Chapter One

Organizations and
Organization Theory
1-1
Organization Theory in Action
Topics
Current Challenges
Global competition
Organizational turbulence
E-commerce
Managing knowledge and information
Diversity
Ethics and social responsibility
1-2
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 computer-
based technology

1-3
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
1-4
An Open System
and Its Subsystems
1-5
Transformation




Process
Environment

Raw Materials
People
Information
resources
Financial
resources
Input
Subsystems
Boundary
Spanning
Production,
Maintenance,
Adaptation,
Management
Boundary
Spanning
Products
and
Services
Output
Five Basic Parts of an Organization
1-6
Top
Management
Technical
Support
Technical Core
Administrative
Support
Middle
Management
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.
1-7
Goals and
Strategy
Environment Size
Culture Technology
Structure
1. Formalization
2. Specialization
3. Hierarchy of Authority
4. Centralization
5. Professionalism
6. Personnel Ratios
1-8
Organization Chart Illustrating the Hierarchy of Authority
for a Community Job Training Program
Board of
Directors
Assistant Executive Director
for Human Services
Executive
Committee
Executive
Director
Advisory
Committee
Director
Economic Dev.
Assistant Executive Director
for Community Service
Director
Reg. Planning
Director
Housing
Director
Criminal Justice
Director
Finance
Director
AAA
Director
CETA
Secretary
Lead
Counsel
Lead
Counsel
Asst. Director
Finance
Records
Clerk
Secretary Adm. Asst Payroll Clerk Secretary MIS Specialist Staff Clerk Adm. Asst.
Alcohol
Coord.
Public
Info
Coord.
Account.
Contract
Fiscal
Manager
CETA
Couns.
Devs.
Title II D
&VI&VII
CETA
Planner
Housing
Coord.
CETA
Couns.
Devs.
Title II
ABC
CETA
Intake
&
Orient
CETA
Couns.
Devs.
Youth
IV
Program
Spec.
AAA
Program
Planner
AAA
Level 1
Level 2
Level 3
Level 4
Level 5
Characteristics of three Organizations
1-9
0
50
100
W.L. Gore &
Associates
Wal-Mart State Arts
Agency
Formalization
Specialization
Centralization
Configuration
(%nonworkflow
personnel)
TECHNOLOGY Manufacturing Retailing Government
Service
SIZE (#employees) 4,200 200,000 35
Two Organization Design Paradigms
1-10
Vertical
Structure
Routine
Tasks
Rigid
Culture
Competitive
Strategy
Formal
Systems

Horizontal
Structure


Adaptive
Culture


Empowered
Roles


Collaborative
Strategy


Shared
Information


Organizational Change
in the service of
performance and
survival
Mechanical System Paradigm Natural System Paradigm
Stable Environment
Efficient Performance
Turbulent Environment
Learning Organization
Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)
Organizational Dimensions
1-11
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
Workbook
Activity
IBM
1-12
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

Use for 1975-1990, Use for 1993-present
Workbook
Activity