9.1 Organizational theory and management cybernetics
Teori Dasar Sistem [IS1223]
ORGANIZATIONAL THEORY AND MANAGEMENT CYBERNETICS Organization “In public service the organization’s money is the means and operations are the goal. In private corporations money is the goal and business the means”
Organizations are the product of the surrounding society whose needs they serve.
Organizations are creation of man, established with the sole aim to realize goals that individually acting persons scarcely can Organization 
The distinctive mark of the human
It represents certain preferences regarded as a unit.
It makes decisions and tries to implement and optimize them.
It determines its own internal structure and the aims of the subsystems.
It has internal control system.
The origin of modern tradingcorporation
To solve large-scale problems of differentkind has always implied the compiling and combining of resources with labour.
The trading corporation soon grew in sizewith its practices of using partnership.
The possibility to raise enough capital for large projects.
Each partner was responsible for all the other
and if one of them died the partnership was
The origin of modern tradingcorporation  The demands to be satisfied by well-
The accumulation of large sums of capital should be enhanced.
The life span of the corporation should outlast the life span or interest of its owner.
Risks and liabilities of those participating in the corporation should be limited.
It should be possible to participate without involvement in daily management.
State and community
Employees The development of organizational theory Frederik Taylor (1856 -1915)
Conclusion the problem:
The used method in production were built on old habits instead of systematical studies. A rigid hierarchical structure managed the production with implacable discipline and individual worker skill was not utilized. No measures existed regarding individual working performance or the average achievement per day for a standard worker. Workers opposed every attempt to increase productivity as this was a threat to their own The development of organizational theory  Taylor recommended four measure:
Every task should be studied according to scientific methods, not heuristics. A good corporations between management and workforce must be established in order to facilitate and develop scientific methods in production.
The most skilled worker should be selected for every specific task and thereafter be trained and developed for this very task. Assignments and responsibility should be shared between management and workers according to the idea of the functional organization. The development of organizational theory 
The working man on the plant floorclaims gratitude and safety.
Elton Mayo (1880-1949)
The group standards of the workingforce are stronger than prevailing standards of the company.
Social standards together with technical and physical prerequisite define production output.
Every company has both a formal and The development of organizational theory  Max Weber (1841-1925)
Authority and responsibility should go hand in hand
Order and method should always prevail
The wholeness is more important than the parts
Every employee should only have one superior
Information should flow through official channels
All persons working in the organization mustshow discipline
Division of labour and specialization is necessary. The development of organizational theory 
Henry Fayol (1841-1925)
Departmentalization Specialization and division of labor.
Strict distribution of responsibility
Vertical chain of command
Well defined internal relations and clear lines command The development of organizational theory  Henry Fayol (1841-1925)
Official reporting is used for coordination. The superior has the right to command the subordinate. Program management A system of authority which is impersonal and belongs to the position rather than individual. Position awarded on the basis of formal competence. A system is responsibility and accountability Safe employment and regulated system of promotion with possibility to earn one’s living Distinct separation of members’ organizational and personal lives The development of organizational theory 
Normative Power (symbolic means like prestige, appreciation, devotion)
Benefit Power (founded in material
benefit like food, clothing, money)
Compulsive power (violence, physical punishment) The development of
organizational theory 
Clinical organizational analysis
Distinctive competence The development of
organizational theory 
Contingency Theory 
The non-avoidable hierarchy
organizations will continue to exist, because leaders exist. Concept hierarchy is basic part of
Hierarchical design of various kind of
man’s mental world. People want to know who is in
charge, who represent them, and take charge of their interest.
design the balance between
centralization and decentralization.Centralization decision taken in
General problem in organizational
higher levels of organization. Decentralization decision-making
is transferred to lower level employees. Organizational Design 
No matter how the structure is arranged, qualities of an organization:
Some of its components are living variables (human being).
The responsibility for choice between possible alternatives of action in a specific situation are shared by one or more individuals and/or groups.
Decisions can be related after function, geographical position, time.
Functionally distinguished groups are conscious about each other’s actions by communication or by observation.
Certain freedom of choice exists regarding means as
Organizational Design 
Tells nothing about the ever-existing
“Who is the boss’s boss”
informal relation in the organization. The size of hierarchy depends of the
size of the organization. Strong leader give rise to strong
for problem-solving and a homogenous background with the same terminology and description model. Disadvantages: inclination toward self-isolation
The main value: specialization in procedures
of the various functional departments and a tendency to get into conflict with each other. Power, coordination, and critical information is
concentrated to the highest boss who normally has a superior overview of what is going on.
there are clearly separated groups of products or services. The central management or concern
A design which is particularly useful when
management nominates and dismisses the boss of each division, stipulate expected results, approve the budget and so on. The concern management also reserves
the right to make decision which are considered common for more divisions. Matrix Organization
where no particular person has a total, responsibility for what is going on. Gives the possibilities both to protect
Has a double profit responsibility
desirable dissimilarities between different business areas and take advantage of existing dependencies. Problem: unclear responsibility,
Project/ ad hoc Organization
Handle problems which overstep the borders between various internal function.
The project director normally has total command over the participating specialist.
Advantages: Freedom to act in a better way More solid and well thought out solutions Instructive and inspiring for the participators Creates new pattern of cooperation Creates influence on the organizational development
Project/ ad hoc Organization 
Phases of Project
Project/ ad hoc Organization 
Critical Success Factor: Aims
Project goals are clearly defined Organization
Resources are sufficient Control mechanisms are in place and used Project has support of top management Communication channels are adequate Feedback exists Contractors are responsive to clients People
Project manager is competent
situation in which organizations exploit opportunities and take advantage of shared expertise, market access, and the sharing of costs and risks.
Take advantage of an entrepreneurial Virtual Organization  Permanent Virtual Organization
Virtual TeamsTemporary Virtual Organization Virtual Project Involvem ent Across organization Internal to an organizational function or departmental
Members unit Across organization Across functions and organizations hip Typically smaller, but scalable Small, local Typically larger Indeterminate Mission All functions and full functionality as a working organization Teams on specific ongoing tasks Multiple functions responding to a market opportunity Multiple organizational representative s working on specific projects
Length of Project Permanent Membership varies, form is permanent Temporary Temporary Uses of IT Channel for Connectivity, Shared Repository of
Multiple perspectives of management cybernetics
Organizations as organisms
Organizations as control systems
Organizations as brains
Organizations as machines
Organizations as cultures
Organizations as political systems
Organizations as theatres
Organizations as instruments of dominations
Organizations as information systems
Life-cycle stages of organizations
The entrepreneurial stage
The collective stage
Declining stage Life-cycle stages of organizations Phas Evolutionary Phase Revolutionary e 1 Growth through Leadership crisis Phase 2 Growth through direction Autonomy crisis creativity
4 Growth through Staff crisis
3 Growth through Control crisis delegation 5 Growth through Unknown crisis coordination collaboration Organization = cybernetics control system
Organization are strongly influenced by their environment and therefore must be able to control it in order to survive. Organization must assume a
measuring device giving information. Negative or positive feedback should
be applied in order to reach goal.
Organization = cybernetics control system 
Keynumber is data which has been aggregated and transformed into information and communicated throughout the organization.
“Balanced Scorecard” a number of keynumbers which make clear the balance between different organizational perspectives. Financial from the keynumber profit-margin The customer’s from the keynumber satisfied customer Process-oriented from the keynumber stock-turnover
velocity Human-oriented from the keynumber personal-turnover
Renewal and development-oriented from the keynumber educational cost per employee Organization = brain Organization as integrated information,
communication, and decision making systems capable of learning how to learn. Holographic qualities the parts reflect the
nature of the whole. Each nerve cell is connected with millions of others, creating the total effect of a brain being both generalized and specialized at the same time.
Employee interact in networks of personal computers and audiovisual facilities.
Holographic organization = information
System Approach in ten points
that take place on its own organizational level. The organizational environment is both natural
Organizations change according to processes
The organization is the result of both human interaction and conscious design. The organization is not reducible to to the sum
or their parts.
Systems on higher levels of organizations are
initially always simpler than the subsystems which compose their main components.
System Approach in ten points 
Organizations evolve by developing progressivelyhigher organizational level through convergence. The organization is operated by human beings
but are not entirely under control of any individual. The organization’s component may also
compose parts of other organizations which integrate them. The organization is a self-determined system
which evolution cannot be predicted.
The organization is a system where the parts are