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There are four areas that will be considered:
There is a two-way relationship between the organisation and Information Technology (IT). This two-way relationship is mediated by a number of factors.
IT systems affect organisations and the nature of the organisation affects the design of IT systems. The relationship between the organisation and IT systems is very complex, being influenced by a range of mediating factors.
One of the most important mediating factors are the management decisions, since it is managers who make the decisions about the nature of the IT system that the organisation will use, how it will be implemented and future expansion of IT systems. However, it is worth bearing in mind that not all of the management decisions have the desired affect and there may also be affects that were not anticipated. Due to the number of other factors involved making good management decisions is not always easy.
How to define an organisation? There is more than one answer.
Technical Definition: An organisation can be seen as a stable, formal social structure. By formal we mean that the structure has clearly laid down rules about the positions of people within the company and relationships between individuals and that the organisation is a legal entity and must abide by the law. The formal nature of organisations tends to make them much longer lasting than informal structures.
Behavioural Definition: An organisation is a collection of rights, privileges, obligations and responsibilities. These are balanced over time through conflict and conflict resolution.
An organisation can be viewed as a “black box”. The black
box takes in resources from the environment and produces some form of output.
Capital and labour are key production resources found in the environment.
The organisation obtains capital and labour from the environment and transforms
them into a production function.
The graph above depicts the microeconomic model of an organisation,
where the organisation takes capital and labour from the environment, utilising
them to make a product. The amount of product is represented by the line Q.
In this model the organisation can use more capital to replace labour or vice
versa, but spending and manpower can only do so much, as can be seen as these
increase the line Q tends to flatten out, so there is a limit to how much
Q can be increased.
The behaviour of people within an organisation is key to the nature of the organisation. People develop customary ways of working (habits), become attached to relationships, make informal arrangements with other workers about how work will be done (both at their own level, with subordinates and superiors). Most of these informal arrangements are never documented but they can still be key features of how the organisation functions.
Some common features shared by all modern organisations:
The German sociologist Max Weber was the first to identify the unifying features of organisations in 1911. Weber saw the division of labour and specialisation as key features of organisations. He saw bureaucracies as more stable and powerful than groups held together by the charisma of individuals or the relations of birth.
Three other key factors Weber identified were: Standard Operating Procedures (SOPs), politics and culture.
Standard Operating Procedures (SOPs): Over time organisations develop to produce a product or service in an efficient manner. Over a longer period of time organisations can become highly efficient, those organisations that cannot keep up with improvements in efficiency may go out of business. Employees develop efficient ways of performing tasks that may be laid down as rules, procedures or practices. These are called Standard Operating Procedures (SOPs). SOPs are one of the greatest contributors to increased efficiency, a far greater contributor than IT systems in fact.
Organisational Politics: All organisations have some degree of organisational politics. Organisations are arrangements of people into different positions and specialities, leading to different people having different points of view and opinions about the use and allocation of resources within the organisation. These differences of opinion lead to political conflict and competition within the organisation. Conflict may occur between individuals or groups of individuals. Organisational politics is one of the biggest obstacles to changing an organisation.
Organisational Culture: Organisational culture is a set of fundamental assumptions. These include what products and services an organisation should produce, for whom, and how. These assumptions are often unquestioned. Organisational culture is a unifying force that gives people a common purpose and reduces political conflict. Organisational culture can also be a restraint on change, slowing the introduction and acceptance of new procedures or technology.
Different types of organisation differ in their features, having different structures and different processes in place suited to the production of the types of goods and services that the organisation produces.
Organisational Type
|
Description |
Example |
|
Entrepreneurial structure |
Young , small firm in a fast changing environment. Managed by an entrepreneur who acts as the single CEO. |
Small start-up companies. |
|
Machine bureaucracy |
Large bureaucracy producing standard products in a slowly changing environment. Dominated by centralised management and decision-making. |
Midsize manufacturing firms. |
|
Divisional bureaucracy |
Combination of a number of machine bureaucracies, each making a different product or service. These are controlled together by a central headquarters. |
e.g. General Motors, Mitsubishi. |
|
Professional bureaucracy |
Knowledge-based organisation, where the products depend upon the expertise and knowledge of professionals. Dominated by strong department heads and a weak central decision making centre. |
Law firms, hospitals, universities. |
|
Adhocracy |
“Task force” organisation, responding to rapidly changing environments. Consists of specialists organised into short-lived multidisciplinary teams for a specific task, with weak central management. |
Consulting firms. e.g The Rand Corporation. |
Different types of organisation can differ in the following areas:
All organisations tend to share the following:
The
role of IT systems has changed over the years. Initially in the 1950s few
organisations had anything and those that did typically had a single computer
for a single specialised area, such as accounting. As technology has progressed,
the role of computers has widened and number of areas within an organisation
where computers can be used has increased. This has changed the nature of
IT and business.
A
major change in the 1990s was the introduction of sophisticated networking
systems, leading to the term enterprise wide systems, where IT systems
were able to penetrate every area of the organisation in a linked manner.
Related to this is the growth of the Internet, not just for E-Commerce where
the public buy products online, but also for business-to-business links.
Many
organisations have a specialised department for IT systems, typically called
the IT Department but sometimes the Information Systems Department. The sole
role of this department is to support IT services for other departments within
the organisation. Some key roles within the IT Department are:
There may be a number of motivating factors for building and introducing new IT systems. These include external and internal factors.
Economic and behavioural theories are considered.
Microeconomic: As the cost of IT falls it is substituted for labour. This can be good because historically the cost of labour is always increasing. Areas where staff levels can typically be reduced are middle management and clerical workers.
Transaction Cost Theory: Transaction costs are those costs that arise from doing business. These costs include communication costs (both within the organisation and with other organisations), purchase of insurance, obtaining information about products and services, complying with contracts and more. The costs of all of these can potentially be reduced with better IT systems. This is especially true with networks, which can reduce communication costs between geographically separate parts of the organisation, suppliers and customers.
Agency Theory: In this theory a principle (owner) employs “agents” (employees) to perform work. The agents require constant supervision and management, which has a cost attached, called the agency cost. As organisations grow in size and scope, the agency cost increases exponentially. By using IT for acquiring data about the organisation and analysing it the agency cost can be reduced, increasing efficiency.
It has been theorised that the increased use of IT, especially networks and groupware could fundamentally change the nature of organisations. One the major predicted effects is the flattening of the organisational hierarchy as middle management is reduced in size.
In post-industrial societies authority increasingly relies on knowledge and not on mere formal position. This allows for greater decentralisation and local decision making. This makes for more rapid responses to changing conditions both within the environment and within the organisation.
“Task force” networked organisations may increasingly appear as IT allows knowledge workers to come together spontaneously to address a single issue before dispersing again. Such organisations may be far less rigid and flatter than what we currently have.
One area that has been much talked about for some years but is only just coming about is teleworking. Teleworking is where workers can remain at home and use a computer and modem to keep in touch with other members of the organisation. This may one day lead to the disappearance of the traditional office, but it has also been noted that many people prefer the office environment due to its direct face-to-face nature.
Some behavioural theorists look at IT systems implementation arising from a sea of conflicting interests within organisations. IT systems inevitably become bound into the conflicts within an organisation and can become tools by which different interest groups, departments and individuals seek to gain influence over procedures, policies and procedures.
Resistance to Change:
As IT systems can have a significant impact on the structure, culture and politics of an organisation there is often stiff resistance to the introduction of new systems. Some individuals or groups may feel threatened by the organisational changes that a new system will bring. One approach to this type of resistance is to unfreeze an organisation, introduce the new system and then re-freeze it again. How exactly to do this is difficult, and may require either cajoling, gentle persuasion, enticements, removing people and any number of other approaches or a combination of these. Even the best IT system can fail to be implemented due to political resistance within the organisation.