1. Week Two

2. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Boundary/Environment 7. Adaptation and Change 8. Technology 9. Communication

3. Types of Organizations Service Production Governmental/Regulatory Professional Advocacy Fund Raising Religious Communal Total

4. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals: Unrealized state that org members deem desirable -- mission, products, services . . . OT: Challenge for orgs = Multiple goals (especially when they are at cross-purposes)

5. Organizational Characteristics: Cornerstones of Organizational Theory 1. Goals: Unrealized state that members deem desirable -- mission, products, services . . . Challenge = Multiple goals (esp when at cross-purposes) Resolution: Top management must (a) achieve balance between competing goals (b) clearly define and communicate goals Why? Design and maintenance of the organization Coordination Motivate members, increase identification w/the organization

6. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work Type(s) of activity needed to accomplish goals (jobs) Primary (line) versus secondary (staff) work OT: How should these functions relate?

7. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority Power = ability to influence successfully through individualfactors knowledge, skills, money, personality . . . Authority = influence through officialrecognition by/role in organization OT: What is relationship between these for organizational effectiveness? (e.g., leadership versus ‘managership’)

8. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity Success/opportunities --> org growth (including size of org) More members --> assigned to subunits & tasks (delegation) Delegation --> role elaboration (variance in jobs) Increased size and role elaboration --> org complexity (formalization in written rules, policies, procedures)

9. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design Role elaboration --> how units to be formed/fit together Decisions about form/fit --> org design (structure/process) Structure - e.g., hierarchical work arrangements Process - e.g., deciding work flow Design decisions --> work and unit differentiation Differentiation must be balanced by integration

10. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design (con’t) OT: What are the structures and processes that organizations utilize to promote integration?

11. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design (con’t) OT Integration mechanisms? mission, power & authority, control systems, job design, selection & training, reward systems, performance appraisal & feedback, job rotation, CFTs, site visits, socialization processes, retreats, strategic planning, communication (meetings, f-to-f, org wide strategic)

12. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Environment = all groups, norms, and conditions w/which org must deal -- critical to org’s inputs and for org’s outputs -- must have boundaries though which inputs/outputs pass

13. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Environment -- critical to org’s inputs and for org’s outputs -- must have boundaries though which inputs/outputs pass MANAGING INPUTS: market research, IS security, sales reports, legal counsel, planners’ & analysts’ activities MANAGING OUTPUTS: PR releases, distributions systems, trade agreements, non-compete clauses/contracts

14. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Environment 7. Adaptation and Change Orgs exist in turbulent environments w/ discontinuous change OT: How do orgs build in flexibility to deal w/ actual and potential environments? Mechanisms?

15. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Environment 7. Adaptation and Change Mechanisms to deal w/ actual and potential environments? strategic planning, internal task forces, consultants, philosophy, human resources, diversity initiatives, new product development, globalization, marketing plans, strategic internal and external communication

16. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Boundary/Environment 7. Adaptation and Change 8. Technology = The art and science employed in production/distribution of the organization’s goods and services Examples?

17. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Boundary/Environment 7. Adaptation and Change 8. Technology Examples? QWL, CPI, 360 Feedback, Six Sigma, Change Mngt, Plant Optimization, Inventory Controls, Tracking systems

18. Organizational Characteristics: Cornerstones of Organizational Theory (OT) 1. Goals 2. Work 3. Power and Authority 4. Size and Complexity 5. Design 6. Boundary/Environment 7. Adaptation and Change 8. Technology 9. Communication a) Often treated only as information transmission in OT b) Or as integration mechanism (coordination, cooperation) c) But also is symbolic exchange and sense making

19. Apply the organizational Characteristics to case Case One

20. How Does an Organization Create Value? Copyright 2007 Prentice Hall 20 Value creation takes place at three stages: input, conversion and output Inputs: include human resources, information and knowledge, raw materials, money and capital Conversion: the way the organization uses human resources and technology to transform inputs into outputs Output: finished products and services that the organization releases to its environment

21. Figure 1 – 1: How An Organization Creates Value Copyright 2007 Prentice Hall 21

22. Why Do Organizations Exist? Copyright 2007 Prentice Hall 22 To increase specialization and the division of labor To use large-scale technology Economies of scale: cost savings that result when goods and services are produced in large volume Economies of scope: cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks

23. Why Do Organizations Exist? (cont.) Copyright 2007 Prentice Hall 23 To manage the external environment Pressures from the external environment make organizations the favored mode for organizing productive resources To economize on transaction costs Transaction costs: the costs associated with negotiating, monitoring, and governing exchanges between people who must cooperate To exert power and control

24. Figure 1-3: Why organizations exist Copyright 2007 Prentice Hall 24

25. Organizational Theory, Design, and Change: Some Definitions Copyright 2007 Prentice Hall 25 Organizational theory: the study of how organizations function and how they affect and are affected by the environment in which they operate Organizational structure: the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals

26. Some Definitions (cont.) Copyright 2007 Prentice Hall 26 Organizational culture: the set of shared values and norms that control organizational members’ interactions with each other and with suppliers, customers, and other people outside the organization Organizational design: the process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve its goals

27. Some Definitions (cont.) Copyright 2007 Prentice Hall 27 Organizational change: the process by which organizations move from their present state to some desired future state to increase their effectiveness

28. Figure 1-4: Relationships Among Organizational Theory, Structure, Culture, Design and Change Copyright 2007 Prentice Hall 28

29. Importance of Organizational Design and Change Copyright 2007 Prentice Hall 29 Dealing with contingencies Contingencies are events that might occur and must be planned for Gaining competitive advantage The ability to outperform other companies because of the capacity to create more value from resources Core competences: skills and abilities in value creation Strategy: pattern of decisions and actions involving core competences that produces a competitive advantage

30. Importance of Organizational Design and Change (cont.) Copyright 2007 Prentice Hall 30 Managing diversity Differences in the race, gender, and national origin of organizational members have important implications for organizational culture and effectiveness Promoting efficiency, speed, and innovation The better organizations function, the more value they create

31. Consequences of Poor Organizational Design Copyright 2007 Prentice Hall 31 Decline of the organization Talented employees leave to take positions in growing organizations Resources become harder to acquire Resulting crisis impels managers to change organizational structure and culture

32. How Do Managers Measure Organizational Effectiveness? Copyright 2007 Prentice Hall 32 Control: external resource approach Method evaluates how effectively an organization manages and controls its external environment Innovation: internal system approach Method allows managers to evaluate how effectively an organization functions and operates Efficiency: technical approach Method evaluates how efficiently an organization converts a fixed amount of resources into finished goods and services

33. Table 1-1: Approaches to Measuring Effectiveness Copyright 2007 Prentice Hall 33

34. Measuring Effectiveness: Organizational Goals Copyright 2007 Prentice Hall 34 Official goals: guiding principles that the organization formally states in its annual report and in other public documents Mission: goals that explain why the organization exists and what it should be doing Operative goals: specific long- and short-term goals that guide managers and employees as they perform the work of the organization