the dynamics of organization
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The Organizational DynamicsThe Organizational Dynamics:
An OverviewAn Overview
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What is an organization?What is an organization?
a consciously coordinated social entity
with a relatively identifiable boundary
functions on a relatively continuous
basis
to achieve common goals
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What do they doWhat do they do? How well do they do?? How well do they do?
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Inputs TransformationProcess
Output
System
ENVIRONMENT
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Current TrendsCurrent Trends
Organizations now function in a global economy.
International expansion can provide a competitive
advantage! "ntering different countries may provide large numbers of
potential customers.
! #uilding production facilities in countries with low$cost labor may
prove cost$efficient.! %he rapid increase in telecommunications and information
technology enables work to be done more rapidly& efficiently&
and effectively around the globe.
McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights resere!.
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CHALLENGES FROM GLOBAL REALITIESCHALLENGES FROM GLOBAL REALITIES
WO'( )O'*" I+ *,A-I-
$ /I0"'+I%1
$ 0A23"+
$ +(I22+
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$ *O752"6'"2A%IO-+,I5 WI%,
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$ 2"A'-I-
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TRENDS IN GLOBAL WORK FORE
!T"E A#ERAGE AGE IS RISING
!$ORE WO$EN ARE ENTERING T"E
FORE
!ET"NI $INORITIES% I$$IGRANTS
! ARE INREASED
!INTERNATIONAL AREER AND WORK
! FORE $OBILIT& IS INREASING
!INTERNATIONAL E'PERIENE IS A
! PRERE()ISITE FOR AREER
! PROGRESSION
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GLOBAL CHALLENGE .GLOBAL CHALLENGE .
CUSTOMEREXPECTATIONS ARECHANGING: FAST ANDRELIABLE DELIVERIES OF
GOODS AND SERVICES INTERM OF:- QUALITY- TIME- PRICE
THE DESIGN ANDCONCEPT OF WORKPLACEARE CHANGING:
- THE IMPACT OF ITSRADICALDEVELOPMENT- NEW WAYS OFORGANIZING
MOVING FROM TRADITIONAL
TO RE-ENGINEERED VALUESTRADITIONAL:
-THE BOSS PAYS OUR SALARIES; KEEP THE
-BOSS HAPPY
-TO KEEP OUR JOB, STAY QUIET AND DONT
-MAKE WAVES-WHEN THINGS GO WRONG, PASS
-PROBLEM TO OTHERS
-GOOD MANAGER BUILDS AN EMPIRE
-THE FUTURE IS PREDICTABLE; PAST
-SUCCESS MEANS FUTURE SUCCESSRE-ENGINEERED:
-CUSTOMERS PAY OUR SALARIES; KEEP
-THEM HAPPY
-WORK SMARTER NOT HARDER
-ACCEPT OWNERSHIP FOR PROBLESM;
-HELP SOLVE THEM
-GOOD MANAGER BUILDS TEAMS-THE FUTURE IS UNCERTAIN; CONSTANT
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GLOBAL CHALLENGE GLOBAL CHALLENGE
7A-A"'+ *,A'A*%"'I+%I*+ A'" *,A-I-
$ 2O#A2 )O*3+$ #"I- 'A/3A%"+
$ '"+32% /'I0"-
"-/"' 'O2"+ A'" *,A-I-
7O'" "83A2 I-0O20"7"-%
2O#A2 "*O-O71 A))"*%+ O'A-I4A%IO- O5"'A%IO-,37A- 'I,%+ I- %," WO'( 52A*"9 *'"A%" 5'"++3'"+ )O'
$ "752O1"" 'I,%
$ :O# +"*3'I%1
$ ""O
$ "83I%1 O) "A'-I-+
"%,I*+ A-/ 7O'A2I%I"+ #"*O7" 5A'% O) O'A-I4A%IO-;+ +O*IA2'"+5O-+I#I2I%I"+
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QUALITY OF WORK LIFE:QUALITY OF WORK LIFE:OVERALL QUALITY OF HUMAN EXPERIENCES IN THE WORK PLACEOVERALL QUALITY OF HUMAN EXPERIENCES IN THE WORK PLACE
PARTICIPATION: INVOLVING PEOPLE FROM ALLLEVELS OF RESPONSIBILITY IN DECISION MAKING
TRUST: PROVIDE MORE FREEDOM WITHIN THE
SYSTEMREINFORCEMENT: SHARING THE WEALTHS
RESPONSIVENESS (MAKING THE WORK SETTINGMORE PLEASANT AND ABLE TO SERVE
INDIVIDUAL NEEDS):
- SENSITIVITY TO FAMILY ISSUES
- FRIENDLINESS AND FUN
- RELIGION PRACTICES AT WORK
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Current Global Changes
"uropean "conomic *ommunity
-orth American )ree %rade
Agreement
%he rowth of Asia
! :apan& *hina& +ingapore& ,ong
(ong& and 7alaysia are significant
economic forces.
eneral Agreement on %ariffs and
%rade
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TRENDS TOWARD INTERNATIONAL ANDTRENDS TOWARD INTERNATIONAL AND
GLOBAL ENTERRISEGLOBAL ENTERRISE
'OW%, I- I-%"'-A%IO-A2 I-0"+%7"-% A-/
%'A/"
'OW%, O) 732%I-A%IO-A2 "-%"'5'I+"+
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NEW ORGANIZATION FEATURES
DYNAMIC GLOBAL ECONOMYBE CUSTOMER RESPONSIVEPROFITABILITY THROUGH COST AND GROWTH
REDEFINITION OF ORGANIZATION CAPABILITIESAS THE DNA OF COMPETITIVENESSLEARNING TO CHANGE: ADAPTATION ANDTRANSFORMATIONMANAGERIAL INNOVATION
KEEPING UP TO TECHNOLOGY INNOVATIONATTRACTING, RETAINING, AND MEASURINGCOMPETENCE AND INTELLECTUAL CAPITALCHANGING EMPLOYEE DEMOGRAPHICS, E.G.MORE WOMEN IN THE WORKFORCE
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THEMES IN CHANGING ANDDEVELOPING ORGANIZATION
+5""/
)2"6I#I2I%1
I-%"'A%IO-
I--O0A%IO-
7I-/+"% A22OW I/"A+& *O75"%"-*I"+ "7"'" A% A222"0"2+ %,'O3,
$ 2"A'-I-
$ +,A'I- (-OW2"/"
$ 'O35I- 5,1+I*A2 A-/ I-%"22"*%3A2 A++"%+
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'atio of 7arket 0alue to #ook 0alue for +elected
*ompanies
Annual Market Book Ratio ofSales Value Value Market too!"any #$ %illions& #$ %illions& #$ %illions& Book Value
eBay *+, -.+/ -+0 1+0
$icrosoft ,/+2 ,32+* 3/+- 2+2Inte4 ,5+/ *2,+* -3+2 2+.
Genera4 $otors orp+ */,+* ,.+. 0+2 ,+*
Nucor 6Stee47 2+/ -+0 ,+- *+1
8+ + Penney -,+- 3+. 5+2 +1/
Note: The data on market valuations are as of June 16, 2003. All other financialdata is ased on the most recentl! availale alance sheets and incomestatements.
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CEO Re!uneration in "#S# Dollars
COUNTRY
"nited #tates$ra%il
&rance
Ar'entina
(erman!
Ja)an
*e+ico
CEO TOTAL
REMUNERATION
1,-0-,000 /,000
-0,000
61,000
-22,000
-6,000
6-/,000
CEO/MANUFACTURING
EMPLOYEE TOTAL
REMUNERATION MULTIPLE
31 60
1
-
11
11
-6
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INDONESIAN WAGE S"R$E% &''(
AREAS CEO DIRECTOR SR# )ANAGER *R#
)ANAGER
ENTR%
LE$EL
OIL+ GAS >@ >> B> BB B.
TELECO) >@ >> BB CB B.>
,AR)AC% >@ B> CB D BB.
)AN"-ACT"RE B@ BB CC $ E C.B
SER$ICES B@ CB FD $ E C.B
A"TO)OTI$E B@ CB FD $ E C.B
ELECTRONICS B@ CB FD $ E C.B
GAR)ENT C@ C $ C GE H G 37'
-ORWARDING C@ C $ C G $ E H G 37'
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oints to onder
1. How do we know if an organization is successful?
2. What are the components of an effectiveorganization?
3. What determines the effectiveness of anorganization?
4. How is an effective organization designed?
5. What theory can be used to solve organizationproblems, i.e. ineffective organization?
6. How does culture work?
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ORGANI.ATIONAL E--ECTI$ENESS
What is effectiveness? Is it different from
efficiency?
What does it mean effectiveness is a necessarycondition for survival4? *an an organization die?
What are the parameters used to explain
organization effectiveness?
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)O3' A55'OA*,"+ %O O'A-I4A%IO-)O3' A55'OA*,"+ %O O'A-I4A%IO-
"))"*%I0"-"++"))"*%I0"-"++
AROAC, DE-INITION
An organization is effective to the extent
that it 5.
W,EN "SE-"L
%he approach is preferred
when 5.
GOAL ATTAIN)ENT Accomplishes its stated goals oals are clear& time bound& and
measurableS%STE) It acuires needed resources A clear connection exists
between inputs and outputs
STRATEGICCONSTIT"ENCIES
All strategic constituencies are at leastminimally satisfied
*onstituencies have powerfulinfluence on the organization& and
the organization must repond totheir demands
CO)ETING$AL"ES
%he emphasis of the organization in the fourmaJor areas
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A T,REE/DI)ENSIONAL )ODEL O-
ORGANI.ATIONAL E--ECTI$ENESS
&789$99T
;
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A -O"R )ODEL O- E--ECTI$ENESS $AL"ES
FLEXIBILITY
CONTROL
PEOPLE ORGANIZATION
*eans:
&le+iilit!
7nds:
#tailit!
7nds: acuisition
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*'I%"'IA O) O'A-I4A%IO- "))"*%I0"-"++
CRITERIA DE-INITION
-LE0IBILIT% A#2" %O A/:3+% W"22 %O +,I)%+ I- "6%"'-A2 *O-/I%IO-+A-/ /"7A-/+
AC1"ISITION O-RESO"RCES
A#2" %O I-*'"A+" "6%"'-A2 +355O'% A-/ "65A-/ +I4" O)WO'( )O'*"
LANNING OA2+ A'" *2"A' A-/ W"22 3-/"'+%OO/
ROD"CTI$IT% ANDE--ICIENC%
0O237" O) O3%53% I+ ,I,& 'A%IO O) O3%53% %O I-53% I+,I,
A$AILABILIT% O-IN-OR)ATION
*,A--"2+ O) *O773-I*A%IO- )A*I2I%A%" I-)O'7I-5"O52" A#O3% %,I-+ %,A% A))"*% %,"I' WO'(
STABILIT% +"-+" O) O'/"'& *O-%I-3I%1& A-/ +7OO%, )3-*%IO-I- O)O5"'A%IO-+
CO,ESI$E WOR2 -ORCE "752O1""+ %'3+%& '"+5"*%& A-/ WO'( W"22 WI%, "A*,O%,"'
S2ILLED WOR2 -ORCE "752O1""+ ,A0" %," %'AI-I-& +(I22+& A-/ *A5A*I%1 %O /O%,"I' WO'( 5'O5"'21
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Effectiveness Criteria(Gross; in GIBSON, ET. AL., 1973)
Acquiring resources
Being efficient or cost-effective
Producing outputsDeveloping administrative and technicalfunctions
InvestmentBehave according to ethical code of conduct
Satisfying the needs of organization members
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Effectiveness Criteria
Expert Effectiveness Criteria
Gross Acquiring
resources
Efficient Producti
on
Adminis
rative &
technical
functions
Ethical
code
Invest-
ment
Satisfying
members
interests
Price Productivity
Institutionali
zation
Productiv
ity
Producti
vity
Adaptati
on
-moral
conformity
adaptation
Institutiona
lization
Institu
tionali
zation
Moral
Adaptation
Institutiona
lization
Mott Productvity Productvi
ty
Product
vity
Adapta
tion
Fleksibili
ty
Adaptation -Adap
tation
-Fleksi
bility
Adaptation
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THE ESSENCE OF AN ORGANIZATIONTHE ESSENCE OF AN ORGANIZATION
ALWAYS HAS A PURPOSE:
EFFECTIVE PERFORMANCE
EFFICIENT PERFORMANCEDEPENDS ON HUMAN EFFORTS
PARADOX BETWEEN DIVISION OF
LABOR AND THE SYNERGY OF ALLEFFORTS
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CRITERIA OF SUCCESS
+3'0I0A2
*O75"%I%I0"
+A%I+)A*%IO-
*O77I%7"-%
O'A-I4A%IO-A2 *I%I4"-+,I5 #",A0IO'
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EFFECTIVENESS VS. EFFICIENCYEFFECTIVENESS VS. EFFICIENCY
PERFORMANCE EFFECTIVENESS
C
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Integrati3e Con4e5ts in "nderstanding
Organizational E66e4ti3eness
Strategies )aintenan4e Ada5ti3eness ara!etersOrganizational $Affirmation of the mission
$Operational adJustment
$*ommitment of people
$*ontinuousexperimentation andlearning
$)acilitative leadership
$7ovement into new
markets$Innovative alliance
$"fficiency
$"ffectiveness
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EFFECTIVENESS CRITERIA VS. TIME
Short term Middle term Long term
Maintenance: Adaptation: Survival
- Production - Investment
- Efficiency - Development
- Satisfaction
The ro4ess o6 De3elo5ing Organizational E66e4ti3enessThe ro4ess o6 De3elo5ing Organizational E66e4ti3eness
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The ro4ess o6 De3elo5ing Organizational E66e4ti3enessThe ro4ess o6 De3elo5ing Organizational E66e4ti3eness
TIME
SHORT'R(N INTERME)IATE'R(N
*ON+'R(N
INVENTIN+
THE ,(T(RE
A)A-TATION -ROESS
Maintenan.e Ada"ti/eness
Ada"ti/enessMaintenan.e
HAN+IN+ SIT(ATION
-ARAMETER O, THE -ROESS
Effe.ti/eness
Effi.ien.y
Or0ani1ation