1. Welcome to all the students of
Organization Theory and Design
Instructor
Mr. M. S. Halder, MBA
Chairperson, BBA Department, BASC
2. Chapter 1
Organization
Organizations have been in existence since the
dawn of civilization, but modern organizations
differ from earlier ones in several respects. As
organizations are always in tune with
environmental demands, their shapes are vastly
different from those of the past and are likely to
change further in future, as can be seen from
the Opening Spotlight. Modern organizations are
large in size and complex in nature. They meet
the greater variety of individual and social
needs.
3. Characteristics of Organization
1. large size
2. Complexity
3. Mutually agreed purpose
4. Pattern of behaviors
5. Continuing system
6. Differentiation
7. Coordination
8. Conscious rationality
9. Import-Conversion-Export
10. Interaction with the other systems
4. Def. of Org.
1.
Pfiffner and Sherwood, “Org. is the
pattern of ways in which large numbers of
people, too many to have intimate face to
face contact with all others, and engaged
in a complexity of tasks, relate
themselves to each other in the
conscious, systematic establishment and
accomplishment of mutually agreed
purposes.”
5. 2. Schein, “the rational coordination of the
activities of a number of people for the
achievement of some common explicit
purpose or goal, through division of labor
and function, and through a hierarchy of
authority and responsibility.”
6. 3. Bakke, “a continuing system of
differentiated and coordinated human
activities utilizing, transforming, and
welding together a specific set of a
human, material, capital, ideational, and
natural resources into a unique problemsolving whole engaged in satisfying
particular human needs in interaction with
other systems of human activities and
resources in its environment.
7. Types of Org.
1. Mutual benefit associations
2. Business concerns
3. Service organizations
4. Commonweal organizations
8. 1. Mutual benefit association
These are associations which come
up voluntarily for the benefit of their
members. For examples, clubs,
labor unions, political parties, and so
on.
9. All members therein have equal rights.
Nevertheless, these organizations are faced with
the problem of maintaining internal democratic
process. Though all members, males more than
females, middle-aged more then younger or
older ones, minorities more than majority groups
and homogeneous groups more than
heterogeneous ones, tend to belong to such
associations and participate more actively in
them.
10. 2. Business concerns
The prime beneficiaries are the owners or
the managers. No business
organizations will ever function, if the
benefits to go someone other than the
owners or managers. It may
simultaneously benefit labor or
customers also, but such an organization
will not survive for long if the owners are
being deprived of the benefit.
11. 3. Service organization
The prime beneficiaries in this case
are the clients or those who come in
contact, that is, public in contact.
These organizations include
schools, hospitals, mental health
clinics, etc. Such organizations have
a problem of providing professional
service within the existing
administrative procedures.
12. 4. Commonweal organizations
The prime beneficiary is the
public at large or the whole
society. Examples include the
army, police department, fire
fighting department, and so on.
17. Functional Departments and the
task environment
Organizational Department
Relevant External Environment
1. Finance and Accounting
Shareholders, creditors, debtors,
professional bodies.
2. Purchasing
Vendors, suppliers
3. Research and Development
New scientific knowledge and
technology, professional bodies
4. Manufacturing
Vendors, suppliers, customers,
regulatory bodies
5. Marketing
Customers, competitors
6. Human Resource
Unions, life insurance
potential employees
7. Legal
Shareholders, regulatory agencies,
courts, professional bodies
agencies,
18. Chapter 3 Organizational Goals
An organizational goal is something which
an organization seeks and something
towards which its resources and efforts
are directed.
Org. goal include the objectives,
purposes, mission, standards, quotas, and
targets which the organization is striving
for.
19.
A religious organization may be formed
with the purpose of propagating a
particular faith, a military organization has
defense of the nation as its goal, an
educational institution may come up for
providing education, a hospital for treating
patients, and a business organization to
earn profits.
20. Nature of Goals
1. Most organizations pursue multiple goals.
2. In view of limited resources, goals are assigned
priorities. In short-run and long-run.
3. Even among the short-run goals, some goals
are weighted more highly than others. It is
important to decide whether we want to pursue
the goal of profitability or increase in market
share in the immediate future.
21. 4. Various workers have different
expectation from the organization
5. The employment of resources indicates
the actual goals pursued which may be
different from the official goals
6. There is a limit to the attainment of some
goals such as increase in market share.
22. 7. Goals are ends and not means.
8. Goals can be either open-end or closed-ended.
Open-end goals do not contain a statement to
indicate when they can be said to have been
achieved. They are vague, ill-defined and
difficult to measure such as the goal of
attaining excellence in research. Closed-end
goals have content, a level, a measure or
indicator, and a time boundary for completion.
They are specific in nature.
24. Functions of organizational Goals
1. The term “goal” has acquired a variety of
meanings and is used to connote but
related things. These can be are follows:
25. 2. Goals of an organization provide
legitimacy to its existence.
3. Goals provide the motive force to
organizational activity
26. Goals serve as the starting point for
organizational activity
Means
Sub-Goals
Sub-Means
Sub-Sub-Goals
Sub-Sub-Means etc.
27. 4. Goals help in coordinating decisions and
decision makers.
5. Organizational performance is also
judged in terms of goals.
6. Goals act as a set of constraints that an
organization must satisfy.
28. Chapter 4 Organization Structure
The term “structure” is highly abstract as
operating structure is different from a
planned one.
Formal structure refers to the followings:
29. 1. The pattern of formal relationships and
duties.
2. The activities or tasks assigned to
different departments and people in the
organization
30. 3. Coordination of these activities tasks
4. The hierarchical relationships within the
organization
5. The policies, procedures, standards,
evaluation systems, and so on, that
guide the activities and relationships of
people in the organization.
31. Some concepts related to org.
structure
1. The Pyramid – When the volume of work
expands and the number of persons
employed in any organization increases, it
becomes difficult for any leader to control
the activities of all individuals and
therefore, they are organized in the form
of departments and sections. A number of
persons are appointed to take charge of
these departments and sections and
assist the leader.
33. 2. Unity of Direction- When division of work takes
place, all related activities are put together in a
particular department. Every dept. and section
attempts to specialize in the activity assigned
to it. This is how unity of direction is achieved.
3. Unity of Command- Each person in a
subordinate level is made accountable to the
next higher level and he is accountable only to
one superior. This approach is necessary
because it protects the integrity of both the
superior and the subordinate.
34. 4. Chain of Command- As a subordinate report to
one boss, who, in turn, reports to his own boss
and like this, a chain of command develops in
which orders or commands flow downwards
and information travels upwards. This chain of
commands keeps all levels informed as to
what is happening in the organization. It gives
them an assurance that no one will skip levels
and undermine the superior’s confidence.
35. 5. Authority- An individual performs the
job assigned to him by the
organization with the help of the
authority granted to him by the
organization for the discharge of his
duties.
37. 6. Delegation of Authority- A position holder
having authority to control the affairs of
his organization establishes his contact
with the employees. He specifies their
jobs and keeps a check on what they are
doing and how they are doing it.
39. What can be delegated?
All matters which are repetitive in nature, routine
tasks, and matters of concern to one
subordinate element alone can be easily
delegated. There are certain problems which
have to be tackled at the top like overall profit
goals and budgeting, financing, major facilities
and other capital expenditures, important new
product programs, major marketing policies,
basic personnel policies and the development
and compensation of managerial personnel.
40. How far it can be delegated?
Delegation can go down to the lowest
level. It depends upon various factors
such as willingness of the superior to
delegate, confidence in subordinates, their
competence, and so on.
41. To delegate authority, a superior
must do the followings:
Clear responsibility
Commensurate authority
Development of subordinates
Adequate controls
42. 7. Centralization
it means consistent reservation of authority at
certain limited points to which all matters
pertaining to a particular problem have to be
referred to. Authority is not delegated to
different levels. People are asked to do defined
jobs, but any problems arising in the course of
performance are reported to the higher levels
which alone have the right to take decisions.
43. 8. Decentralization
it is an extension of delegation.
This delegation is throughout the
organization. Several respects
are follows:
44.
it places decision-making authority at a point
where there is knowledge of local problems
it helps develop mangers at an early stage.
It motivates managers
It focuses on business performance; and
It permits more time for top management to
concentrate on policy-making and creative
innovation.
46. 9. Formalization
Whatever may be the type of structure
an organization has and in whichever
way it distributes authority, organizations
tend to be formalized. “Formalization
implies that organization relationship and
activities have been authenticated, that
is, have a stamp of approval of one who
is authorized.
50. Configuration
Prime
Coordinating
Mechanism
Key Part of
Organization
Type of
Decentralization
Entrepreneurial
organization
Direct supervision
Strategic apex
Vertical and
horizontal
centralization
Machine
organization
Standardization of
work processes
Techno-structure
Limited horizontal
decentralization
Professional
organization
Standardization of
skills
Operating core
Horizontal
decentralization
Diversified
organization
Standardization of
outputs
Middle line
Limited vertical
decentralization
Innovative
organization
Mutual adjustment
Support staff
Selected
decentralization
Missionary
organization
Standardization of
norms
Ideology
Decentralization
Political
organization
None
None
Varies.
51. Chapter 5 Authority, Status,
Power, and Politics
Definition
It may be defined as the “decision-making”
right. When a right to take a decision in a
regard to a particular matter is vested in a
particular position, that position is said to
possess the said authority.
52. Types of Authority
1. Traditional Authority
2. Charismatic Authority
3. Legal Authority
53. Status
Def.
It is a case of perception of how people
look at a position in relation to other
position in the same organization, and
even of how society in general looks at it.
54. Types of STATUS
There are two types of status.
1. Formal- refers to the rank of people as
designated by the authority structure of an
organization.
2. Informal-refers to the social rank which
others accord to a person because of their
feelings towards him
56. Internal Factors
External Factors
Organizational rank
Occupational prestige
Job itself
Organizational image
Differences in abilities Prestige of the industry
or skills or knowledge
that the organization is
engaged in
Material worked on
Education
Working condition
Age
Pay
Sex
Seniority
Race, etc.
57. Power
Definition
1. Power is personal, political and acquired
by individuals.
2. Power is, in fact, one’s ability to influence
others’ behaviors.
58. 3. According to Wolfe, “Power is, therefore,
the potential ability of one person to
induce forces on another person towards
movement or change in a given
direction.
59. Sources of Power
There are two types of power are there
1. Interpersonal sources of power
2. Structural and situational sources of
power
61. Structural and Situation Sources of
Power
1. Knowledge as power
2. Resources as power
3. Decision making as power
4. Networks as power
5. Power of lower level
employees
63. Politics
1.
2.
3.
Politics is the process whereby power is
acquired, transferred and exercised upon
others to influence their behavior to suit the
interests of the person who influence.
Politics or politicking is endemic to every
organization and every level.
People play politics either to serve their
individual interests, or organizational interests,
or both.
64. Nord suggestion 4 postulates of
power
1.
2.
3.
4.
Org. composed of coalitions competing
with one another for resources;
Each coalition seeking to protect its own
interests;
Unequal distribution of power
The exercise of power within
organizations having impact of power
within the larger social system.
65. Lasswell said that
Politics has a problem of who gets what,
when, and how, imply the use of power for
allocation of scarce resources.
66. Pfiffner said that
If power is a force to influence events,
politics involves those activities or
behaviors through which power is
developed and used in organizational
settings.
67. Chapter 6 Organizational Culture
1. According to Taylor, "Culture … is that
complex whole which includes knowledge,
belief, art, morals, law, custom, and any
other capabilities and habits acquired by
man as a member of society.
68. 2. According to Herskovits, “that part of the
total setting that includes the material
objects of human manufacture,
techniques, social orientations, points of
view, and sanctioned ends, which are the
immediate conditioning factors underlying
behavior.”
69. 3. According to Aviel, “
Culture as a way of
life, the sum total of
one’s philosophy,
beliefs, norms,
values, morals,
habits, customs, art,
and literature.
70. 4. According to Lahiry, “Culture as a set of
unwritten rules that embodies the dos,
don’ts and shouldn't of the organization
and tells its members how to interact with
others and approached tasks in order to fit
and meet the firm’s expectations.
71. 5. According to Vein,
Hunt, “ Culture takes
years to develop. It is
done covertly rather
than overtly, by
example rather than
by prescription,
informally rather than
formally.
73. 1. Nature of people
What do people of a
particular culture think
of human beings-as
honest or dishonest,
trustworthy or
untrustworthy, good
or bad? People have
a way of thinking
about other people.
74. 2. Relationship with nature
How do people of a
particular culture view
relationship between
people and the
environment? Is there
control over nature or
a subordination to it?
76. 4. Achievement orientation
Do people prefer
activity to being
where they are? Are
they achievementoriented or leisureseeking?
77. 5. Time orientation
Do they think of the
past or of the future?
Some cultures
continues to bask
under the glory of
their past without
paying much attention
to their present or the
future.
78. 6. Concept of space
How do people vies
space? Should we sit
close to each other or
at a distance? Should
there be a hall or
private cabins for
officials to sit?
79. Chapter 7 Decision Making
1.Decision making is commonly
referred to as choosing between
alternatives
2. It is a process of specifying the
nature of a particular problem and
selecting among available
alternatives in order to solve it.
80. 3. It is an essential human activity that
pervades all management functions in
organizations.
4. The important thing is to look at how
individuals and groups attempt to identify
problem areas, examine various potential
solutions to problems, and select the most
suitable solution in a particular situation.
81. Types of Decisions
1. Personal and
Organizational
decisions
2. Basic and Routine
decisions
3. Programmed and
Non-programmed
decisions.
82. 1. Personal and Organizational
decisions
Personal decisions are to achieve personal
goals and organizational decisions are to
achieve the organizational goals.
Ex. A manager may decide to join a
university programmed to brighten his
career prospects in his present organization
or elsewhere. It is purely his personal
decision, but when he comes back after the
completion of the course and does his job,
he is serving organizational goals with
improved skills.
83. 2. Basic and Routine decisions
Basic decision are unique, one-time
decisions involving long-term commitment
or resources. Ex. Plant location,
organization structure, product line and so
on.
Routine decisions are highly repetitive,
everyday decisions, often taken at lower
levels, such as a supervisor assigning a
worker from one job to another on a
particular day or a salesman deciding his
schedule for visits.
84. 3. Programmed and Nonprogrammed decisions.
This brings to the fact that
some decisions in every
organization are quiet
routine or repetitive in
nature and every
organization has
developed standard
operating procedures to
handle such decision
problems.
85.
People come and go,
but irrespective of the
incumbents in
particular positions in
the organization, the
same procedures are
followed day in and
day out throughout
the organization.
88. The Decision Making Process
Problem Formulation
Recognition of the decision problem
Diagnosis of the problem
Problem Solution
Generation of alternatives and Consequences
thereof
Choice of the most suitable alternative
Decision Implementation
Evaluation of follow-up of the Decision
89. Decision making under different
conditions of knowledge
1. Certainty
2. Risk
3. Uncertainty
91. 2. Risk
Occurs when a
particular action may
lead to ore than one
potential outcome,
but the relative
probability of each
outcome is fairly
known.
92. 3. Uncertainty
Occurs when an
action may lead to
more than one
potential outcome and
their relative
probabilities are
unknown.
93. Techniques for Decision Making
1. Brainstorming
2. Synectics
3. Nominal Group Technique
4. Delphi Technique
5. Devil’s Advocate
6. Dialectical Inquiry
7. Quality Circles and Quality Teams
8. Self-Managed Teams
9. Group Decision Support System (GDSS)
10. Creativity and Innovation
94. 1. Brainstorming
It is a techniques which helps in storming
brains. The belief is that when people
interact in a free and uninhibited
atmosphere, they will generate creative
ideas.
The chief merit of this technique is that
every member of the group gets a chance
to stretch his/her imagination to the wildest
extent possible and contribute to decision
making by bringing in newer ideas.
95. 2. Synectics
Synectics is derived from a Greek word
meaning “the fitting together of diverse
elements”.
It is a technique in which diverse elements
are put together so that the problem can
be viewed from different angles.
96. 3. Nominal Group Technique
Members are asked to list their own
solutions to the problem silently and
independently after giving due thought to it
over a period of time, say ten to fifteen
minutes.
7-10 individuals with different
backgrounds and training are brought
together and familiarized with the problem.
97. 4. Delphi Technique
It is based on the use of questionnaire for
eliciting opinions and it overcomes the
need for any face-to-face interaction.
These questionnaires are completed
independently by experts at distant places.
But it is time consuming also.
98. 5. Devil’s Advocate
This follows the popular saying:" Keep a critic by
your side”. This critic brings out negative aspects of
your point of view and helps improve your decision
provided you are an open-minded person.
This method helps the individual as well as the
organization.
It helps the individual to develop presentation and
debating skills. At the same time, the organization
increases the probability of creative solutions to
problems and reduces the probability of groupthink
99. 6. Dialectical Inquiry
It is nothing but putting forth two opposing
views which bring out the benefits and
limitations of both sets of ideas.
But it must be seen that it does not create
a win-lose situation.
The chief merit of DDM (Dialectical
Decision Method) is that members arrive
at a compromise and believe that they
have made the decision.
100. 7. Quality Circles and Quality
Teams
QC are small groups that voluntarily meet
to provide input for solving quality or
production problems.
Managers often listen to recommendations
from quality circles and implement the
suggestions.
101. 8. Self-Managed Teams
QC and QT usually emphasize quality and
production problems, whereas selfmanaged teams are more broadly
focused.
They even cover problems like work
scheduling, job assignments and staffing.
These teams possess authority in the
organization's decision-making process
102. 9. Group Decision Support System
(GDSS)
A revolution in decision making has come
about with the development of support
systems.
These support systems use computers,
decision models, and technological
advances to remove communication
barriers, structure the decision process and
generally direct the group’s discussion
103. 10. Creativity and Innovation
Equally important is that organizations compete
not with products but with people.
Ideational resource is now at a high premium.
Both individual and organizational influences
affect the creative process.
In order to induce creativity and innovation, one
important step, among various techniques used
for generating alternatives, is to reduce barriers
to creativity and innovative thought and action.
104. Chapter 8 Bureaucracy
Bureaucracy is the connecting link
between the mandators of the
organization and the workers.
It is the concept that there must be
systematic and orderly policy and rules
must exist within the organization.
105. Characteristics of Bureaucracy
1. Division of Work
2. Hierarchy of Authority
3. Maintain Formal, Written Documents
and Extensive Filing System
4. Procedures, Rules and Regulations
5. Expert Training
6. Impersonality of Interpersonal Relations
7. Rational Programme of Personnel
Administration
107. 1. Division of Work
This process of division of work goes on
till the job of an individual becomes highly
specific and each individual is performing
only a limited task.
108. 2. Hierarchy of Authority
Every organization which is an entity of
scale of possesses a hierarchical system.
Every level is supervised by the next
higher level except, of course, the top.
109. 3. Maintain Formal, Written
Documents and Extensive Filing
System
A bureaucratic organization has an
elaborate and extensive filing system.
As far as possible, all decisions are
formally recorded.
110. 4. Procedures, Rules and
Regulations
A bureaucratic organization obtains clarity
in operating processes through the
developing of procedures, rules, and
regulations
111. 5. Expert Training
It is a process provide
with expert training in
order to effect
qualitative and
quantitative
improvements in their
performance.
112. 6. Impersonality of Interpersonal
Relations
Emotions and sentiments interfere with
rationality and objectivity and promote
nepotism and favoritism.
Therefore, in a bureaucracy interpersonal
dealings are formal, impersonal and
wholly devoid of emotions and sentiments.
113. 7. Rational Programme of Personnel
Administration
All recruitment to the organization is made
on the basis of the achievement criteria
rather than the ascriptive criteria.
What an individual is capable of doing or
what achievements he already has, rather
than who he is, decides his selection or
promotion.
114. Assignment on July 2, 2008
Find out how to bring “remedy for evils of
Bureaucracy”
115. Case study solution
1. Defining the problems of the case
2. Characters of the case
3. Main factors which make the case in problem
4. Answer all the questions in the case
5. Choose the alternative solutions
6. Each solutions analyze by SWOT
7. Find out the best solution
8. Find out how to implement and evaluate the
solved alternatives.
9. Synopsis
10. Gist of the case in brief.
