Organisational Behaviour And Design PDF

CHAPTER 1 WHAT ARE ORGANIZATIONS? Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa Block 1 An Organization is more than ,the external part and concrete aspect that we see. The concept of organisation is more abstract...

CHAPTER 1 WHAT ARE ORGANIZATIONS? Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa Block 1 An Organization is more than ,the external part and concrete aspect that we see. The concept of organisation is more abstract What is an Organization? Definition: Organizations are: CREATED 34 PERPLE (1) social entities that (2) are goal-directed, (3) are designed as deliberately structured and coordinated activity systems, and (4) linked to the external environment. ©2024 Grazia Garlatti Costa  What is an Organization? The organization: üis a means to an end; üIt has to be designed to accomplish an end; üIt is a tool or machine to accomplish things and achieve a specific purpose. üThe purpose will vary, but the central aspect of an organization is the coordination of people and resources to accomplish desired goals. üAn organization exists when people interact with one another to perform essential functions that help attain goals. üManagers and owners structure organizational resources to achieve the organization’s purpose. ©2024 Grazia Garlatti Costa  Types of Organizations Types of organizations § Large, multinational corporations vs family-owned businesses. Y Earn money and want to have a § For-profit business vs non-profit organizations. social impact + Hybrid or dual-purpose organizations (does both at the same time) The primary difference is that managers in: Øfor-profit businesses direct their activities toward earning money for the company and its owners, Ønon-profit organizations direct much of their effort toward generating some social impact. X Since they do this , they need money to survive so they are organisation but they are not earning ©2024 Grazia Garlatti Costa Importance of Organizations The primary resources are transferred With competitive price Like a.i Organisation are open systems that changes Related since technology is with the external chancing and facilitating the way environment they work ©2024 Grazia Garlatti Costa Organisational studies is a recent discipline since the largest organisation developed in the 1990s, organisation are important because they shape our life  Organization Design and Theory Is focused on role the of the manager Managers continually face with several challenges… Need to take ✗the company’s failure to respond to or control elements as fast decisions competitors and customers in the fast-paced external environment; ✗its difficulties implementing strategic and structural changes to help the organization attain effectiveness; ✗pay attention to growing sustainability issues; ✗difficulties coping with the problem of large size and bureaucracy; ↓ ✗lack of adequate cost controls; ✗an outmoded corporate culture that stifled innovation and change. Need balance between them ©2024 Grazia Garlatti Costa  ↑ Organization Design I Organization design: § Its concepts can be applied to all types of organizations in all industries…also NONprofit organizations! § It continuously draws lessons from organizations and makes lessons available to students and managers. § It has a practical application. § It helps managers understand, diagnose, and respond to emerging organizational needs and problems. § It provides tools to understand, design, and manage organizations more successfully. ©2024 Grazia Garlatti Costa  Organization Theory in Action Current challenges 1. Globalization Is a challenge since transform the external environment It can create opportunities in third world countries but then you enter in comparison with them 2. Intense competition Ex china→ produce lower cost product that are in competition with the European products If you lost credibility is hard to recover 3. Sustainability, Ethics and social responsibility 4. Speed of responsiveness To fight this you need to Find other value like uniqueness Amazon prime vs normal shops Fast fashion vs design pieces 5. The digital workplace 6. Diversity and inclusion ©2024 Grazia Garlatti Costa  Levels of Analysis in Organizations Department business units Employees ◦ Organizational behavior focuses on the individuals within organizations. ◦ Organization theory and design analyzes the whole organization as a unit. ©2024 Grazia Garlatti Costa Organizational Design Essentials ◦ Organization design provides tools to understand, design, and manage organizations more successfully. ◦ Many types of organizations exist, such as for-profit and non-profit. ◦ The primary focus of analysis for organization theory is employees’ activities as organizational members. ◦ The focus of this course is how organization structures are influenced by the wider environment, and how key decision makers attempt to manage their environment by designing effective structures. ©2024 Grazia Garlatti Costa  What is an Organization? Build Definition: PEOPLE By Organizations are (1) social entities that (2) are goal-directed, (3) are designed as deliberately structured and coordinated activity systems, and (4) linked to the external environment. The organization: üis a means to an end; üIt has to be designed to accomplish an end; üIt is a tool or machine to accomplish things and achieve a specific purpose. üThe purpose will vary, but the central aspect of an organization is the coordination of people and resources to accomplish desired goals. üAn organization exists when people interact with one another to perform essential functions that help attain goals. üManagers and owners structure organizational resources to achieve the organization’s purpose. ©2024 Grazia Garlatti Costa  Perspectives on Organizations From Closed to Open systems ØClosed system perspective focuses exclusively upon the organization without consideration of its dependence upon or capacity to influence elements comprising its context. ØOpen system perspective pays attention to the (open) boundary between the organization and its context. - And the changes in external context ©2024 Grazia Garlatti Costa The organization is an open system ©2024 Grazia Garlatti Costa  Organizational configuration Five basic parts of an organization Coordinate all part of organisation 1 ◦ Technical core (part that develop basic activities of an organisation) · - ◦ Technical support (People who are in contact with external environment) & Researchers,engeenier ◦ Administrative support Same task of top but manage Accounting ◦ Management specific parts (Body who provide Hr direction,strategy,goals) ↑ ØTop Management ØMiddle management (More operative than top management) (Production department, teachers,medical activities) ©2024 Grazia Garlatti Costa  Dimensions of Organization Design The first step for understanding organizations is to examine the features that describe specific organizational design traits. These features describe organizations in much the same way that personality and physical traits describe people. Two types of interacting features of organizations: structural dimensions and contextual dimensions (or contingency factors). ØStructural dimensions ØContextual dimensions § Provide labels to describe the § Describe the organizational internal characteristics of an setting that influences and organization. shapes the structural § They create a basis for dimensions. measuring and comparing § They represent both the organizations. organization and the environment. ©2024 Grazia Garlatti Costa  Dimensions of Organization Design Structural dimensions Contextual dimensions ◦ Formalization (or Contingency factors) ◦ Specialization ◦ Size ◦ Hierarchy of authority ◦ Organizational technology ◦ Centralization ◦ Environment ◦ Professionalism ◦ Goals and strategy ◦ Personnel ratios ◦ Culture ◦ Complexity - Managers need to modify adapt, to these dimensions ©2024 Grazia Garlatti Costa  Structural dimensions ØFormalization: refers to the amount of written documentation in the organization. ØSpecialization: is the degree to which organizational tasks are subdivided into separate jobs (or the division of labor). ØHierarchy of authority: describes who reports to whom and the span of control for each manager (the number of employees reporting to a supervisor). ØCentralization refers to the hierarchical level that has authority to make decisions. ØProfessionalism is the level of formal education and training of employees. ØPersonnel ratios refer to the deployment of people to various functions and departments. ØComplexity refers to the number of distinct departmental units or activities within the organization (vertical, horizontal and spatial complexity). ©2024 Grazia Garlatti Costa  Contextual dimensions (Contingency factors) ØSize: can be measured for the organization as a whole or for specific components (e.g., division). Typically measured by the number of employees. ØOrganizational technology: the tools, techniques, and actions used to transform inputs into outputs and to produce organization’s product or services. ØEnvironment: includes all elements outside the boundary of the organization. ØGoals and strategy: define the purpose and competitive techniques that set it apart from other organizations. ØCulture: is the underlying set of key values, beliefs, understandings, and norms shared by employees. ©2024 Grazia Garlatti Costa Interacting different dimensions of Organization Design They are very interdependent T Is different for different dimension > - of structure ©2024 Grazia Garlatti Costa Characteristics of three Organizations ©2024 Grazia Garlatti Costa A company can be effective but not efficient or the contrary Performance and ↑ Effectiveness Outcomes ØEfficiency refers to the amount of resources used to achieve the organization’s goals. ØEffectiveness refers to the degree to which an organization achieves its goals. ØStakeholder approach – balancing the needs of groups in and outside of the organization that has a stake in the organization’s performance. A stakeholder is any group within or outside of the organization that has a stake in the organization’s performance. E.g., Customers Employees Stockholders ©2024 Grazia Garlatti Costa Major stakeholder groups and what they expect ©2024 Grazia Garlatti Costa  · Always dynamic The Evolution of Organization Theory and Design Historical perspectives ØEfficiency is everything –Scientific Management: pioneered by Frederick Winslow Taylor ØHow to get organized –Administrative principles: Henri Fayol and the 14 principles of management –Contributed to the development of bureaucratic organizations ØWhat about people? –Hawthorne Studies ØDon’t forget the context –Contingency: there must be a ‘goodness of fit’ between ‘structural’ and ‘contextual’ dimensions. ©2024 Grazia Garlatti Costa  The Evolution of Organization Theory and Design Contemporary organization design As the context of organizations becomes more turbulent and complex, managers and organizations face a range of intertwined challenges. ØChaos Theory suggests that relationships in complex systems are nonlinear and made up of numerous interconnections and divergent choices. ØLearning organization is based on equality, open information, little hierarchy and a culture that encourages adaptability and participation. ©2024 Grazia Garlatti Costa  The Evolution of Organization Theory and Design Efficient performance versus the learning organization ü From vertical to horizontal structure ü From routine tasks to empowered roles ü From formal control systems to shared information ü From competitive to collaborative strategy ü From rigid to adaptive culture ©2024 Grazia Garlatti Costa  CHAPTER 3 STRATEGY, ORGANIZATION DESIGN AND EFFECTIVENESS Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa Is difficult to find a company that is fitting perfectly with the mechanistic or organic design it could be in the middle Mechanistic- organisation with machine live standard, hierarchy and authority is clear and well defined, high level formalisation. Main goal is to achieve efficiency. Ex automobile assemble line this structure is rigid is difficult to adapt to changes approval from a lot of managers Organic- is the opposite can adapt to a turbolent environment they focus on innovation, much free flowing and they adapt to changes. Sometimes rules and regulation are not written and for this reason the level of formalisation is lower and decision making is centralised. Organisation is really important Task vs rules Task-something that is narrowly define Rule- include different type of activities and tasks Activities of organic model are rules The Role of Strategic Direction in Organization Design ◦ The choice of goals and strategy influences how an organization should be designed. ◦ Organizational goal is a desired state of affairs that an organization attempts to reach. ◦ A goal represents a result or end point toward which organizational efforts are directed. ◦ Primary responsibility of top management is to determine an organization’s goals, strategy, and design so that the organization adapts to a changing environment ◦ Organizational design is used to implement goals and strategy and also determines the organization's success. ©2024 Grazia Garlatti Costa  Top Management Role in Organization Direction, Design, and Effectiveness ◦ The role of top management is important because managers can interpret the environment differently and develop different goals and strategies. ◦ The choices top managers make about goals, strategies, and organization design have a tremendous impact on organizational effectiveness. ◦ Top managers and middle managers must select goals for their respective units, and the ability to make good choices largely determines a firm’s success. ◦ Two approaches use in setting direction: ØSWOT analysis ØScenario planning ©2024 Grazia Garlatti Costa  SWOT analysis ØThe direction-setting process typically begins with an assessment of the opportunities and threats in the external environment, including the amount of change, uncertainty, and resource availability. ØTop managers also assess internal strengths and weaknesses to define the company’s distinctive competence compared with other firms in the industry. ØSWOT analysis includes a careful assessment of the strengths, weaknesses, opportunities, and threats that affect organizational performance. ©2024 Grazia Garlatti Costa  Scenario planning ØScenario planning is a forecasting technique use to setting direction. ØIt involves looking at current trends and discontinuities and visualizing future possibilities. ØManagers can’t predict the future, but they strengthen their ability to cope with uncertainty by rehearsing a framework within which future events can be managed. ØTwo to five scenarios are developed for each set of factors, ranging from the most optimistic to the most pessimistic view. They need to create a piano b Need to consider environment, social condition, health condition and so on ©2024 Grazia Garlatti Costa  Top Management Role in Organization Direction, Design, and Effectiveness ©2024 Grazia Garlatti Costa After this direction setting manager need to find the strategic intent of the organisation  Organizational Purpose: strategic intent ◦ All organizations exist for a purpose that may be referred to as the overall goal or mission. ◦ Different parts of the organization establish their own goals and objectives to help meet the overall goal, mission, or purpose of the organization. ◦ Many types of goals exist in organizations, and each type performs a different function. ◦ To achieve success, however, organizational goals and strategies are focused with strategic intent. ◦ Strategic intent means that all the organization’s energies and resources are directed toward a focused, unifying, and compelling goal. Ø Three aspects related to the strategic intent: ØMission ØCompetitive advantage ØCore competence ©2024 Grazia Garlatti Costa  Strategic intent: mission ØMission Overall goals § The mission describes the overall goal for an organization, and the organization’s reason of existence. § It is sometimes called the official goals, referring to the formally stated definition of business scope and outcomes that the organization is trying to achieve. § A mission statement communicates legitimacy to internal and external stakeholders. ©2024 Grazia Garlatti Costa Vision VS Mission VS Values A vision is an inspiring description what do you want to achieve meanwhile the mission is something more concreate for ex how do you want to achieve the vision ©2024 Grazia Garlatti Costa  Strategic intent: competitive advantage ØCompetitive advantage Superior value if we compare it with ours competitor why we are best from the other § The overall aim of strategic intent is to help the organization achieve a sustainable competitive advantage. § Competitive advantage refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace. § Managers analyze competitors and the internal and external environments to find potential competitive openings and learn what new capabilities the organization needs to gain the upper hand against other companies in the industry. § Red oceans VS Blue oceans Red ocean- market with a high level of competition ex soft drink Blue ocean- aim to create a new market ex Nintendo ©2024 Grazia Garlatti Costa  Strategic intent: core competence ØCore competence § A company’s core competence is something the organization does especially well in comparison to its competitors. § Managers identify what their company does especially well and build the strategy around it. ©2024 Grazia Garlatti Costa  Organizational Purpose: ØOperating goals: operating goals ◦ the ends sought through the actual operating procedures ◦ what the organization is actually trying to do ◦ specific measurable outcomes ◦ concerned with the short run ◦ the primary tasks an organization must perform ◦ provide direction for the day-to-day decisions and activities ØExamples of operating goals: ØPerformance goals, They goal put the mission in practice ØResource goals, ØMarket goals, ØEmployee development goals, ØInnovation and change goals, ØProductivity goals. ©2024 Grazia Garlatti Costa  Typical Operating Goals for an Organization This goals can be in conflict with each other Is difficult to decide what are the most important à Goal conflict! Net income, roi ratio, earning per share different measure of performance that is an operative goal Then we have resources goal that refear to the acquisition of the resources Market goals are related to market shares ©2024 Grazia Garlatti Costa Employees development- satisfaction of the employees Goals Types and Purposes ©2024 Grazia Garlatti Costa  Selecting Strategy and Design To support and accomplish the organization’s strategic intent, managers select specific strategy and design options. Goals and strategy What is a strategy? A strategy is a plan for interacting with the competitive environment to achieve organizational goals. Goals define where the organization wants to go and strategies define how it will get there. Strategies can include any number of techniques to achieve the goal. Two models for formulating strategies: ØPorter’s Competitive Strategies ØMiles and Snow’s Strategy Typology ©2024 Grazia Garlatti Costa  Differentiation is the strategy of porter Diversification is the fact that a company decide to produce different items Lock in effect- we can substitute our products Porter’s Competitive Strategies ØDifferentiation strategy: ◦ Distinguish products or services from others in the industry ◦ Achieve a product perceived as unique ◦ Target customers are not particularly concerned with priceà premium price ◦ Successful differentiation strategies require a number of costly activities. ØLow-cost Leadership: ◦ Increase market share by keeping costs low compared to competitors ◦ Cost reduction and cost efficiency ◦ Low cost doesn’t necessarily mean low price, but in many cases cost leaders provide goods and services to customers at cheaper prices. The competitive scope can be Broad or Narrow: Organizations can compete in many market and customer segments or focus on a specific market or buyer group. ©2024 Grazia Garlatti Costa Porter’s Competitive Strategies ©2024 Grazia Garlatti Costa  balance between interal and external environment Miles and Snow’s Strategy Typology The Miles and Snow typology is based on the idea that managers seek to formulate strategies that will be congruent with the external environment. ØProspector ◦ Learning orientation; flexible, fluid, decentralized structure ◦ Values creativity, risk-taking, and innovation ØDefender ◦ Efficiency orientation; centralized authority and tight cost control ◦ Emphasis on production efficiency, low overheads ØAnalyzer ◦ Balances efficiency and learning; tight cost control with flexibility and adaptability ◦ Emphasis on creativity, research, risk-taking for innovation ØReactor ◦ No clear organizational approach; design characteristics may shift abruptly depending on current needs ©2024 Grazia Garlatti Costa  How Strategies Affect Organization Design – Examples ØPorter’s competitive ØMiles and Snow’s strategy strategies typology § Strategy: Differentiation § Strategy: Prospector § Organization design: - Learning orientation; strong § Organization design: horizontal coordination - Learning orientation; flexible, - Strong capability in research decentralized structure - Values and builds in - Strong capability in research mechanisms for customer intimacy - Rewards employee creativity, risk taking and innovation ©2024 Grazia Garlatti Costa  Strategies affect organization design ØThe choice of strategy affects internal organization characteristics. ØOrganization design characteristics need to support the firm’s competitive approach. üWith a low-cost leadership or defender strategy, select design characteristics associated with an efficiency orientation. üFor a differentiation or prospector strategy, on the other hand, choose characteristics that encourage learning, innovation, and adaptation. üUse a balanced mixture of characteristics for an analyzer strategy. ©2024 Grazia Garlatti Costa  Other contingency factors affect organization design üStrategy is one important factor that affects organization design. üHowever, Organization design is a result of numerous contingencies. üOne responsibility of managers is to design organizations that fit the contingency factors of strategy, environment, size and life cycle, technology and culture. üFinding the right fit leads to organizational effectiveness. üThe organization is designed to “fit” the contingency factors. ©2024 Grazia Garlatti Costa Top Management Role in Organization Direction, Design, and Effectiveness im Take consideration results of previous years ©2024 Grazia Garlatti Costa  Assessing Organizational Effectiveness ØOrganizational effectiveness is a broad concept, and it refers to the degree to which an organization realizes its goals. MISSION MESUREACTIVITY § It evaluates multiple goals (official and operative goals). § Overall effectiveness can be difficult to measure. § It is a social construct: it is created and defined by an individual or group § Managers determine what indicators to measure. ØOrganizational efficiency is a more limited concept and it refers to the amount of resources used to produce a unit of output. à Measuring Effectiveness: 1. The Goal Approach 2. The Resource-Based Approach 3. The Internal Process Approach 4. The Strategic Constituents Approach ©2024 Grazia Garlatti Costa  Approaches to Measuring Organizational Effectiveness üEffectiveness is multidimensional. üManagers often use indicators from more than one of the four approaches. üNo approach I suitable for every organization, but each approach offers some advantages ©2024 Grazia Garlatti Costa Open system- the elements like resource dependence are related also with the external environment The organization is an open system ©2024 Grazia Garlatti Costa  Examples of Indicators of Organizational Effectiveness 1. Meeting deadlines; on-time delivery 2. Timely material and equipment acquisition 3. Quality of product or service 4. Customer satisfaction/complaints 5. Market share compared to competitors 6. Employee training and development (number of hours) 7. Staying within budget 8. Shareholder satisfaction 9. Reduction in costs 10. Supply chain delays or improvements 11. Productivity; dollars spent for each unit of output 12. Employee engagement 13. Achieving sales targets 14. Product development cycle time (reduction in cycle time) 15. Number of hours/days and so on to complete tasks ©2024 Grazia Garlatti Costa  1- Goal Approach ØThe goal approach is concerned with progress towards attainment of output (goals). § Indicators: Efforts to measure effectiveness have been more productive using operative goals than official goals. § Usefulness: This approach is widely used in business organizations because output goals can be readily measured. § Problems: - The issue of multiple goals. - Subjective indicators of goal attainment. ©2024 Grazia Garlatti Costa  2- Resource-based Approach § The resource-based approach assesses effectiveness by observing the beginning of the process and evaluating whether the organization effectively obtains resources necessary for high performance. § Indicators include bargaining position, the ability to interpret external environment, the ability to use tangible and intangible resources in operations (i.e. supplies, people), and the ability to respond to changes. § Usefulness: It is valuable when other indicators of performance are difficult to obtain. § Problems: It fails to adequately consider the changing value of various resources. ©2024 Grazia Garlatti Costa  3- Internal Process Approach § The internal process approach looks at internal activities and assesses effectiveness by indicators of internal health and efficiency. § Indicators: There are different indicators (e.g. operational efficiency, strong corporate culture and positive work climate, and team spirit and teamwork). § Usefulness: It is important because the efficient use of resources and harmonious internal functioning are ways to assess organizational effectiveness. § Problems: Evaluations are often subjective. ©2024 Grazia Garlatti Costa 4- Strategic Constituents Approach § The strategic constituents approach is related to the stakeholder approach. It measures effectiveness by focusing on the satisfaction of key stakeholders, those who are critical to the organization’s ability to survive and thrive. § Indicators: Each constituent group had a different criterion of effectiveness. If an organization fails to meet the needs of several constituent groups, it is probably not meeting its effectiveness goals. § Usefulness: the assessment of multiple constituents is an accurate reflection of organizational effectiveness, especially with respect to organizational adaptability. § Problems: Each organization might have a different set of strategic constituents. ©2024 Grazia Garlatti Costa Major stakeholder groups and what they expect ©2024 Grazia Garlatti Costa  An Integrated Effectiveness Model § The competing values model tries to balance a concern with different kinds and aspects of effectiveness rather than focusing on one approach. It combines several indicators of effectiveness into a single framework. § Indicators: Two value dimensions are üFOCUS (internal versus external) üSTRUCTURE (stability versus flexibility) 1. - Open systems emphasis 2. - Rational goal emphasis 3. - Internal process emphasis 4. - Human relations emphasis § Usefulness: - Integrates diverse concepts of effectiveness. - Calls attention to effectiveness criteria as management values. ©2024 Grazia Garlatti Costa  Summary and Interpretation § Organizations exist for a purpose. § Setting a direction for the organization begins with top leaders looking at both the external environment and the organization’s internal situation. § Official and operative goals are a key element in organization. § Strategies may include many techniques to achieve the stated goals. § There are models to aid in the development of strategy. § Organizational effectiveness must be assessed. § No approach is suitable for every organization. ©2024 Grazia Garlatti Costa