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

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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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 Humanistic Management

Human Relations Movement Human Resources Perspective Behavioural Sciences Approach

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

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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