Organizational Theory & Behavior Mgt 5320 Chapter 1: Introduction

Coping with rapid change emerged as most common problem facing managers and organizations today. Sacred Cows Make Best Burgers 1) Round up sacred cows. 2) Develop a change-ready environment. 3) Turn resistance into readiness. 4) Motivate people to change. 5) Develop personal change-ready traits. Definition of an Organization Organizations are (1) social entities that (2) are goal directed, (3) are designed as deliberately structured and coordinated activity systems, and (4) are linked to the external environment. An organization cannot exist without interacting with customers, suppliers, competitors, and other elements of the external environment. Importance of Organizations 1. Bring together resources to achieve desired goals and outcomes. 2. Produce goods and services efficiently. 3. Facilitate innovation. 4. Use modern manufacturing and computer-based technology. 5. Adapt to and influence a changing environment. 6. Create value for owners, customers, and employees. 7. Accommodate ongoing challenges of diversity, ethics, career patterns, and the motivation and coordination of employees. One of the most significant changes in the external environment today is globalization.

Organizations As Systems A closed system does not depend on its environment; it would be autonomous, enclosed, and sealed off from the outside world. A truly closed system cannot exist. An open system must interact with the environment to survive; it both consumes resources and exports resources to the environment. It must continuously change and adapt to the environment. Chaos Theory --test question

Butterfly effect means that small events can have giant effects.

Dimensions of Organization Design Structural Dimensions 1. Formalization pertains to amount of written documentation 2. Specialization degree to which organizational tasks are subdivided into separate jobs 3. Standardization extent to which similar activities performed in a uniform manner 4. Hierarchy of Authority span of control and who reports to whom 5. Complexity refers to number of activities or subsystems in the organization 6. Centralization refers to hierarchical level that has authority to make decisions 7. Professionalism level of formal education and training of employees 8. Personnel Ratios deployment of people to various functions & departments (Raw ratio 1HR/100 emp) (Refined ratio prof & clerical/100 emp or 3 prof & 3 clerical/600 employees) Contextual Dimensions 1. Size 2. Organizational technology 3. Environment 4. Goals and strategy 5. Culture

History of Organizational Theory

Scientific management claimed decisions and job design based on precise, scientific procedures after careful study of individual situations. Administrative principles focused on the total organization and grew from the insights of practitioners, such as Fayols 14 principles of management which included (unity of command) each subordinate receives orders from only one superior Postmodern Organization Paradigm A paradigm is a shared mind-set that represents a fundamental way of thinking, perceiving and understanding the world.

Organizational behavior is the micro approach to organizations

because it focuses on the individuals within organizations as the relevant units of analysis. It examines concepts such as motivation, leadership style, and personality and is concerned with cognitive and emotional differences among people and the psychology within organizations.

Organizational theory is a macro examination of organizations because

it analyzes the whole organization as a unit. It is concerned with people aggregated into departments and deals with the sociology of organizations. It is concerned with the big picture of the organization and its major departments.

Chapter 2: Strategic Management & Organizational Effectiveness

An organizational goal is a desired state of affairs that the organization attempts to reach. ********** Top managements primary responsibility is to determine an organizations goals, strategy, and design, therein adapting the organization to a changing environment. **********

Mission
The overall goal for an organization is called the mission the organizations reason for existence. It describes the organizations vision, its shared values and beliefs, and its reason for being. It is sometimes called the official goals.

Operative Goals
Operative goals describe specific measurable outcomes and are often concerned with the short run. They represent the actual versus stated goals. 1. 2. 3. 4. 5. 6. Overall performance Resources Market Employee Development Innovation Productivity

Purpose of Goals
Official goals provide legitimacy and operative goals provide employee direction. *********** The mission statement is a powerful first step in communicating legitimacy to external and internal stakeholders and creating a positive impression. *********** Goals help motivate participants, especially if they help select the goals.

Organizational Strategies
A strategy is a plan for interacting with the competitive environment to achieve organizational goals. Goals define where the organization wants to go and strategies define how it will get there. Porters Competitive Strategies 1. Low-Cost Leadership. This strategy tries to increase market share by emphasizing low cost compared to competitors. The strategy is concerned primarily with stability rather than taking risks or seeking new opportunities for innovation and growth. 2. Differentiation. In this strategy organizations attempt to distinguish their products or services from others in the industry. Examples include, Mercedes-Benz, Maytag, Tylenol. 3. Focus. With this strategy the organization concentrates on specific regional market or a differentiation advantage within a narrowly defined market. Strategies for Organizational Excellence 1. Strategic Orientation. Three characteristics identified in corporate research pertain to an organizations strategic orientation: being close to the customer, providing fast response, and having a clear business focus and goals. 2. Top Management. Three factors unique to managers are part of a highly successful company: leadership vision, a bias toward action, and promoting a foundation of core values. 3. Organization Design. Excellent organizations are characterized by three design attributes: simple form and lean staff, decentralization to increase entrepreneurship, and a balance between financial and nonfinancial measures of performance. 4. Corporate Culture. Excellent companies manage to harness employee energy and enthusiasm. They do so by creating a climate of trust, encouraging productivity through people, and taking a long-term view.

Organizational Effectiveness
Organizational effectiveness is the degree to which an organization realizes its goals. Efficiency is a more limited concept that is the amount of resources used to produce a unit of output. Goal Approach to effectiveness consists of identifying output goals and assessing how well the organization has attained those goals, using indicators of the operative goals, such as profitability, growth, market share, etc. System Resource Approach Looks at the input side of transformation process using indicators such as, bargaining position, interpret real properties of external environment, maintenance of day-to-day organizational activities, and ability to respond to changes in the environment. Internal Process Approach Measured as internal organizational health and efficiency. Indicators of an effective organization from internal process approach are: 1. Strong corporate culture and positive work climate 2. Team spirit, group loyalty, and teamwork 3. Confidence, trust and communication 4. Decision making near sources of information 5. Undistorted horizontal and vertical communication 6. Rewards to managers for performance, growth, & development of subordinates 7. Interaction between the organization and its parts Contemporary Effectiveness Approaches Stakeholder Approach ************ A stakeholder is any group within or outside an organization that has a stake in the organizations performance. ************ Stakeholders Owners Employees Customers Creditors Community Suppliers Government

Chapter 3: The External Environment

The external environment is the source of important threats facing major corporations today. An organizations domain is the chosen environmental field of action. The environment comprises several sectors of the external environment, they are: Industry, raw materials, human resources, financial resources, market, technology, economic conditions, government, sociocultural, and international. Task environment The task environment includes sectors with which the organization interacts directly and that have a direct impact on the organizations ability to achieve its goals. This typically includes the industry, raw materials, and market sectors, and perhaps human resources and international sectors. General environment The general environment includes those sectors that may not have a direct impact on the daily operations of a firm but will indirectly influence it. This includes the government sector, sociocultural sector, economic conditions, technology sector and financial resources. **** Nine of ten of the worlds largest banks are Japanese ****

Simple-Complex Dimension Concerns environmental complexity or the number and dissimilarity of external elements relevant to an organizations operations. Stable-Unstable Dimension The stable-unstable dimension refers to whether elements in the environment are dynamic, ie either stable or unstable.

Buffering and Boundary Spanning The buffering role is to absorb uncertainty from the environment, this includes the purchasing and human resources department. Boundary spanning is concerned with the exchange of information to (1) detect and bring into the organization info about the environment and (2) send info into the environment that presents the organization in a favorable light. Differentiation and Integration ********** Differentiation is the differences in cognitive and emotional orientations among mangers in different functional departments, and the difference in formal structure among these departments. Such as unique attitudes, values, goals and education of employees in R& D department. *********** Integration is the quality of collaboration among departments.

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Organic versus Mechanistic Management Processes

ORGANIC Young, small, innovative Tasks adjusted Common employee tasks Less hierarchy of authority Knowledge & control decentralized Communication horizontal MECHANISTIC Large, stable Rigidly defined tasks Specialized, separate tasks Strict hierarchy of authority, rules Control centralized at top of org Communication vertical

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Institutional Imitation Institutional perspective argues that under high uncertainty, organizations mimic or imitate other organizations in the same institutional environment. This also means that organizations within an industry will tend to look alike over time. Low Uncertainty 1. Mechanistic, formal, centralized 2. Few departments 3. No integrating roles 4. Little imitation 5. Current ops orientation Simple Stable/Small High Uncertainty 1. Organic, teamwork, decentralized 2. Many departments, boundary span 3. Many integrating roles 4. Extensive imitation 5. Extensive planning, forecasting Complex Unstable/Large

Resource dependence means that organizations depend on the environment but strive to acquire control over resources to minimize the dependence. Cooptation occurs when leaders from important sectors in the environment are made part of the organization. An interlocking directorate is a formal linkage that occurs when a board member of one company sits on the board of another company. A direct interlock is when one individual is the link between two companies. An indirect interlock occurs when a director of company A and a director of company B are both directors of company C. Political activity is so important that informal lobbyist is an unwritten part of almost any CEOs job description.

Chapter 4: Manufacturing, Service and Advanced Information Technologies

Technology is the tools, techniques, and actions used to transform organizational inputs into outputs. Form usually follows function so the form of the organizations structure should be tailored to fit the needs of the production technology. Technical complexity represents the extent of mechanization of the manufacturing process. High complexity means most of the work is performed by machines. Low complexity means workers play a larger role in production. Small-batch production Large-batch production Continuous process production Computer-integrated manufacturing ( CIM) Computer-aided design (CAD) Computer-aided manufacturing (CAM)

Service Firms
Airlines, Hotels, Consultants, Teachers, Health clinics, Law firms Services now generate 74% of GDP and 79% of jobs.

Organic structure
Low formalization, flat organizational structure De-centralization Training plus experience Large span of control, fewer levels of management Horizontal communication, meetings

Mechanistic structure
High formalization, tall organizational structure Highly centralized Little training or experience Small span of control, more levels of management Vertical communication, written memos

Span of Control is the number of employees who report to a single manager. Should be smaller for complex tasks where manager and subordinate must interact frequently. Large/wide span of control has fewer managers supervising many employees. Small/narrow span of control has more managers supervising fewer employees.

Workflow Interdependence Among Departments

Interdependence means the extent to which departments depend on each other for resources or materials to accomplish their tasks. 1. Pooled interdependence is the lowest form among departments where work does not flow between units 2. Sequential interdependence is of a serial form, with parts produced in one department becoming inputs to another department 3. Reciprocal interdependence is the highest level when the output of operation A is the input of operation B and the output of operation B is the input back again to operation A Impact of Advanced Information Technology on Organization Design Flatter organization structure Greater centralization or decentralization Improved coordination Fewer narrow tasks Large professional ratio Impact of Technology on Job Design Job simplification Job enrichment Job satisfaction Increased income Research indicates that workers who use advanced technology generally earn 10 to 15 per cent more than those who dont.

Chapter 5: Organization Size, Life Cycle, and Decline Four S Management ----- simple, small, speedy, & strategic Pressures for Growth
Organizational Goals meet the goal of grow fast and large Executive Advancement necessary to attract & keep quality managers Economic Health firms must grow to stay economically healthy ********* Greater size gives marketing intensive companies power in the marketplace and thus increased revenues. ********* Average size is decreasing in US, Britain & Germany. The fastest growing companies in America are small firms characterized by an emphasis on putting customer first and being fast and flexible in responding to the environment.

Bureaucracy - Max Weber

1. 2. 3. 4. 5. 6. Rules and procedures Specialization and division of labor Hierarchy of authority Technically qualified personnel Separate position and incumbent Written communications and records

Bases of Authority 1. Rational-legal based on employees beliefs in legality of rules and right of those in authority to issue commands. 2. Traditional authority is based on traditions and history and is basis for monarchy and church authority. 3. Charismatic authority based on devotion to exemplary character or heroism of an individual and order defined by them.

Formalization
Large organizations are more formalized because they rely on rules, procedures, and paperwork to achieve standardization and control across large numbers of employees and departments.

Decentralization
In decentralized organizations decisions tend to be made at lower levels in the organization. As an organization grows larger and has more people, decisions cannot be passed to the top, or senior managers would be overloaded.

Complexity
Refers to both the number of levels in the hierarchy (vertical complexity) and the number of departments or jobs (horizontal complexity). Large organizations show definite pattern of greater complexity and need for additional specialties, such as administrative dept or planning dept.

Personnel Ratios Parkinsons law argues that work expands to fill the time available for its completion. 1st pattern that ratio of top administration to total employment is actually
smaller in a large organization.

2nd pattern support personnel such as clerical and professional tend to

increase in proportion to organization size. SEE Exhibit 5.4 page 171. Another attack on bureaucracy is from increasing professionalism of employees. Increased training substitutes for bureaucratic rules and procedures that can constrain creativity of employees to solve problems.

Organizational Life Cycle

Four Major Stages Organizational Development 1. Entrepreneurial Stage when org is born emphasis to create product and survive in marketplace. 2. Collectivity Stage has rapid growth but must provide leadership and clear direction and goals. 3. Formalization Stage installation of rules, procedures and control systems. Other departments added, human resources, etc. 4. Elaboration Stage is too much red tape, need collaboration and teamwork. Organizational Decline and Downsizing Organizational decline a condition in which substantial, absolute decrease in resource base occurs over period of time. 1. Organizational atrophy - when grow older overly bureaucratic 2. Vulnerability - strategic inability to prosper in environment 3. Environmental decline or competition refers to reduced energy and resources available to support organization. Decline Stages 1. Blinded stage is the internal and external changes that threaten long-term survival. 2. Inaction stage is when denial occurs despite signs of deteriorating performance. 3. Faulty stage - further indicators of poor performance. 4. Crisis stage is when organization still has not been able to deal with decline effectively, only major solution is reorganization. 5. Dissolution - this stage is irreversible only strategy to close. Downsizing Implementation 1. Consider voluntary programs 2. Communicate and over communicate 3. Allow to leave with dignity 4. Provide assistance 5. Use ceremonies