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Welcome to all the students of
Organization Theory and Design

Instructor
Mr. M. S. Halder, MBA
Chairperson, BBA Department, BASC
Chapter 1


Organization

Organizations have been in existence since the
dawn of civilization, but modern organizations
differ from earlier ones in several respects. As
organizations are always in tune with
environmental demands, their shapes are vastly
different from those of the past and are likely to
change further in future, as can be seen from
the Opening Spotlight. Modern organizations are
large in size and complex in nature. They meet
the greater variety of individual and social
needs.
Characteristics of Organization
1. large size
2. Complexity
3. Mutually agreed purpose
4. Pattern of behaviors
5. Continuing system
6. Differentiation
7. Coordination
8. Conscious rationality
9. Import-Conversion-Export
10. Interaction with the other systems
Def. of Org.
1.

Pfiffner and Sherwood, “Org. is the
pattern of ways in which large numbers of
people, too many to have intimate face to
face contact with all others, and engaged
in a complexity of tasks, relate
themselves to each other in the
conscious, systematic establishment and
accomplishment of mutually agreed
purposes.”
2. Schein, “the rational coordination of the
activities of a number of people for the
achievement of some common explicit
purpose or goal, through division of labor
and function, and through a hierarchy of
authority and responsibility.”
3. Bakke, “a continuing system of
differentiated and coordinated human
activities utilizing, transforming, and
welding together a specific set of a
human, material, capital, ideational, and
natural resources into a unique problemsolving whole engaged in satisfying
particular human needs in interaction with
other systems of human activities and
resources in its environment.

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Welcome to organization theory and design

  • 1. Welcome to all the students of Organization Theory and Design Instructor Mr. M. S. Halder, MBA Chairperson, BBA Department, BASC
  • 2. Chapter 1  Organization Organizations have been in existence since the dawn of civilization, but modern organizations differ from earlier ones in several respects. As organizations are always in tune with environmental demands, their shapes are vastly different from those of the past and are likely to change further in future, as can be seen from the Opening Spotlight. Modern organizations are large in size and complex in nature. They meet the greater variety of individual and social needs.
  • 3. Characteristics of Organization 1. large size 2. Complexity 3. Mutually agreed purpose 4. Pattern of behaviors 5. Continuing system 6. Differentiation 7. Coordination 8. Conscious rationality 9. Import-Conversion-Export 10. Interaction with the other systems
  • 4. Def. of Org. 1. Pfiffner and Sherwood, “Org. is the pattern of ways in which large numbers of people, too many to have intimate face to face contact with all others, and engaged in a complexity of tasks, relate themselves to each other in the conscious, systematic establishment and accomplishment of mutually agreed purposes.”
  • 5. 2. Schein, “the rational coordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through division of labor and function, and through a hierarchy of authority and responsibility.”
  • 6. 3. Bakke, “a continuing system of differentiated and coordinated human activities utilizing, transforming, and welding together a specific set of a human, material, capital, ideational, and natural resources into a unique problemsolving whole engaged in satisfying particular human needs in interaction with other systems of human activities and resources in its environment.
  • 7. Types of Org. 1. Mutual benefit associations 2. Business concerns 3. Service organizations 4. Commonweal organizations
  • 8. 1. Mutual benefit association  These are associations which come up voluntarily for the benefit of their members. For examples, clubs, labor unions, political parties, and so on.
  • 9. All members therein have equal rights. Nevertheless, these organizations are faced with the problem of maintaining internal democratic process. Though all members, males more than females, middle-aged more then younger or older ones, minorities more than majority groups and homogeneous groups more than heterogeneous ones, tend to belong to such associations and participate more actively in them.
  • 10. 2. Business concerns The prime beneficiaries are the owners or the managers. No business organizations will ever function, if the benefits to go someone other than the owners or managers. It may simultaneously benefit labor or customers also, but such an organization will not survive for long if the owners are being deprived of the benefit.
  • 11. 3. Service organization  The prime beneficiaries in this case are the clients or those who come in contact, that is, public in contact. These organizations include schools, hospitals, mental health clinics, etc. Such organizations have a problem of providing professional service within the existing administrative procedures.
  • 12. 4. Commonweal organizations  The prime beneficiary is the public at large or the whole society. Examples include the army, police department, fire fighting department, and so on.
  • 13. Chapter 2 Organization and its external environment
  • 14. Environment Typology 1. 2. The General Environment The Task Environment
  • 15. 1. The General Environment            Economic Legal Natural Resources Technological Educational Political Cultural Demographic Sociological Governmental Ecological
  • 16. 2. The Task Environment     Competitors Customers Suppliers Workforce
  • 17. Functional Departments and the task environment Organizational Department Relevant External Environment 1. Finance and Accounting Shareholders, creditors, debtors, professional bodies. 2. Purchasing Vendors, suppliers 3. Research and Development New scientific knowledge and technology, professional bodies 4. Manufacturing Vendors, suppliers, customers, regulatory bodies 5. Marketing Customers, competitors 6. Human Resource Unions, life insurance potential employees 7. Legal Shareholders, regulatory agencies, courts, professional bodies agencies,
  • 18. Chapter 3 Organizational Goals   An organizational goal is something which an organization seeks and something towards which its resources and efforts are directed. Org. goal include the objectives, purposes, mission, standards, quotas, and targets which the organization is striving for.
  • 19.  A religious organization may be formed with the purpose of propagating a particular faith, a military organization has defense of the nation as its goal, an educational institution may come up for providing education, a hospital for treating patients, and a business organization to earn profits.
  • 20. Nature of Goals 1. Most organizations pursue multiple goals. 2. In view of limited resources, goals are assigned priorities. In short-run and long-run. 3. Even among the short-run goals, some goals are weighted more highly than others. It is important to decide whether we want to pursue the goal of profitability or increase in market share in the immediate future.
  • 21. 4. Various workers have different expectation from the organization 5. The employment of resources indicates the actual goals pursued which may be different from the official goals 6. There is a limit to the attainment of some goals such as increase in market share.
  • 22. 7. Goals are ends and not means. 8. Goals can be either open-end or closed-ended. Open-end goals do not contain a statement to indicate when they can be said to have been achieved. They are vague, ill-defined and difficult to measure such as the goal of attaining excellence in research. Closed-end goals have content, a level, a measure or indicator, and a time boundary for completion. They are specific in nature.
  • 23. 9. Social responsibility has become an important goal.
  • 24. Functions of organizational Goals 1. The term “goal” has acquired a variety of meanings and is used to connote but related things. These can be are follows:
  • 25. 2. Goals of an organization provide legitimacy to its existence. 3. Goals provide the motive force to organizational activity
  • 26. Goals serve as the starting point for organizational activity Means Sub-Goals Sub-Means Sub-Sub-Goals Sub-Sub-Means etc.
  • 27. 4. Goals help in coordinating decisions and decision makers. 5. Organizational performance is also judged in terms of goals. 6. Goals act as a set of constraints that an organization must satisfy.
  • 28. Chapter 4 Organization Structure   The term “structure” is highly abstract as operating structure is different from a planned one. Formal structure refers to the followings:
  • 29. 1. The pattern of formal relationships and duties. 2. The activities or tasks assigned to different departments and people in the organization
  • 30. 3. Coordination of these activities tasks 4. The hierarchical relationships within the organization 5. The policies, procedures, standards, evaluation systems, and so on, that guide the activities and relationships of people in the organization.
  • 31. Some concepts related to org. structure 1. The Pyramid – When the volume of work expands and the number of persons employed in any organization increases, it becomes difficult for any leader to control the activities of all individuals and therefore, they are organized in the form of departments and sections. A number of persons are appointed to take charge of these departments and sections and assist the leader.
  • 33. 2. Unity of Direction- When division of work takes place, all related activities are put together in a particular department. Every dept. and section attempts to specialize in the activity assigned to it. This is how unity of direction is achieved. 3. Unity of Command- Each person in a subordinate level is made accountable to the next higher level and he is accountable only to one superior. This approach is necessary because it protects the integrity of both the superior and the subordinate.
  • 34. 4. Chain of Command- As a subordinate report to one boss, who, in turn, reports to his own boss and like this, a chain of command develops in which orders or commands flow downwards and information travels upwards. This chain of commands keeps all levels informed as to what is happening in the organization. It gives them an assurance that no one will skip levels and undermine the superior’s confidence.
  • 35. 5. Authority- An individual performs the job assigned to him by the organization with the help of the authority granted to him by the organization for the discharge of his duties.
  • 37. 6. Delegation of Authority- A position holder having authority to control the affairs of his organization establishes his contact with the employees. He specifies their jobs and keeps a check on what they are doing and how they are doing it.
  • 39. What can be delegated?  All matters which are repetitive in nature, routine tasks, and matters of concern to one subordinate element alone can be easily delegated. There are certain problems which have to be tackled at the top like overall profit goals and budgeting, financing, major facilities and other capital expenditures, important new product programs, major marketing policies, basic personnel policies and the development and compensation of managerial personnel.
  • 40. How far it can be delegated?  Delegation can go down to the lowest level. It depends upon various factors such as willingness of the superior to delegate, confidence in subordinates, their competence, and so on.
  • 41. To delegate authority, a superior must do the followings:     Clear responsibility Commensurate authority Development of subordinates Adequate controls
  • 42. 7. Centralization it means consistent reservation of authority at certain limited points to which all matters pertaining to a particular problem have to be referred to. Authority is not delegated to different levels. People are asked to do defined jobs, but any problems arising in the course of performance are reported to the higher levels which alone have the right to take decisions.
  • 43. 8. Decentralization it is an extension of delegation. This delegation is throughout the organization. Several respects are follows:
  • 44.      it places decision-making authority at a point where there is knowledge of local problems it helps develop mangers at an early stage. It motivates managers It focuses on business performance; and It permits more time for top management to concentrate on policy-making and creative innovation.
  • 46. 9. Formalization Whatever may be the type of structure an organization has and in whichever way it distributes authority, organizations tend to be formalized. “Formalization implies that organization relationship and activities have been authenticated, that is, have a stamp of approval of one who is authorized.
  • 47. Determinants of organization structure 1. Size 2. Technology 3. Environment 4. Strategies and Goals
  • 48. Designing an organization structure 1. Identification of goals and sub-goals 2. grouping of activities 3. span of supervision
  • 50. Configuration Prime Coordinating Mechanism Key Part of Organization Type of Decentralization Entrepreneurial organization Direct supervision Strategic apex Vertical and horizontal centralization Machine organization Standardization of work processes Techno-structure Limited horizontal decentralization Professional organization Standardization of skills Operating core Horizontal decentralization Diversified organization Standardization of outputs Middle line Limited vertical decentralization Innovative organization Mutual adjustment Support staff Selected decentralization Missionary organization Standardization of norms Ideology Decentralization Political organization None None Varies.
  • 51. Chapter 5 Authority, Status, Power, and Politics   Definition It may be defined as the “decision-making” right. When a right to take a decision in a regard to a particular matter is vested in a particular position, that position is said to possess the said authority.
  • 52. Types of Authority 1. Traditional Authority 2. Charismatic Authority 3. Legal Authority
  • 53. Status   Def. It is a case of perception of how people look at a position in relation to other position in the same organization, and even of how society in general looks at it.
  • 54. Types of STATUS There are two types of status. 1. Formal- refers to the rank of people as designated by the authority structure of an organization. 2. Informal-refers to the social rank which others accord to a person because of their feelings towards him 
  • 55. Two types of factors 1. 2. Internal External
  • 56. Internal Factors External Factors Organizational rank Occupational prestige Job itself Organizational image Differences in abilities Prestige of the industry or skills or knowledge that the organization is engaged in Material worked on Education Working condition Age Pay Sex Seniority Race, etc.
  • 57. Power  Definition 1. Power is personal, political and acquired by individuals. 2. Power is, in fact, one’s ability to influence others’ behaviors.
  • 58. 3. According to Wolfe, “Power is, therefore, the potential ability of one person to induce forces on another person towards movement or change in a given direction.
  • 59. Sources of Power There are two types of power are there 1. Interpersonal sources of power 2. Structural and situational sources of power 
  • 60. Interpersonal Sources of Power 1. Legitimate power 2. Reward 3. Coercive 4. Expert 5. Referent
  • 61. Structural and Situation Sources of Power 1. Knowledge as power 2. Resources as power 3. Decision making as power 4. Networks as power 5. Power of lower level employees
  • 62. Forms of Power Suggested from Goldhammer and Shils 1. Force 2. Domination 3. Manipulation 
  • 63. Politics 1. 2. 3. Politics is the process whereby power is acquired, transferred and exercised upon others to influence their behavior to suit the interests of the person who influence. Politics or politicking is endemic to every organization and every level. People play politics either to serve their individual interests, or organizational interests, or both.
  • 64. Nord suggestion 4 postulates of power 1. 2. 3. 4. Org. composed of coalitions competing with one another for resources; Each coalition seeking to protect its own interests; Unequal distribution of power The exercise of power within organizations having impact of power within the larger social system.
  • 65. Lasswell said that  Politics has a problem of who gets what, when, and how, imply the use of power for allocation of scarce resources.
  • 66. Pfiffner said that  If power is a force to influence events, politics involves those activities or behaviors through which power is developed and used in organizational settings.
  • 67. Chapter 6 Organizational Culture 1. According to Taylor, "Culture … is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.
  • 68. 2. According to Herskovits, “that part of the total setting that includes the material objects of human manufacture, techniques, social orientations, points of view, and sanctioned ends, which are the immediate conditioning factors underlying behavior.”
  • 69. 3. According to Aviel, “ Culture as a way of life, the sum total of one’s philosophy, beliefs, norms, values, morals, habits, customs, art, and literature.
  • 70. 4. According to Lahiry, “Culture as a set of unwritten rules that embodies the dos, don’ts and shouldn't of the organization and tells its members how to interact with others and approached tasks in order to fit and meet the firm’s expectations.
  • 71. 5. According to Vein, Hunt, “ Culture takes years to develop. It is done covertly rather than overtly, by example rather than by prescription, informally rather than formally.
  • 72. Dimensions of Culture 1. 2. 3. 4. 5. 6. Nature of people Relationship with nature Interpersonal relationship Achievement orientation Time orientation Concept of space
  • 73. 1. Nature of people  What do people of a particular culture think of human beings-as honest or dishonest, trustworthy or untrustworthy, good or bad? People have a way of thinking about other people.
  • 74. 2. Relationship with nature  How do people of a particular culture view relationship between people and the environment? Is there control over nature or a subordination to it?
  • 75. 3. Interpersonal relationship  Do people stress individualism or collectivism? Are they individual-oriented or group-oriented?
  • 76. 4. Achievement orientation  Do people prefer activity to being where they are? Are they achievementoriented or leisureseeking?
  • 77. 5. Time orientation  Do they think of the past or of the future? Some cultures continues to bask under the glory of their past without paying much attention to their present or the future.
  • 78. 6. Concept of space  How do people vies space? Should we sit close to each other or at a distance? Should there be a hall or private cabins for officials to sit?
  • 79. Chapter 7 Decision Making 1.Decision making is commonly referred to as choosing between alternatives 2. It is a process of specifying the nature of a particular problem and selecting among available alternatives in order to solve it.
  • 80. 3. It is an essential human activity that pervades all management functions in organizations. 4. The important thing is to look at how individuals and groups attempt to identify problem areas, examine various potential solutions to problems, and select the most suitable solution in a particular situation.
  • 81. Types of Decisions    1. Personal and Organizational decisions 2. Basic and Routine decisions 3. Programmed and Non-programmed decisions.
  • 82. 1. Personal and Organizational decisions   Personal decisions are to achieve personal goals and organizational decisions are to achieve the organizational goals. Ex. A manager may decide to join a university programmed to brighten his career prospects in his present organization or elsewhere. It is purely his personal decision, but when he comes back after the completion of the course and does his job, he is serving organizational goals with improved skills.
  • 83. 2. Basic and Routine decisions   Basic decision are unique, one-time decisions involving long-term commitment or resources. Ex. Plant location, organization structure, product line and so on. Routine decisions are highly repetitive, everyday decisions, often taken at lower levels, such as a supervisor assigning a worker from one job to another on a particular day or a salesman deciding his schedule for visits.
  • 84. 3. Programmed and Nonprogrammed decisions.  This brings to the fact that some decisions in every organization are quiet routine or repetitive in nature and every organization has developed standard operating procedures to handle such decision problems.
  • 85.  People come and go, but irrespective of the incumbents in particular positions in the organization, the same procedures are followed day in and day out throughout the organization.
  • 86.   Programmed decisions are routine and repetitive Non-programmed decisions are unique and one-shot
  • 87. Managerial Decisions based on problem complexity and outcome uncertain
  • 88. The Decision Making Process Problem Formulation Recognition of the decision problem Diagnosis of the problem Problem Solution Generation of alternatives and Consequences thereof Choice of the most suitable alternative Decision Implementation Evaluation of follow-up of the Decision
  • 89. Decision making under different conditions of knowledge    1. Certainty 2. Risk 3. Uncertainty
  • 90. 1. Certainty  Occurs when complete information about alternatives and consequences thereof is available.
  • 91. 2. Risk  Occurs when a particular action may lead to ore than one potential outcome, but the relative probability of each outcome is fairly known.
  • 92. 3. Uncertainty  Occurs when an action may lead to more than one potential outcome and their relative probabilities are unknown.
  • 93. Techniques for Decision Making           1. Brainstorming 2. Synectics 3. Nominal Group Technique 4. Delphi Technique 5. Devil’s Advocate 6. Dialectical Inquiry 7. Quality Circles and Quality Teams 8. Self-Managed Teams 9. Group Decision Support System (GDSS) 10. Creativity and Innovation
  • 94. 1. Brainstorming   It is a techniques which helps in storming brains. The belief is that when people interact in a free and uninhibited atmosphere, they will generate creative ideas. The chief merit of this technique is that every member of the group gets a chance to stretch his/her imagination to the wildest extent possible and contribute to decision making by bringing in newer ideas.
  • 95. 2. Synectics   Synectics is derived from a Greek word meaning “the fitting together of diverse elements”. It is a technique in which diverse elements are put together so that the problem can be viewed from different angles.
  • 96. 3. Nominal Group Technique   Members are asked to list their own solutions to the problem silently and independently after giving due thought to it over a period of time, say ten to fifteen minutes. 7-10 individuals with different backgrounds and training are brought together and familiarized with the problem.
  • 97. 4. Delphi Technique    It is based on the use of questionnaire for eliciting opinions and it overcomes the need for any face-to-face interaction. These questionnaires are completed independently by experts at distant places. But it is time consuming also.
  • 98. 5. Devil’s Advocate    This follows the popular saying:" Keep a critic by your side”. This critic brings out negative aspects of your point of view and helps improve your decision provided you are an open-minded person. This method helps the individual as well as the organization. It helps the individual to develop presentation and debating skills. At the same time, the organization increases the probability of creative solutions to problems and reduces the probability of groupthink
  • 99. 6. Dialectical Inquiry    It is nothing but putting forth two opposing views which bring out the benefits and limitations of both sets of ideas. But it must be seen that it does not create a win-lose situation. The chief merit of DDM (Dialectical Decision Method) is that members arrive at a compromise and believe that they have made the decision.
  • 100. 7. Quality Circles and Quality Teams   QC are small groups that voluntarily meet to provide input for solving quality or production problems. Managers often listen to recommendations from quality circles and implement the suggestions.
  • 101. 8. Self-Managed Teams    QC and QT usually emphasize quality and production problems, whereas selfmanaged teams are more broadly focused. They even cover problems like work scheduling, job assignments and staffing. These teams possess authority in the organization's decision-making process
  • 102. 9. Group Decision Support System (GDSS)   A revolution in decision making has come about with the development of support systems. These support systems use computers, decision models, and technological advances to remove communication barriers, structure the decision process and generally direct the group’s discussion
  • 103. 10. Creativity and Innovation     Equally important is that organizations compete not with products but with people. Ideational resource is now at a high premium. Both individual and organizational influences affect the creative process. In order to induce creativity and innovation, one important step, among various techniques used for generating alternatives, is to reduce barriers to creativity and innovative thought and action.
  • 104. Chapter 8 Bureaucracy   Bureaucracy is the connecting link between the mandators of the organization and the workers. It is the concept that there must be systematic and orderly policy and rules must exist within the organization.
  • 105. Characteristics of Bureaucracy        1. Division of Work 2. Hierarchy of Authority 3. Maintain Formal, Written Documents and Extensive Filing System 4. Procedures, Rules and Regulations 5. Expert Training 6. Impersonality of Interpersonal Relations 7. Rational Programme of Personnel Administration
  • 107. 1. Division of Work  This process of division of work goes on till the job of an individual becomes highly specific and each individual is performing only a limited task.
  • 108. 2. Hierarchy of Authority   Every organization which is an entity of scale of possesses a hierarchical system. Every level is supervised by the next higher level except, of course, the top.
  • 109. 3. Maintain Formal, Written Documents and Extensive Filing System   A bureaucratic organization has an elaborate and extensive filing system. As far as possible, all decisions are formally recorded.
  • 110. 4. Procedures, Rules and Regulations  A bureaucratic organization obtains clarity in operating processes through the developing of procedures, rules, and regulations
  • 111. 5. Expert Training  It is a process provide with expert training in order to effect qualitative and quantitative improvements in their performance.
  • 112. 6. Impersonality of Interpersonal Relations   Emotions and sentiments interfere with rationality and objectivity and promote nepotism and favoritism. Therefore, in a bureaucracy interpersonal dealings are formal, impersonal and wholly devoid of emotions and sentiments.
  • 113. 7. Rational Programme of Personnel Administration   All recruitment to the organization is made on the basis of the achievement criteria rather than the ascriptive criteria. What an individual is capable of doing or what achievements he already has, rather than who he is, decides his selection or promotion.
  • 114. Assignment on July 2, 2008  Find out how to bring “remedy for evils of Bureaucracy”
  • 115. Case study solution           1. Defining the problems of the case 2. Characters of the case 3. Main factors which make the case in problem 4. Answer all the questions in the case 5. Choose the alternative solutions 6. Each solutions analyze by SWOT 7. Find out the best solution 8. Find out how to implement and evaluate the solved alternatives. 9. Synopsis 10. Gist of the case in brief.