Organization and environment

The Organization and its Environment

1.0        Definitions

§  Organizations are social entities that are goal directed, are designed as deliberately structured and coordinated activity systems, and are linked to external environment.”

§  “Organizations are made up of people and their relationships with one another.”

§  An organization is any social structure or system consisting of two or more are somehow interdependent and who together in a coordinated manner to attain common goals. 

§  Organizations consist of persons who interact with one another, directly or indirectly, whose fates are somehow linked with what happens to one affects what happens to the others, and who work together in order to reach shared goals.

§  "A group of persons with a common objective" (Neoclassical)

§  "A structured process in which individuals interact for objectives" (Hicks, Management of Organizations, p.23)

§  "A structure of relationships, power, objectives, roles, activities, communications and other factors that exist when persons work together" (Classical amalgamism)

§  "A dynamic social system of cooperative interactions with the purpose of satisfying individual needs" (Chaster Barnard, 1938; = transition between neoclassical and modern; accommodating formal and informal aspects of organizations)

§  "A set of social relations deliberately created, with the explicit intention of continuously accomplishing some specific goals or purposes" (Stinchcombe, in J.March, ed., Handbook of Organizations, 1964, p.142.)

§  "A system of structural interpersonal relations ... (within which) ... individuals are differentiated in terms of authority, status, and role with the result that personal interaction is prescribed... Anticipated reactions tend to occur, while ambiguity and spontaneity are decreased" (R.V. Presthus)

§  "A system consisting generally of inputs, process, outputs, feedback, and environment" (Norbert Wiener's cybernetic interpretation of organization)

§  "A set of interlocked activities under unified control" (Pfeffer & Salancik)

§  "Every organized human activity -- from the making of pots to the placing of a man on the moon -- gives rise to two fundamental and opposing requirements: The division of labour into various tasks to be performed, and the coordination of these tasks to accomplish the activity" (Mintzberg, 1983)

§  "The most effective organizations achieve a degree of differentiation and integration in organizational boundary-spanning functions which is compatible with environmental demands" (Lawrence & Lorsch, 1967)

§  "Formal organization: "The goals to be achieved, the rules the members of the organization are expected to follow, and the status structure that defines the relations between them have not been spontaneously emerged in the course of social interaction but have been consciously designed a priori to anticipate and guide interaction and activities" (Blau & Scott, Formal Organization, 1962, p.5)

  

§  "One characteristic which distinguishes organizations from other collections of people is a commitment to achieving members' goals by means of an explicit and stable structure of task allocations, roles, and responsibilities. Mobs and informal groups are not organizations. Social and service clubs, like Rotary and Kiwanis, are organizations only part of the time. However, as long as one is concerned with organizational behaviour and not with social behaviour in general, one should emphasize the modes of behaviour in which organizations specialize" (W.H. Starbuck, 1965)

§  "Different types of organizational structure are suitable for particular environmental conditions. An organization with well-defined tasks and a rigidly hierarchical system of decision-taking is argued to be appropriate for stable environmental conditions. Where the environment is changing, an organic form of organizational structure is deemed more appropriate, in which tasks are flexibly defined and participants cooperate on the basis of expertise and not on hierarchical positions" (contingency view; Burns and Stalker, 1961)

  

 2.0    Organization Theory

§  Discipline that studies the structure and design of organizations

§  Organization theories are interdisciplinary, based on knowledge from the fields of psychology, political science, economics, anthropology and sociology

§  Organization theory is a macro examination of organizations – analyses the whole organization as a unit; while organization behaviour is the micro approach to organizations – focuses on the individuals within organization.

2.1    Classical Theories
2.2.1      Federick Winslow Taylor  - Efficiency is everything

§  Scientific management approach

§  “Managers develop precise, standard procedures for doing each job, select workers with appropriate abilities, train workers in standard procedures, carefully plan work, and provide wage incentives to increase output.”

§  “The role of management is to maintain stability and efficiency.”

§  Thinking (top managers)

§  Working (workers doing what they are told)

§  Focused on the technical core.

2.2.2      Max Weber -  To Get Organized

§  Bureaucratic approach

§  Clear division of labour

§  Hierarchical structure in the organization

§  Predictability and stability

§  Rationality

§  Impersonal relationship

§  Characteristics for most of today’s large organizations

  

2.2.3      Henri Fayol - To Get Organized

§  Administrative principles

§  Concerned with the problems of management

§  Develop general principles applicable to all managers and describe the functions a manager should perform

§  14 principles in total – division of work, authority, discipline, nity of command, unity of direction, subordination of individual interests to the general interests, remuneration, centralization, scalar chain, order, equity, stability of tenure of personnel, initiative, Esprit de corps

2.2    Human-Relations Theories
2.2.1      People:-

§  Elton Mayo, Chester Bernard, Douglas Mc Gregor

§  Hawthrone Studies

Ø Work on industrial psychology and human relations.

Ø Chicago Western Electric Company

Ø Positive treatment of employees improved their motivation and productivity.

Ø Laid the groundwork for subsequent work examining worker treatment, leadership, motivations and HR management.

Ø Human relations and behavioural approaches

 2.3    Contingency Theory

 2.3.1     The Environment:-

§  All organizations are not alike.

Ø The scientific management and administrative principles approaches attempted to design all organization in the same manner.

§  Contingency Theory – there is no one best way for organization design.

§  Contingency means that one thing depends on other things, and for organizations to be effective, there must be a goodness of fit between their structure and conditions in their external environment.

 3.0        Importance of Organizations

i)            Bring together resources to achieve desired goals and outcomes.

ii)          Produce goods and services efficiently.

iii)        Facilitate innovation.

iv)         Use of modern manufacturing and information technologies.

v)           Adapt to and influence a changing environment.

vi)         Create value for owners, customers and employees.

vii)       Accommodate ongoing challenges of diversity, ethics, social responsibility, and the motivation and coordination of employees.

  

4.0        Type of Organizations

Two types of organization :

4.1        Open Systems

Early organization studies focused on closed internal systems, based on assumptions that environment is stable and predictable. An open system interacts with and adapts to the environment by consuming resources and exporting product and services to it.  Issues involved are more complex due to interdependence of various elements. Open systems consist of interrelated components.  They also show several distinct and interesting properties.  Open systems receive input from the external environment which they then transform, through internal processes, into output.  Their exchanges with the environment are cyclic with nature, and throughout the process, they tend to maintain a constant internal state; in short, they are self-sustaining.

 If successful in these tasks, open systems grow, and tend toward greater internal differentiation.  Indeed, this description seems to fit many modern organizations. 

4.2     Closed Systems

“A closed system would not depend on its environment; it would be autonomous, enclosed, and sealed off from the outside world”. Primary issue is efficiency.

 5.0     Organizational structure in TRC Synergy

Organizations have a formal structure, an internal of divisions, work teams and others.  This internal structure, which is often represented by an organizational chart (refer to TRC Synergy Berhad Chart as per attached, Figure 1.1). It indicates how tasks and responsibilities are to be divided, how communication is supposed to take place, and where power or authority rests.  This internal structure often profoundly affects the persons within the organization, determining the kinds of work they do, with whom they come in contact, and to whom they report.  Although every organization has some form of internal structure, it varies greatly. 

For example, some adopt a system in which few intermediate levels separate the lowest rank on the career or corporate ladder from the highest, their chain of command is short.  In contrast, others develop a structure in which many levels separate such positions; their chain of command is long. 

The five basic parts of an organization to perform the subsystem functions effectively.

i)            Technical Core

§  Includes people who do the basic work.

ii)          Technical Support

§  Helps the organization adapt to the environment.

iii)        Administrative Support

§  Responsible for smooth operation and upkeep.

iv)        Management

§  Top Management – provides direction, strategy, goals and policies.

Middle Management – implementation and coordination.

5.1         Structural Dimensions

5.1.1      Formalization

§  The amount of written documentation.

The formal structure of organization in TRC Synergy Berhad is shaped by two factors; technologies and the external environment.  Technologies refers to the knowledge, processes, equipment, and facilities used by an organization to produce desired outputs.  The external environment refers to the economic, social and legal context in which it operates. 

Structure contributes to how TRC achieves its goals.  TRC structure is the formal configuration between individuals and groups regarding allocation of tasks, responsibilities, and authority within  TRC corporate structure (refer to Figure 1.2).  This abstract concept can be represented by an organizational chart, which is a diagram indicating relationships between the various units in TRC.

A TRC’s structure is defined by how tasks are formally divided, grouped, and coordinated.  HR department can alter one or more of the key elements in an TRC’s design.  For instance, departmental responsibilities can be combined, vertical layers removed, and spans of control widened to make the organization flatter and less bureaucratic. 

More rules and procedures can be implemented to increase standardization.  An increase in decentralization can be made to speed up the decision-making process. 

5.1.2      Specialization

§    The degree to which TRC tasks are subdivided into separate jobs.

HR department can also introduce or advice top management major modifications in the actual structural design.  This might include a shift from a simple structure to a team-based structure or the creation of a matrix design.  HR department can propose to management and they might consider redesigning jobs or work schedules.  Job descriptions can be redefined, jobs enriched or flexible work hours introduced.  Still another option is to modify the TRC’s compensation system.  Motivation could be increased by, for example, introducing performance bonuses or profit sharing.

5.1.3          Hierarchy of Authority

§    Span of control of the managers.

Similarly, in other organizations, many subordinates in TRC report to a single supervisor or manager, the span of control is narrow.  This firm also differ in many other aspects of internal structure, we wish to emphasize that the way a given in this firm is structured can greatly affect the persons within it.

5.1.4          Centralization

§    Hierarchical level of authority for decision making.

5.1.5          Professionalism

§    Level of formal education and training of employees.

5.1.6          Personnel ratios

§    People deployed to each functions and departments.

5.2     Vertical to Horizontal Structure

§    Traditionally the activities were grouped together by common work from bottom to the top of the organization, little collaboration occurs across functional departments.

§    In a fast changing environment the vertical structure becomes overloaded.

§    In TRC organization, structure is created around horizontal workflows or processes rather than departmental functions.

§    Self-directed teams are the fundamental work unit in TRC.

§    Boundaries between functions are eliminate in TRC.

6.0    Organizational Strategies

§  Defined as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

§  Two models

Ø Porter model

Ø Miles and Snow model

6.1     Porter’s Competitive Strategies

§  No firm can successfully perform at an above-average level by trying to be all things to all people

Ø Low-cost leadership

Ø Differentiation

Ø Focus

6.2     Miles and Snow’s Strategies

§  Classify organizations into one of four strategic types based on the rate at which they change their products or markets

Ø Defenders

Ø Prospectors

Ø Analyzers

Ø Reactors

7.0    Organization Design

§    Emphasis the management side of organization theory

§    Concerned with constructing and changing an organization’s structure and traits to achieve the organization’s goals

  

8.0    Dimensions of Organization Design

8.1     Organization traits are described by:

i)            Structural Dimensions

§  Describes internal characteristics of an organization.

ii)          Contextual Dimensions

§  Characterises the whole organization, including its size, technology, environment and goals.

8.2        Contextual Dimensions

i)            Size

§  Number of employees.

ii)          Organizational Technology

§  Tools, techniques and actions used to transform inputs into outputs.

iii)        Goals and Strategy

§  Purpose and competitive techniques that set it apart from other organizations.

iv)        Environment

§  All elements outside the organizational boundary.

v)          Culture

§  Shared key values, beliefs, understandings and norms.

9.0    Goals

All organizations have goals that they require to meet.  We take an example in the private sector like mine, TRC Synergy Berhad a construction firm has the goal to make a profit and, within this context, individual organizations have goals that are specifically related to this end.  Organization goal is related to employee to train to achieve the goal.  Organization without employee we could not called them organization, in fact this firm is not exist without employee.  They are related each other.

We take for example, suppose I am doing a task given, such as a typing in Microsoft win words, when a performance goal is assigned.  I am now is expected, for example, to type 80 words per minute instead of the 70 words per minute that I have been doing for a long time I am working in TRC Synergy Berhad.  Would I work hard to meet this goal or would I simply give up?  Some insight into how employees respond to assigned goals is provided by Locke an Latham.  These theorists claim that an assigned goal influences people’s beliefs about their ability to perform the task in question.

The basic idea behind Locke and Latham’s theory is that a goal serves as a motivator because it causes people to compare their present capacity to perform with that required to succeed at the goal and to the extent people believe they will fall short of the goal, they will feel dissatisfied and work harder to attain it, so long as they believe it is possible to do so.  When they succeed at meeting a goal, they feel competent and successful.  Having a goal enhances performance largely because the goal makes clear exactly what type and level of performance is expected.

Employee, like me is person who contributed to the organization goal like firm I attached with.  If I am not just proactive but very proactive, this is contributed to organization goal that how fast the goal can achieved.

  

10.0  Organization Challenges

§  Globalization

§  Ethics and Social Responsibility

§  Speed of Responsiveness

§  The Digital Workplace

§  Diversity

 CONCLUSION

No discussion of managing change would be complete without including organizational development.  Organizational development is not an easily defined single concept.  Rather, it is a term used to encompass a collection of planned-change interventions built on humanistic-democratic values that seek to improve organizational effectiveness and employee well-being. 

The organizational development paradigm values human and organizational growth, collaborative and participative processes, and a spirit of inquiry.  The change agent may be directive in organizational development; however, there is a strong emphasis on collaboration,  Concepts such as power, authority, control, conflict, and coercion are held in relatively low esteem among organizational development change agents. 

There are identifies value that underlying in the most organization development efforts.  There are as follows :-

a.            Respect for people

Individuals are perceived as being responsible, conscientious, and caring.  They should be treated with dignity and respect.

b.           Trust and support

The effective and healthy organization is characterized by trust, authenticity, openness, and a supportive climate.

c.            Power equalization

Effective organizations emphasize hierarchical authority and control.

d.           Confrontation

Problems should not be swept under the rug.  They should be openly confronted

  

e.            Participation

The more that people who will be affected by a change are involved in the decisions surrounding that change, the more they will be committed to implementing those decisions.

Organizations today need greater fluidity and adaptability. The learning organization promotes use of communication and collaboration technologies, so that everyone is engaged in identifying and solving problems. All organization members continuously help to experiment, improve and increase its capability.  “It is based on equality, open information, little hierarchy, and a culture that encourages adaptability and participation.”  Essential value is problem solving as opposed to efficient performance.

The scientific management precisely define each job and how it should be done.  “In traditional organizations, tasks are broken down into specialized, separate parts, as in a machine. Knowledge and control of tasks are centralized.”  In learning organizations, employees are assigned roles – with discretion and responsibility - in the team or department which are continuously redefined or adjusted.  Employees are encouraged to take care of problems by working with each other and with customers.

“Formal systems are often implemented to manage the growing amount of complex information and to detect deviations from established standard and goals.”  In the learning organization ideas and information are shared throughout the organization.  Managers find ways to open channels of communication so that ideas flow freely in all directions.  Learning organisations communicate with customers, suppliers, and even competitors to enhance learning capability.

Strategy in traditional organizations is formulated by top managers and imposed on the organization.  In the learning organisations the accumulated actions of an informed and empowered workforce contribute to strategy development.  Partnerships with suppliers, customers and competitors to find the best way to learn and adapt, forming modular or virtual organizations that are connected electronically.

Organisations should continuously adapt to external environment.  In a learning organisation, employees are aware of the whole system and interactions of its parts and the culture encourage openness, equality, continues improvement and change.  “Each employee is a valued contributor and the organisation becomes a place for creating a web of relationships that allows people to develop their full potential.”

Modern organizations face many problems, from increasing internal efficiency to more effectively interacting with their external environments.  In all of these endeavours people play a key role, and for this reason more and more attention is now being directed toward the understanding of behaviour in organizations.  We know intuition and common sense can help us to understand, predict, and control human behaviour, but they not substitute for a systematic, analytical approach to the field.  It is this need that has given rise to the academic discipline of organizational behaviour.

We come into contact with organizations from the cradle to the grave.  Indeed, organizations regulate and dictate so many aspects of our lives, giving many of us somewhere to work, entertaining us when we are at leisure, and developing new products and services for our enjoyment, that even if you do not work in one, you can rarely escape their influence.

Organizations are responsible for your education and training, health and welfare, and security.  In most economies, the government will take responsibility for organizing a country’s systems, emergency services and even legal and regulatory authorities.  Each is maintained by some form of organization.

We can make a distinction between commercial organization on the one hand, whose chief intention is to provide financial returns to their owners, and non profit and public sector organizations on the other, whose objectives are based on a broader set of outcomes such as the provision of a social service.

Whether an organization is privately owned or not, demands for ever increasing efficiency and effectiveness leads us to look for responses to previously unconsidered issues.

However, current uncertainty in the business world has caused some organizations to shy away from offering these long-term agreements to employees, resulting in a reassessment of the unwritten understanding between the employee and the organization, known as a psychological contract.  The position today, according to Pascale (1995) and Kissler (1994), is very different.  An offer of long-term job security is no longer seen as an effective way of building a flexible and competitive organization.  Employees find it equally hard to keep their side of the bargain.  Indeed, in some professions a career can be built more effectively by moving from one organization to another.

Modern organizations face many problems, from increasing internal efficiency to more effectively interacting with their external environments.  In all of these endeavours people play a key role, and for this reason more and more attention is now being directed toward the understanding of behaviour in organizations.  We know intuition and common sense can help us to understand, predict, and control human behaviour, but they not substitute for a systematic, analytical approach to the field.  It is this need that has given rise to the academic discipline of organizational behaviour.

We come into contact with organizations from the cradle to the grave.  Indeed, organizations regulate and dictate so many aspects of our lives, giving many of us somewhere to work, entertaining us when we are at leisure, and developing new products and services for our enjoyment, that even if you do not work in one, you can rarely escape their influence.

Organizations are responsible for your education and training, health and welfare, and security.  In most economies, the government will take responsibility for organizing a country’s systems, emergency services and even legal and regulatory authorities.  Each is maintained by some form of organization.

We can make a distinction between commercial organization on the one hand, whose chief intention is to provide financial returns to their owners, and non profit and public sector organizations on the other, whose objectives are based on a broader set of outcomes such as the provision of a social service.

Whether an organization is privately owned or not, demands for ever increasing efficiency and effectiveness leads us to look for responses to previously unconsidered issues.

However, current uncertainty in the business world has caused some organizations to shy away from offering these long-term agreements to employees, resulting in a reassessment of the unwritten understanding between the employee and the organization, known as a psychological contract.  The position today, according to Pascale (1995) and Kissler (1994), is very different.  An offer of long-term job security is no longer seen as an effective way of building a flexible and competitive organization. 

Employees find it equally hard to keep their side of the bargain.  Indeed, in some professions a career can be built more effectively by moving from one organization to another.

At a more sociological or psychological level, organizations also have significant effects on our lives.  They offer a source of identity to those who wish to be associated with them, a sense of continuity between generations, and opportunities for social interaction with other members of society.

  

REFERENCES AND BIBLOGRAPHY

§    Richard L. Daft, Organization Theory and Design, Thomson (South-Western), 8^th edition, 2004.

§    Stephen P. Robbins, Neil Barnwell, Organisation Theory: Concepts and cases, Prentice Hall, 4^th edition, 2002.

§    Penny Dick and Steve Ellis, Introduction to Organizational Behaviour, The McGraw-Hill Companies, 3^rd edition, 2006.

§    Jerald Greenberg - Robert A. Baron, Behavior In Organizations - Understanding and Managing the Human Side of Work, Prentice Hall, Upper Saddle River, New Jersey 07458,7^th edition, 1999.

§    Stephen P. Robbins, Organizational Behavior, Prentice Hall, Upper Saddle River, New Jersey 07458,7^th edition, 2001.

§    Steven Altman, Enzo Valenzi and Richard M. Hodgetts, Organizational Behavior : Theory and Practice, Academic Press, Inc. International Edition.

§    Robert A. Baron and Jerald Greenberg, Behavior in Organizations, Ally and Bacon, Third Edition 1990.

§    Lawrence, P.R., & Lorsch, J.W. (1967). Organization and environment.  Homewood, IL : Irwin.