Psychology Decision-Making Strategies

Organizational Theory Introduction

• This course is ADMN 2510H
• This course covers organizational theory and design.
• The textbook is by Richard L. Daft and Ann Armstrong (2022).

Grade Breakdown

• Discussion questions: 40% (10 questions x 4%)
• Film analysis assignments: 30% (2 assignments x 15%)
• Final exam: 30%

What is an Organization?

• An organization is a social collective designed to offer a product or service to others.
• Organizations are formed by relationships inside and outside the organization.
• Organizations set goals and objectives.
• The mission statement describes the organization's purpose.
• Organizations have goals related to operations, employees, markets, innovation, and stakeholders.
• Organizations impact their external environments.
• Organizations can take many forms, such as for-profit, non-profit, multinational, or government.

Purpose of Organizations

• Organizations exist to create value for owners, customers, and employees.
• They bring resources together to achieve goals.
• Organizations efficiently produce goods and services.
• They manage diversity, ethics, and coordination.
• Organizations adapt to rapidly changing environments.

Organizational Change

• Organizations in the 20th century faced stable environments, becoming "open" systems dependent on the environment.
• Industries switched to wartime supplies (WWII).
• Globalization made competition more complex.
• Workers gained rights and unions grew in power.
• Organizations became focused on employee motivation, diversity, and ethics, and society demanded more variety from them.
• Society buying habits changed (from brick-and-mortar to online).

Closed and Open Organizations

• A closed system is within the organization only.
• An open system depends on the environment outside the organization.
• Organizations have both an external environment and Internal subsystems.

Organization Design (Mechanistic and Organic)

• Mechanistic structures are organized for efficiency.
• Organic structures support learning and adapting.

Organization Configuration

• There are five basic parts in an organization: Top Management, Middle Management, Technical Support Staff, Administrative Support Staff, and the Technical Core.

Dimensions of Organizational Design

• Organizations have structural dimensions (formalization, specialization, hierarchy, centralization, professionalism, and personnel ratios) and contextual dimensions (goals and strategy, environment, size, and culture).

What are Organizational Theories?

• Theories are guidelines that help decision-makers.
• People have been leading and controlling others for a long time.
• Social, environmental, and technological changes lead to new approaches in management.
• Organization theories provide ways to think about and manage organizations.

Theories (Classical Management, Scientific Management, Human Relations, Bureaucracy)

• Classical Management and Scientific Management focus on efficiency (mass production), structure, authority, command, and control.
• Scientific Management seeks to optimize output.
• Human Relations focus on employees' needs and roles for organizational productivity.
• Bureaucracy emphasizes structure with rules, policies, procedures, hierarchies, and command.

Theories (Politics, Newer Theories, Frames)

• Politics- the use of power and conflict in decision making.
• Newer theories embrace physical capabilities, intellect, skills, morals, social and ethical considerations to go beyond profits.
• Frames (Structural, Human Resource, Political, Symbolic) are different ways of looking at an organization and management.

What are Organizational Frames? (Bolman and Deal)

• Organization theories are broken down into frames.
• Managers can apply multiple perspectives.

Organization Theories (Four Frames)

• The Machine Frame, The Jungle Frame, The Extended Family Frame, The Theatre Frame

Frames

• Structural (architecture of the organization): strategy, structure, goals, efficiency, roles, and relationships are important
• Human resource (Human component): understanding workers and their skills; individuals needing motivation
• Political (organizations as arenas): competing for power and resources
• Symbolic (Organizations as cultures): rituals, ceremonies, heroes, myths, and language are important

Organization Types

• Government, business/corporations, not-for-profits, creative industries, worker co-operatives, charities, unions, non-governmental organizations (NGOs), United Nations, grassroots organizations, social platforms, and multinational corporations (MNCs)

Strategic Design

• Organizations are built to achieve a purpose.
• Managers set goals, mission, and competitive strategy.
• Environmental factors are internal and external.
• Strategic methods include SWOT and PEST analysis.

Organizational Purpose

• Mission statements represent shared values and beliefs.
• Operative goals focus on achieving performance, acquisition, market, employee development, and change (adapt to environment).
• Operational goals are linked through triangles (Overall, Employee development, Resources, Market, Productivity, and Innovation).

Framework for Selecting Strategies and Design (Lawrence and Lorsch, Porter, Miles and Snow, Blue Ocean)

• Lawrence and Lorsch strategy: mechanistic, stable environment, organic, volatile
• Porter strategy: cost leadership, differentiation
• Miles and Snow: defender, prospector,
• Blue Ocean strategy: create a new market for products/services.

Organizational Effectiveness

• Effectiveness is about whether goals have been achieved.
• Resource-based, internal-process, and goal approaches help to measure effectiveness and ensure that the organization meets various stakeholders' concerns.
• Competing values model (balance the internal and external values).

Contingency Approaches: Environmental Influence

• Open systems, flexibility, human relations, rationality, internal processes, and control are all important aspects of the environment.
• Using the appropriate types of internal structure and strategy is critical based on the type of environment

Organizational Structure

• Organizational structure designates formal reporting relationships.
• Structure groups individuals into departments, and departments into organizations.

Organizational Hierarchy

• Vertical structure: specialized tasks, many rules, top-down control.
• Horizontal structure: shared tasks, empowerment, decentralized.

Information Processing

• Vertical and horizontal structures impact information flow and organizational learning.

Departmental Grouping

• Functional: Grouping departments by function
• Divisional: Grouping departments by product, customer, or geographic region
• Multi-focused: Combining functional and divisional characteristics
• Horizontal: Organizing departments around processes
• Virtual: Online collaboration among geographically dispersed teams

Concerns with Departmental Grouping

• Integration: conflicts amongst departments
• Co-ordination: difficulty coordinating amongst departments that are larger
• Communication, who is responsible for the decisions
• Duplication
• Departmental silos – competition rather than cooperation

Holacracy Team Structure

• COVID has supported the ideas of Holacracy – getting rid of managers, workers self-managing, no job titles, no hierarchies.

Symptoms of Structural Deficiency

• Decision making is delayed or lacking in quality
• Organizations do not respond to changing environments
• Employee performance declines and goals are not met
• "Too much" conflict

New Directions

• Outsourcing: contracting out work to other organizations
• Focus on special tasks (functional) for efficiency
• Using virtual networks for greater flexibility

Organizational Theory, Politics: Power and Conflict

• Politics is a theory about power and conflict.
• Most managers have a negative view of politics.
• Politics can hurt an organization more than help it.
• Businesses need to be well managed, and can't be destroyed by politics that aren't managed efficiently.

Power

• Power is the ability to influence people to act in a certain way.
• There are tactics to increase power.
• Power is vested in a position
• Power vs. Authority: power is the influence to change behavior and authority is vested in a position.
• Different types of authority: traditionally inherited, legal, and charismatic

Sources of Power

• Formal Authority
• Coercive, Reward
• Control of Resources (scarce)
• Network Centrality, and People
• Charismatic

Sharing Power

• Empowerment of employees in decision making
• Training, workplace empowerment; teams, delegation, suggestions.
• Public consultations/meetings, stakeholder engagement
• Workers' Self-Directed Enterprises (WSDE) and worker cooperatives – workers share more power

Conflict

• Conflict occurs in organizations because managers, employees, and stakeholders have different ideas.
• Conflict can be a good thing: encouraging innovation and change
• Sources: goal incompatibility, differentiation, tasks interdependence, restricted resources.

Conflict Management

• Ways to manage conflict: avoidance, compromise, competition, accommodation and collaboration.

Decision Making, Sensemaking

• Decision making is the process of identifying and solving problems in an organization.
• Decisions involve problem identification, discussion, alternatives, and implementation.
• Decisions can be based on rationality and bounded rationality.

Rational Decision Making

• Identify the problem
• Define objectives
• Develop alternatives
• Evaluate alternatives
• Choose the best alternative
• Implement the choice
• Monitor the results (feedback)

Bounded Rationality

• Decisions are made based on incomplete information
• There are time constraints, pressures, and personal limits
• The goal is to make a "good enough" decision

Cognitive Biases

• Cognitive biases are severe errors in judgement that lead to bad choices
• Anchoring, confirmation bias, escalation of commitment are examples.

Sensemaking

• Understanding, processing, and organizing information to build a reality
• Triggered by uncertainty and ambiguity; use cues and social aspects.

Weick's 7 Properties of Sensemaking

• Identity, retrospective, ongoing events, socialization, important cues, plausibility, and sufficiency/satisfice

Newer Theories

• New theories are needed to manage today's organizations
• Changing technologies, social values, and stakeholder demands require new thinking.

Organizational Life Cycle

• Organizations are born, grow, mature, and decline.
• The stages are entrepreneurial, collectivity, formality, and elaboration.

Organizational Decline

• Organizational decline is the inability of an organization to adapt to change or an inability to control the organization itself.
• Decline can result from shifts in environment, vulnerabilities, or competition.
• Organizations experience stages of decline (e.g., denial, inaction, crisis, final stage).

Organizational Control Strategies

• Bureaucratic (rules, standards, hierarchy), market-based (prices, competition), and clan-based (tradition, shared values).
• Organizations need more complex systems for control as they grow.

Institutional Pressures

• Organizations adapt to external expectations (laws, norms, values, cultures).
• This can create institutional isomorphisms/similar structural patterns among organizations.
• Isomorphisms can be coercive (regulations), mimetic (imitating), or normative (adoption of norms).

Innovation and Change

• Change and innovation are essential for survival and adaptation.
• Internal and external forces of change (e.g., technology, globalization, competition) should be viewed as threats and opportunities.
• A variety of strategies and approaches are used by leaders and organizations to implement changes.

Barriers to Implementation of Change

• Focus on cost, Lack of motivation, lack of coordination and cooperation, uncertainty avoidance, loss of power and fear of job loss
• Lack of understanding or communication creates barriers to change.

Techniques for Implementing Change

• Establishing a sense of urgency, forming a guiding coalition, developing a vision and strategy, communicating the vision, empowering others to act on the vision, creating short-term wins, consolidating gains, and institutionalizing new approaches

Test your understanding of key psychological factors influencing decision-making, communication barriers, and techniques for improving memory and managing stress. This quiz covers various strategies and methods relevant to effective decision-making in complex scenarios.