Maintenance,
Adaptation,
Management

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Boundary
Spanning

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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.

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Environment

Culture

Goals and
Strategy

Size

Structure
1.
2.
3.
4.
5.
6.

Technology

Formalization
Specialization
Hierarchy of Authority
Centralization
Professionalism
Personnel Ratios

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Organization Chart Illustrating the Hierarchy of Authority

for a Community Job Training Program

Board of
Directors
Advisory
Committee

Executive
Committee

Level 1

Executive
Director
Assistant Executive Director
for Community Service

Level 2
Level 3

Assistant Executive Director

for Human Services

Director

Director

Director

Director

Director

Director

Director

Economic Dev.

Reg. Planning

Housing

Criminal Justice

Finance

AAA

CETA

Public
Info
Coord.

Level 4
Level 5

Secretary

Housing
Coord.

Alcohol
Account.
Coord.

Records
Clerk

Secretary

Asst. Director
Finance

Program Contract
Spec.
Fiscal
AAA
Manager

Adm. Asst

Payroll Clerk

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Lead
Counsel

Program
Planner
AAA

Secretary

CETA
Intake
&
Orient

CETA
Couns.
Devs.
Title II
ABC

CETA
Couns.
Devs.
Youth
IV

MIS Specialist

Lead
Counsel
CETA
Couns.
Devs.
Title II D CETA
&VI&VII Planner

Staff Clerk

Adm. Asst.

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Characteristics of three
Organizations
Formalization

100

Specialization
50
Centralization
Configuration
(%nonworkflow
personnel)

TECHNOLOGY
SIZE (#employees)

W.L. Gore &

Associates

Wal-Mart

State Arts
Agency

Manufacturing

Retailing

Government
Service

4,200

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200,000

35

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Two Organization Design

Paradigms
Natural System Paradigm

Mechanical System Paradigm

Horizontal
Structure

Vertical
Structure

Routine
Tasks

Formal
Systems

Rigid
Culture

Organizational Change
in the service of
performance and
survival

Empowered
Roles

Shared
Information

Competitive
Strategy

Stable Environment
Efficient Performance

Adaptive
Culture

Collaborative
Strategy

Turbulent Environment
Learning Organization

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

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Workbook
Activity

Organizational Dimensions
High Formalization

1-4

5-6

7 - 10

Low Formalization

High Specialization

1-4

5-6

7 - 10

Low Specialization

Tall Hierarchy

1-4

5-6

7 - 10

Flat Hierarchy

Product Technology

1-4

5-6

7 - 10

Service Technology

Stable Environment

1-4

5-6

7 - 10

Unstable Environment

Strong Culture

1-4

5-6

7 - 10

Weak Culture

High Professionalism

1-4

5-6

7 - 10

Low Professionalism

Well-Defined Goals

1-4

5-6

7 - 10

Poorly-Defined Goals

Small Size

1-4

5-6

7 - 10

Large Size

Modern

1-4

5-6

7 - 10

Postmodern

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IBM

Workbook
Activity

Use

for 1975-1990, Use

for 1993-present

High Formalization

1-4

5-6

7 - 10

Low Formalization

High Specialization

1-4

5-6

7 - 10

Low Specialization

Tall Hierarchy

1-4

5-6

7 - 10

Flat Hierarchy

Product Technology

1-4

5-6

7 - 10

Service Technology

Stable Environment

1-4

5-6

7 - 10

Unstable Environment

Strong Culture

1-4

5-6

7 - 10

Weak Culture

High Professionalism

1-4

5-6

7 - 10

Low Professionalism

Well-Defined Goals

1-4

5-6

7 - 10

Poorly-Defined Goals

Small Size

1-4

5-6

7 - 10

Large Size

Modern

1-4

5-6

7 - 10

Postmodern

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