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Chapter 1

MGT363H5 Chapter Notes - Chapter 1: Empowered, Ellisdon, Frederick Winslow Taylor

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Rafael Chiuzi

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Chapter 1 Organizations and Organization Theory
Organizations are not static, they continuously adapt to shifts in the external environment
Air Canada story imp b/c it demonstrates that even large, successful companies are vulnerable,
organizations are only as strong as their leaders
The Evolution of Organization Theory and Design
Organization theory is a way to see and analyze orgs more accurately and deeply than we
otherwise would based on patterns and regularities in org design behaviour
Historical Perspectives
Modern era of management theory began with the classical management perspective
Idustial e posed poles that ealie ogs did’t eoute
Work was being performed on a larger scale so needed to know how to design & manage
work in order to increase productivity & help orgs max efficiency
Classical perspective subfields:
Efficiency is everything
o Scientific management Pioneered by Frederick Winslow Taylor decisions about
orgs and job design should be based on precise, scientific study of individual situations
- Manages develop precise procedures for doing each job, select workers with
appropriate abilities, train workers in the standard procedures, provide wage
How to get organized
o Administrative principles Henri Fayol looked at the design and functioning of the
org as a whole 14 principles of management (ex. unity of command, etc.)
o Bureaucratic organizations emphasized designing and managing organizations on
the impersonal, rational basis through elements like authority, responsibility, formal
record keeping, standard rules
- Problem: failed to consider the social context and human needs
What About People?
o Hawthorne Studies studies concluded that positive treatment of employees
improved their motivation and productivity lead to revolution of worker treatment,
human resource management
o However hierarchal system and bureaucratic approaches remained primary approach
to org design & functioning into 70s and 80s but due to increased competition, org
culture changed towards motivated employees, caring customer relations
Current Challenges
World is rapidly changing, specific challenges include dealing with:
- globalization rapid changes in technology and communications, markets and
organizations are interconnected, interdependence makes for more competition
where parts of a product can be made in diff countries for lower costs)
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- ensuring high standards of ethics and social responsibility, responding rapidly to
environmental changes and customer needs, and supporting diversity
- managing the digital workplace (companies taking e-business to high levels,
companies using intermediation eliminating the middleperson means org
leaders need to manage a web of relationships with employees, suppliers, contract
partners and customers
What Is an Organization?
Organizations are (1) social entities that are (2) goal directed, (3) designed as deliberately
structured and coordinated activity systems, and (4) linked to external environment
An organization exists when people interact with one another to perform essential functions
that help attain goals
Maages stutue & oodiate ogaizatioal esoues to ahiee the og’s pupose
Organizations cannot exist without interacting and some companies even cooperate now
with competitors, sharing information & tech for mutual advantage
Types of Organizations
Primary difference btw profit and non-profit businesses is profit directs its activities towards
earning money, non-profit directs efforts toward making social impact and gets financial
resources from gov through grants or individual donations
Non-profits struggle to keep steady stream of funds to continue operating and has trouble
with what constitutes org effectiveness and efficiency
Some non-profits created social enterprises designed to use business practices to achieve
social missions
- social enterprises are a form of community economic development in which an
organization exchanges services and goods in the market as a means to realizing its
social objectives or mission
Importance of Organizations
1. Organizations bring together resources to accomplish specific goals ex. Bombardier
2. Organizations also produce goods and services that customers want at competitive prices
3. Companies look for innovative ways to produce and distribute desirable goods and services
more efficiently through e-business and through the use of computer-based
manufacturing technologies, or redesigning org structures & management practices
4. Orgs create a drive for innovation rather than a reliance on standard products & outmoded
ways of doing things
5. Organizations adapt to and influence a rapidly changing environment
6. Organizations create value for their owners, customers and employees
7. Organizations have to ope ith ad aoodate toda’s halleges of okplae diesit
and growing concerns over ethics and social responsibility & find effective ways to motivate
employees to work together to accomplish org goals
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