1. Thomson Learning
© 2004 1-1
Chapter One
Organizations and
Organization Theory

2. Thomson Learning
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Organization Theory in Action
 Topics
 Current Challenges
 Global Competition
 Ethics and and Social Responsibility
 Speed of Responsiveness
 The Digital Workplace
 Diversity

3. Thomson Learning
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What is an Organization?
 Definition
 Importance of Organizations
 Bring together resources to achieve
desired goals and outcomes
 Produce goods and services efficiently
 Facilitate innovation
 Use modern manufacturing and information
technologies

4. Thomson Learning
© 2004 1-4
Importance of Organizations
 Importance of Organizations (cont’d)
 Adapt to and influence a changing
environment
 Create value for owners, customers and
employees
 Accommodate ongoing challenges of
diversity, ethics, and the motivation and
coordination of employees

5. Thomson Learning
© 2004 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

6. Thomson Learning
© 2004 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) 215-297;
and Henry Mintzberg, “Organization Design: Fashion or Fit?” Harvard Business Review 59 (Jan. – Feb. 1981): 103-116.

7. Thomson Learning
© 2004 1-7
Goals and
Strategy
Environment Size
Culture Technology
Structure
1. Formalization
2. Specialization
3. Hierarchy of Authority
4. Centralization
5. Professionalism
6. Personnel Ratios

8. Thomson Learning
© 2004 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 Secretary Adm. Asst Payroll Clerk Secretary MIS Specialist Staff Clerk Adm. 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

9. Thomson Learning
© 2004 1-9
Characteristics of Three
Organizations
0
50
100
W.L. Gore &
Associates
Wal-Mart State Arts
Agency
Formalization
Specialization
Centralization
Configuration
(%nonworkflow
personnel)
TECHNOLOGY Manufacturing Retailing Government
Service
SIZE (#employees) 6,000 250,000 35

10. Thomson Learning
© 2004 1-10
Two Organization Design
Approaches
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
Mechanical System Design Natural System Design
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)

11. Thomson Learning
© 2004 1-11
Organizational Dimensions
High Formalization 1 - 4 5 - 6 7 - 10 Low Formalization
High Specialization 1 - 4 5 - 6 7 - 10 Low Specialization
Tall Hierarchy 1 - 4 5 - 6 7 - 10 Flat Hierarchy
Product Technology 1 - 4 5 - 6 7 - 10 Service Technology
Stable Environment 1 - 4 5 - 6 7 - 10 Unstable Environment
Strong Culture 1 - 4 5 - 6 7 - 10 Weak Culture
High Professionalism 1 - 4 5 - 6 7 - 10 Low Professionalism
Well-Defined Goals 1 - 4 5 - 6 7 - 10 Poorly-Defined Goals
Small Size 1 - 4 5 - 6 7 - 10 Large Size
Modern 1 - 4 5 - 6 7 - 10 Postmodern
Workbook
Activity

12. Thomson Learning
© 2004 1-12
Xerox
High Formalization 1 - 4 5 - 6 7 - 10 Low Formalization
High Specialization 1 - 4 5 - 6 7 - 10 Low Specialization
Tall Hierarchy 1 - 4 5 - 6 7 - 10 Flat Hierarchy
Product Technology 1 - 4 5 - 6 7 - 10 Service Technology
Stable Environment 1 - 4 5 - 6 7 - 10 Unstable Environment
Strong Culture 1 - 4 5 - 6 7 - 10 Weak Culture
High Professionalism 1 - 4 5 - 6 7 - 10 Low Professionalism
Well-Defined Goals 1 - 4 5 - 6 7 - 10 Goals Not Defined
Small Size 1 - 4 5 - 6 7 - 10 Large Size
Modern 1 - 4 5 - 6 7 - 10 Postmodern
Use for 1959-1990, Use for 1990-present
Workbook
Activity