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Organization Theory Chapter 4

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119 views38 pages

Organization Theory Chapter 4

Uploaded by

Mikias Degwale
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter Four

Open System And Design Elements


Objectives
4.1 The external environment.
4.2 Inter-organizational Relationships.
4.3 Organization size and life cycle and
design/structure.
4.4 Comparative management
System
 Any organization can be described as a “system”

 A system is a group of components (or parts) that interact with

each other and are dependent on each other to serve a common

goal.

 Organizations and other social systems can be “closed” or

“open” systems.
System....
 Closed systems have boundaries that cannot be penetrated by
new information or ideas.
 Open systems have permeable boundaries (or boundaries
which allow things to pass through them)
 Open systems interact with their environments and constantly
let in new information and ideas so that they can continue to
grow.
Open system theory
• Open Systems Theory (OST) is a modern
systems-based changed management theory
designed to create healthy, innovative and
flexible organizations and communities in
today’s fast changing and unpredictable
environments.
Cont....

• The open-systems theory assumes that all large

organizations are comprised of multiple

subsystems, each of which receives inputs from

other subsystems and turns them into outputs

for use by other subsystems.


Cont…..
• An open system is a system that regularly exchanges

feedback with its external environment. Open systems

are systems of inputs, processes, outputs, goals,

assessment and evaluation, and learning.

• Aspects that are critically important to open systems

include the boundaries, external environment

equifinality
Cont….
• Healthy open systems continuously exchange
feedback with their environments,
analyze that feedback, adjust internal systems
as needed to achieve the system’s
goals, and then transmit necessary information
back out to the environment.
Open system
1. BOUNDRIES
• All systems have boundaries, although the boundaries

can be difficult to identify because systems can be very

dynamic.

• Open systems have permeable boundaries through

which useful feedback can readily be exchanged and

understood.
Cont….
• Closed systems, unlike open systems, have hard

boundaries through which little information is

exchanged.

• Organizations that have closed boundaries often are

unhealthy. Examples include bureaucracies,

monopolies and stagnating systems.


2. EXTERNAL ENVIRONMENT

• The external environment includes a wide variety of


needs and influences that can affect the organization,
but which the organization cannot directly control.
Influences can be political, economic, ecological,
societal and technological in nature.
• A highly effective organization is regularly
exchanging feedback with its external environment.
Cont…

Healthy organizations regularly try to understand

their environments through use of environmental

scanning, market research and evaluations. These

organizations often try to influence their external

environment by using the public relations,

advertising and promotions, and advocacy, and

educating industry and local leaders


3. EQUIFINALITY
Equifinality means that the same or similar results
can be achieved by using a variety of different
processes. For example, management can achieve
the same results by using different inputs or by
using different processes with the same inputs.
Equifinality suggests that there is no one right way
to accomplish important results in an organization
Major benefits of open system
1. More Effective Problem Solving
• More Effective Problem Solving Without clear
understanding of the “big picture” of an organization,
consultants and leaders tend to focus only on the
behaviors and events associated with problems in the
workplace, rather than on the systems and structures
that caused the problems to occur in the first place.
Cont....
2. More Effective Leadership
• A systems view helps the leader to really
understand the overall structures and dynamics
of the organization and what must be done to
guide the organization towards it strategic vision
and goals.
Cont....
3. More Effective Communication
• One of the most important ingredients for the
success of any system is ongoing feedback, or
communication, among all the parts of the
organization. Some of the first symptoms that an
organization or consulting project is in trouble
are sporadic and insufficient communications.
Cont....
4. More Effective Planning
• It includes identifying desired results (goals and
outcomes), what measures or outputs (tangible results)
will indicate that those results have been achieved, what
processes will produce those outputs, and what inputs
are required to conduct those processes in the system.
• A systems view often makes the planning process much
more clear and orderly to planners.
Cont....
5. More Effective Organizational Results
• Any consultant or leader would be hard-pressed
to employ various methods in an effective
fashion without a good understanding of the
overall systems of their project or organization.
Consequently, having a systems view is critical
to accomplishing successful results.
History and Application of Inter-organizational Relations Theory (IOR)

• Beginning in the 1960s, researchers had a


growing interest in how the environment
affected organizational behavior.
• Specifically, interest in how organizations
could decrease uncertainty in the environment
through collaboration.
Cont…
• In today’s fast –paced environment, can the
organizations afford to be disintegrated with their
environmental settings to prevail their supremacy?
• Inter-dependency is the need of the hour.
No single organization can build expertise and
resources to stay competitive without the inter-
organizational relationship.
Cont…
 Organizations build Business Ecosystem (interaction
of an organization with its ecosystem)
 The interaction paves the way for both
COMPETITION AND COLLABORATION.
Cont…

• Inter-organizational Relationships – the relatively


enduring resource transactions, flows, and linkages
that occur among two or more organizations
• Organizational Ecosystem – a system formed by
the interaction of a community of organizations
and their environment
Stated benefits of collaboration include:
Access to new ideas, material, and other
resources
Reduced duplication of services
More efficient use of resources
Increased power and influence
Ability to address issues beyond a single
organization's domain
Shared responsibility for complex or
controversial issues
Alternatively, costs of collaboration
include:

• Diversion of organizational resources or


mission.
• Incompatibility with partner organizations'
policies or positions.
• Delays in taking action due to consensus
building
Factors critical to IOR formation include:

 Recognition of the need for coordination and


interdependence; available resources (time, staff, and
expertise).
 Mandates from a funding or regulatory agency; clear

and mutually shared goals, values, interests and norms.


 Positive previous experience in working together.
4.3 Organization size and life cycle and
design/structure.

• As organizations grow and become more competitive,


they need more complex systems and procedures.
• Bigger organization = more bureaucracy.
• The size of an organization influences design and
goals in the same way.
• Examining the natural life cycle of an organization.
Cont....
• Does your organization need growth?

• Pressures of Growth include:


Many believe that growth is the only way to stay
economically healthy.
Your customers could be at risk if growth happens
to quickly. – The more employees, the more
challenges.
Organizational Size Differences
Large
Very complex
Global reach
Vertical hierarchy (Mechanistic)
Employees durability, raises and promotions
Stable market
Economies of scale
Cont...
Simple
Regional Reach

Flat structure (Organic)

Entrepreneurs

Niche finding

Responsive and flexible


Size and Structural Control
• Size influences structural design and methods of
control.
• Formalization – Rules, procedures, and written
documents
• Centralization – Refers to hierarchy with
authority to make decisions.
The Organizational Life Cycle
Entrepreneurial Stage
 Start up of organization
Full energies into production or service
Crisis: Need for leadership - must adjust
structure of the organization to accommodate
continued growth
Collectivity Stage
• Grows and develops a more structured design.

• Employees identify with the mission of the


organization
• Crisis: Need for delegation with control -
Employees and middle management are
restricted by top management.
Formalization Stage
• Involves the installation and use of bureaucracy
and control systems.
• Communication less frequent and more formal.
• Top management becomes concerned with
issues such as strategy and planning, and leave
the operations of the firm to middle
management.
• Crisis: Need to deal with too much red tape
Elaboration stage
• The stage in which the organization requires
flexibility
• Bureaucracy may have reached the limit.
• Collaboration helps companies excel in this
stage
• Crisis: Need for revival – After the
organization reaches maturity, it may enter
periods of temporary decline.
Cont.....
Organizational Decline and Downsizing
• Continual growth and expansion may not be
possible.
• Many have collapsed partly as a result of rapid
growth and an ineffective control.
• Downsizing refers to intentionally reducing the
size of a company’s workforce.
Organizational Life cycle
Three factors that result in decline: –

Organizational deterioration

The inability (of a system or a unit) to


withstand the effects of a hostile
environment
Environmental decline or competition

....the end

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