organizations

1. ORGANIZATIONS ANDORGANIZATIONS AND
ORGANIZATION THEORYORGANIZATION THEORY

2. DefinitionDefinition
Organizations are social entities that are
goal directed, deliberately structured
activity systems with an identifiable
boundary.
Organizations shape our lives and are
important social institutions.

3. Elements in the definitionElements in the definition
Social entities – organizations are composed of
people and groups of people. The building blocks of
an organization are people and their roles. People
interact with each other to perform essential
functions in organizations.
Goal-directed – organizations exist for a purpose. An
organization and its members are trying to achieve
an end. Participants may have different goals from
those of the organization, and the organization may
have several goals.

4. Deliberately structured activity systems – being activity
systems means that organizations perform work
activities. Organizational tasks are deliberately
subdivided into separate departments and sets of
activities. The deliberate structure is used to
coordinate and direct separate groups and
departments.
Identifiable boundary – the boundary identifies which
elements are inside and which are outside the
organization. Membership is distinct. Members
normally have some commitment or contract to
contribute to the organization in return for money,
prestige or other gain.

5. Organizations as SystemsOrganizations as Systems
There are two types of systems – closed and open
systems.
A closed system would not depend on its
environment; it would be autonomous, enclosed,
and sealed off from the outside world. It would
have all the energy it needed, an it could function
without the consumption of external resources. A
true closed system does not exist but early
management believed they could do things without
the environment.

6. An open system must interact with the
environment to survive; it both consumes
resources and exports resources to the
environment. It cannot seal itself off. It must
continuously change and adapt to the environment.
Open systems can be enormously complex.
A system is a set of interacting elements that
acquires inputs from the environment, transforms
them, and discharges outputs to the external
environment. The need for inputs and outputs
reflects dependency on the environment.
Interacting elements mean that people and
departments depend upon one another and must
work together.

7. Environment
Raw
materials &
resources
Subsystems
Input
organization
Transformation
Output
Products
Services
Boundary
Spanning
Boundary
Spanning
Production, Maintenance,
Adaptation, Management
Exhibit 1.1: An organization system and its subsystems

8. Inputs – include employees, raw materials and
other physical resources, information, and financial
resources.
The transformation process – changes these
inputs into something of value that can be exported
into the environment.
Outputs – include specific products and services
for customers and clients. They may also include
employee satisfaction, pollution, and other by-
products of the transformational process.

9. Organization subsystemsOrganization subsystems
Organization subsystems perform five
essential functions: boundary spanning,
production, maintenance, adaptation, and
management.
Boundary spanning – handles inputs and
output transactions. On the input side
they acquire needed supplies and
materials Purchasing departments). On
the output side they create demand and
market outputs (marketing departments).

10. Production – produces the product and
service outputs. This is were the
transformation takes place (production
departments in a manufacturing firm,
classrooms in a university, and medical
activities in a hospital).
Maintenance – responsible for the
smooth operation and upkeep of the
organization cleaning, painting of
buildings, repair and servicing of
machines).

11. Adaptation – responsible for organizational
change. Scans the environment for problems and
opportunities, and technological developments
(engineering, research, and marketing research
departments).
Management - Responsible for directing the other
subsystems of the organization. Management
provides direction, strategy, goals, and policies for
the entire organization, coordinates other
subsystems and resolves conflicts between
departments, develops organization structure,
directs tasks within each subsystem.

12. Dimensions of OrganizationsDimensions of Organizations
Structural dimensions – provides labels
and describes the internal characteristics
of an organization. They create a basis for
measuring and comparing organizations.
Contextual dimensions – characterizes
the whole organization, including size,
technology, environment, and goals. They
describe the organizational settings that
influences the structural dimensions.

13. Structural dimensions
◦ Formalization – pertains to the amount of written
documentation in the organization. Documentation
includes procedures, job descriptions, regulations, and
policy manual.
◦ specialization (division of labor) – is the degree to which
organizational tasks are subdivided into separate jobs.
◦ Standardization – is the extent to which similar work
activities are performed in a uniform manner.
◦ Hierarchy of authority – describes who reports to whom
and the span or control for each manager. Depicted by
vertical lines on an organization chart.

14. ◦ Complexity – refers to the number of
activities or subsystems within the
organization. Can be measure along three
dimensions: vertical, horizontal and spatial.
 Vertical complexity is the number of levels in the
hierarchy,
 Horizontal complexity is the number of job titles or
departments existing horizontally.
 Spatial complexity is the number of geographical
locations.

15. ◦ Centralization – refers to the hierarchical
levels that has authority to make a decision.
◦ Professionalism – is the level of formal
education and training of employees.
Considered high when employees require
long periods of training required to hold jobs
in the organization.
◦ Personnel ratios - refer to the deployment of
people to functions and departments.
Measured by dividing the number of
employees in a classification by the total
number of organizational employees.

16.  Contextual Dimensions
◦ Size - is the organization's magnitude as reflected in the number of
people in the organization. Size is typically measured by the count of
employees because organizations are social systems.
◦ Organizational technology – is the nature of the production subsystem,
and it includes the actions and techniques used to change
organizational inputs into outputs.
◦ Environment – includes the elements outside the boundary of the
organization (industry, government, customers, suppliers, and financial
community).
◦ The organization’s goals and strategy – define the purpose and
competitive techniques that set it apart from other organizations.
Goals define company intent and strategy is a plan of action.