1. Advanced Diploma in Procurement & Supply
Management in
procurement and supply
Session 1
Theories of organisation and management

2. About this session
This is the first session in this unit and covers organisations and organisational behaviour; the concept of management; how thinking on it has changed and why it is necessary; and the importance of organisational culture.
This is a big session but there is a lot of background reading to support you.

3. Session Learning Outcomes
On completion of this session you should be able to:
Explain the main aspects of organisational behaviour
Evaluate the main influences that shape organisational behaviour
Analyse the origins of management and organisational behaviour
Analyse the main contemporary approaches to management and organisational behaviour
Syllabus references 1.1, 1.2, 1.3 and 1.4
In the introduction to this unit we reviewed the four overarching learning outcomes for this unit expressed in terms of knowledge and understanding.
As we mentioned then in order to better assess knowledge and understanding it is necessary to support these overarching learning outcomes with more detailed learning outcomes expressed in terms of what you should be able to do.
So, if you did take a look at the syllabus as suggested in the introduction you will see that the learning outcomes above are more detailed learning outcomes supporting overarching learning outcome 1.0.
They clearly state what you should be able to do at the end of this session.
We suggest that at the end of each session you review these session learning outcomes to ensure that you are able to complete the tasks / processes defined in them.

4. Organisational Behaviour
Organisations consist of both
Systems
People
An organisation has been defined as “a social arrangement for the controlled performance of collective goals”
CIPS (2012 p2)
‘Organisational behaviour is concerned with the study of the behaviour of people within an organisational setting.’
Mullins (2005, p. 26)
In order to be effective a manager needs to understand ‘what is going on, and why, in order to be able to ‘manage’ – explain, predict, direct, facilitate or control - those behaviours or events.’ CIPs (2012, [p. 2)
Organisations consist of both systems, which are observable, and people, who interact with others in pursuit of goals –whether individual, group, or corporate ones.
The study of organisational behaviour seeks to understand how people behave when they are in an organisational setting.
The next slide explores Mullins’s definition in more detail.

5. Mullins’s framework
The framework above shows us that the behaviour of people can’t be studied in isolation.
It is important to understand how people inter-relate with the other variables that together total the whole organisation.
Mullins (2005, p. 27) therefore states that the study of organisational behaviour needs us to understand also:
The behaviour of people (both individuals and groups);
The process of management (the next slide includes a range of definitions of management);
The organisational context in which the process of management takes place;
Organisational processes and the execution of work; and
Interactions with the external environment of which the organisation is part.
Wilson cited in Mullins (2005, p. 27) also says that we can gain insights into organisational life and behaviour by looking at what happens outside the organisation. For example what happens when we rest and play.
As the above diagram shows the reason why it is important to understand organisational behaviour – improved organisational performance and success.

6. Definitions of management
Management is the process of getting results by making the best use of available human, financial and material resources
(CIPS 2012, p.3)
The key purpose of management (and leadership) is to ‘provide direction, facilitate change and achieve results through the efficient, creative and responsible use of resources’.
Management Standards Centre (cited in CIPS 2012, p. 3 )
Management is ‘a social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of given purposes or tasks.’
EFL Brech (cited in CIPS 2012, p. 3)
Above are just some of the many definitions of management (CIPS 2012 p3).
NB If you do an internet search on management books you will get over 1 billion hits and if you do a search for a definition of management you will get 900 million. So there is plenty to choose from.
The Management Standards Centre website ( contains some interesting resources including a range of best practice guides relating to a number of sessions. For example: team working and recruitment and selection.

7. Characteristics of organisations
Structure (controlled performance)
A formal network of authority and responsibility relationships, division of labour and communication channels.
Objectives (collective goals) Stated quantitative and/or qualitative aims towards which activity will be directed, and against which performance will be measured.
People (social arrangements) Organisations are ‘made up’ of people, in a complex network of formal and informal roles and relationships, individual and collective effort, decision-making and communication.
The above slide identifies three basic characteristics shared by all organisations.
Think about the organisation you work for - you should be able to readily relate each of these characteristics to your organisation.
NB The idea of a psychological contract is discussed in the same chapter in the CIPS book (pp5-6). This will be covered in session 3, Motivation & Job Satisfaction

8. Fayol’s functions of management
Planning:
defining objectives or desired results, and formulating courses of action to achieve them
Organising:
establishing a structure of tasks which must be performed to achieve the objective, and allocating them to appropriate individuals and units
Commanding:
instructing and influencing people towards the accomplishment of tasks and goals
Co-ordinating:
integrating the goals and activities of individuals and groups within the organisation, through communication
Controlling:
measuring and monitoring the process of work in relation to the plan, and taking corrective action where necessary
Fayol cited in CIPS, 2012, p. 7
As we have seen there are many definitions of management.
Mullins (2013, pp ) sees management as essentially an integrating activity and that the overall responsibility of management is the achievement of the organisation’s objectives.
CIPS (2012, p. 7) state that effective management involves:
Satisfying the needs of people at work (in order to maintain a positive psychological contract and employee relations)
Creating a positive organisational ecology, environment or ‘climate’ which enables people to work willingly and effectively
Achieving the strategic objectives and activities of the organisation.
This slide and the following will look at the findings of some influential management theorists starting with what are called the classical management theories.

9. Mintzberg’s managerial roles
Mintzberg is famous for his early study of managers when he discovered that managers rarely spent longer than 15 minutes on a task before other demands had to be met (The Nature of Managerial Work, 1973).
Note also that he includes leadership as part of a manager’s role. This is unusual these days when leadership is widely considered a heroic, charismatic role.
The idea of a leader has grown in popularity since the 1960s with writers such Warren Bennis and John Kotter diminishing the role of manager.
Bennis said managers promote efficiency, follow the rules and accept the status quo whereas leaders focus on challenging the rules and promoting effectiveness.
Kotter saw managers as being the ones who plan, budget, organise and control while leaders set direction, manage change and motivate people.

10. The importance of leaders
Leaders energise and support change, which is essential for survival in highly competitive and fast-changing business environments
Leaders secure commitment, mobilising the ideas, experience and motivation of employees
Leaders set direction, helping teams and organisations to understand their purpose and goals
Leaders support, challenge and develop people, maximising their contribution to the organisation
Leaders use a facilitate-empower style (rather than a command-control style), which is better suited to the expectations of empowered teams and the need for information-sharing
This slide , from Whetten & Cameron (CIPS p9), sets out a number of reasons why leaders are important.
Could you replace leaders by managers?
The last bullet point assumes a particular preferred style of leadership. This is not appropriate for every situation. Can you think of a situation where “command and control” might be the better option?

11. Reasons for forming organisations
For social reasons
Organisations meet human beings’ psychological needs for relationship, belonging and identifying with something ‘bigger’ than themselves.
To enlarge abilities or increase productive capacity
This is done not only by ‘pooling’ energies and resources, but by facilitating specialisation.
To accumulate information and knowledge
Because organisations are continuous, they build up a knowledge base through the combined learning and information-gathering of members over time
To facilitate efficiency
Organisations make it possible for objectives to be achieved with less expense of time and resources than individuals can manage working on their own.
These are all very different. How did you organisation begin?
Do you think these are discrete stages in an organisation’s life-cycle?
Do these apply to all kinds of organisations eg public sector, third sector or NGOs, manufacturing? And what about social media organisations and internet-based ones like Amazon?

12. Organisational metaphors
The organisation as a machine
The organisation as a biological organism
The organisation as a brain
The organisation as culture
The organisation as a political system
Psychic prisons
Flux and transformation
Instruments of domination
Gareth Morgan in Creative Organisation Theory
This slide (see CIPS p11) reminds me of a party game; if your organisation were an animal what would it be? If it were a car? However Morgan has a serious intent with his metaphors getting us to look at organisations from more than one perspective.
Some of these metaphors are more memorable than others. The one about the brain appeals to me (as a psychologist) because the brain has higher executive functions, parts that keep you alive without your having to think about it (business as usual) and parts that assess risks and threats (which give rise to the “flight or fight” response.
Jungian psychic prisons reflect the idea that organisations have a shadow side. How we perceive them is important.

13. Organisation structure - 1
Formal organisation structure consists of a framework designed to:
Define work roles and relationships
Define work tasks and responsibilities
Channel information flows efficiently through the organisation
Coordinate goals and activities of different units
Control the flow of work, information and resources
This is the ideal rationale for a formal organisation structure.
Mintzberg (CIPS p12) defines it as” the pattern of relationships among positions in the organisation and among members of the organisation. Structure makes possible the application of the process of management and creates a framework of order and command through which the activities of the organisation can be planned, organised, directed and controlled.”
If you used this as a checklist to audit your own organisation could you tick every box?

14. Organisation structure - 2
Formal organisation structure consists of a framework designed to:
Support flexible working and adaptability to changing internal and external demands
Facilitate organisational learning
Encourage and support the commitment, involvement and satisfaction of the people who work for the organisation
Support and improve the efficiency and effectiveness of the organisation’s performance through all of the above
This is the ideal rationale for a formal organisation structure.
If you used this as a checklist to audit your own organisation could you tick every box?

15. Influences on organisation structure
The strategic objectives or mission of the organisation
The task or ‘business’ of the organisation
The technology of the task
The size of the organisation
Geographical dispersion
The environment of the organisation
The culture and management style of the organisation
Organisations don’t exist in isolation.
As this slide makes clear there is the environment or context in which the organisation operates.
In the modern business environment global (and virtual) teams are common, technology is vital, and the culture is key to attracting and retaining staff.

16. Components of organisation structure
Mintzberg
Here is Mintzberg’s way of looking at organisations.
Each segment has a part to play (see CIPS p14).
The CEO and strategic team often get the plaudits (and brickbats when things go wrong) but they couldn’t function without the other segments.
Don’t assume that the diagram reflects the proportion of employees at each level; organisations are much flatter, generally speaking, than they were 20 or 30 years ago.
Mintzberg himself demonstrates how organisations can be configured in different ways and suggests 5 general types which you can reada bout on p14 of the CIPS book

17. Organisational flexibility
Modern trends in flexible organisation:
The flattening of organisation hierarchies
Project management structures
Horizontal structures
Boundaryless structures
Functional flexibility or versatility
Numerical flexibility
As mentioned in the previous slide organisations have become flatter by taking out layers of middle management.
This has had the effect of making teams bigger with managers having to manage more staff then their predecessors. This can be a challenge for some managers.
Project management or matrix structures can mean that you have more than one manager. You might have a functional manager and a project manager from a different part of the organisation or even from a different discipline.
This then begs the question of who sets your priorities and who assesses your performance?
Numerical flexibility is often necessary to respond to seasonal demands or other variations. Contract workers, or temporary staff, can be used to plug the gaps as can employing staff on zero hours contracts (working as and when required by the organisation).
Contract workers are usually more expensive than regular staff and there is the problem of training them to your standards. Another challenge for managers!

18. Inter-organisational and network structures
Markets
Separate firms act independently of each other, forming temporary relationships based on competition or transactions and exchanges.
Hierarchies
An organisation forms a single, structured entity, within which all relationships are formally defined and all activities integrated, as in a bureaucracy.
These are the two extremes of inter-organisational structures and between them there are inter-organisational structures in which organisations share resources.
For example many public sector organisations have a shared services arrangement where they use one of the organisations to provide payroll or HR functions for them.
You will probably be more familiar with other arrangements such as franchising, outsourcing, and joint ventures.
Does your organisation have any arrangements like these?
Or does it have more of a network arrangement as described in CIPS pp16-17?
These are looser, more dynamic arrangements which may be global in reach but rely on collaboration, trust, and some mutual benefit.

19. Virtual organisations
Are supported by on-going developments in ICT which allow data-sharing and synchronisation, interactive communication and virtual meetings
Allow a high degree of flexibility (numerical, temporal and functional)
Enable information and other resources to be mobilised efficiently in widely dispersed regions and specialist sectors, while allowing central control, pooled information and consistency of service and image where required
Offer cost savings in areas such as employment, overheads and logistics,
Exploit an increasingly knowledge-based economy, where the prime commodities are knowledge, information and expertise
Exploit international markets, as they enable members to take advantage of local knowledge, indigenous language speakers, indigenous trading partnerships, etc.
A virtual organisation is a special form of the network concept.
An obvious drawback is that communicating across different time zones may impose extra demands on organisations but it also means that the organisations can operate 24/7 by using different members of the network around the world.
The external environment is an important consideration because organisations are open rather than closed systems ie they exchange resources and information with the outside world.

20. The STEEPLE framework Socio-cultural Technological Economic
Environmental (or ‘ecological’)
Political
Legal
Ethical
So, because organisations are open systems they are subject to external influences.
This is a tool for analysing the macro-environment or the different demands or challenges facing an organisation.
It extends the PEST framework.
There is more information on the systems approach in CIPS section 4 of chapter 2
If you were examining your own organisation which of these would provide the greatest challenge?

21. Ethical issues At the macro level At the corporate level
issues of the role of business and capitalism in society
At the corporate level
issues which face an individual organisation as it formulates strategies and policies about how it interacts with its various stakeholders
At the individual level
issues which face individuals as they act and interact within the organisation and supply chain
Recent events involving clothing suppliers in Asia have highlighted some of the ethical issues and the dilemma of providing cheap fashionware without breaching international standards of health and safety and what some would see as moral obligations to fair trade.
How much can organisations be expected to know about manufacturing and employment conditions further down the supply chain?

22. Corporate social responsibility (CSR)
Law, regulation and Codes of Practice impose certain social responsibilities on organisations
Voluntary measures may enhance corporate image and build a positive brand
Above-statutory provisions for employees and suppliers may be necessary to attract, retain and motivate them to provide quality service and commitment
Increasing consumer awareness of social responsibility issues creates a market demand for CSR
As discussed in the last slide CSR is now almost a mandatory requirement for any sizeable organisation.
Does yours have such a policy? Is it widely disseminated?

23. Elements of culture
Culture can be thought of as an iceberg; there is a lot beneath the surface you are not aware of. In this case underlying values and beliefs.
What you observe are the rituals, the myths and stories about people in the organisation, and people’s behaviour.
We may not even be aware of what is going on below the waterline (to continue the iceberg analogy) just as we may not be aware of our own personal values - until they are threatened.

24. Hofstede’s dimensions of culture
Power distance
The extent to which unequal distribution of power is accepted.
Uncertainty avoidance
The extent to which security, order and control are preferred to ambiguity, uncertainty and change
Individualism
The extent to which people prefer to live and work in individualistic (‘I’) rather than collectivist (‘We’) ways.
Masculinity
The extent to which social gender roles are distinct.
Long-term orientation
The extent to which society embraces long-term devotion to traditional, forward thinking values.
Hofstede’s work has been very influential in comparing cultures across the world. The dimensions are at country rather than organisational level but are useful as guidelines if you are working globally.
For example the USA and the UK are more individualistic than many Asian countries as well as the former soviet republics where individualism was discouraged under communism.
The long-term orientation is also typical of far eastern countries in contrast to the short-termism evident in the West.
However be aware that there are often cultural differences with a region , or even a country eg in Spain or America.
Which countries do you think have low gender differences?

25. The Trompenaars model
In relation to how individuals relate to other people, a society may emphasise any of the following five aspects:
Universalism or particularism
Individualism or collectivism
Affective or neutral
Specific or diffuse
Achievement or ascription
In relation to time and the environment, societies may emphasise any of the following two aspects:
Past/present or future
Internal control or external control
In this model the authors recognise that different cultures may place different emphases on the same values.
Another aspect which is of keen interest to inter-culturalists (who study these things) is whether or not the language is high or low context. In other words how much information is unspoken?
High context cultures such as Japanese, Asian, Southern European, Latin American, Middle Easternrely on more than the written word to communicate. Non-verbal communication is also important as is less formal forms of communication.
In contrast low context cultures such as Germanic, Scandinavian and North American (and the UK is similar) take the content of a communication at face value and directly express themselves. Contract and rules are more important than personal relationships.

26. Cross-cultural management
Cultural differences may raise issues in the following areas:
Team-working
Communication
Participation and involvement
Conflict resolution
International issues
Thinking about the previous two slides on cultural differences it becomes clear that these factors can have a considerable influence and impact on day-to-day global management.
Which of these do you think are most likely to be affected by cultural differences in your own organisation?

27. The cultural web
Culture at the organisational level is often defined as “the way we do things round here”
This diagram includes typical elements of that way of looking at culture, some of which have been mentioned earlier.
These elements are described in more detail in CIPS p26
Does your organisation (or department if it is large) have its own rituals and routines eg the way new staff are inducted or welcomed?

28. Harrison/Handy’s four cultural types
CULTURE
KEY FEATURES
Power culture
(Zeus)
Power centred in a key figure, owner or founder
Control through direct personal communication
Little formalisation, rules or procedures
Role culture
(Apollo)
Classical, rational organisation (bureaucracy)
Formalised, impersonal: authority based on position, function; conformity to rules and procedures
Task culture
(Athena)
Management directed at outputs and results
Team-based organisation: horizontally structured, flexible
Valuing expertise, communication, collaboration
Person culture
(Dionysus)
Serves the interests of individuals
Management function administrative and supportive, rather than directive
Harrison’s original model proposed that organisations could be classified into four types. These were differentiated by their structures, processes and management methods which resulted in different cultures.
Charles Handy popularised it when he gave each type the name of a mythological Greek god.
This model operates at the organisational level and below that. It is not uncommon to see different parts of an organisation displaying different cultural types.
Does that happen in your organisation? Is the culture in production the same as that in sales for example?

29. Organisational forms - 1
CLASSICAL
MODERN
POSTMODERN
Approximate period
1880–1970 (the industrial age)
1970–1990 (the technological age)
1990– (the information age)
Organisation metaphor
Machine
Open system
Flexible tool
Organisation structure
Rigid, hierarchical chain of authority
Decentralised: delegated authority and local units
Not important: action, not ‘design’
Focus
Internal processes
Human relations
Adaptability and innovation
Production focus
Mass production: efficiency
Customisation: meeting customer demands
Time to market: speed of response
These divisions are not necessarily so clear cut and may be more typical of western culltures.
Many organisations still use industrial methods from the classical era.

30. Organisational forms - 2
CLASSICAL
MODERN
POSTMODERN
Work organisation
Routine, repetitive work
Teamworking
Entrepreneurial units
Human resource
Full-time employees
Flexible working patterns
Networks, sub-contractors
Control mechanisms
Direct supervision, rules and procedures
Decentralisation: local problem-solving
Not important: results, not rules
Key values
Control and predictability
Quality, customer service
Change, flux, quick decisions
Approach
Find the ‘one best way’ (prescriptive approach)
Find ‘best fit’ (contingency approach)
Maximise responsiveness
Strategy for uncertainty
Avoid
Manage
Exploit
Taking all these factors into account, in which era would you place your organisation?

31. Developing ‘schools’ of organisation and management
This is just another way at looking at the evolution of organisations.
The human relations approach was in part a reaction to scientific management approaches but was also influenced by the human potential school of psychology eg Maslow (which is here called neo-human relations).
This included the work of Douglas McGregor famous for his Theory X:Theory Y which challenges management assumptions about how people relate to their jobs.
This is described on p 40 of the CIPS unit.
Would you say you are more Theory X or Theory Y? What about your own boss?

32. Scientific management: key features
Recognise a clear-cut division of responsibility and work between management and workers
Develop a science for each element of work, to replace the old rule-of-thumb method: the best way of doing a job
Apply work-study techniques to establish the most efficient operations, motions and processes
Redesign jobs so that each worker carried out only one job operation as a specialised job
Scientifically select and train workers to ensure all of the work being done is in accordance with the principles of scientific management
A simple way to look at this, which is still relevant today, is: select the right person, train them, then motivate them.
The question of how we motivate employees will be addressed in session 3.

33. Henri Fayol’s 14 principles of management
Division of work
Scalar chain of authority
Correspondence of authority and responsibility
Appropriate centralisation
Unity of command
Unity of direction
Initiative
Subordination of individual interests
Discipline
Order
Stability of personnel
Equity
Remuneration
Esprit de corps
Fayol was a French industrialist ( ) who believed in the universality of management principles.
We looked at his five functions earlier in this session:
Planning:
Organising:
Commanding:
Co-ordinating:
Controlling:

34. Weber’s general characteristics of bureaucracy
Hierarchy of authority
Specialisation
System of rules
Impersonality
Rationality
Uniformity
Technical ability
Stability
At the time a bureacracy was considered an ideal form of organisation ensuring that the same processes were carried out in every department and in whichever location.
This would ensure similar treatment of problems. In other words a pure form of a rational organisation.
Now bureacracy is often seen in a negative light.
What kind of organisations still exhibit these characteristics and need to to deliver their products or services?

35. Addressing the dysfunctions of bureaucracy
Downsizing organisations, or ‘chunking’
Decentralising authority, or delegating
Decreasing the rigidity of specialisation
Improving structural communication mechanisms in all directions
Emphasising quality, customer service and flexibility as key cultural values
Bureaucracies are not ideal where there is ambiguity and change as there can be long lines of communication passing through different levels of the organisation mitigating against a quick response.
Bureacracies tend to inhibit personal growth and promotion may depend on seniority/length of service

36. Basic sub-systems for analysing work organisation and activities
Task
the nature of the organisation’s inputs and outputs and the work activities to be carried out as part of the conversion process
Technology
the manner in which organisational tasks are carried out
Structure
the patterns of organisation, division of labour, co-ordination, authority relationships and communication channels by which activities are carried out
People
the nature of the people undertaking the activities
Management
the co-ordination of the other sub-systems, and the direction of organisational activities as an integrated whole
Eric Trist and colleagues at the Tavistock Institute for Human Relations developed the idea of organisations as socio-technical systems.
This comprised two main sub-systems or parts; the technology and the people.
They knew that productivity was linked to worker satisfaction and motivation and were the first to promote autonomous working groups which could identify their effort with their reward.

37. Contribution of the systems approach
It draws attention to the dynamic nature of organisations
It creates awareness of subsystems, each with goals which must be integrated
It creates awareness of the inter-relatedness of aspects of the organisation, and a focus on the needs of the system as a whole
It focuses attention on the interrelationship between the organisation and its external environment
It integrates the insights of the formal classical approach and the informal human relations approach, by seeing these as inter-related subsystems
The systems approach and especially the soft systems approach (Peter Checkland) enables you to have an overview of the system as a whole, its environment and the sub-systems within it.

38. Organic organisations
Typified by structural and cultural fluidity and flexibility, involving:
A ‘contributive’ culture of information and skill sharing, encouraging versatility and team-working
A ‘network’ structure of authority and communication, allowing decentralisation and a range of lateral relationships for coordination and self-control
Job design that allows flexible definition of tasks according to the needs of the team and changing demands
Focus on goals and outputs rather than processes
This kind of organisation is in complete contrast to mechanistic, bureaucratic organisations
What kind of organisation takes this form?

39. The postmodern organisation
Involves maximising structural and cultural fluidity through mechanisms such as:
Multi-directional information flows, through networking
Permeable boundaries with the environment
Downsizing and delayering to shorten decision processes and decentralise authority to front-line responsive units
Staff flexibility and empowerment: multi-skilling, team autonomy, motivation for commitment, encouragement of entrepreneurship
Cultural tolerance of ambiguity, change and flexibility
This is probably more of a concept than a practical reality but it makes you think how oranisations might respond to a turbulent environment.
It requires a lot of flexibility and probably creates a sense of impermanenceand even disorder.
Could some of these ideas really work in your organisation?

40. References
CIPS (2012) Management in procurement and supply, Stamford, Profex Publishing Limited
Chapter 1 pp 1-30
Chapter 2 pp 31-46
Mullins et al (2004) Management and organisational behaviour, Harlow, Pearson Education Limited
Chapters 1, 2, 10, 11, 12, 13, 17 & 18
Human Resource Management (8th edition) by Torrington et al, FT Prentice Hall
Chapters 4, 13 & 27