Chapter 1

INTRODUCTION TO ORGANIZATIONS

Copingwiththerapidchangeisthemostcommonproblemfacingmanagersandorganizations.
Some specific challengesare:
- Globalization;environmentforcompaniesisbecomingextremelycomplexande
xtremely competitive. Learn to cross lines of time, culture andgeography.
- Intense competition; This growing global interdependence creates new
advantages, but it also means that the environment for companies is
becoming extremely competitive. Customers want low prices for goods and
services.
- EthicsandSocialResponsibility;heethangijzer(vooralinAmerika),betreftfrauduleuzep
raktijken
etc.Corporateexecutivesfacetremendouspressuretoholdtheirorganizationsandemploy
eesto high ethical and professionalstandards.
- SpeedofResponsiveness;respondquickytoenvironmentalchanges,organizationalcri
ses,or shifting customer expectations. Caused by globalization and advancing
technology. Financial basis of today’s economy is information, notmachines.
- TheDigitalWorkplace;disintermediation=eliminatingthemiddleman.Executivessho
uldhavea virtualnetwork.
- SupportingDiversity;demographicdiversity,peopleofallnationalitiesshouldbeadmitte
dtochair the company, as well as women. Try to balance between a strong
corporate culture and supporting diversity, balancing work and family andcultures.

Organizations are social entities that are goal-directed, are designed as deliberately
structured and coordinated activity systems and are linked to the external
environment.
Organizations are made up of people and their relationships with one another.
Managers deliberately structure and coordinate organizational resources to achieve the
organization’s purpose. The modern organization may be the most significant
innovation of the past 100 years. What contribution do organizations make:

1) Organizationsbringtogetherresources(labour,materials)toachievedesiredgo
alsand outcomes;
2) Produce goods and services efficiently (competitive prices,benefits);
3) Facilitate innovation (e-business, computers, redesigning organizational structuresetc);
4) Use modern manufacturing and information technologies (e-business,computers);
5) Adapt to and influence a changing environment(globalization);
6) Create value for owners, customers andemployees;
7) Accommodateongoingchallengesofdiversity,ethicsandthemotivationandcoordi
nationof employees (cope with growing concerns about ethics and
socialresponsibility).

Organizational behaviour = micro approach to organizations because it focuses on

the individuals within the organizations as the relevant units of analysis. Like
motivation, leadership style etc.
Organization theory = macro examination of organizations because it analyzes the
whole organization as a unit. Like differences in structure and behaviour at the level of
analysis.
Meso theory = concerns the integration of both micro and macro levels of analysis.

Profit organizations: managers direct their activities toward earning money for the company.
Non-profit Organizations: Managers direct their effort toward generating some kind of
social impact. Problems: securing a steady income, difficult to measure the effect,
marketing as well for the clients but also for volunteers and donors.

Perspectives on Organizations
Two important perspectives:
1) Opensystem:mustinteractwiththeenvironmenttosurvive.Itconsumesresourcesandex
ports resources to the environment. It cannot seal itself off. Every system that must
interact with the environment to survive is an opensystem.

2) Organizational configuration: Mintzberg said that every organization has five

parts: the
technicalcore(peoplewhodothebasicwork),topmanagement(providesdirection,str
ategy, goals and policies for the entire organization), middle management
(responsible for implementation and coordination on department level),
technical support (R&D, Marketing
research)andadministrativesupport(responsibleforthesmoothoperationandupkee
pofthe organization).

A system is a set of interacting elements that acquire inputs from the environment,
transforms them, and discharges outputs to the external environment. A system is made up
of several subsystems, they perform the specific functions required for organizations to
survive. Boundary subsystems are responsible for exchanges with the external
environment (purchasing supplies, marketing products).
Further there are Production, Maintenance, Adaption and Management subsystems.
Closed system: would not depend on its environment. It’s autonomous, enclosed and
sealed of from the outside world.

Briefcase 1: Design the organization so that the five basic parts – technical core, technical
support, administrative support, top management and middle management – adequately
perform the subsystem functions of production, maintenance, adaptation, management and
boundary spanning. Try to maintain a balance among the five parts so that they work
together for organizational effectiveness.

Dimensionsoforganizationaldesign:Organizationaldimensionsfallintotwotypes:
1) Structuraldimensions:providelabelstodescribetheinternalcharacteristicsofanorgan
ization. They create a basis for measuring and comparingorganizations.
a. Formalization: amount of written documentation/rulesetc.
b. Specialization: the degree in which organizational tasks aresubdivided.
c. Hierarchy of authority: who reports to whom and the span of control formanagers.
d. Centralization: refers to the hierarchical level that has authority to make adecision.
e. Professionalism: level of formal education and training ofemployees.
f. Personnelratios:deploymentofpeopletovariousfunctionsanddepartments.M
easured by dividing the number employees in a classification by thetotal.

Briefcase 2: Think of the organization as an entity distinct from the individuals who work
in it. Describe the organization according to its size, formalization, decentralization,
specialization, professionalism, personnel ratios and the like. Use these characteristics to
analyze the organization and to compare it with other organizations.

2) Contextualdimensions:characterizethewholeorganization.Theyrepresent
boththe organization and the environment.
a. Size:Organizationsaresocialsystems,thussizeismeasuredbythenumberofpeopl
 ein theorganization.
b. Organizationaltechnology:Tools,techniquesandactionsusedtotransformi
nputsto outputs.
c. Environment:allelementsoutsidetheboundaryoftheorganization.
d. Goalsandstrategy:definethepurposeandcompetitivetechniques.
e. Culture:theunderlyingsetofvalues,beliefs,understandingsandnormssha
redby employees.
These dimensions provide a basis for the measurement and analysis of characteristics
that cannot be seen by the casual observer. Managers strive, in their company policy, to at
least minimally satisfy the interests of all stakeholders (= belanghebbenden) Stakeholders
are: owners and stockholders (financial return), employees (satisfaction, pay, supervision),
customers (high-quality goods, service, value), suppliers (satisfactory transactions,
revenue from purchases), community (good corporate citizen, contribution to community
affairs), union (workers pay, benefits), government (obedience to laws and regulations,
fair competition), creditors (creditworthiness, fiscal responsibility), management
(efficiency, effectiveness)

Efficiency = refers to the amount of resources ( materials, money, employees) used to

achieve the organizations goals.
Effectiveness = meaning the degree to which an organization achieves its goals.

Briefcase 3: Consider the needs and interests of all stakeholders when setting goals and
designing the organization to achieve effectiveness.

The evolution of organization theory and design.

Organization theory is a way of thinking about organizations. It’s a way to see and
analyze organizations more accurately and deeply than one otherwise could. There are
general patterns and insights into organizational functioning.

Historicalperspectives:theclassicalperspectiveisassociatedwiththedevelopmentofhierarc
hyand
bureaucraticorganizationsandremainsthebasisofmuchofmodernmanagementtheoryandpra
ctice. (Mechanical SystemDesign)
- Efficiency is everything: Scientific management should be based on precise,
standard
proceduresfordoingeachjob.Theroleofmanagementistomaintainstabilityandeffic
iency, with top managers doing the thinking and workers doing what they’re
told.(1900)
- How to get organized: Administrative principles looked at the design and
functioning of the
organizationasawhole.Unityofcommandandunityofdirection.Theseprinciplescontri
butedto the development of bureaucratic organizations, which worked extremely
well in the Industrial Age. The perspective failed to consider the social context and
humanneeds.
- What about people: The Hawthorne Studies concluded that positive treatment of
employees
improvedtheirmotivationandproductivity.However,thehierarchalandbureaucraticap
proaches functioned well into the 1970s and1980s.
- Don’tforgettheenvironment:Contingency,onethingdependsonotherthings,theremu
stbea constant ‘goodness of fit’ between organizations’ structure and the
externalenvironment.

Briefcase 4: Be cautious when applying something that works in one situation to another
situation. All organizational systems are not the same. Use organization theory to identify
the correct structure, goals, strategy, and management systems for each organization.

Contemporary Organizations: managers and organizations are still imprinted with the
hierarchical, bureaucratic approach that arose more than a century ago. The challenges of
today’s environment call for dramatically different responses from people and
organizations. (Natural System Design)
Eighteenth-century Newtonian science, which suggests that the world functions as a
well-behaved machine, continued to guide managers’ thinking about organizations
through most of the 20th century. The science of chaos theory, however, suggests that
relationships in organizations create unintended effects and are unpredictable. The ideas
of chaos theory suggest that organizations should be viewed
more as natural systems than as well-oiled, predictable machines. Bottom-up instead of top-down.
Learning organizations: promotes communication and collaboration.

Efficient performance versus the learning organization; five elements of organization design:
- From vertical to horizontal structure: vertical can be quite effective/efficient.
However, in a rapidly
changingenvironment,thehierarchybecomesoverloaded.Horizontalsystemsoftenope
ratewith self-directed teams that work on specificprojects.
- Fromroutinetaskstoempoweredroles:Ataskisanarrowlydefinedpieceofworkassigne
dtoa person. A role is a part in a dynamic socialsystem.
- From formal control systems to sharedinformation.
- From competitive to collaborative strategy: traditionally strategy is formulated by
top managers
whothinkabouthowtheorganizationcanrespondtocompetitionetc.Inthelearningorgani
zation the accumulated actions of an informed and empowered workforce
contribute to strategy development.
- Fromrigidtoadaptiveculture:adaptationtotheexternalenvironment.Thecultureenc
ourages openness, equality, continuous improvement andchange.

Briefcase 5: When designing an organization for learning and adaptation in a turbulent

environment, include elements such as horizontal structure, shared information,
empowered roles, collaborative strategy, and adaptive culture. In stable environments,
organizations can achieve efficient performance with a vertical structure, formal
information and control systems, routine tasks, competitive strategy and a stable culture.