1-1 ©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e Chapter One Organizations and Organization Theory

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-2 Organization Theory in Action b Topics b Current b Current Challenges GlobalGlobal competition OrganizationalOrganizational turbulence E-commerceE-commerce ManagingManaging knowledge and information DiversityDiversity EthicsEthics and social responsibility

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-3 What is an Organization? b Definition b Importance of Organizations Bring together resources to achieve desired goals and outcomesBring together resources to achieve desired goals and outcomes Produce goods and services efficientlyProduce goods and services efficiently Facilitate innovationFacilitate innovation Use modern manufacturing and computer- based technologyUse modern manufacturing and computer- based technology

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-4 b Importance of Organizations (cont’d) Adapt to and influence a changing environmentAdapt to and influence a changing environment Create value for owners, customers and employeesCreate value for owners, customers and employees Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employeesAccommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-5 Transformation Process An Open System and Its Subsystems Environment Raw Materials People Information resources Financial resources Input Subsystems Boundary Spanning Production, Maintenance, Adaptation, Management Boundary Spanning Products and Services Output

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-6 Five Basic Parts of an Organization Top Management Technical Support Technical Core Administrative Support Middle Management Source: Based on Henry Mintzberg, The Structuring of Organizations (Englewood Cliffs, N. J.: Prentice-Hall, 1979) ; and Henry Mintzberg, “Organization Design: Fashion or Fit?” Harvard Business Review 59 (Jan. – Feb. 1981):

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-7 Goals and Strategy EnvironmentSize Culture Technology Structure 1.Formalization 2.Specialization 3.Hierarchy of Authority 4.Centralization 5.Professionalism 6.Personnel Ratios

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-8 Organization Chart Illustrating the Hierarchy of Authority for a Community Job Training Program Board of Directors Assistant Executive Director for Human Services Executive Committee Executive Director Advisory Committee Director Economic Dev. Assistant Executive Director for Community Service Director Reg. Planning Director Housing Director Criminal Justice Director Finance Director AAA Director CETA Secretary Lead Counsel Lead Counsel Asst. Director Finance Records Clerk SecretaryAdm. AsstPayroll ClerkSecretaryMIS SpecialistStaff ClerkAdm. Asst. Alcohol Coord. Public Info Coord. Account. Contract Fiscal Manager CETA Couns. Devs. Title II D &VI&VII CETA Planner Housing Coord. CETA Couns. Devs. Title II ABC CETA Intake & Orient CETA Couns. Devs. Youth IV Program Spec. AAA Program Planner AAA Level 1 Level 2 Level 3 Level 4 Level 5

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-9 Characteristics of three Organizations TECHNOLOGY Manufacturing Retailing Government Service SIZE (#employees) 4, ,000 35

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-10 Two Organization Design Paradigms Vertical Structure Routine Tasks Rigid Culture Competitive Strategy Formal Systems Horizontal Structure Adaptive Culture Empowered Roles Collaborative Strategy Shared Information Organizational Change in the service of performance and survival Mechanical System Paradigm Natural System Paradigm Stable Environment Efficient Performance Turbulent Environment Learning Organization Source: Adapted from David K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard Business School)

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-11 Organizational Dimensions High Formalization Low Formalization High Specialization Low Specialization Tall Hierarchy Flat Hierarchy Product Technology Service Technology Stable Environment Unstable Environment Strong Culture Weak Culture High Professionalism Low Professionalism Well-Defined Goals Poorly-Defined Goals Small Size Large Size Modern Postmodern Workbook Activity

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organization Theory and Design 7/e 1-12IBM High Formalization Low Formalization High Specialization Low Specialization Tall Hierarchy Flat Hierarchy Product Technology Service Technology Stable Environment Unstable Environment Strong Culture Weak Culture High Professionalism Low Professionalism Well-Defined Goals Poorly-Defined Goals Small Size Large Size Modern Postmodern Use for , Use for 1993-present Workbook Activity