Organizational Theory PDF

TOPIC 2: ORGANIZATIONAL THEORY MS. JESSA T. SAMOY Organization - collectivities of parts that cannot accomplish their goals effectively if they operate separately - a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal....

TOPIC 2: ORGANIZATIONAL THEORY MS. JESSA T. SAMOY Organization - collectivities of parts that cannot accomplish their goals effectively if they operate separately - a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal. 2 ORGANIZATIONAL THEORY - explains or predicts how groups and individuals behave in varying organizational structures and Circumstances. 3 1. CLASSICAL ORGANIZATION Focus: 1. The classical theory focuses on achieving maximum efficiency and productivity in organizations. 2. Emphasizes a clear, rigid hierarchy where each employee has a specific role and reports to a higher authority. 3. Jobs are broken down into simple, repetitive tasks to increase efficiency. 4 Major Approaches: 1. Bureaucracy (Max Weber) - He described bureaucracy as the most efficient form of organization, characterized by formal rules, a clear division of labor, and a hierarchy of authority. 5 Bureaucracy 6 Major Approaches: 2. Scientific Management (Frederick Taylor) - He introduced time-and-motion studies, which analyze the most efficient ways to perform tasks. 7 To conclude: In simple terms, the focus of the Classical Theory is on an organization without people. 8 2. Neo-classical organization Introduced a more human-centered approach. It emphasizes the importance of individuals, relationships, and social factors within the organization. 9 FOCUS of neo-classical: 1. Human Relations Approach Focus on People: Emphasizes the social and psychological needs of workers, rather than viewing them as just components in a machine. Workplace Relationships: Highlights the importance of relationships between employees, supervisors, and groups. 10 2. Hawthorne Studies (Elton Mayo) - These studies revealed that workers’ productivity increased when they felt observed and valued, even when physical working conditions did not change. - The phenomenon where individuals modify their behavior in response to being observed 11 3. Decentralization - distributing decision-making power across various levels of the organization. - This allows more autonomy for employees and managers at different levels, leading to more flexibility and responsiveness 12 4. Informal Organizations Informal groups, with their own norms and relationships, can significantly influence the behavior and productivity of employees. These informal networks often serve as a source of social support and cooperation. 13 5. Individual and Group Behavior Neo-Classical theory recognizes that organizations are composed of individuals who have unique motivations, desires, and personalities. 14 To conclude: This theory lacks a unified approach. The theory prioritizes context and adaptability, meaning there isn’t a one-size-fits-all model. 15 3. Moden organization theory based on the concept that the organization is a system that has to adapt to changes in its environment to survive. 16 Example: Nokia’s Bankruptcy: A Case Study Nokia was once a global leader in the mobile phone industry, renowned for its durable and reliable devices. By the early 2000s, it held a dominant position in the market. Issues Faced: 1. Failure to Embrace Smartphone Technology: Change: The rise of smartphones, particularly the introduction of Apple's iPhone in 2007 and the growth of Android devices, revolutionized the mobile phone market. Nokia’s Response: Nokia was slow to adapt to the new smartphone technology. Although it had early access to digital innovations, the company clung to its successful feature phone business and was hesitant to fully embrace the new touch-screen smartphone trend. 17 Example: 18 Example: Apple iPhone: Adapting to Market Changes By embracing new technologies, innovating continuously, expanding product offerings, integrating products, and addressing consumer concerns, Apple has managed to stay at the forefront of the smartphone industry. This adaptability has been key to its success and market leadership. 19 4. Contingency theory - The “it depends” theory - the effectiveness of strategies, structures, and behaviors depends on the specific context or situation faced by an organization. 20 FACTORS: Variable Factors: Different organizations, teams, and situations have unique characteristics and challenges. What works well in one scenario might not be effective in another. Adaptation: Managers and leaders must assess the unique factors influencing their environment and adapt their practices accordingly. This involves considering internal factors (like company culture and employee dynamics) and external factors (such as market conditions and competition). 21 5. Open system theory views organizations as systems that continuously interact with their external environment. It focuses on how organizations exchange resources, information, and energy with their surroundings. 22 EXAMPLE: Coffee shop 1. Input: the resources and materials that the coffee shop acquires to run its operations. - Raw Materials - Human Resources - Equipment - Financial Resources - Information 23 EXAMPLE: Coffee shop 2. Processes: the internal activities and procedures that transform inputs into finished products or services. - Coffee brewing - Food preparations - Inventory management - Cleaning& maintenance 24 EXAMPLE: Coffee shop 3. Output: the final products and services that the coffee shop provides to its customers. - Beverages - Food items - Customer Experience? (are they satisfied?) - Sales Revenue 25 Feedback (the most important): the information and responses from the external environment that the organization receives about its outputs. This feedback helps the organization assess its performance and make necessary adjustments to improve its processes and outputs. NOT just adapting to the TREND, but relying heavily on customer feedback and satisfaction… 26 Feedback: “Masarap sana, kaso masyadong mahal” “Okay naman, kaso it’s too sweet for me” 27 HUMANISTIC THEORY > Motivation: punishment and reward (external) > Management Style: Authoritarian Approach > Motivation: internal factors like job satisfaction, personal growth, and fulfillment. > Management Style: democratic and participative approach. 28 Scenario: Due to heavy rains, a university declares a suspension of classes for students, but employees are still expected to work. Theory X: Theory Y: - The university administration follows a Theory X - They allow employees to work from home if they approach. Despite the heavy rains, they require all can do so, trusting that employees will stay employees to report to the office because they believe productive even outside the office. They also employees won’t be productive unless they are consider individual circumstances, encouraging physically present. flexibility while still expecting work to be done. 29 ORGANIZATIONAL STRUCTURE 30  (1) FUNCTIONAL STRUCTURE - Skills - Expertise - Function But still in the same company 31  (2) DIVISIONAL STRUCTURE A divisional structure is typically used by large firms that have diverse products or services. While the company may have one CEO or owner, each division operates independently but they all report to the overall leadership. - They are not in the same company 32 (3) TEAM-BASED STRUCTURE Hardware engineer Software developers Marketing experts Supply chain managers Quality assurance - ONLY CREATED because they have to solve specific problems or create a new product 33 (4) FLAT STRUCTURE - Mostly applies to “Start-up business or organization Employee 1 Employee 2 Employee 3 Employee 4 34 (5) MATRIX STRUCTURE Project Manager- An employee has two functions or belongs Functional Manager to more than 1 division 35  (6) HIERARCHICAL STRUCTURE - In an University president organization, the top management is The VPs always the authority College deans Department heads The traditional type of organization Other faculty 36 (7) NETWORK STRUCTURE - Partnership - Affiliated - collaboration 37 THANK YOU FOR LISTENING! 38