Organisation Effectiveness

1. LECTURE OBJECTIVES
1. Identify and describe four characteristics common to all organizations.
2. Identify and explain the two basic dimensions of organization charts.
3. Contrast the traditional and modern views of organizations.
4. Describe a business organization in terms of the open-systems model.
5. Explain the term learning organization.
6. Explain the time dimension of organizational effectiveness.
1. Explain the role of complacency in organizational decline and discuss the
ethics of downsizing.
2. Describe at least three characteristics of organizational culture and explain
the cultural significance of stories.
What is an Organization?
• A cooperative and coordinated social system of two or more people with a
common purpose.
What is an Organization? (cont’d)
• Common Characteristics of Organizations
1. Coordination of effort: multiplying individual contributions to achieve
results greater than those possible by individuals working alone.
2. Common goal or purpose: having a focus to strive for something of mutual
interest.
3. Division of labor: dividing tasks into specialized jobs that use human
resources efficiently.
4. Hierarchy of authority: using a chain of command to control and direct the
actions of others.

2. Classifying Organizations
• Business Organizations
• Purpose: to make a profit in a socially acceptable manner.
• Nonprofit Organizations
• Purpose: to provide a specific public service to some segment of society without
attempting to earn a profit.
• Mutual-Benefit Organizations
• Purpose: to provide a vehicle for individuals to pursue their own self-interests.
• Commonweal Organizations
• Purpose: To provide standardized public services to all members of a society without
attempting to earn a profit.
Organization Charts
• Organization Chart
• A visual display of an organization’s positions and lines of authority that is
useful as a blueprint for deploying human resources.
• Vertical and Horizontal Dimensions
• Vertical hierarchy establishes the chain of command.
• Horizontal specialization denotes the division of labor.
• The Growth of an Organization
• Generally, specialization is achieved at the expense of coordination when
designing organizations.
The Evolution of an Organization Chart - Assignment question

3. Contrasting Theories of Organization
• The Tradition View
• The organization’s primary goal is economic efficiency.
• The organization is characterized by closed-system thinking and no or
little interaction with the external environment.
• Planning and strict control are used to eliminate uncertainty in the
organization.
• The organization’s surrounding environment is fairly predictable.
Contrasting Theories of Organization
(cont’d)
• The Modern View
• The organization’s principal goal is survival in an uncertain
environment.
• The organization is an open-system interacting with its
environment.
• The organization’s surrounding environment is composed of
variables that are difficult to predict or control.
The Traditional View of
Organizing
• The Early Management Writers
• Henri Fayol
• Frederick W. Taylor
• Four traditional principles of organization
• A well-defined hierarchy of authority.
• Unity of command.
• Authority equal to responsibility.
• Downward delegation of authority.

4. The Traditional View of
Organizing (cont’d)
• Max Weber’s Bureaucracy
• The most rationally efficient form of organization
1. Division of labor
2. Hierarchy of authority
3. Framework of rules
4. Impersonal management
• Problems with overly “bureaucratic” organizations
• Slow
• Insensitive
• Inefficient

5. Challenges to the Traditional
View of Organizations
• Bottom-up Authority
• Acceptance theory of authority (Chester Barnard)
• A leader’s authority is determined by the willingness of subordinates to
comply with authoritative communications only when
• the message is understood.
• the message is consistent with the organization’s purpose.
• it serves the subordinate’s interests.
• the subordinate is able to comply.
Organizations as Open Systems:
A Modern View
• Characteristics of Open Systems
• Interaction with the external environment through permeable
boundaries.
• Synergy in combining resources to achieve superior performance.
• Dynamic equilibrium in maintaining internal balances with help from the
external environment.
• Equifinality in achieving similar ends through different means.
Figure 9.2
Open-System Model of a Business

6. Organizations as Open Systems:
A Modern View (cont’d)
• Developing an Open-System Model
• Interacting organizational subsystems:
• Technical (production function) subsystems define the organization’s
transformation process.
• Boundary-spanning subsystems provide the organization’s interface
with the external environment.
• Managerial subsystems bridge (control and direct) the technical and
boundary-spanning subsystems.
Extending the Open-System Model: The Learning Organization
• Learning Organization
• An organization that is skilled at creating, acquiring, and transferring
knowledge, and at modifying its behavior to reflect new knowledge and
insights.
• Stages of Organization Learning
• Cognition (learning new concepts)
• Behavior (developing new skills and abilities)
• Performance (actually getting something done)
Extending the Open-System Model: The Learning Organization (cont’d)
• Five Critical Learning Skills
• Solving problems.
• Experimenting.
• Learning from organizational experience/history.
• Learning from others.
• Transferring and implementing.

7. Figure 9.3
Garvin’s Model of the Learning Organization
Organizational Effectiveness
• Effectiveness
• A measure of whether or not organizational objectives are accomplished.
• Efficiency
• A measure of the relationship between inputs and outputs for the
organization.
• No Silver Bullet
• There is no single approach to the evaluation of effectiveness that is
appropriate in all circumstances or for all organizational types.
Organizational Effectiveness
(cont’d)
• The Time Dimension of Organizational Effectiveness Involves
• meeting organizational objectives and prevailing societal expectations in
the near future.
• adapting to environmental demands and developing as a learning
organization in the intermediate future.
• surviving as an effective organization into the distant future.

8. Figure 9.4
The Time Dimension of Organizational Effectiveness
Source: Adapted from James L. Gibson, John M. Ivancevich, and James H. Donnelly, Jr., ORGANIZATIONS: BEHAVIOR,
STRUCTURE, PROCESSES, 5th ed. (Homewood, IL: Richard D. Irwin, Inc.), p. 37. © l991.
Organizational Effectiveness
(cont’d)
• Organizational Decline
• The weakening of an organization by resource or demand restrictions and/or
mismanagement.
• Sources of decline
• Mismanagement (complacency)
• Unsteady economic growth
• Resource shortages
• Global competition
• End of the cold war
• Reactions to decline
• Downsizing, demassing, reengineering
Figure 9.5
Complacency Can Lead to Organizational Decline

9. Organizational Effectiveness
(cont’d)
• Characteristics of Organizational Decline
• Decline Dilemmas
• Exit of leaders from the organization.
• Control that suppresses participation and morale.
• Preference for short-term thinking and risk avoidance.
• Intense conflict, preventing teamwork.
• Strong resistance to change.
• Counteracting Organizational Decline
• Kaizen: the philosophy of continuous improvement.
Organizational Effectiveness
(cont’d)
• Downsizing: An Ethical Perspective
• Downsizing: the planned elimination of positions or jobs.
• Commodity versus human resources viewpoints of the worth of
employees.
• Does downsizing work?
• Not nearly as well as expected.
• Only 30-45% of downsized companies report increased productivity and/
or profits.
Organizational Effectiveness
(cont’d)
• Ways of Making Layoffs a Last Resort
• Redeployment
• Downgrading
• Work sharing
• Job banks
• Employee sharing
• Voluntary early retirement
• Early warning of facility closings
• Outplacement
• Helping layoff survivors

10. Organizational Cultures
• Organizational Culture
• The collection of shared beliefs, values, rituals, stories, myths, and
specialized language that creates a common identity and sense of
community.
• The “social glue” that binds an organization’s members together.
Organizational Cultures (cont’d)
• Characteristics of Organizational Cultures
1. Collective: organizations are social entities.
2. Emotionally charged: the organization’s culture serves as a security
blanket to its members.
3. Historically based: trust and loyalty result from long-term organizational
associations.
4. Inherently symbolic: actions often speak louder than words.
5. Dynamic: culture promotes stability and control.
6. Inherently fuzzy: ambiguity, contradictions, and multiple meanings are
part of culture.
Organizational Cultures (cont’d)
• Forms and Consequences of Organizational Cultures
• Organizational values: shared beliefs about what the organization stands
for.
• The degree of sharing and intensity determine whether an organization’s
culture is strong or weak.

11. Figure 9.6
Forms and Consequences of Organizational Culture
Organizational Cultures (cont’d)
• The Organizational Socialization Process
• Organizational socialization: the process of transforming outsiders into
accepted insiders.
• Orientations
• Orientation programs familiarize new employees with the
organization’s history, culture, competitive realities, and compensation
and benefits.
• Storytelling
• Recitations of heroic or inspiring deeds provide “social roadmaps” for
new employees.
Organizational Cultures (cont’d)
• Strengthening Organizational Cultures
• Symptoms of a weak organizational culture
• Inward focus
• Morale problems
• Fragmentation/inconsistency
• Ingrown subcultures
• Warfare among subcultures
• Subculture elitism