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CHAPTER ONE
What Is an Organization?
Definition
Organizations are social entities that are goal directed, with deliberately structured
activity systems, and with a link to the external environment.
Types of Organizations
Organization can differ by size, by purpose (service or product /manufacturing), for
profit or not for profit, and legal status – corporation, partnership or sole
proprietorship.
Importance of Organizations
See Slides
Dimensions of Organizational Design
Structural Dimensions
Structural dimensions provide labels to describe an organization’s internal
characteristics. A few examples:
1) Formalization:
the amount of written documentation in the organization
Include procedures, job descriptions, regulations, and policy manuals
2) Specialization:
the degree to which organizational tasks are subdivided into separate jobs
Skilled trades often exhibit a high degree of specialization
3) Hierarchy of Authority:
describes who reports to whom and the span of control of each managerThe
number of layers of management: tall vs. flat organizations
4) Centralization:
refers to the hierarchical level that has authority to make a decision
Centralized decision making (at top) gives little discretion to lower level employees
5) Professionalism:
- is the level of formal education and training of employees
accounting firms have a high level of professionalism
5) Personnel Ratios:
Refer to the deployment of people to various functions and departments
Measures include various ratios such as administrative ratio (e.g. the workplace
consists of 25% administrators and professional staff, 60% front line employees,
and 15% executive level management)
Contextual Dimensions
Contextual dimensions characterize the whole organization and describe the
organizational setting.
1) Size:
is the organization’s magnitude as reflected in the number of people in the
organization
2) Organizational Technology
is the nature of the production subsystem that changes inputs to outputs
Includes assembly lines, classrooms, oil refineries, etc.
3) Environment:
includes all elements outside the boundaries of the organization
Includes customers, suppliers, competitors, government, etc.
4) Goals & Strategy:
define the purpose and competitive techniques that set one organization apart from
others - Includes mission statements and plans of action
5) Culture:
is the underlying set of key values, beliefs, understandings, and norms shared by
employees May be observed in stories, symbols, ceremonies, etc.
Performance and Effectiveness Outcomes
The organization must learn to be efficient—using the least amount of resources to
achieve its goals, as well as effective—the degree to which an organization
actually achieves its goals. In doing so, the organization must consider its
stakeholders who are any groups within or outside the organization that have a
stake in the organization’s performance.
Contingency Theory
Contingency theory means that one thing depends or is influenced by other
things, and for organizations to be effective, there must be a proper fit (or goodness
of fit) between the structure and the conditions in the external environment. There is
no one best way to manage or structure and organization; the structure of an
organization is contingent or dependent upon a nos of factors that influence to
operations of an organization (such as the external environment).
Contemporary Organizational Design
Before the Industrial Revolution, when most organizations were involved in
agriculture or craft work, communication was primarily face-to-face, and structures
were simple. In the industrial age, however, a different paradigm emerged, focusing
on stable environment, routine technology, large organization size, growth and
efficiency goals, and a culture in which employees were taken for granted.
Challenges presented by today’s environment including global competitiveness,
diversity, rise of e-commerce, a shift to knowledge and information as organizations’
most important form of capital, and worker expectations for meaningful work and
opportunities for personal and professional growth.
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