Organizations in

Changing Environment

with; Nyaruba, C.M

School of Public Administration & Management
Mzumbe University
 Chapter Objectives

1. Identify and describe four characteristics common to

all organizations, and explain the time dimension of
organizational effectiveness.
2. Explain the concept of contingency organization
design, distinguish between mechanistic and organic
organizations
3. Identify and briefly describe the five basic
departmentalization formats, and distinguish
between centralized and decentralized organizations.
4. Understand and explain organizations as systems
and characteristics of organizations as systems
 What is an Organization?

–A cooperative and coordinated

social system of two or more
people with a common purpose.
–When people gather and formally
agree to combine their efforts for a
common purpose.
 What is an Organization? (cont’d)

• Common Characteristics of Organizations

1. Coordination of effort: multiplying individual
contributions to achieve results greater than those
possible by individuals working alone.
2. Common goal or purpose: having a focus to strive
for something of mutual interest.
3. Division of labor: dividing tasks into specialized
jobs that use human resources efficiently.
4. Hierarchy of authority: using a chain of command
to control and direct the actions of others.
 Organization Charts

• Organization Chart (Table)

– A visual display of an organization’s positions and
lines of authority that is useful as a blueprint for
deploying human resources.
• Vertical and Horizontal Dimensions
– Vertical hierarchy establishes the chain of command
which coordinates the efforts of the organization.
– Horizontal specialization denotes the division of labor.
– A balance between hierarchy and specialization is
necessary if the organization is to be effective.
 Organizational Effectiveness

• Evaluation of Effectiveness
– There is no single approach to that is appropriate in
all circumstances or for all organizational types.
• The Time Dimension of Organizational
Effectiveness Involves
– Meeting organizational objectives and prevailing
societal expectations in the near future.
– Adapting to environmental demands and developing
as a learning organization in the intermediate future.
– Surviving as an effective organization into the future.
 A System is a set of
components that interact
with one another and serve
for a common purpose or
goal.
 What is a system
• Assemblage of things connected or
interdependent so as to form a complex unity
• A whole composed of parts in orderly
arrangement according to plan
• A system is a set of interrelated parts that
operate together to achieve a common purpose.
 SYSTEM APPROACH TO MGT

• The system approach sees organizations as a

system either open or closed, with inputs,
outputs, transformational processes and
feedback.
 System Approach
• System approach stresses that organizations
must be viewed as total systems with each part
linked to every other part.
• SA to mgt is a way of thinking about
organizations and management problems.
• The approach views an organization as group of
interrelated parts with a unified purpose..
 Strategic Thinking
Generating Options Options

What might happen?

Strategic Decision Making

Making choices Decisions

What will we do?

Strategic Planning
Taking Action
Actions
How will we do it?
 System thinking
• An organized unitary whole composed of two or
more interdependent parts, components or
subsystems.
• Organizations are systems composed of parts
which are interrelated and interdependent of
each other. Ie divisions, sections, units, etc
 “Systems” Thinking
• Being able to identify something as a system
• Involves being able to identify subsystems
• Identifying system characteristics and functions
• Identifying where the boundaries are (or should
be)
• Identifying inputs and outputs to systems
• Identifying relationships among subsystems
 System Thinking
• From the system approach mgt involves
managing and solving problems in each part of
the organization but doing so with an
understanding that action taken in one part of
the organization affects other parts of an
organization.
• No single part in the organization exists and
operates in isolation from the others.
 System Thinking
• Thus in solving problems managers must view
the organization as a system and dynamic whole
and try to anticipate the unintended impacts of
their decisions.
 Four parts of a system

• Inputs- people, money, information, equipment,

material.
• Transformation processes are organizations
capabilities in management and technology that
are applied to converting inputs into outputs. Ie
planning, organizing, leading, staffing,
controlling
• Outputs are products, services, profits, losses,
employee satisfaction etc
 Four parts of a system

• Feedback is information about the reaction of

the environment to the outputs. Eg are the
customers buying or not buying the output.
 Characteristics of a system

• Constitute of parts which are viewed as a whole

• A system must be open i.e. it exchanges
information with external environment. A closed
system has little integration with its environment.
• Must have boundaries that will separate it with
its environment.
• All systems are subsystem of other systems
 SYSTEM CHARACTERISTICS

• Synergy
An organization can accomplish more when its
subsystems work together than it can
accomplish when they work independently.
• Enthropy
This is a tendency of a system to decay over time.
A system that does not receive inputs from its
environment will eventually die.
 System Characteristics
Either system has nine main characteristics:

1. Components. 6. Input.
2. Interrelationships. 7. Output.
3. Boundary. 8. Interface.
4. Purpose. 9. Constraints.
5. Environment. 10. feedback
CHARACTERISTICS OF A SYSTEM
• A system must have inputs from the
environment which will equal its output.
• A system must have feedback to show weather
expected output are obtained.
• A system must have transformation of inputs
• A system must have an output.
• A system must have a purpose
 System approach to management

• Managerial transformation process is influenced

by the communication system in the
organization.
• Communication link organization with
environment, integrates managerial functions,
and employees, consumers, suppliers,
community, government etc.
• External variables ie opportunities, constraints
etc.influence organization
 Contingency Design

• Organizing
– The structuring of a coordinated system of authority
relationships and task responsibilities.
• Contingency Design
– The process of determining the degree of
environmental uncertainty and adapting the
organization and its sub units to the situation.
– How much environmental uncertainty is there?
– What combination of structural characteristics is
most appropriate?
– There is no single best organization design.
 Contingency Design (cont’d)

• The Burns and Stalker Model

– Mechanistic organizations
– Are rigid in design, rely on formal communications,
and have strong bureaucratic qualities best suited
to operating in relatively stable and certain
environments.
– Organic organizations
– Have flexible structures, participative
communication patterns and are successful in
adapting to change in unstable and uncertain
environments.
 Contingency Design Alternatives

• Departmentalization
– The grouping of related jobs or processes into major
organizational units.
– Overcomes some of the effect of fragmentation
caused by differentiation (job specialization).
– Permits coordination (integration) to be handled in
the least costly manner.
– Sometimes refers to division, group, or unit in large
organizations.
 Basic Structural Formats

• Functional Departments
– Categorizing jobs according to the activity performed.
• Product-Service Departments
– Grouping jobs around a specific product or service.
• Geographic Location Departments
– Adopting a structural format based on the physical
dispersion of assets, resources, and customers.
• Customer Classification Departments
– Creating a structural format centered on various
customer categories.
Alternative Departmentalization Formats
Alternative Departmentalization Formats (cont’d)
 Basic Structural Formats (cont’d)

• Reengineering into Cross-Functional Teams

– Lowering costs, improving quality, increasing speed,
incorporating IT, and improving customer satisfaction
• Work Flow Process Departments in
Reengineered Organizations
– Creating horizontal organizations that emphasize
speedy work flow between two key points:
– Identifying customer needs
– Satisfying customer needs
– Focus is outward rather than inward.
 Contingency Design Alternatives

• Span of Control (Management)

– The number of people who report to a manager.
– Narrow spans of control foster tall organizations
with many organizational/managerial layers.
– Flat organizations have wider spans of control.
• Is There an Ideal Span of Control?
– The right span of control efficiently balances too little
and too much supervision.
Narrow and Wide Spans of Control
 Contingency Design
Alternatives (cont’d)

• The Contingency Approach to Spans of Control

– Both overly narrow and overly wide spans of control
are counterproductive.
– Situational factors dictate the width of spans of
control.
– Wide spans of control are appropriate for
departments where many workers work close
together and do the same job.
– Narrow spans of control are best suited for
departments where the work is complex and/or the
workers are widely dispersed.
 Contingency Design
Alternatives (cont’d)

• Centralization
– The retention of decision-making authority by top
management.
• Decentralization
– The sharing of decision-making authority by
management with lower-level employees.
• The Need for Balance
– The challenge is to balance the need for
responsiveness to changing conditions
(decentralization) with the need to create low-cost
shared resources (centralization).
 The Changing Shape of Organizations

• Characteristics of New Organizations

– Fewer organizational layers
– More teams
– Smallness within bigness
• New Organizational Configurations
– Hourglass organization: a three-layer structure with
constricted middle (management) layer.
– Cluster organization: collaborative structure in
which teams are the primary unit.
– Virtual organizations: internet-linked networks of
value-adding subcontractors.
 Partly adapted from:
Kreitner, Foundations of
Management : Best Practices

Designing Effective
Organizations