Introduction to Organization Theory

1. Introduction to Organization Theory Dr. UpulAbeyrathne, Dept. of Economics, University of Ruhuna Matara

2. Objectives • To introduce the Nature and Scope of Organization Theory • To make students aware of the importance of studying organizations

3. Nature of Organizations • Organizations are hard to see. • They touches our everyday lives. • They are so common and we take them for granted.

4. Definition • Organisations are diverse. But they have got common features • Hence, adopting a describing approach is suitable. • “Organizations are 1. social entities that are 2. goal directed, 3. are deliberately desinged, structured and coordinated activity system 4. are linked to external environment (Richard L Draft 2004. Organizational theory, Change and Design)

5. Key Elements of an Organization • Buildings, set of policies and procudures etc are less important • Most important aspect of an organization is people and their interactions with one another. Organizations exist when people interact to perform essential functions that help to attain goals. • An organization cannot exist without interacting with customers, suppliers, competitors and other elements in the environment.

6. 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 • 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.

7. Perspectives on Organizations 1Close System. 2. Open System.

8. Closed System • Does not depend on its environment • Is autonomous. • Enclosed and sealed off from outside world.

9. Open System • It interact with environment to survive • It consumes recourses in and exports to environment • It cannot seal off from environment. • It has to adapt to the environment. • Internal efficiency is just one issue • The need for inputs and outputs reflect the dependency on environment.

10. Parts of the Organization or Organizational Configuration Henry Mintzberg (1979), in his book the Structuring of Organization, has suggested every organization has five parts. • Technical core • Technical support • Administrative suppor • Middle management and • Management.

11. Technical core and Technical Support • Technical core includes the people who do the basic works.It is where the primary transformation of inputs into outputs take place. • Technical Support function helps the organization to adapt to the environment. It employs persons such as engineers and researchers to scan the environment for problems, opportunities and technological development. It is responsible for innovation in the technical core.

12. Administrative Support • It is responsible for smooth functioning and up keeping of organization including physical and human elements. • It includes human resource activities such as recruitment and hiring etc. • It also includes maintenance activities such as cleaning and repair of buildings and maintenance etc.

13. Middle Management and Top Management • Management is a distinctive sub system. • It is responsible for directing and coordination. • Top management is responsible for direction, goals and policies of the entire organization or major division. • Middle Management is responsible for implementation and coordination at departmental level. • Traditionally the middle management have been responsible for mediating between top management and technical core such as implementing rules and passing information up and down the hierarchy .

14. Thank you