MODULE 1

ZCMB6122 ORGANIZATION THEORY AND DESIGN

 1 Introduction to organization

2 Evolution of organization theory & design

TOPICS

3 Dimensions of organizational design

4 History of organization & management

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1 INTRODUCTION TO ORGANIZATION

What is an organization? Who creates an

organization?

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1 INTRODUCTION TO ORGANIZATION

How does an organization

create value?

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1 INTRODUCTION TO ORGANIZATION

Continuous assessment 1:

ü INSTRUCTIONS WILL BE GIVEN IN THE CLASS SESSION

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1 INTRODUCTION TO ORGANIZATION

Increase specialization and

Why do organizations exist? the division of labour

Use large-scale technologies

The use of an organization Manage external Which increases the value that an
allows people jointly to: environment organization can create.

Economize on transaction
costs

Exert power and control

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 Organization Theory
The study of how organizations function and how they affect and are affected by
the environment in which they operate.

Organization Structure Organizational Design & Change Organizational Culture

• The formal system of task and authority
relationships that controls how people are to
cooperate and use resources to achieve the
organization’s goals.
• Evolves as organization grows.
• Can be managed and changed through the
process of organizational design.
• The process by which managers select and
manage various dimensions and components
of organizational structure and culture so that
an organization can control the activities
necessary to achieve its goals.
• Balances the need of the organization to manage
external and internal pressures so that it can
survive in the long run.
• Allows the organization to continually redesign
and transform its structure and culture to
respond to a changing global environment
• The set of shared values and norms that
controls organizational members
• Controls coordination and motivation; shapes
behaviour of people and the organization.
• Evolves as organization grows and
differentiates.
• Can be managed and changed through the
process of organizational design.

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Discuss the concept of organizational culture and its impact
on employee behavior, job satisfaction, and organizational
performance. Can a strong culture be a liability for an
organization? Why or why not?
2 EVOLUTION OF ORG. THEORY & DESIGN

• Organization theory (OT) is not about a collection of facts, but a way of thinking about organization.
• OT is a way to see and analyze organizations more accurately and deeply based on patterns and
regularities in organizational design and behaviour.

• The modern era of management theory started in late 19th and 20th centuries due to the emergence of
the factory system during the 1st Industrial Revolution.

• Work was performed on a much larger scale.

• There were larger number of employees.
• Concern with increase productivity and maximum efficiency.

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2 EVOLUTION OF ORG. THEORY & DESIGN

Classical Management Perspective

1. Efficiency is everything.

• Scientific management (Frederick W. Taylor) – decision about organization and job design should
be based on precise, scientific study of individual situations.
• Develop precise, standard procedures for doing each job; select workers with appropriate
abilities; train workers in the standard procedures; carefully plan work; provide wage incentives to
increase output.
• Organizational assumption: role of management is to maintain stability and efficiency, with top
managers doing the thinking and workers doing what they are told.

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3 DIMENSIONS OF ORG. DESIGN

Dimensions are used to understand an

organization’s design traits.

Two dimensions:
1. Structural dimension – describe the internal
characteristics of an organization, and is used to measure
and compare organizations.
2. Contextual dimension – characterize the whole
organization, which influences and shapes the structural
dimension.

Adopted from Daft & Armstrong (2015)

Organization Theory & Design

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3 DIMENSIONS OF ORG. DESIGN

Structural dimensions
1. Formalization – the amount of written documentation (e.g., procedures, job descriptions, regulations, and policy manuals) in the
organization that describe behaviour and activities.

2. Specialization – the degree to which organizational tasks are subdivided into separate jobs; also known as division of labour – extensive
specialization, narrow range of tasks, low specialization, broad range of tasks.

3. Hierarchy of authority – describes who reports to whom and the span of control (i.e., number of employees reporting to
a supervisor) for each manager – narrow span of control, tall hierarchy; wide span of control,flat hierarchy.

4. Centralization – the hierarchical level that has authority to make a decision – kept at the top level, centralization; delegated to lower
level of organization, decentralization.

5. Professionalism – the level of formal education and training of employees – professionalism is high when employees require long periods of
training to hold jobs in the organization – measure: competency &adhere to code of conduct.

6. Personnel ratio – deployment of people to various functions and departments – measured by dividing the number of
employees in a classification by the total number of organizational employees.

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3 DIMENSIONS OF ORG. DESIGN

Contextual dimensions
1. Goals and strategy – define the purpose and competitive techniques that set it apart from other organizations – goals are enduring
statement of company intent,; strategy is the plan of action that describes resource allocation and activities for dealing with the
environment and for reaching the organization’s goals.

2. Environment – all elements outside the boundary of the organization – industry, government, customers, competitors, suppliers, and
financial community.

3. Size – organization’s magnitude as reflected in the number of people in the organization – total sales and total assets are measures to
reflect magnitude but they do not indicate the size of the human part of the system.

4. Culture – underlying set of key values, beliefs, understandings, and norms shared by employees – culture is unwritten
but can be observed in its stories, slogans, ceremonies, dress, and office layout.

5. Technology – tools, techniques, and actions used to transform inputs into outputs – concerns with how the organization actually produces
the products and services it provides for customers – examples of technology: flexible manufacturing, advanced information system, and the
Internet.

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4 HISTORY OF ORG. & MANAGEMENT
Adopted from Daft (2016), Management

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4 HISTORY OF ORG. & MANAGEMENT

Classical Perspective

• Imagine you were in the late 1800s, what would you do when the new factory system requires:
• Setting up managerial structure,
• Training employees who were majority non-English speaking immigrants,

• Scheduling complex manufacturing operations,

• Managing employee dissatisfaction,

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Human Relations Movement
• Idea: truly effective controls come from within
the individual worker rather than from strict,
authoritarian control.
• Hawthorne studies – money matters but human
relations complete the equation.
• Employees perform better when managers
treated them in a positive manner.
• Worker productivity increase partly as a result of
the increased feelings of importance and group
pride that employees felt by virtue of being
selected for this important project and the
camaraderie that developed among group
members.
• Be careful of Hawthorne effect – employees
behave differently because of the active
participation of managers.
Humanistic Management
Human Resources Perspective
• Interest in worker participation and considerate
leadership are maintained but emphasized on
considering the daily tasks that people perform –
the diary farm view.
• Combine prescriptions for design of job tasks with
theories of motivation – job should be designed to
allow workers to fully use their potentials.
• Contributors: Abraham Maslow (Maslow’s Hierarchy
of Needs) and Douglas McGregor (Theory X and
Theory Y).
• McGregor – organizations can take advantage of the
imagination and intellect of all their employees,
who will exercise self- direction and self-control to
contribute to organizational goals when given the
opportunity.
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Behavioural Sciences Approach
• Uses scientific methods and draws from
sociology, psychology, anthropology,
economics and other disciplines to develop
theories about human behaviour and
interaction in organizational setting.
• Examples of management techniques:
organization development (OD), matrix
organizations, self-managed teams, ideas
about corporate culture, and management by
wandering around.
• OD was developed in 1970s – it applies the
behavioural sciences to improve the
organization’s health and effectiveness through
its ability to cope with change, improve internal
relationships, and increase problem-solving
capabilities.
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4 HISTORY OF ORG. & MANAGEMENT

• Three management science sub-fields:

• Operations research – consists of mathematical model building and other applications of quantitative
techniques to managerial problems.

• Operations management – field of management that specializes in the physical production of goods and
services – use management science (e.g., forecasting, inventory modelling, linear and nonlinear
programming, queuing theory, scheduling simulation, and break-even analysis) to solve manufacturing
problems.

• Information technology – MIS is designed to provide relevant information to managers in a timely and
cost-efficient manner – intranets, extranets, and software programs help managers to estimate costs, plan
and track production, manage projects, allocate resources, or schedule employees.

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4 HISTORY OF ORG. & MANAGEMENT

• People are trained to solve problems by breaking a complex system

into discrete parts and working to make each part perform as well as
possible.

• Problem – success of one part does not add up to success of the

whole – sometimes changing one part to make it better actually
makes the whole system function less effectively.

• Managers need to understand the relationship among the parts of a

whole system – patterns of movement over time and focus on the
qualities of rhythm, flow, direction, shape and network of
relationships that accomplish the performance of the whole.

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4 HISTORY OF ORG. & MANAGEMENT
Adopted from Daft (2016), Management

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4 HISTORY OF ORG. & MANAGEMENT

Contingency View

• Universalist view + case view = contingency view.

• Certain contingencies (i.e., variables) exists for helping managers identify and understand situations.
• One thing depends on other things, and a manager’s response to a situation depends on identifying
key contingencies in an organizational situation.

• What works in one setting might not work in another.

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4 HISTORY OF ORG. & MANAGEMENT

Innovative Management Thinking

• It continues to emerge to address new management challenges – new management tools:

• E-business
• Customer relationship management (CRM)
• Virtual organization.
• Empowerment
• Bossless workplace
• Big-data analytics

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CASE STUDY 1

ü INSTRUCTIONS WILL BE GIVEN IN THE

CLASS SESSION

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 END OF
MODULE 1
Don’t forget to do your
revision and read up
further to enhance your
understanding.

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Dr. Ida R. Ismail. 2021