805- Introduction to Management

Chapter 1: The History of Organisations

page 1

Learning outcomesThis chapter will enable you to:

•Describe now organisations have emerged to meet human needs;

•Define an organisation;

•Describe the components and key features of an organisation;

•Understand the role organisations play in contemporary society;

•Differentiate between an open & closed system.

Organisations in our societyEarly ancestors used simple organisations for

task such as building shelter, protection, finding food and developing communities.

Today, organisations are all around us, and take many different forms, for example:

•Healthcare

– hospitals, medical centre, dentist

•Physical and spiritual needs

– sports clubs, churches, mosques

•Take care of our money

- banks

Organisations in our society

•Organisations are an important part of contemporary society.

•People have been forming organisations for thousands of years.

•Organisations help people to achieve things they could not achieve individually.

•Organisations provide for social interaction with other people.

•Understanding the way organisations operate can help employees and managers alike.

Characteristics of organisations

All organisations – whether they are large, small, not-for-profit or profit-making – have some common characteristics. These include:

•People

•Working together

•A division of labour

•A common goal

Therefore the definition of an organisation is a group of people working together in a division of labour towards a common goal.

Efficient or effective?

Organisations should be both efficient and effective, but what is the difference?

•Effective means that a job is done well, and achieves the desired results.

•Efficient work is completed at the least possible cost within an acceptable time frame

•See page 5 and page 6 Case Study: Banking on the best

Efficient or effective?Is hiring a taxi to transport a sales representative from Auckland to Wellington effective or efficient?

Wellington

Auckland

EFFECTIVE!

Efficient or effective?

Is using a untrained staff to complete the GST returns more likely to be effective or efficient?

EFFICIENT!

The Organisation as a system

Resources

•Human

•Materials

•Equipment

•Financial

•Informational

Managerial & technological abilities

•Planning

•Organising

•Leading

•Controlling

•Technology

Outcomes

•Product & services

•Profits & losses

•Employee growth & satisfaction

The Organisation as a system

INPUTSTRANSFORMATION

PROCESSES

OUTPUTS

FEEDBACK FROM ENVIRONMENT

Information about:

•Results

•Organisational status

The organisation operates as a system, with inputs, a transformation process, and puts. Feedback from the environment is also important.

Open vs Closed systemsAn open system influences, and is influenced by the external environment. Not only is it affected by many different forces (society, climate, the economy), but it also has an effect on these too.

e.g most organisations

A closed system is complete within itself. It neither influences, nor is influenced by the events going on around it.

E.G a closed religious sect

•See page 8 and page 9 Case study: Fish’n’chips – a business in transition

A restaurant as an open system

INPUTS

•Building

•Tables & chairs

•Cutlery

•Waiting Staff

•Chefs

•Fresh food & beverages

•Money

•Knowledge of cuisine

•EFTPOS terminal

TRANSFORMATION

•Orders are taken

•Food is prepared

•Food is cooked

•Bills are paid

OUTPUTS

•Tasty food

•Satisfied customers

•Memorable experience

•Profit

•Satisfied staff

FEEDBACK

Division of labour

Division of labour (D.O.L) is splitting up the production process with workers doing separate tasks.

• Advantages of specialisation within D.O.L– Increased labour productivity and reduced

costs.– Reduced training time

• Disadvantages – Reduced job satisfaction– Loss of craftsmanship– Work is monotonous (boring)

Multi-skillingMulti-skilling encourages employees to learn a variety of

tasks throughout the organisation. An employees pay may be dependent on the number of different tasks he or she has acquired.

Advantages – Employer at less risk of a skills shortage in a critical

area in the advent of staff illness or resignation.– Organisation/employee more adaptable in market

conditions as they can move towards trends and changes in demand.

• Disadvantages – Become a ‘jack of all trades, master of none’.– Employee less productive as they are not experts who

specialise in one area.

Chapter summary

• Organisations consist of groups of people working together towards a common goal.

• Organisations and people have a symbiotic relationship – that is organisations depend on people, and people depend on organisations.

• Most organisations operate as open systems, which influence, and are influenced by, the environment.

• The key to success for many organisations is the ability to adapt and be flexible to their outside environment.

Chapter summary questions

1. What are the main characteristics of an organisation?

2. What does it mean when we say an organisation or individual is effective?

3. What does it mean when we say an organisation or individual is efficient?

4. A closed system is quite rare – identify an example

5. What is division of labour? Give an example from your personal life (for example within your family, within a sports team)

6. List outside/external factors which you think might influence an organisation.