1-1 ©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e Chapter One Organizations and Organization Theory Prof Col (R) Manzoor Iqbal Awan +92 (300) Organization Theory and Design

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-2 Organization Theory in Action b Organization theory deals with following subjects: Control of elements such as competitors, customers and creditors etc;Control of elements such as competitors, customers and creditors etc; Implementation of needed strategic and structural changes;Implementation of needed strategic and structural changes; Ethical conduct;Ethical conduct; Handling of bureaucratic issues;Handling of bureaucratic issues; Adequate cost controls;Adequate cost controls; Use of power and politics; andUse of power and politics; and Corporate culture.Corporate culture. b Example of the downfall of Xerox Corporation in the book highlights all these.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-3 Organization Theory in Action b Current Challenges Global competitionGlobal competition Organizational turbulenceOrganizational turbulence E-commerceE-commerce Managing knowledge and informationManaging knowledge and information DiversityDiversity Ethics and social responsibilityEthics and social responsibility

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-4 What is an Organization? b Definition b Organizations are social entities that are: Goal-directed;Goal-directed; Designed as deliberately structured and coordinated activity systems; andDesigned as deliberately structured and coordinated activity systems; and Linked to the external environment.Linked to the external environment.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-5 What is an Organization? b Type of organizations Size: small, medium & large;Size: small, medium & large; Technology: manufacturing & service;Technology: manufacturing & service; Purpose/goals: for-profit & non-profitPurpose/goals: for-profit & non-profit b Following organization design concepts apply equally to for-profit and non-profit organizations: Goal setting and effectiveness measurement;Goal setting and effectiveness measurement; Coping with environmental uncertainty;Coping with environmental uncertainty; Implementing effective control mechanisms;Implementing effective control mechanisms; Satisfying multiple stakeholders; andSatisfying multiple stakeholders; and Dealing with issues of power and conflict.Dealing with issues of power and conflict.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-6 What is an Organization? b Importance of Organizations Bring together resources to achieve desired goals and outcomes;Bring together resources to achieve desired goals and outcomes; Produce goods and services efficiently;Produce goods and services efficiently; Facilitate innovation; andFacilitate innovation; and Use modern manufacturing and computer- based technology.Use modern manufacturing and computer- based technology.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-7 What is an Organization? b Importance of Organizations (cont’d) Adapt to and influence a changing environmentAdapt to and influence a changing environment Create value for owners, customers and employeesCreate value for owners, customers and employees Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employeesAccommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-8 Perspective on Organizations - Systems b Open systems Interacts with environment to survive; consumes resources from environment and also exports resources back to it.Interacts with environment to survive; consumes resources from environment and also exports resources back to it. b Closed systems Not dependent on environment; autonomous, enclosed and sealed off from the outside world.Not dependent on environment; autonomous, enclosed and sealed off from the outside world. Although true closed system can hardly exist.Although true closed system can hardly exist.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-9 Transformation Process An Open System and Its Subsystems Environment Raw Materials People Information resources Financial resources Input Subsystems Boundary Spanning Production, Maintenance, Adaptation, Management Boundary Spanning Products and Services Output

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-10 Perspective on Organizations – Organizational Configuration b Various parts of the organization are designed to perform key subsystems. b Basic parts: Technical core (production);Technical core (production); Technical support (business development, R&D, and marketing etc);Technical support (business development, R&D, and marketing etc); Administrative support; andAdministrative support; and Management – top and middle (directing and coordinating other parts of organization).Management – top and middle (directing and coordinating other parts of organization).

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-11 Five Basic Parts of an Organization Top Management Technical Support Technical Core Administrative Support Middle Management Source: Based on Henry Mintzberg, The Structuring of Organizations (Englewood Cliffs, N. J.: Prentice-Hall, 1979) ; and Henry Mintzberg, “Organization Design: Fashion or Fit?” Harvard Business Review 59 (Jan. – Feb. 1981):

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-12 Goals and Strategy EnvironmentSize Culture Technology Structure 1.Formalization 2.Specialization 3.Hierarchy of Authority 4.Centralization 5.Professionalism 6.Personnel Ratios Organization Design Dimensions: Contextual and Structural Contextual and Structural

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-13 Organization Design Dimensions: Structural and Contextual b Contextual and structural dimensions are interdependent; and b These dimensions provide a basis for measurement and analysis of characteristics of the organization.

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-14 Organization Chart Illustrating the Hierarchy of Authority for a Community Job Training Program Board of Directors Assistant Executive Director for Human Services Executive Committee Executive Director Advisory Committee Director Economic Dev. Assistant Executive Director for Community Service Director Reg. Planning Director Housing Director Criminal Justice Director Finance Director AAA Director CETA Secretary Lead Counsel Lead Counsel Asst. Director Finance Records Clerk SecretaryAdm. AsstPayroll ClerkSecretaryMIS SpecialistStaff ClerkAdm. Asst. Alcohol Coord. Public Info Coord. Account. Contract Fiscal Manager CETA Couns. Devs. Title II D &VI&VII CETA Planner Housing Coord. CETA Couns. Devs. Title II ABC CETA Intake & Orient CETA Couns. Devs. Youth IV Program Spec. AAA Program Planner AAA Level 1 Level 2 Level 3 Level 4 Level 5

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-15 Characteristics of three Organizations TECHNOLOGY Manufacturing Retailing Government Service SIZE (#employees) 4, ,000 35

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-16 Two Organization Design Paradigms Vertical Structure Routine Tasks Rigid Culture Competitive Strategy Formal Systems Horizontal Structure Adaptive Culture Empowered Roles Collaborative Strategy Shared Information Organizational Change in the service of performance and survival Mechanical System Paradigm Natural System Paradigm Stable Environment Efficient Performance Turbulent Environment Learning Organization Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)

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©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-18 Organizational Dimensions High Formalization Low Formalization High Specialization Low Specialization Tall Hierarchy Flat Hierarchy Product Technology Service Technology Stable Environment Unstable Environment Strong Culture Weak Culture High Professionalism Low Professionalism Well-Defined Goals Poorly-Defined Goals Small Size Large Size Modern Postmodern Workbook Activity

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-19IBM High Formalization Low Formalization High Specialization Low Specialization Tall Hierarchy Flat Hierarchy Product Technology Service Technology Stable Environment Unstable Environment Strong Culture Weak Culture High Professionalism Low Professionalism Well-Defined Goals Poorly-Defined Goals Small Size Large Size Modern Postmodern Use for , Use for 1993-present Workbook Activity