Management and Organisational Behaviour

7th Edition

CHAPTER 4

The Nature of Organisations

 Purpose of organisations

• Organisations exist in order to achieve their

aims & objectives and to provide satisfaction for
their members

• Organisations are structures of people

• Organisations are an integral part of society

operating in both public & private sectors
 Defining organisations

Farnham & Horton define organisations as:

..social constructs created by groups in society to achieve

specific purposes by means of planned & co-ordinated
activities.

These activities involve using human resources to act in

association with other inanimate resources in order to
achieve the aims of the organisation.
 1-3
Management Key Concepts
• Organization: A structure whereby people are working together
and coordinating their actions to achieve specific goals.

• Goal: A desired future condition that the organization seeks to

achieve.

• Management: The process of using organizational resources to

achieve the organization’s goals by…

– Planning, Organizing, Directing/Leading, and Controlling

(Ref: Henri Fayol)
 Formal organisations
Schein defines a formal organisation as….

… the planned, co-ordination of the activities of a

number of people for the achievement of some
common, explicit purpose or goal, through the
division of labour & function, & through a
hierarchy of authority & responsibility
 Formal organisations

Formal organisations are:

• Deliberately planned and created

• Concerned with the co-ordination of activities
• Hierarchically structured with stated objectives
• Based on certain principles such as the
specification of tasks and defined relationships
of authority & responsibility
Basic components of an organisation Figure 4.3
 Basic components of an
organisation

• Operational core – the direct performance of the

technical or productive operations and the carrying out
of actual task activities

• Operational support – concerned indirectly with the

technical or productive process but closely related to
the actual flow of operational work
 Basic components of an
organisation
• Organisational support – the provision of services for
the whole organisation, including the operational core
but usually outside the actual flow of operational work

• Top management – concerned with the broad

objectives and policy & strategic decision making

• Middle management – concerned with the co-

ordination & integration of activities & providing links
with operational support staff
 Private enterprise & public sector
Private
organisations
Public sector

• Owned & financed by

• Created by government
individuals, partners, or
shareholders accountable
to their owners or
members.

• Main aim is of a
commercial nature such as • Do not generally have
profit, return on capital profit as their goal but
employed, market standing have a political purpose
or sales levels
 Organisational goals

• Market leadership • To be the best in field

• Growth • To invest in our people

• Profitability • To be professional
 Environmental influences on organisations
Figure 4.6

PESTEL ANALYSIS

Political, Economics, Socio-cultural, technological, Environmental, and Legal Influences

 The informal organisation

The informal organisation arises from:

• the interaction of people working in the organisation

• their psychological and social needs
• the development of groups with their own
relationships and norms of behaviour, irrespective of
those defined within the formal structure
 The formal & informal organisation Figure 4.9

Source:
Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’,
Supplement to the British Journal of Administrative Management,
Management, no. 18, March/April 1997.
 The formal organisation
• Organisation charts • Production efficiency

• Spans of control • Policies & procedures

• Job definitions &

descriptions
 The informal organisation
• Personal animosities & • Prestige & power
friendships structures

• Grapevines • Emotional feelings, needs

& desires
• Group norms &
sentiments • Effective relationships

• Informal leaders • Personal & group goals