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8/10/2019 Ch1 of Org Behavior by Jones
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Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
1-11-1
Organizational Theory,Design, and Change
Sixth Edition
Gareth R. Jones
Chapter 1
Organizations andOrganizational
Effectiveness
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Learning Objectives (cont.)
3.
Understand how managers can utilizeorganizational theory to design andchange their organizations to increase
organizational effectiveness4.
Identify how managers assess and
measure organizational effectiveness
5.
Appreciate the way contingency factorsinfluence the design of organizations
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What is an Organization?
!
Organizations provide goods andservices
!Organizations employ people
!
Organizations bring together peopleand resources to produce products and
services
4
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What is an Organization? (cont.)
!
Organization:a tool used by peopleto coordinate their actions to obtainsomething they desire or value
!
Entrepreneurship:identifyopportunities to satisfy needs, andthen gather and use resources to meet
those needs
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How Does an OrganizationCreate Value?
!
Value creation takes place at threestages: input, conversion, and output! Inputs: include human resources,
information and knowledge, rawmaterials, money and capital
! Conversion: the way the organizationuses human resources and technology to
transform inputs into outputs! Output: finished products and services
that the organization releases to itsenvironment
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Why Do Organizations Exist?
!
To increase specialization and thedivision of labor
! Division of labor allows specialization
! Specialization allows individuals tobecome experts at their job
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Why Do Organizations Exist?(cont.)
!
To use large-scale technology!
Economies of scale:cost savings thatresult when goods and services are
produced in large volume!
Economies of scope:cost savings thatresult when an organization is able to useunderutilized resources more effectively
because they can be shared acrossseveral different products or tasks
9
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Why Do Organizations Exist?(cont.)
!
To manage the external environment!
External environment consists of thepolitical, social, economic, and
technological factors that affectorganizations
! Organizations regularly exchangeproducts and services for needed
resources!
Organizations need to manage theirexternal environment
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Why Do Organizations Exist?(cont.)
!
To exert power and control!
Organizations structure their members toefficiently produce products and services
!To economize on transaction costs!
Transaction costs:the costs associated
with negotiating, monitoring, andgoverning exchanges between peoplewho must cooperate
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Figure 1.3: WhyOrganizations Exist
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Organizational Theory, Design, andChange: Some Definitions
!
Organizational theory:the study ofhow organizations function and how theyaffect and are affected by the
environment in which they operate
!
Organizational structure:the formalsystem of task and authority
relationships that control how people tocoordinate their actions and useresources to achieve organizational goals
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Some Definitions (cont.)
!
Organizational culture:is the set ofkey values, beliefs, and attitudes sharedby organizational members and helpsshape the behavior within theorganization
!
Organizational design:the processby which managers select and manage
aspects of structure and culture so thatan organization can control the activitiesnecessary to achieve its goals
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Some Definitions (cont.)
!
Organizational change:
! the process by which organizationsmove from their present state tosome desired future state to
increase their effectiveness
! Organizational redesign andtransformation
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Figure 1.4: The Relationship AmongOrganizational Theory, Structure, Culture,Design, and Change
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Importance of OrganizationalDesign and Change
!
Dealing with contingencies!
Contingencies are events that might occurand must be planned for
! Organizations must be designed to beable to respond to changes in thecomplex and increasingly difficultenvironment many organizations face
! Globalization and changing ITtechnologies are just two challengesorganizations must be ready to face
I t f O i ti l
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Importance of OrganizationalDesign and Change (cont.)
!
Gaining competitive advantage!
The ability to outperform other companiesbecause of the capacity to create more
value from resources!
Core competences: skills and abilities invalue creation embedded in theorganizations people or structures
! Strategy:pattern of decisions andactions involving core competences thatproduces a competitive advantage tooutperform competitors
18
I f O i i l
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Importance of OrganizationalDesign and Change (cont.)
!
Managing diversity
! Differences in the race, gender, andnational origin of organizational members
have important implications fororganizational culture and effectiveness
! Learning how to effectively utilize a
diverse workforce can result in betterdecision making and more effectiveworkforce
I f O i i l
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Importance of OrganizationalDesign and Change (cont.)
!
Promoting efficiency, speed, andinnovation
! The better organizations function, the
more value they create
! The correct organizational design can lead
to faster innovation and quickly get new
products to market
20
C f P
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Consequences of PoorOrganizational Design
!
Decline of the organizations sales andprofits
!Layoffs occur and talented employeesleave to take positions in growing
organizations
!
Resources become harder to acquire
!
Resulting crisis may result inorganizational failure
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How Do Managers MeasureOrganizational Effectiveness?
!
Control:external resource approach!
Monitors how effectively an organizationmanages and controls its external environment
!Innovation:internal system approach
! Develops an organizations skills andcapabilities to change, adapt, and improve theway it functions
!Efficiency:technical approach! Measures how efficiently an organization
converts a fixed amount of resources intofinished goods and services
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Table 1.1: Approaches toMeasuring Effectiveness
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Measuring Effectiveness:Organizational Goals
!
Official goals:guiding principles thatthe organization formally states in itsannual report and in other publicdocuments
!
Mission:a mission statement explainswhy the organization exists and what itshould be doing
!
Operative goals:specific long- andshort-term goals that guide managersand employees as they perform thework of the organization
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Figure 1.5: Plan of the Book
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Figure 1.5: Plan of the Book(cont.)
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Figure 1.5: Plan of the Book(cont.)
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Summary
!
Organizations are a tool people use toachieve their goals
!Organizational theory is the study ofhow organizations function and how
they affect and are affected by theirenvironment
!
Organizational effectiveness must bemonitored by managers