OTSD For Presentation Prof. Vivekanand Pawar
Transcript of OTSD For Presentation Prof. Vivekanand Pawar
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Organization Theory
And Structure Design
By Prof. Vivekanand Pawar
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What is an Organisation?
An Organisation is consciouslycoordinated social entity, with a
relatively identifiable boundary,that functions on relativelycontinuous basis to achieve a
common goal or set of goals.
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What is an Organisation?
A Consciously coordinated social entity
People or group of peoples interaction. Co-ordinate means Management.
Relatively identifiable boundary thatdifferentiates who is and who is not a part of theorganization. Boundary not always clear; can
change over a period of time. Has both explicit &implicit contracts.
Functioning on a continuous basis havingsome continuing bond regular employee orvisit once a while.
Achieve a set of common goals achievedeither individually or though group effort.
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Organisational Life Cycle
2. Collectivity stage
Informal communication
and structure
High Commitment
3. Formalization and
control stage
Formalization of rules
Stable structure
Emphasis on efficiency
4. Elaboration-of-
structure stage
More complex
structure
Decentralization
Diversified markets
5. Decline stage
High employee turnover
Increased conflict
Centralization
1.Entrepreneurial stage
Ambiguous goals
High Creativity
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Importance of Organisations
Bring together resources to achieve desired goalsand outcomes.
Produce goods and services efficiently.
Facilitate innovation.
Use of modern manufacturing and informationtechnologies.
Adapt to and influence a changing environment.
Create value for stakeholders.
Accommodate ongoing challenges of diversity,ethics, social responsibility, and the motivationand coordination of employees.
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Five basic Parts of anOrganisation
Middle
Management
TopManagement
Technical
SupportAdministrative
Support
Technical Core
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Five basic Parts of anOrganisation
Technical Core (Operating Core): do the work
Top Management (Strategic Apex) : executiveleadership
Middle Management (Middle Line) : mechanism ofsupervision
Technical Support (Technostructure) : technicalfacilitation
Administrative Support (Support Staff) : servicefacilitation
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Organisation Structure
Organization Structure defines the manner in whichtasks are allocated; who reports to whom and the formalcoordinating mechanisms and interaction pattern that willbe followed.
The three elements of organization structure are:
Complexity : extent of differentiation within theorganization
Formalization : extent to which an organization relieson rules & regulations
Centralization : where the locus of decision making lies
f i d
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Structures of Organic andMechanistic Organizations
Organic Mechanistic
High Complexity
Low Centralization
Low Formalization
Low Standardization
High Person Specialization
High Task Specialization
Low Complexity
High Centralization
High Formalization
High Standardization
Low Person Specialization
Low Task Specialization
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Organisation Design
Organisation Design emphasizes the management side oforganization theory. Organization is concerned withconstructing and changing an organizations structure toachieve the goals of the organization.
It is extremely important to know how to design anorganization.
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Interacting Contextual and StructuralDimensions
Goals and
StrategyEnvironment Size
Culture TechnologyStructure
1. Formalization
2. Specialization
3. Hierarchy of Authority4. Centralization
5. Professionalism
6. Personnel Ratios
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Organisation Theory
Organisation Theory is a disciplinethat studies the structure and design ofan organization.
It describes how organizations areactually structured and offers
suggestions on how they can beconstructed to improve its effectiveness.
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Contrasting OT, OB, OD, and HRM
Macro View Micro View
Theory
Practice
OBOT
HRMOD
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Some Applications of Organization Theory
Structuring activities and designing organizationalprocesses to:
Strategy/Finance : Support goal achievement andperformance monitoring.
Marketing : Align the organization & its brand strategy.
Information Technology : Align information flows withwork processes and outcomes.
Operations : Support supply chain management.
Human Resources : Provide a basis for HRM
activities, organizational development and change.
Communication : Design effective communicationprocesses.
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The Systems Perspective
A system is a set of interrelated and inter-dependent parts arranged in a manner
that produces a unified whole.
Every system is characterized by two
diverse forces; differentiation and
integration.
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Types of System
Closed System that which totally ignoresthe effect of environment on the system; one
that receives no energy from an outside
source and from which no energy is released
to it surroundings.
Open System that which recognizes the
dynamic interaction of the system with its
environment
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Basic Open System
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An Industrial Organization as an Open System
INPUTSMaterials
LaborCapital
TECHNICALPROCESSING CORE
(Transformation ofRaw material intofinished product)
OUTPUTS
FinishedProducts
CUSTOMERS
Government
FinancialInstitutions
Labor Force
Suppliers
Receipt ofRevenue
Payment toCreditors
Wages
Repayment ofLoans
Consumer Advocacy
Lobbyin
g
Regulat
ions
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Characteristics of An Open System
Environment awareness: Recognition ofinterdependency between the system and itsenvironment. Changes in the environment can one ormore attributes of the system, and conversely,change in the system affect its environment.
Feedback: Open systems continuously receivedinformation from their environment. This helps thesystem to adjust and allows correction to rectifydeviation from its specific course.
Cyclical character: Open systems are cycles ofevents. The systems outputs furnish the means fornew inputs that allow for repetition of cycle.
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Characteristics of An Open System
Negative entropy: entropy is the propensity of a system to run
down or disintegrate. A closed system, as it does not receiveinputs from environments will run down over a period of time.Whereas an Open system can repair, maintain its structureand avoid death.
Movement towards growth: As the system becomes more
complex, it moves to counteract entropy and move towardsgrowth.
Balance of maintenance & adaptive activities: Maintenanceactivities ensure that various subsystems are in place; and thetotal system is in accordance with the environment; whileadaptive activities are necessary to adjust over time tovariations and internal and external demands.
Equifinality: This means an organization can achieve itsobjectives with varied inputs and transformation process.
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Learning Objective
To understand .
1. The importance of organizationaleffectiveness.
2. The relative importance of Strategy, Sizeof organization, Technology, Environmentand power control in determining the
structure of the organization.
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Learning Objective
3. To know different forms of excellence.
4. To learn the strategies to manage:
The environmentOrganizational change
Organizational conflict
Organizational culture
Organizational evolution
Framework for Analysing
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Framework for AnalysingOrganization Theory
Determinantsof Organisation
Structure :Strategy
OrganisationSizeTechnologyEnvironmentPower-control
OrganisationStructure
OrganisationDesigns
DesignOptions
BureaucracyAdhocracy
Applications :
Managing the EnvironmentManaging OrganisationalChangeManaging OrganisationalConflictManaging OrganisationalCultureManaging Organisational
Evolution
OrganisationalEffectiveness
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Course Content
1. Evolution of the Organizational Theories.
2. Determinants of Organization Structure:
Strategy
Organization Size
Technology
Environment
Power-control
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Course Content
3.Organization Structure, Design andOrganizational Effectiveness.
4. Applications:
Managing the Environment
Managing Organizational Change
Managing Organizational Conflict
Managing Organizational Culture
Managing Organizational Evolution.
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Course Content
With special reference to :
Impact of mergers, Acquisition andglobalization on organizational structure.
Managing dynamic processes decisionmaking, conflict, power and politics.
Learning Organizations, Virtual
organizations, boundary-lessorganizations, network Organizations,organizational design for change andinnovation.
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Course Content
5.Keys to Organizational Excellence
6. Forms of Excellence
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Course Content
7. Review of Research Related to OrganizationalDesigns for excellence (some examples) :
Viable and effective organizational designs of firms P.N. Khandwalla
In search of Excellence T. Peters
Designing and managing human resource systems Uday Pareek
Survival strategies in a Hostile Environment
-W. Hall
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List of Books to refer
Stephen P. Robbins, Organization Theory-
Structure, Design and Applicatons
Hatch Mary Jo & Cunliffe Ann L. OrganizationTheory Modern, Symbolic, and Postmodern
perspectives, Oxford University Press.
Hall Richard H. Organizations Structures,Processes and outcomes, Prentice Hall of India.
Khandwalla Pradip N. Organizational designsfor excellence, Tata Mc Graw Hill PublishingCompany Ltd.
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Teaching Learning Process
Classroom discussion
Case study method
Review of related literature
Group Projects and Presentations.
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Evaluation
1. Internal Assessment ( 40 Marks).
Attendance and class participation (20 marks).
Group Research Projects to critically evaluate
the structure and design of the chosenorganization.
Group presentation of the same.
Group research presentations on review ofresearch related to organizational design forexcellence.
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Evaluation
2. External Assessment:
Term End UniversityExam. (60 Marks)
E l i f C Th
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Evolution of Contemporary Theory
Type 1 Closed Rational Mechanical Efficiency. 1900
1930.
The Type 1 theorists, also known as the classicalschool, developed universal principles or models
that would apply in all situations. As noted
previously, each essentially perceived
organization as closed systems created to achieve
goals efficiently.
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Type 1: Closed Rational Mechanical Efficiency
Frederick Taylor & Scientific ManagementFredrick Taylor was a mechanical engineer by
background & he strongly believed that worker
output was only about one-third of what was
possible. He set out to correct the situation byapplying the scientific method to jobs on the shop
floor. His desire to find the one best way in
which each job should be done would be part of
what today we would call the issue of work design.
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Type 1: Closed Rational Mechanical Efficiency
Accordingly, he proposed 4 principles of scientific
management, that, he argued, would result in significant
increases in productivity: (1) the replacement of rule-of-
thumb methods for determining each element of a
workers job with scientific determination; (2) the
scientific selection of training of workers; (3) thecooperation of management & labor to accomplish work
objectives, in accordance with the scientific method; & (4)
a more equal division of responsibility between managers
& workers, with the former doing the planning &supervising, & the latter doing the execution.
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Type 1: Closed Rational Mechanical Efficiency
At the same time the Frenchman Henri Fayol was
consolidating the principles of organization. Thoughthey were writing at the same time, Fayols &
Taylors foci were considerably different. Fayol
sought to develop general principles applicable to all
managers at all levels of the organization & todescribe the functions a manager should perform.
Taylor focused on the lowest level in the organization
shop level management & accordingly proposed 14
principles that he argued were universally applicable& could be taught in schools & universities. We shall
be discussing the said 14 principles in the topic of
Organizational Structure.
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Type 1: Closed Rational Mechanical Efficiency
The third contribution made by Type 1
theorists was the ideal-type organizationstructure proposed by the German sociologist,
Max Weber. He developed a structural model
that, he argued, was the most efficient meansby which organizations can achieve their
ends. He called this ideal structure
bureaucracy.
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Type 1: Closed Rational Mechanical Efficiency
It was characterized by division of labor, a
clear authority hierarchy, formal selectionprocedures, detailed rules & regulations, &
impersonal relationships.
The final contribution of the Type 1 theorists
is the rational-planning perspective which
was best expressed in the work of RalphC.Davis.
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Type 1: Closed Rational Mechanical Efficiency
He stated that the primary objective of a
business firm is economic service. Nobusiness can survive if it doesnt provide
economic value. The economic value is
generated by the activities members engage into create the organizations products or
services.
1 C i i ffi i
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Type 1: Closed Rational Mechanical Efficiency
These activities then link the organizations
objectives to its results. It is themanagements job to group these activities
together in such a way as to form the structure
of the organization. Davis concluded,therefore, that the structure of the
organization is contingent (dependent) upon
the organizations objectives.
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Type 2: Closed Social People & Human Relations
Type 2. Closed Social People & Human
Relations. 19301960.
The common theme among Type 2 theorists
is recognition of the social nature of
organizations. These theorists, who arefrequently referred to as forming the human
relations school, view organizations as made
up of both tasks & people. Type 2 theoristsrepresent a human counterpoint to Type 1s
machine view.
C S i & i
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Type 2: Closed Social People & Human Relations
The second stage in contemporary (modern-day)
organization theory began with a set of experiments
undertaken at Western Electric Companys
Hawthorne Works in Cicero, Illinois between 1924
& 1927. These studies which would eventually bewidely expanded & would carry on through the early
1930s were initially devised by Western Electric
industrial engineers to examine the effect of various
illumination levels on worker productivity.
T 2 Cl d S i l P l & H R l i
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Type 2: Closed Social People & Human Relations
Control & experimental groups were established.
The experimental group was presented with varying
intensity of illumination, while the controlled unit
worked under constant illumination intensity. The
engineers had expected individual output to bedirectly related to the intensity of light. However,
the light level was increased in the experimental
unit, output rose for each group. To the surprise of
the engineers, as the light level was dropped in theexperimental group, productivity continued to
increase in both.
T 2 Cl d S i l P l & H R l i
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Type 2: Closed Social People & Human Relations
In fact, a productivity decrease was observedin the experimental group only when the light
intensity had been reduced to that of
moonlight. The engineers concluded that
illumination intensity clearly was not directly
related to group productivity, but they could
not explain the behavior they had witnessed.
T 2 Cl d S i l P l & H R l ti
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Type 2: Closed Social People & Human Relations
Merging the ideas of Taylor, Fayol, & Weber with
the results from the Hawthrone studies led to the
conclusion that organizations are cooperative
systems. They are composed of tasks & people that
have to be maintained at an equilibrium state.Attention only to technical jobs or the needs of
people who do the jobs sub optimizes the system. So
managers need to organize around the requirements
of the tasks to be done & the needs of the peoplewho will do them.
T 2 Cl d S i l P l & H R l ti
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Type 2: Closed Social People & Human Relations
The notion that an organization is acooperative system is generally credited to
Chester Barnard. He presented his ideas in
The Functions of the Executive, in which he
drew upon his years of experience with
American Telephone & Telegraph, including
the presidency of New Jersey Bell.
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Type 2: Closed Social People & Human Relations
One of the most frequently mentionedcontributions from Type 2 theorists is
Douglas McGregors thesis that there are two
distinct views of human beings : Theory X &
the other basically positiveTheory Y.
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Type 2: Closed Social People & Human Relations
After reviewing the way managers dealt withemployees, McGregor concluded that a
managers view of the nature of human
beings is based on a certain grouping of
assumptions & that he or she tends to mold
his or her behavior toward subordinates
according to these assumptions.
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Type 2: Closed Social People & Human Relations
Under Theory X, 4 assumptions are held by
managers:
Employees inherently dislike work &, whenever
possible, will attempt to avoid it.
Since employees dislike work, they must be coerced,controlled, or threatened with punishment to achieve
desired goals.
Employees will shirk responsibilities & seek formal
direction whenever possible.
Most workers place security above all other factors
associated with work & will display little ambition.
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Type 2: Closed Social People & Human Relations
In contrast to these negative views of human
beings, McGregor listed 4 assumptions that
he called Theory Y:
Employees can view work as being as natural
as rest or play.
Human beings will exercise self-direction &
self-control if they are committed to the
objectives.
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Type 2: Closed Social People & Human Relations
The average person can learn to accept, even
seek, responsibility.
Creativity-that is, the ability to make good
decisions-is widely dispersed throughout the
population is not necessarily the sole province
of those in managerial functions.
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Type 2: Closed Social People & Human Relations
In his theory, McGregor argued that Theory Y
assumptions were preferable & that they
should guide managers in the way they
designed their organizations & motivated
their employees.
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Type 2: Closed Social People & Human Relations
The strong humanistic theme of the Type 2 theoristsculminated with a eulogy to the passing of
bureaucracy. Warren Bennis, for example, claimed
that bureaucracy, centralized decision making,
impersonal submission to authority, & narrowdivision of labor was being replaced by
decentralized & democratic structures organized
around flexible groups. Influence based on authority
was giving way to influence derived from expertise.
Type 2: Closed Social People & Human Relations
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Type 2: Closed Social People & Human Relations
The strong humanistic theme of the Type 2 theoristsculminated with a eulogy to the passing of
bureaucracy. Warren Bennis, for example, claimed
that bureaucracy, centralized decision making,
impersonal submission to authority, & narrowdivision of labor was being replaced by
decentralized & democratic structures organized
around flexible groups. Influence based on authority
was giving way to influence derived from expertise.