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Introduction to Organisation Theory and Design

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Title: Introduction to Organisation Theory and Design


1
Introduction to Organisation Theory and Design
  • Ho Sooi Hock

2
Outline
  • What is an organisation
  • Importance of organisations
  • Organisation design what and why
  • Dimensions of organisational design
  • Organisation theory what and why
  • Historical perspectives
  • Organisational strategies
  • Contemporary organisation design

3
What is an Organisation?
  • Organisations are social entities that are goal
    directed, are designed as deliberately structured
    and coordinated activity systems, and are linked
    to external environment.
  • Organisations are made up of people and their
    relationships with one another.

4
Importance of Organisations
  • Bring together resources to achieve desired goals
    and outcomes.
  • Produce goods and services efficiently.
  • Facilitate innovation.
  • Use of modern manufacturing and information
    technologies.
  • Adapt to and influence a changing environment.
  • Create value for owners, customers and employees.
  • Accommodate ongoing challenges of diversity,
    ethics, social responsibility, and the motivation
    and coordination of employees.

5
Perspectives on Organisations
  • Two views of organisations
  • Open Systems
  • Early organisation studies focused on closed
    internal systems, based on assumptions that
    environment is stable and predictable.
  • Organisational Configuration
  • Balance the five basic parts of an organisation
    to perform the subsystem functions effectively.

6
Open Systems
  • Closed Systems
  • A closed system would not depend on its
    environment it would be autonomous, enclosed,
    and sealed off from the outside world. Primary
    issue is efficiency.
  • Open Systems
  • An open system interacts with and adapts to the
    environment by consuming resources and exporting
    product and services to it.
  • Issues involved are more complex due to
    interdependence of various elements.

7
An Open System and its Subsystems
Environment
People Raw materials Information Financial
resources
Products and Services
Transformation Process
Input
Output
Boundary spanning
Production, maintenance, adoption, management
Boundary spanning
Source Organization Theory and Design, Richard
L. Daft
8
Organisational Configuration
  • Technical Core
  • Includes people who do the basic work.
  • Technical Support
  • Helps the organization adapt to the environment.
  • Administrative Support
  • Responsible for smooth operation and upkeep.
  • Management
  • Top Management provides direction, strategy,
    goals and policies.
  • Middle Management implementation and
    coordination.

9
Five Basic Parts of an Organisation
Top Management
Technical Support
Administrative Support
Middle Management
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.
10
Organisation Design
  • Emphasies the management side of organisation
    theory
  • Concerned with constructing and changing an
    organisations structure and traits to achieve
    the organisations goals

11
Dimensions of Organisation Design
  • Organisation traits are described by
  • Structural Dimensions
  • Describes internal characteristics of an
    organisation.
  • Contextual Dimensions
  • Characterises the whole organisation, including
    its size, technology, environment and goals.

12
Structural Dimensions
  • Formalisation
  • The amount of written documentation.
  • Specialisation
  • The degree to which organisational tasks are
    subdivided into separate jobs.
  • Hierarchy of Authority
  • Span of control of the managers.
  • Centralisation
  • Hierarchical level of authority for decision
    making.
  • Professionalism
  • Level of formal education and training of
    employees.
  • Personnel ratios
  • People deployed to each functions and departments.

13
Contextual Dimensions
  • Size
  • Number of employees.
  • Organisational Technology
  • Tools, techniques and actions used to transform
    inputs into outputs.
  • Goals and Strategy
  • Purpose and competitive techniques that set it
    apart from other organisations.
  • Environment
  • All elements outside the organisational boundary.
  • Culture
  • Shared key values, beliefs, understandings and
    norms.

14
Interacting Contextual and Structural Dimensions
15
Organisation Theory
  • Discipline that studies the structure and design
    of organisations
  • Organisation theories are interdisciplinary,
    based on knowledge from the fields of psychology,
    political science, economics, anthropology and
    sociology
  • Organisation theory is a macro examination of
    organisations analyses the whole organisation
    as a unit while organisation behaviour is the
    micro approach to organisations focuses on the
    individuals within organisation

16
Organisation Challenges
  • Globalisation
  • Ethics and Social Responsibility
  • Speed of Responsiveness
  • The Digital Workplace
  • Diversity

17
Classical TheoriesEfficiency is Everything
  • Fredrick Winslow Taylor
  • Scientific management approach
  • Managers develop precise, standard procedures
    for doing each job, select workers with
    appropriate abilities, train workers in standard
    procedures, carefully plan work, and provide wage
    incentives to increase output.
  • The role of management is to maintain stability
    and efficiency.
  • Thinking (top managers)
  • Working (workers doing what they are told)
  • Focused on the technical core.

18
Classical TheoriesHow to Get Organised
  • Max Weber
  • Bureaucratic approach
  • Clear division of labour
  • Hierarchical structure in the organisation
  • Predictability and stability
  • Rationality
  • Impersonal relationship
  • Characteristics for most of todays large
    organisations

19
Classical TheoriesHow to Get Organised
  • Henri Fayol
  • Administrative principles
  • Concerned with the problems of management
  • Develop general principles applicable to all
    managers and describe the functions a manager
    should perform
  • 14 principles in total division of work,
    authority, discipline, unity of command, unity of
    direction, subordination of individual interests
    to the general interests, remuneration,
    centralisation, scalar chain, order, equity,
    stability of tenure of personnel, initiative,
    Esprit de corps

20
Human-Relations TheoriesWhat About People?
  • Elton Mayo, Chester Bernard, Douglas Mc Gregor
  • Hawthrone Studies
  • Work on industrial psychology and human
    relations.
  • Chicago Western Electric Company
  • Positive treatment of employees improved their
    motivation and productivity.
  • Laid the groundwork for subsequent work examining
    worker treatment, leadership, motivation and HR
    management.
  • Human relations and behavioural approaches

21
Contingency Theory Dont Forget the Environment
  • All organisations are not alike.
  • The scientific management and administrative
    principles approaches attempted to design all
    organisation in the same manner.
  • Contingency Theory there is no one best way for
    organisation design
  • Contingency means that one thing depends on
    other things, and for organisations to be
    effective, there must be a goodness of fit
    between their structure and conditions in their
    external environment.
  • Contingency means it depends.

22
Organisational Strategies
  • Defined as the determination of the basic
    long-term goals and objectives of an enterprise,
    and the adoption of courses of action and the
    allocation of resources necessary for carrying
    out these goals
  • Two models
  • Porter model
  • Miles and Snow model

23
Porters Competitive Strategies
  • No firm can successfully perform at an
    above-average level by trying to be all things to
    all people
  • Low-cost leadership
  • Differentiation
  • Focus

24
Miles and Snows Strategies
  • Classify organisations into one of four strategic
    types based on the rate at which they change
    their products or markets
  • Defenders
  • Prospectors
  • Analysers
  • Reactors

25
Contingency Factors Affecting Organisation Design
Technology


Organizational Structure and Design
The Right Mix of Design Characteristics Fits the
Contingency Factors
Source Organization Theory and Design, Richard
L. Daft
26
Discussions
  • Discuss how the following organisational
    strategies affect organisation design
  • Low-cost leadership
  • Differentiation
  • Defenders
  • Prospectors
  • Analysers
  • Reactors

27
Contemporary Organisation Design Learning
Organisations
  • Organisations today need greater fluidity and
    adaptability.
  • The learning organisation promotes use of
    communication and collaboration technologies, so
    that everyone is engaged in identifying and
    solving problems.
  • All organisation members continuously help to
    experiment, improve and increase its capability.
  • It is based on equality, open information,
    little hierarchy, and a culture that encourages
    adaptability and participation.
  • Essential value is problem solving as opposed to
    efficient performance.

28
Two Organisation Design Approaches
Organizational Change in the Service
of Performance
The slide adapted from David K. Hurst, Crisis
and Renewal Meeting the Challenge of
Organizational Change (Harvard Business School)
Original source Organization Theory and
Design, Richard L. Daft
29
Vertical to Horizontal Structure
  • Traditionally the activities were grouped
    together by common work from bottom to the top of
    the organisation, little collaboration occurs
    across functional departments.
  • In a fast changing environment the vertical
    structure becomes overloaded.
  • In the learning organisation, structure is
    created around horizontal workflows or processes
    rather than departmental functions.
  • Self-directed teams are the fundamental work
    unit in the learning organisation.
  • Boundaries between functions are eliminated.

30
Routine Tasks to Empowered Roles
  • The scientific management precisely define each
    job and how it should be done.
  • In traditional organisations, tasks are broken
    down into specialized, separate parts, as in a
    machine. Knowledge and control of tasks are
    centralized.
  • In learning organisations, employees are assigned
    roles with discretion and responsibility - in
    the team or department which are continuously
    redefined or adjusted.
  • Employees are encouraged to take care of problems
    by working with each other and with customers.

31
Formal Control to Shared Information
  • Formal systems are often implemented to manage
    the growing amount of complex information and to
    detect deviations from established standard and
    goals.
  • In the learning organisation ideas and
    information are shared throughout the
    organisation.
  • Managers find ways to open channels of
    communication so that ideas flow freely in all
    directions.
  • Learning organisations communicate with
    customers, suppliers, and even competitors to
    enhance learning capability.

32
Competitive to Collaborative Strategy
  • Strategy in traditional organisations is
    formulated by top managers and imposed on the
    organisation.
  • In the learning organisations the accumulated
    actions of an informed and empowered workforce
    contribute to strategy development.
  • Partnerships with suppliers, customers and
    competitors to find the best way to learn and
    adapt, forming modular or virtual organisations
    that are connected electronically.

33
Rigid to Adaptive Culture
  • Organisations should continuously adapt to
    external environment.
  • In a learning organisation, employees are aware
    of the whole system and interactions of its parts
    and the culture encourage openness, equality,
    continues improvement and change.
  • Each employee is a valued contributor and the
    organisation becomes a place for creating a web
    of relationships that allows people to develop
    their full potential.

34
Resources
  • Richard L. Daft, Organization Theory and
    Design, Thomson (South-Western), 8th edition,
    2004.
  • Stephen P. Robbins, Neil Barnwell, Organisation
    Theory Concepts and cases, Prentice Hall, 4th
    edition, 2002.

35
Acknowlegement
  • This module was taught by Dr. Payam Mamaani
    Barnaghi since 2005. Most slides have been
    adopted from his lecture materials with some
    changes.

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