The Elements of Organizations

Topic 1: The elements of organizations

Organizations are the basis of the economic system, producing goods and services needed by society. They provide compensation for workers.
Organizations coordinate the allocation and distribution of scarce resources.
The economic system encompasses the production, distribution, and consumption of goods and services.
Organizations integrate elements to meet individual and collective needs, aiming for business and social goals, including profit maximization, growth, satisfaction, quality, survival, and social impact.
Companies are driven to adopt social goals due to changing values, corporate responsibility, creating shared value, talent retention, and competitive advantage.
Organizations need a set of organized and directed elements to achieve business and social goals. These elements include humans (workers, managers), materials (raw materials, equipment, infrastructure), and intangibles (image, organizational structure, and expertise).
Organizations have productive processes where inputs are transformed into outputs using technology and organizational tasks
Technological advancements and innovation play a fundamental role in organizational progress, evident in the evolution from stone tools to modern information and communication technologies (ICT), affecting the tourism sector with new payment methods (cashless- mobile wallets), software solutions (QR technology for access, massive emails, virtual meetings, and virtual assistants like Greta), and applications for booking and security.
Organizations operate within a specific environment involving customers, suppliers, competitors, intermediaries, and a general environment with political, legal, economic, socio-cultural, and technological dimensions (PEST factors)
A company also has its own influence on the environment, depending on its market power/ influence
Company culture encompasses the values, practices, and rules that guide employee behavior to communicate with the workforce and management. Culture affects autonomy at work, staffing, and customer interaction.
Organizational culture comprises elements like mission (the company's purpose), values (qualities of company members), and policies (action plans defining identity)
A company's image is a public impression about its performance/ quality
The social balance document assesses and evaluate corporate social responsibility
Social costs and benefits are reflected in the social balance, including job creation, wealth generation, charitable contributions, and social costs such as pollution, limited natural resources, job stress, and the difficult reconciliation between personal life and work life.
AAPP (Aassociation of the professional accounting) encourages the social balance

1.2 Organization theory

Organization theory is a complex concept not easy to precisely define but easier to provide examples of.
Organizations are social units with specific objectives and a desire for continuity over time.
Organizations establish formalized relationships among their members to achieve shared goals.
Organizations need to be legitimate within the external social system.
Organizations should be able to replace members without compromising their survival.
Organizations are more than socio-technical elements. They also have important socio-technical, political-cultural dimensions, and need to be controlled and improved to handle new realities like information and control, organizational change, and organizational improvement.
Different perspectives regarding organizations' operations are considered, including classic theories, neoclassical theories, and contemporary theories. There are different approaches for these theories. Classic perspectives were predominant in the first half of the 20th century. Neoclassical theories occurred from 1950-1970, and contemporary theories occurred also during those years
Some classical paradigms include scientific management (Taylor), administrative management (Fayol, Gulick, and Urwick), bureaucracy (Weber), Theory and social structure (Selznick, Merton), the human problems associated with an industrial civilization (Mayo), and the Human Side of the Enterprise (McGregor).
Scientific management, proposed by Taylor, focuses on the systematic analysis of work through a hierarchical-personal control to improve productivity.
Administrative Management, proposed by Fayol & Urwick, focuses on management and tasks such as planning, organizing, coordinating, and controlling – this is a process.
Structuralism (Weber), focuses on how organizations operate/ function - how formal rules are established, how power is used, and how hierarchical structures are set.
The humanistic approach from (Mayo) considered how workplace attitudes and relationships between workers affect work dynamics and job performance.

1.3 Fundamental Dimensions in Organizations

The environment is composed of external actors and forces, which influence organizational activities, potentially uncontrollable, impacting how organizations exchange with markets.
The components of the environment are general and competitive. General environment is comprised of ecological, economic, political, technological, and socio-cultural context.
Competitive environment includes competitors, suppliers, and customers.
There is an open economic system, indicating that organizations operate in a dynamic environment where supply and demand are significant factors determining exchanges
Uncertainty is a reality in the environment, including factors such as stability, complexity, diversity, and hostility.
Organizations need goals – these can be economic (profitability, productivity), growth-related (increasing production volume), or social (community development, job creation and other social improvements.)
Administrative structure is a formal plan for establishing relationships, communications, decision-making, and procedures for managing people, tasks, factors (materials), and functions to achieve organizational objectives. This design is materialized in an organizational chart.
Components of administrative structures include hierarchy, coordination and control systems, and various organizational units (departments or divisions.)
Hierarchy and divisionalization is essential for the administration structure.
Models of divisionalization include functional, products or services, type of demand/users, territories/markets, and matrix.
Human resources (HR) departments have various activities such as personnel monitoring, continuous training, communication channel establishment, motivation management, and payroll & labor agreement management, performance evaluation, and career development, and sanctioning.
Organizations need to define required professional and human skills, establish relationships with employees, determine the cost of hiring the individuals, discover where they can hire the individuals, and define the procedures for these individuals selection.
Some technological, financial, and essential material resources include information and communication technologies (ICTs, like info systems, SAP, CRM, distribution systems, finances, and material resources.)
Basic management functions include planning – defining actions to reach a goal, organizing – structuring activities and resources to achieve goals, integrating – selecting, training, and developing staff, and leading – guiding employees towards the goals, controlling – ensuring plans are met.

1.4 Creation of an Organizational Structure

Four stages are needed for the design of an organizational structure: defining goals, considering contingency factors, designing the structure, and implementing systems.
Defining goals includes strategic and operational goals, activity functions, and tasks.
Contingency factors include the age of workers, organization size, and history, forecasting environmental pressures, and stability/complexity
Designing the structure includes defining job positions, assessing specialization, and grouping positions into units.
Implementing systems involves defining information systems and designing planning and control systems to manage the organization. Organization designs may have problems/dysfunctions like excessive lengths of hierarchies, horizontal fragmentation, bureaucratic expansion.

1.5 Business Excellence

Business excellence represents the highest level of performance and achievement within an organization. It is based on continuous improvement, innovation, quality, and customer satisfaction to ensure long-term success and competitive advantages.
Strategic management encompasses decisions and actions for formulating, implementing, and adapting to an organization's objectives.
Organizational culture influences business excellence by affecting values, beliefs, norms, and rules that help define employee behavior.
Business excellence depends on integrating strategic fit, values fit, and organizational fit. Organizational culture is based on quality, innovation, productivity, and attention to people and their working conditions.