Nature of Organizations and Organization Design F What is organizing? F What is an organization? F What is organizational effectiveness? F What are the contextual factors influencing design choices?

Fundamental Questions of Organizing F Who should contribute and how much to the collective resource pool? ( Resource Acquisition ) F For which activities should the collective resources be used? ( Resource Utilization ) F To whom should the benefits of the collective activities be allocated? ( Outcome Allocation )

WHICH OF THESE ARRANGEMENTS ARE ORGANIZATIONS? A) Your son/daughter was asked by a family friend on a Saturday night to baby-sit for their child and she accepted the request because she had no other plans and needed the money. B)The same friend asked to make an agreement with her for the rest of the year saying that they regularly need a baby sitter every Saturday. She agreed to accept the offer with the condition that for those Saturday nights when they do not need her services, she will be paid half of her regular fee C)Your daughter realized that in your neighborhood it is often difficult to coordinate a workable schedule between the available baby-sitters and the families needing their services. So she compiled a list of baby-sitters and the families and distributed it to all, so that whenever someone needs a baby-sitter or a baby sitting job they can use the list. D)Your daughter decided that the list does not really solve the problem of coordination, and saw an opportunity in providing a service. From now on, the families needing a baby- sitter would call her and she would locate a suitable baby-sitter for them. She now keeps a daily schedule of who is available to baby-sit and for whom they prefer to work for. She charges a small fee for her service from the families. E)The problem with the previous arrangement was that she did not know in advance who is available to baby-sit. So she made an agreement with all the baby-sitters in her list. The agreement stated that she will pay a fixed rate (equivalent of four hours of baby-sitting) and it did not matter whether they will baby-sit or not in any given weekend night. She reserves the right to decide for whom they will baby-sit. In case they work more than four hours she will pay them overtime for the extra hours.

Alternative Means of Organizing F Economic Perspective è MARKETS Vs FIRMS F Sociological Perspective è COMMUNAL Vs ASSOCIATIVE GROUPS F Legal Perspective è PARTNERSHIP Vs CORPORATION F Managerial Perspective è OWNERSHIP Vs CONTROL

A Working Definition of Organizations F social entity F goal-directed F deliberately structured F identifiable boundary

EFFECTIVENESS Different Types of Effectiveness in Organizations F Organizational Effectiveness F Managerial Effectiveness F Design Effectiveness

TMT Role & Effectiveness External Environment Opportunities Threats Uncertainty Resource Availability Internal Environment Strengths Weaknesses Distinctive competencies Leader style Past performance CEO TMT Mission Strategies Operational Goals Organizational Design Organizational Effectiveness

Approaches to measuring Organizational Effectiveness v External Resource Approach: Evaluation of the organization’s ability to secure, manage, and control valuable resources v Internal Systems Approach: Evaluation of the organization’s ability to innovate and function quickly and responsively v Technical Approach: Evaluation of the organization’s ability to convert resources into outputs efficiently v Stakeholders Approach:

Alternative Approaches to Organizational Effectiveness

MANAGERIAL EFFECTIVENESS F The Symbolic Role of Management: maintaining the belief that managerial action is responsible for organizational outcomes F The Responsive Role of Management: evaluating & assessing the demands and constraints confronting the organization F The Discretionary Role of Management: taking action to modify the future activities of the organization

Design Effectiveness Internal Efficiency External Adaptability

Critical Elements of Design v Purpose : The basic function for which the organization is formed v Structural Materials : The availability of information processing and decision making mechanisms v Collateral Technology : Managerial skills, performance measurement techniques, and human resources v Architectural Style : Management strategy

Contextual Factors Influencing Design Choices v The organization’s External Environment v The organization’s History and Life-cycle v The organization’s Operational Technology v The organization’s Corporate, Business, and Functional Strategies