Lecture One

Organisations and Organisation Theory

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Lecture Structure

Organisation Theory in Action: Xerox What is an Organisation? Current Challenges to Organisations Perspectives on Organisations Organisational Design What is Organisational Theory?
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Organization Theory in Action

Xerox

Classic example of organisational decline Founders created successful, people oriented culture based on involvement Excellent main product blinded company to potential of new innovations Crippled by bureaucratic culture - Burox Poor diversification strategy, slow to enter new product markets, disabled by conflict New leader renewal ?
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What is an Organization?

Definition Organisations 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 (Daft, 2004: 11)
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What is an Organization?
Bring together resources to achieve desired goals and outcomes Produce goods and services efficiently to create value for owners, customers and employees Facilitate innovation by using modern manufacturing and information technologies

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What is an Organization?
Adapt to and influence a changing environment Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees

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Current Challenges for Organisations

Global Competition Ethics and and Social Responsibility Speed of Responsiveness The Digital Workplace Diversity

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Perspectives on Organisations

Closed Systems

Not dependent on environment internal efficiency

Open Systems

Environment vital customers, suppliers and competitors System designed to acquire inputs, transform them and discharge outputs to external environment Importance of subsystems in organisations
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An Open System and Its Subsystems

Environment
Raw Materials People Information resources Financial resources
Transformation

Input
Process
Boundary Spanning

Output

Products and Services

Subsystems

Production, Maintenance, Adaptation, Management

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Boundary Spanning

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Perspectives on Organisations
Top Management

Technical Support

Middle Management

Administrative Support

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.

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Organisational Design

Structural

Labels to describe internal characteristics Requirements for organising efficient internal operations Characterise the whole organisation and describe the organisational setting in detail Importance of Stakeholders
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Contextual

Performance and Effectiveness Outcomes

Goals and Strategy Environment Size

Culture
1. 2. 3. 4. 5. 6.

Structure Formalization Specialization Hierarchy of Authority Centralization Professionalism Personnel Ratios

Technology

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Stakeholders for Organisations

THE WIDER ENVIRONMENT
THE NATURAL ENVIRONMENT Pollution

IMMEDIATE STAKEHOLDERS
Creditors Government Local Community THE ORGANISATION Customers Suppliers Employees Regulatory Interest Groups Owners and Investors

Sustainability of Resources
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Source: Rollinson with Broadfield (2002: 48)

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What is Organisational Theory?

Different from Organisational Behaviour Developing the field

Rational Perspectives

Scientific Management (Taylor); Administrative and bureaucratic design (Fayol / Weber)

Hawthorne Studies Contingency Perspective Global Competitiveness; Rise of e-commerce; Primacy of knowledge and information; Meaningful work and personal growth Thomson Learning
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Contemporary Organisational Design

Efficient Performance v The Learning Organisation:

Two Organisation Design Approaches
Mechanical System Design
Vertical Structure

Natural System Design

Horizontal Structure

Routine Tasks

Rigid Culture

Organizational Change in the Service of Performance

Empowered Roles

Adaptive Culture

Formal Systems

Competitive Strategy

Shared Information

Collaborative Strategy

Stable Environment Efficient Performance

Turbulent Environment Learning Organisation

Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)

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Summary and Conclusions

Organisational Theory is study of aggregate behaviour of individuals in organisations Organisations are important in society Need for understanding of structure and systems to cope with current challenges Interesting trends in organisational design and management practices
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