The Organisational Setting Management and Organisational Behaviour 7th Edition PART 2 The Organisational Setting

The Nature of Organisations Management and Organisational Behaviour 7th Edition CHAPTER 4 The Nature of Organisations

Purpose of organisations Organisations exist in order to achieve their aims & objectives and to provide satisfaction for their members Organisations are structures of people Organisations are an integral part of society operating in both public & private sectors

Defining organisations Farnham & Horton define organisations as: ..social constructs created by groups in society to achieve specific purposes by means of planned & co-ordinated activities. These activities involve using human resources to act in association with other inanimate resources in order to achieve the aims of the organisation.

Common factors in organisations There are at least three common factors in any organisation: People Objectives Structure

The nature of organisations Figure 4.1 The nature of organisations

The interactions between the organisation & general environment. Approach to organisation theory that stresses the common aspects of organisational life (Watson) The importance of the creative, critical & situation-defining characteristics of the individuals within the organisation. The varieties of interest and goal among the individuals & groups in the organisation, & the emphasis on conflict & political behaviour. The interactions between the organisation & general environment.

Schein defines a formal organisation as…. Formal organisations Schein defines a formal organisation as…. … the planned, co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through the division of labour & function, & through a hierarchy of authority & responsibility

Formal organisations are: Deliberately planned and created Concerned with the co-ordination of activities Hierarchically structured with stated objectives Based on certain principles such as the specification of tasks and defined relationships of authority & responsibility

Basic components of an organisation Figure 4.3 Basic components of an organisation

Basic components of an organisation Operational core – the direct performance of the technical or productive operations and the carrying out of actual task activities Operational support – concerned indirectly with the technical or productive process but closely related to the actual flow of operational work

Basic components of an organisation Organisational support – the provision of services for the whole organisation, including the operational core but usually outside the actual flow of operational work Top management – concerned with the broad objectives and policy & strategic decision making Middle management – concerned with the co-ordination & integration of activities & providing links with operational support staff

Private enterprise & public sector organisations Owned & financed by individuals, partners, or shareholders accountable to their owners or members. Main aim is of a commercial nature such as profit, return on capital employed, market standing or sales levels Public sector Created by government Do not generally have profit as their goal but have a political purpose

Characteristic features of service organisations The consumer is a participant in the service process Services cannot be stored, they are time-perishable & if they are not used they are likely to be wasted Services are less tangible & more difficult to explain or communicate Fitzsimmons & Sullivan

Characteristic features of service organisations Benefits derived from services tend to be associated with feelings or emotions Work activities are people-oriented Measurement of output is difficult & there is unlikely to be a single, important criterion by which to measure effective performance Fitzsimmons & Sullivan

Differences between products & services Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

Differences between products & services Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6.

Differences between products & services Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6.

Differences between products & services Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6.

Types of organisational authority Traditional organisations - legitimised by custom and long-standing beliefs in the natural right to rule Charismatic organisations – legitimised by belief in the personal qualities of the leader Bureaucratic organisations – authority is based on the law of formal rules & procedures and on impersonal principles

Classifying organisations by major purpose Economic Protective Associative Public service Religious Political Educational Military Voluntary

Classifying organisations according to main beneficiaries Mutual-benefit associations – the membership Business concerns – owners Service organisations – client group Commonweal organisations – public at large

Alternative classification – genotypic function Productive Maintenance Adaptive Managerial or political Katz & Khan

The open systems model of organisations Figure 4.4 The open systems model of organisations

Management/sales/ technical expertise Finance Subcontractors Customers Inputs Company products Factored products Staff Technology Management/sales/ technical expertise Finance Subcontractors Customers

Transformation process Comfortable & safe environment for customer businesses Design of systems Selling of systems expertise Provision of quality service

Transformation process Project management of customer order Site presence Innovation Internal & external communication

Outputs Invoiced sales Satisfied and committed staff Reputation for excellence Installations that are fit for purpose Satisfied customers

Organisational goals Market leadership Growth Profitability To be the best in field To invest in our people To be professional

Measures of achievement Repeat business Customer feedback Budgets Margin performance Staff appraisal Free of charge work Volume of work Relationship with stakeholders

Environmental influences on organisations Figure 4.6 Environmental influences on organisations

Organisations as socio technical systems The sub systems of these organisations include: Goals and values Technical Psychological Structure Managerial Kast & Rosenzweig

Alternative sub systems Human / social Administrative / structural Informational / decision making Economic / technological Hersey & Blanchard

Contingency models of organisations Adopts an if–then approach A number of situational factors influence organisational performance If certain situational factors exist, then certain organisational and managerial variables are most appropriate

Technology The physical aspects of machines, equipment, processes & work layout (machine technology) involved in the transformation or conversion process The actual methods, systems & procedures involved (knowledge technology) in carrying out the work of the organisation & transforming or converting inputs into outputs

Information technology Has prompted more procedures of work Has demanded new patterns of work organisation Affects the nature of individual jobs, formation & structure or work groups Led a move away from large-scale, centralised organisations to smaller working units Allows people to work more on their own Requires changes in the nature of supervision

The informal organisation The informal organisation arises from: the interaction of people working in the organisation their psychological and social needs the development of groups with their own relationships and norms of behaviour, irrespective of those defined within the formal structure

The formal & informal organisation Figure 4.9 The formal & informal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

The formal organisation Figure 4.9 The formal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

The informal organisation Figure 4.9 The informal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

The formal organisation Organisation charts Spans of control Job definitions & descriptions Production efficiency Policies & procedures

The informal organisation Personal animosities & friendships Grapevines Group norms & sentiments Informal leaders Prestige & power structures Emotional feelings, needs & desires Effective relationships Personal & group goals

Comparing formal & informal organisations Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

Comparing formal & informal organisations Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

Comparing formal & informal organisations Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

Organisations of the future Organisations are living organisms that are constantly evolving. Ulrich suggests that with the changing and dynamic contextual factors - … the essence of organisations has shifted and will continue to shift from focusing on structure to capability.

Rise of organisational democracy There is a demand for alternative organisational practices and a far reaching transformation has already begun based on the idea that management as a system fails to open the heart or free the spirit The age of management is coming to an end and the real push for the future is for more authentic human relationships and the humanisation of organisations as crucibles for personal growth and development Cloke & Goldsmith