Nature of Organisations - Definition, Components, and Characteristics

1. Management and Organisational Behaviour 7th Edition PART 2 The Organisational Setting

2. Management and Organisational Behaviour 7th Edition CHAPTER 4 The Nature of Organisations

3. Purpose of organisations • Organisations exist in order to achieve their aims & objectives and to provide satisfaction for their members • Organisations are structures of people • Organisations are an integral part of society operating in both public & private sectors

4. Defining organisations Farnham & Horton define organisations as: ..social constructs created by groups in society to achieve specific purposes by means of planned & co-ordinated activities. These activities involve using human resources to act in association with other inanimate resources in order to achieve the aims of the organisation.

5. Common factors in organisations There are at least three common factors in any organisation: • People • Objectives • Structure

6. Figure 4.1 The nature of organisations

7. Approach to organisation theory that stresses the common aspects of organisational life (Watson) • The importance of the creative, critical & situation-defining characteristics of the individuals within the organisation. • The varieties of interest and goal among the individuals & groups in the organisation, & the emphasis on conflict & political behaviour. • The interactions between the organisation & general environment.

8. Formal organisations Schein defines a formal organisation as…. … the planned, co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through the division of labour & function, & through a hierarchy of authority & responsibility

9. Formal organisations Formal organisations are: • Deliberately planned and created • Concerned with the co-ordination of activities • Hierarchically structured with stated objectives • Based on certain principles such as the specification of tasks and defined relationships of authority & responsibility

10. Figure 4.3 Basic components of an organisation

11. Basic components of an organisation • Operational core – the direct performance of the technical or productive operations and the carrying out of actual task activities • Operational support – concerned indirectly with the technical or productive process but closely related to the actual flow of operational work

12. Basic components of an organisation • Organisational support – the provision of services for the whole organisation, including the operational core but usually outside the actual flow of operational work • Top management – concerned with the broad objectives and policy & strategic decision making • Middle management – concerned with the co-ordination & integration of activities & providing links with operational support staff

13. Private Owned & financed by individuals, partners, or shareholders accountable to their owners or members. Main aim is of a commercial nature such as profit, return on capital employed, market standing or sales levels Public sector Created by government Do not generally have profit as their goal but have a political purpose Private enterprise & public sector organisations

14. Characteristic features of service organisations • The consumer is a participant in the service process • Services cannot be stored, they are time-perishable & if they are not used they are likely to be wasted • Services are less tangible & more difficult to explain or communicate Fitzsimmons & Sullivan

15. Characteristic features of service organisations • Benefits derived from services tend to be associated with feelings or emotions • Work activities are people-oriented • Measurement of output is difficult & there is unlikely to be a single, important criterion by which to measure effective performance Fitzsimmons & Sullivan

16. Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

17. Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

18. Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

19. Table 4.1 Differences between products & services Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. Source: Reproduced with permission from John Macdonald, ‘Service Is Different’, The TQM Magazine, Vol. 6, No. 1, 1994, p.6. http://www.emeraldinsight.com/tqm.htm

20. Types of organisational authority • Traditional organisations - legitimised by custom and long-standing beliefs in the natural right to rule • Charismatic organisations – legitimised by belief in the personal qualities of the leader • Bureaucratic organisations – authority is based on the law of formal rules & procedures and on impersonal principles

21. Economic Protective Associative Public service Religious Political Educational Military Voluntary Classifying organisations by major purpose

22. Mutual-benefitassociations – the membership Business concerns – owners Service organisations – client group Commonweal organisations – public at large Classifying organisations according to main beneficiaries

23. Productive Maintenance Adaptive Managerial or political Katz & Khan Alternative classification – genotypic function

24. Figure 4.4 The open systems model of organisations

25. Company products Factored products Staff Technology Management/sales/ technical expertise Finance Subcontractors Customers Inputs

26. Comfortable & safe environment for customer businesses Design of systems Selling of systems expertise Provision of quality service Transformation process

27. Transformation process • Project management of customer order • Site presence • Innovation • Internal & external communication

28. Invoiced sales Satisfied and committed staff Reputation for excellence Installations that are fit for purpose Satisfied customers Outputs

29. Market leadership Growth Profitability To be the best in field To invest in our people To be professional Organisational goals

30. Repeat business Customer feedback Budgets Margin performance Staff appraisal Free of charge work Volume of work Relationship with stakeholders Measures of achievement

31. Figure 4.6 Environmental influences on organisations

32. The sub systems of these organisations include: Goals and values Technical Psychological Structure Managerial Kast & Rosenzweig Organisations as socio technical systems

33. Human / social Administrative / structural Informational / decision making Economic / technological Hersey & Blanchard Alternative sub systems

34. Adopts an if–then approach A number of situational factors influence organisational performance If certain situational factors exist, then certain organisational and managerial variables are most appropriate Contingency models of organisations

35. The physical aspects of machines, equipment, processes & work layout (machine technology) involved in the transformation or conversion process The actual methods, systems & procedures involved (knowledge technology) in carrying out the work of the organisation & transforming or converting inputs into outputs Technology

36. Has prompted more procedures of work Has demanded new patterns of work organisation Affects the nature of individual jobs, formation & structure or work groups Led a move away from large-scale, centralised organisations to smaller working units Allows people to work more on their own Requires changes in the nature of supervision Information technology

37. The informal organisation arises from: the interaction of people working in the organisation their psychological and social needs the development of groups with their own relationships and norms of behaviour, irrespective of those defined within the formal structure The informal organisation

38. Figure 4.9 The formal & informal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

39. Figure 4.9 The formal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

40. Figure 4.9 The informal organisation Source: Reproduced with permission from Kenneth Lysons, ‘Organisational Analysis’, Supplement to the British Journal of Administrative Management, no. 18, March/April 1997.

41. Organisation charts Spans of control Job definitions & descriptions Production efficiency Policies & procedures The formal organisation

42. Personal animosities & friendships Grapevines Group norms & sentiments Informal leaders Prestige & power structures Emotional feelings, needs & desires Effective relationships Personal & group goals The informal organisation

43. Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

44. Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

45. Table 4.2 Comparing formal & informal organisations Source: Adapted from J. L. Gray and F. A. Starke, Organizational Behavior: Concepts and Applications, Fourth edition, Merrill Publishing Company, an imprint of Macmillan Publishing Company (1988), p.432. Reproduced with permission from Pearson Education Inc., Upper Saddle River, NJ.

46. Organisations are living organisms that are constantly evolving. Ulrichsuggests that with the changing and dynamic contextual factors - … the essence of organisations has shifted and will continue to shift from focusing on structure to capability. Organisations of the future

47. There is a demand for alternative organisational practices and a far reaching transformation has already begun based on the idea that management as a system fails to open the heart or free the spirit The age of management is coming to an end and the real push for the future is for more authentic human relationships and the humanisation of organisations as crucibles for personal growth and development Cloke & Goldsmith Rise of organisational democracy