Appunti Business Organization - EV

Business organization: lesson 1

What is an organization?

An organization is a social organism that enables an activity system.

How can we analyze an organization as an organism?

• Anatomy
• Ecology
• Survival
• Operating mechanism
• Physiology

How can we analyze an organization as a social organism?

• Anatomy
• Ecology
• Mechanism
• Physiology

The meaning of organization

As a synonym for company → As a synonym for one of the functional areas → As a synonym for one of the managerial activities → Like a set of organizational variables →

Analysis and design of organizational variables

The analysis and design of the organizational variables can be carried out on different levels:

• Macro-organizational or managerial: it is the organization of top managerial positions, especially, CEO, Board members
• Meso-organizational or middle management: it is the organization of business sub-systems, especially business units, functional areas, processes, etc.
• Micro-organization or executive: it is the organization of individual offices, departments, laboratories, workplaces, especially at the practical level.

Organizational theories and approaches

There are numerous and multidisciplinary theories that study the organization. They began in the late nineteenth century with the scientific management (or Taylorism).

A modern, and at the same time consolidated approach, which is typical of management studies, is the contingency model.

In the past, they had great resonance with other approaches, characterized by operational orientation and problem-solving, including the following:

• Taylorism: It formulates general organizational rules, considered universally valid, it advocated hierarchy and functional specialization, subordinates the human component to the technical one.
• Human relations and motivational theories: It emphasizes the human component, the role of groups, and the informal organization. It affirms the need to motivate individuals to share organizational decisions.

Taylorism

• Hierarchy order: scalar principle → unitary control → line & staff → the exception principle and delegation → balancing authority and accountability
• Labor specialization: by department (marketing, production, administration, etc.) → specific tasks
• Management activities: planning, management control system, leadership, organization, employee motivation.

Motivational theories

Needs in hierarchical order:

• Physiological
• Safety
• Belonging
• Self-esteem
• Self-realization

Policies/tools to satisfy needs: factors as salary, safety, and hygiene at work, etc. → motivational factors (recognition of results, job satisfaction, involvement, team spirit, etc.)

Contingency approach

The organization has to be analyzed and designed in strict compliance with contingency variables:

• External environment
• Trade and cultural associations
• Technologies
• Institutional variables
• Business strategy

There are no best organizational choices. There are different options: the company must be like a tailor and adapt its organization to company needs.

Business world in the 21st century

Many organizations today have to face phenomena that were insignificant – sometimes unknown – many years ago:

• Global competition and globalization of economic-financial events
• Competitive advantages based on the differentiation of products
• Management of the diversity of the labor force
• Development and change of inter-firm relations
• Tumultuous development of ICT
• Absolute importance of knowledge
• Business ethics and social responsibilities of companies
• Process of large-scale financial integration

A correct forma mentis in managerial topics

• Few universally valid principles
• It is necessary to apply several models/organizational principles depending on different situations (contingencies)
• Based on previous models it is possible to tailor the suit that the company needs
• Flexibility logic and ability to change

Every organized human activity gives rise to two fundamental and opposing requirements: the division of labor into various tasks to be performed and the coordination of these tasks to accomplish the activity.

The structure of an organization can be defined simply as the sum total of the ways in which it divides its labor into distinct tasks and then achieves coordination among them.

Five coordinating mechanisms seem to explain the fundamental ways in which organizations coordinate their work: mutual adjustment, direct supervision, standardization of work process, standardization of outputs, and standardization of worker skills.

These should be considered the most basic elements of structure, the glue that holds organizations together.

Mutual adjustment

Mutual adjustment achieves the coordination of work by the simple process of informal communication. Under mutual adjustment, control of the work rests in the hands of the doers. Because it is such a simple coordinating mechanism, mutual adjustment is naturally used in the very simplest of organizations: for example, by two people in a canoe or a few in a pottery studio. It is also used in the most complicated ones because, as we shall see later, it is the only one that works under extremely difficult circumstances.

Direct supervision

As an organization outgrows its simplest state—more than five or six people at work in a pottery studio, fifteen people paddling a war canoe—it tends to turn to a second coordinating mechanism. Direct supervision achieves coordination by having one individual take responsibility for the work of others, issuing instructions to them and monitoring their actions. In effect, one brain coordinates several hands, as in the case of the supervision of the pottery studio or the caller of the stroke in the war canoe.

Standardization

Work can also be coordinated without mutual adjustment or direct supervision. It can be standardized: the coordination of parts is incorporated in the program when it is established, and the need for continuing communication is correspondingly reduced. Coordination is achieved on the drawing board, so to speak, before the work is undertaken.

Standardization of work processes

Work processes are standardized when the contents of the work are specified, or programmed. An example that comes to mind involves the assembly instructions provided with a child’s toy. Here, the manufacturer in effect standardized the work process of the parent.

Standardization of outputs

Outputs are standardized when the results of the work, for example, the dimensions of the product or the performance, are specified. Taxi drivers are not told how to drive or what route to take. They are merely informed where to deliver their fares. With output standardized, the interfaces among tasks are predetermined, as in the bookbindery which knows that the pages it receives from one place will fit perfectly into the covers it receives from another.

Standardization of skills

Skills and knowledge are standardized when the kind of training or education required for the job is specified or when certain standards of proficiency are required before someone is allowed to undertake the work.