The document discusses key concepts in organizational theory and design. It covers: 1) The importance of organizations in bringing together resources to achieve goals efficiently while adapting to changes. 2) How organizations create value through inputs, conversion of inputs, and outputs. 3) Why organizations exist to increase specialization and use of large-scale technology for economies of scale and scope. 4) Key aspects of organizational theory including its structure, design, and response to environmental changes.

1. Introduction
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2. Organization Theory in Action
 Current Challenges
◦ Global Competition
◦ Ethics and and Social Responsibility
◦ Speed of Responsiveness
◦ The Digital Workplace
◦ Diversity
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3. What is an Organisation?
 Organisations are social entities that
are goal directed, are designed as
deliberately structured and
coordinated activity systems, and are
linked to external environment.”
 “Organisations are made up by people
and their relationships
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4. What is an Organization?
 A tool used by people to coordinate their actions to obtain
something they desire or value
 Importance of Organizations
◦ Bring together resources to achieve desired goals
and outcomes
◦ Produce goods and services efficiently
◦ Facilitate innovation
◦ Use modern manufacturing and information
technologies
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5. Importance of Organizations
 Importance of Organizations (cont’d)
◦ Adapt to and influence a changing
environment
◦ Create value for owners, customers and
employees
◦ Accommodate ongoing challenges of
diversity, ethics, and the motivation and
coordination of employees
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6. How Does an Organization
Create Value?
 Value creation takes place at three stages: input, conversion and
output.
 Inputs – include human resources, information and knowledge, raw
materials, money and capital
 Conversion – the way the organization uses human resources and
technology to transform inputs into outputs
 Output – finished products and services
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7. Figure 1: How Does an Organization
Create Value?
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8. Example of McDonald
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9. Why Do Organizations Exist?
 To increase specialization and the
division of labor
 To use large-scale technology
◦ Economies of scale: cost savings that result when
goods and services are produced in large volume
◦ Economies of scope: cost savings that result when an
organization is able to use underutilized resources more
effectively
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10. Figure 2: Why organizations
exist
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11. Organizational Theory, Design, and
Change: Some Definitions
 Organizational theory: the study of how
organizations function and how they affect
and are affected by the environment in
which they operate
 Organizational structure: the formal
system of task and authority relationships
that control how people coordinate their
actions and use resources to achieve
organizational goals
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12. An Open System
and Its Subsystems
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Transformation
Process
Environment
Raw Materials
People
Information
resources
Financial
resources
Input
Subsystems
Boundary
Spanning
Production,
Maintenance,
Adaptation,
Management
Boundary
Spanning
Products
and
Services
Output

13. Organisational Configuration
 Technical Core
 Technical Support
 Administrative Support
 Management
◦ Middle Management
◦ Top Management
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14. Five Basic Parts of an
Organization
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Top
Management
Technical
Support
Technical Core
Administrative
Support
Middle
Management

15. 15
Goals and
Strategy
Environment Size
Culture Technology
Structure
1. Formalization
2. Specialization
3. Hierarchy of Authority
4. Centralization
5. Professionalism
6. Personnel Ratios

16. Two Organization Design
Approaches
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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
Mechanical System Design Natural System Design
Stable Environment
Efficient Performance
Turbulent Environment
Learning Organization

17. Organisation Theory and
Design, The History
 Fredrick Winslow Taylor
◦ Scientific management
◦ “managers develop precise, standard procedures for
doing each job, select workers with appropriate
abilities, train workers in standard procedures,
carefully plan work, and provide wage incentive to
increase output.”
◦ “the role of management is to maintain stability and
efficiency”
 Thinking (top managers)
 Working (workers doing what they are told)
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18. Organisation Theory and Design, The
History (cont’d)
 Henri Fayol
◦ Administrative principles
◦ “looked at the design and functioning of the
organisation as a whole”
◦ “administrative principles in particular contributed to
the development of bureaucratic organisations”
◦ “designing and managing organisations on an
impersonal, rational basis through such elements as
clearly defined authority and responsibility, formal
record keeping, and uniform application of standard
rules.”
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19. Organisation Theory and Design, The
History (cont’d)
 Hawthrone studies
◦ Work on industrial psychology and human
relations
◦ Chicago western electric company
◦ “positive treatment of employees
improved their motivation and
productivity”
◦ The human relations and behaviuoral
approaches
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20. Contingency Theory
 “Contingency means that one thing
depend on other things, and for
organisations to be effective, there
must be a goodness of fit between
their structure and coordination in their
external environment.”
 Contingency means it depends.
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21. Contingency Factors Affecting
Organisation Design
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Organizational Structure and Design
The Right Mix of Design Characteristics Fits the Contingency Factors