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CHAPTER 1 A INTRODUCTION TO ORGANIZATION THEORIES

TOPICS TO BE COVERED
What is an organization? Elements of an Organization Model for the Concept of Organization Definition of Organization theory Contrast between Organization Theory & Organization Behaviour Scope of Organization theory Applications of Organizational theory
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WHAT IS AN ORGANIZATION?
Organizations are social entities that are goal-oriented; are designed as deliberately structured and coordinated activity systems, and are linked to the external environment (Daft, 2004).

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 set of goals.

MODEL FOR THE CONCEPT OF ORGANIZATION


The five intersecting circles of this model represent the organization as fiveinterrelated phenomenon. Power a sixth core concept symbolized by grey tint that infuses the other circles.
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Five basic elements of an Organization


Strategic Apex

Middle Line

Operating Core

Five basic elements of an Organization


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2. 3. 4. 5. According to Henry Mintzberg every organization has five basic parts. The operating core Employees who perform basic work related to production of products / services The strategic apex - Top level managers who are incharge of the overall responsibility for the Organization The middle line Managers who connect the operating core to the strategic apex The technostructure Analysts, who have responsibility for effecting certain forms of standardization in organization. The support staff People who fill the staff units, provide indirect support services for the organization

Organization Structure
Organization structure defines how tasks are to be allocated, who reports to whom and the formal coordinating mechanisms and interaction patterns that will be followed. Organization structure has 3 components: Complexity , Formalization & Centralization
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Complexity considers the extent of differentiation within the organization. This includes division of labor, the number of levels in the organizations hierarchy, and the extent to which the organizations units are dispersed geographically. Formalization : The degree to which an organization relies on rules and procedures to the direct the behavior or employees. Centralization ; centralization considers where the locus of decision-making authority lies.
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Five Structure Configurations


Simple Structure - Strategic apex is dominant Machine Bureaucracy - Analysts in the technostructure are dominant Professional Bureaucracy Control lies in the operating core Divisional Structure Here the control lies with the Middle line Adhocracy - When the support staff rules, control will be via mutual adjustment

Organization Design
Org design emphasizes the management side of organization theory. Organization design is concerned with constructing and changing an organizations structure to achieve the organizations goals.

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WHAT IS ORGANIZATION THEORY?


Theory derived from organizational structures and procedures during the industrial revolution. It is the study of structure and design of organizations It is the study of how organizations function and how they affect and are affected by the environment in which they operate
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WHAT IS ORGANIZATION THEORY?


Organization theory: is the set of propositions (body of knowledge) stemming from a definable field of study which can be termed organizations science (Kast&Rosenzweig1970). The study of organizations: is an applied science because the resulting knowledge is relevant to problem solving or decision making in ongoing enterprises or institutions (Kast&Rosenzweig1970).
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Contrast between Organization Theory & Organization Behaviour


OB It takes a micro view It emphasizes on individuals and small groups Focuses on behaviour in organization Deals with group topics OT It takes a macro view Its unit of analysis is the organization itself Focuses on behaviour of organization Concerned with the organizations ability to adapt and achieve goals
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SCOPE OF ORGANIZATION THEORY


It helps to understand the organization structure in a better way & to develop systematic theories of organizations OT offers a clear and comprehensive introduction to the study of organizations and organizing processes. It presents many ways in which organizations can be analyzed - as entities within an environment, as social structures, technologies, cultures and physical structures, and as the products of power and political processes.
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SCOPE OF ORGANIZATION THEORY


It equips us to make choices about how an organization can be designed It explores applications of organization theory to the practical matters of organizational design and change, and introduces the latest perspectives on the horizons of organization theory.

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Applications of Organization Theory

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Applications of Organization Theory

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Early Management Concepts And Influences


Industrial revolution
minor improvements in management tactics produced impressive increases in production quantity and quality economies of scale - reductions in the average cost of a unit of production as the total volume produced increases

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Early Management Concepts And Influences


opportunities for mass production created by the industrial revolution spawned intense and systematic thought about management problems and issues
efficiency production processes cost savings

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SYSTEMATIC MANAGEMENT
Key concepts
Systematized manufacturing operations Coordination of procedures and processes built into internal operations Emphasis on economical operations, inventory management, and cost control

Contributions
Beginning of formal management Promotion of efficient, uninterrupted production

Limitations
Ignored relationship between an organization and its environment Ignored differences in managers and workers views
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Scientific Management (The Classical Organization Theory)


Advocated the application of scientific methods to analyze work and to determine how to complete production tasks efficiently Four principles
develop a scientific approach for each element of ones work scientifically select, train, teach and develop each worker
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Scientific Management (The Classical Organization Theory)


cooperate with workers to ensure that jobs match plans and principles ensure appropriate division of labor

Personalities
Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt

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Scientific Management (cont.)


Key concepts
Used scientific methods to determine the one best way Emphasized study of tasks, selection and training of workers, and cooperation between workers and mgt.

Contributions
Improved factory productivity and efficiency Introduced scientific analysis to the workplace System equated worker rewards and performance

Limitations
Simplistic motivational assumptions Workers viewed as parts of a machine Potential for exploitation of labor Excluded senior management tasks

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Administrative Management
Scientific Mgnt looked at the design & functioning of technical core on work performed on shop floor. Administrative principles looks at the design and functioning of organization as a whole.

Emphasized the perspective of senior managers Five management functions


planning organizing commanding coordinating controlling

Fourteen principles of management Personalities


Henri Fayol Chester Barnard Mary Parker Follet

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Administrative Management (cont.)


Key concepts
Fayols five functions and 14 principles of management Executives formulate the organizations purpose, secure employees, and maintain communications Managers must respond to changing developments

Contributions
Viewed management as a profession that can be trained and developed Emphasized the broad policy aspects of top-level managers Offered universal managerial prescriptions

Limitations
Universal prescriptions need qualifications for
environmental, technological, and personnel factors
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HUMAN RELATIONS
Aimed to understand how psychological and social processes interact with the work situation to influence performance Hawthorne Studies
Hawthorne Effect - workers perform and react differently when researchers observe them

Argued that managers should stress primarily employee welfare, motivation, and communication Personalities
Abraham Maslow - physiological, safety, social,
esteem & self actualization
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HUMAN RELATIONS (CONT.)


Key concepts
Productivity and employee behavior are influenced by the informal work group Cohesion, status, and group norms determine output Social needs have precedence over economic needs

Contributions
Psychological and social processes influence performance Maslows hierarchy of need

Limitations
Ignored workers rational side and the formal organizations contributions to productivity Research overturned the simplistic belief that happy workers are more productive
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BUREAUCRACY
everything is governed by certain rules and regulations

Bureaucratic structures can eliminate the variability that results when managers in the same organization have different skills, experiences, and goals Allows large organizations to perform the many routine activities necessary for their survival People should be treated in unbiased manner Personalities Max Weber

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Bureaucracy (cont.)
Key concepts
Structured network of relationships among specialized positions Rules and regulations standardize behavior Jobs staffed by trained specialists who follow rules Hierarchy defines the relationship among jobs

Contributions
Promotes efficient performance of routine operations Eliminates subjective judgment by employees and management Emphasizes position rather than the person

Limitations

Limited organizational flexibility and slowed decision making Ignores the importance of people and interpersonal relationships Rules may become ends in themselves

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QUANTITATIVE MANAGEMENT
Teams of quantitative experts tackle complex issues facing large organizations Helps management make a decision by developing formal mathematical models of the problem Personalities
military planners in World War II
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Quantitative Management (cont.)


Key concepts
Application of quantitative analysis to management decisions

Contributions
Developed specific mathematical methods of problem analysis Helped managers select the best alternative among a set

Limitations
Models neglect nonquantifiable factors Managers not trained in these techniques may not trust or understand the techniques outcomes Not suited for nonroutine or unpredictable management decisions
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ORGANIZATIONAL BEHAVIOR
Studies management activities that promote employee effectiveness
investigates the complex nature of individual, group, and organizational processes Theory X
managers assume that workers are lazy, irresponsible, and require constant supervision

Theory Y
managers assume employees want to work and control themselves

Personalities
Douglas McGregor
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ORGANIZATIONAL BEHAVIOR (CONT.) Key concepts


Promotes employee effectiveness through understanding of individual, group, and organizational processes Stresses relationships among employees, managers, and work performed Assumes employees want to work and can control themselves

Contributions
Increased participation, greater autonomy, individual challenge and initiative, and enriched jobs may increase participation Recognized the importance of developing human resources

Limitations
Some approaches ignored situational factors, such as the environment and technology
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SYSTEMS THEORY
Key concepts
Organization is viewed as a managed system Management must interact with the environment Organizational goals must address effectiveness and efficiency Organizations contain a series of subsystems There are many avenues to the same outcome Synergies enable the whole to be more than the sum of the parts

Contributions
Recognized the importance of the relationship between the organization and the environment

Limitations
Does not provide specific guidance on the functions of managers
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CONTINGENCY PERSPECTIVE
Key concepts
Situational contingencies influence the strategies, structures, and processes that result in high performance There is more than one way to reach a goal Managers may adapt their organizations to the situation

Contributions
Identified major contingencies Argued against universal principles of management

Limitations
Not all important contingencies have been Identified Theory may not be applicable to all managerial issues
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