Chapter 1; Organization and Its importance
Organization: Aims to present state-of-the-art principles and practice in the organizing of collective
activities primarily with reference to business companies.
1. Provides necessary background and looks at the broad picture rather than specifics. It introduces
the nature of the organization and the contributions it can make.
2 + 3. Turn to the specifics of organizational form. The focus on the internal aspects of organization,
while others examine the various networked forms of organization spanning traditional boundaries.
Both parts are largely concerned with the structures and mechanisms that facilitate ongoing
processes.
4. Examine each of the capabilities for evolving effective organizations.
5. Steps back from the detail of previous chapters to make sense of how organizations can be
designed to help meet the strategic business and social criteria of the present century.
Organization assists the management of a collective activity by providing:
Structure and procedures
Ways of managing fundamental processes
Arrangements for transacting across corporate and national boundaries
Two different definitions of organization:
1. A set of arrangements for undertaking collective goal-directed activities in a cohesive and
coherent manners. This is the side of organization that contributes to meeting strategic
business needs.
2. A set of arrangements that distributes power, rewards and personal well-being. If this aspect
of organization is seen to be failing, it will gave deleterious performance effects as well as
calling the legitimacy of business into question.
Organizing; the process of arranging collective effort so that it achieves and outcome potentially
superior to that of individuals acting or working alone. It involves some division of labour with
different people or groups concentrating on different activities that then have to be integrated
(coordinated) to achieve a successful result. It also requires a degree of control. So as to monitor
progress against original intentions and to make appropriate adjustments along the way.
Organization; The form or organizing used by a company persists in a recognizable form, at least for
a while. It is important to bear in mind that not all organization is consciously designed and formal in
nature.
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,An organization has structural, processual, and boundary-defining facts:
Structural:
- Basic structure
- Hierarchy: levels, layers, authority, reporting lines
- Specialization: roles, groups, and units
- Procedures
- Rules and standards
- Schedules
- Systems
Processual:
- Integration / coordination The purpose of each is to help achieve a
configuration of mental and physical effort that
- Control
leads to good corporate performance.
- Rewards
Boundary-crossing
All aspects have become more prominent with
- Outsourcing
the growing flexibility and permeability of the
- Virtual organization boundaries of firms. In the past, much of the
- Alliances concern in organizing was directed at drawing
- Organizing across borders lines of exclusion, both between units within
companies and between companies themselves.
1. Basic structure: The form of organization charts, job descriptions ,and the constitution of
boards, committees, working parties, task force, and teams. It can only provide a general
blueprint or constitution.
2. Hierarchy: Depict reporting lines for instructions and feedback of results, through these can
sometimes jump across levels.
Horizontal : specialization of tasks according to functional speciality, business focus or
geography
Vertical: specialization of discretionary decision-making responsibilities through specifying
levels in hierarchy.
3. Procedures focus more closely on behavior.
4. Rules and standards aim at clarifying to people what is expected of them.
5. With the use of schedules people can report information of performance, drawing up of
accounts ,plant maintenance, and personal appraisals. Or other typical activities that can be
planning and conducting set schedules.
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, 6. Systems are a set of procedures for the performance of connected activities that constitute a
particular task, and they normally rely on the support of information technology.
7. Integration is concerned with ensuring that there is adequate coordination between the
different but complementary activities that create collective value.
8. Control involves setting goals, implementing them and monitoring their attainment.
9. Reward is a process fundamental to engaging the motivation among members of a company
to contribute positively to the achievement of its goals. The design of reward systems is part
of managements toolkit. There are broadly two main requirement that rewards systems. 1)
To attract people with the required abilities and skills to join a company. 2) To encourage
people to offer a high degree of commitment to their employment, including a willingness to
accept innovation and change.
10. More activities are being outsourced to sub-contractors in order to focus on core capabilities
and benefits form the advantages in cost and expertise enjoyed by external specialist firms
11. Virtual organization offers advantages that suggest it will come into progressively greater
use. Some value chains, bringing together various contractors into networks, are being
organized along virtual lines.
12. There is also a rising number of alliances between firms in order to secure global market
coverage , to resource innovation, and to access sources of low cost products. Many alliances
are formed between firms from different countries and this is part of the trend to
internationalize the scope of business value chains.
13. Challenge of internationalization: Organizing across borders.
How Does Organization Contribute to Performance?
Management has long been defined as: “getting things done through other people”
Therefore how people are organized will affect the contribution they make through their
collective effort
Organizational Arrangements can Affect People’s Performance
They can motivate behavior - e.g. via defining jobs & goals, reward systems
They can facilitate behavior - e.g. via providing for communication
They can constrain behavior - e.g. via restrictive rules & procedures
Distinction between conventional and new organizational forms
Organization aims to provide a set of framework provisions within which the processes necessary for
effective collective activity can proceed. IT can, however, only make a partial contribution to the
effectiveness of those processes. An assumption shared by those who advocate the adoption of new
organizational forms is that in the future we have to rely less than before on ‘’organization’’ as
framework , and more on ‘’organizing’’ as process that respond to present needs and anticipate the
future. These processes have to be based on intensive communication and knowledge-sharing
between people. In modern conditions of high chance and turbulence, structures may well be
obsolete before they are even implemented, and can inhibit the flexibility on which the survival of
companies increasingly depends. Self-generated spontaneous processes that allow for rapid and
innovative adjustments to new circumstances are seen to be appropriate instead.
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,Activiteit en organisatorisch component Traditionele organisatievorm Moderne organisatievorm
Doelbepaling & Verspreiding
Hiërarchie - Gecentraliseerde initiatief en gezag - Gedistribueerde initiatief en gezag
- Leiderschap door formele autoriteit - Leiderschap door begeleiding
- Gebruik van hiërarchische kanalen - Gebruik van teams, met mindere mate van
hiërarchie
Regels en roosters - Verplicht; op regels gebaseerde oriëntatie - Vrijheid om zelfstandig te oordelen; op relatie
gebaseerde oriëntatie
Controle - Gecentraliseerd: Persoonlijk of regel- - Gedecentraliseerd: doelgroep, cultuur of
gebaseerd HRM-gebaseerd
Beloning - Gebaseerd op individuele prestaties - Gebaseerd op groepsprestaties
Identificeren van taken en rollen
Specialisatie - Gespecialiseerd, overzichtelijke en duidelijk - Algemeen, onduidelijke rollen
omschreven taken - Voorkeur voor uitgebreide rollen
- Voorkeur voor beperkte rollen
Graad van integratie - Nadruk op differentiatie plaats van integratie - Nadruk op integratie
Onderhouden van een waarde toegevoegd systeem
Systemen - Gericht op het verminderen van onzekerheid - Gericht op het signaleren van nood aan
verandering
Methode van integratie - Formele procedures en taken - Invloed van IT
Netwerken - Algemeen; alleen belangrijke belanghebbende - Integraal naar waardeketen
Outsourcing - Verticale integratie in grotere eenheden; lage - Horizontale integratie tussen kleinere
mate van outsourcing eenheden; niet-kernactiviteiten uitbesteed.
Alliantie - Wordt vermeden vanwege angst voor verlies - Veel gebruikt
van controle en conflict
Internationaal organiseren - Losse financieel gecoördineerd - Complexe multidimensionale organisatie die
- Conglomeraat of gecoördineerd via een tevens probeert om de voordelen van de
internationale divisie; integratie voornamelijk wereldwijde coördinatie en lokaal initiatief te
verticaal krijgen; integratie verticaal en horizontaal
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, Signs of Organizational Deficiencies
Depressed motivation and morale
Decision making is slow and of poor quality
Conflict and lack of co-ordination
Failure to respond innovatively to changing circumstances
Rapidly rising costs, especially in administration
The Strategic Contribution of Organization
1. “Organizational Capabilities Represent the Last Truly Sustainable Source of Competitive
Advantage”
People are the key strategic resource
Organization is concerned with the ability to organize and motivate people in unique ways to
achieve strategic objectives
2. “The Last Truly Sustainable Source of Competitive Advantage”
From a strategic perspective, organization is expected to make an important contribution to:
dealing with changing contingencies (e.g. growth)
effectively implementing strategy, so gaining competitive advantage
managing diversity (e.g. international expansion)
promoting a combination of efficiency and innovation
The Key Drivers of Business Strategy that Organization has to Support
Customer demands for higher quality & service
Ability to attract and retain the best people
International competition
New and rapidly changing technologies
So, the Design of Organization has to “Fit” With:
Strategy (tasks and priorities)
People
Environment
Technology (physical and informational)
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