Webers ideal Bureaucracy elements
- Division of labour (regarding job specialisation) with good coordination;
- Well-defined authority hierarchy (long vertical chain of command. It is clearly defined who is responsible who has the right to take what decision); High formalisation (standardisation/ rules and regulations); Impersonal nature (getting rid of favouritism); Employment decisions based on merit (technical qualifications, competence and performance);
- Career tracks for employees (tenure for career commitment); Distinct separation of members’ organisational and personal lives.
Most commoncly used dimensions in organisational structures
- Size: The number of employees in the organisation;
- Administrative Component: The ratio between staff and line workers; percentage of total number of employees who have administrative responsibilities, often broken into:
1. Line functions: departments involved directly in the production of organisational outputs;
2. Staff functions: departments that advise and support line functions, for example with strategic planning and finance; - Differentiation: There are two types of differentiation, namely vertical, number of levels in the hierarchy, and horizontal, number of departments or divisions spanning the entire organisation;
- Integration: The extent to which activities are coordinated across the organisation. This can be managed using, for example, accountability and procedures;
- Centralization: The extent to which authorities make decisions is concentrated at the top levels of the organisation. When an organisation is decentralised, decision-making is spread across all levels in the hierarchy;
- Standardisation: The extent to which standard procedures govern the organisation’s operations and activities. Also, the extent to which an individual will use these procedures instead of their intuition when faced with an event;
- Formalisation: The extent to which an organisation uses written, and often formal, communication instead of face-to-face, and often informal, interactions. This social structure impacts job descriptions, rules and procedures;
- Specialisation: The extent to which the work of the organisation is divided into narrowly defined tasks that are assigned to specific employees and work units.
Mechanistic Structure
Produce predictability and accountability
Suitable for organizations that are producing conventional products
High horizontal and vertical differentiation: hierarchy and authority, control
High formalisation
Centralised
Standarized
Close supervision
Vertical communication in form of instruction
Integration: coordination mechanisms
- Programmed coordination
By rules and regulations;
By planning, timetable setting, scheduling, standard operating procedure (technical solutions); By goals and targets (e.g. sales have to grow by 4%). - Individual coordination
By hierarchy; By person (i.e. project leader, boundary spanner). - Informal coordination/mutual adjustment
By non-formalized contact; By spontaneous contact
Advantages of Burocracy
Clear lines for authority
Security for workers (fixed pay)
Selection based on merit
Rules and objectives for objective decision making
Disadvantages
Subunit goals instead of organisational goals- goal displacement
High formalisation hence hard to adjust to new conditions
Employee alienation
Power Concentration
Over staffing
Large size but low productivity
Goal displacement
Overall organisational goals are replaced by subunit or personal goals, as the rules and procedures become more important than the goal. This describes the process of blindly sticking to the rules and not applying common sense, which leads to a lack of flexibility. Hence, the customer frustration increases because employees focus on their own rules/goals/interests.
Integration in Bureaucracy
Hierarchy-individual coordination
rules regulations-better integration
Contigency approach differentiation by Lawrence and Losh
- Type of goal orientation:
Goal orientation of departments differed as sales focused on customer issues, while production focused on cost and process efficiency;
- Time orientation (long or short term - depending on pace feedback): Departments with rapid feedback, such as sales and production, held short-term orientations while R&D, with more timely feedback, had long-term orientations;
- Relative amount of attention given to task performance and relationship building; Degree of task uncertainty determining: Departments with greater task uncertainty (sales) were more relationship-oriented, while departments facing less task uncertainty (production) were more task-oriented;
- Degree of formality: Departments operating in the most stable environments (production) were more formalised and hierarchical than those facing environmental uncertainty.
Lawrence and Lorsch theory is anchored in contingency theory, and they therefore investigated the relationship between environmental stability and social structure. They found that in stable environments, hierarchy and centralised coordination are favoured. However, unstable environments require direct communication and decentralisation.
Technology definition
the information, equipment, techniques and processes required to transform inputs into outputs.”. The contingency approach claims that technology determines structure.
Perrow Typology
Task variability- how often there are exceptions to the task
Task analysability- extend to which there are methods to deal with exceptions: high-decentralised (ppl know what to do) low centralised someone high up must decide
Perrow’s technologies
Routine technologies: characterised by low task variability and high task analysability, e.g. assembly line workers;
Craft technologies: characterised by low task variability but low task analysability, e.g. building project and unit production based on craftsmanship. When exceptions arise, workers use their experience, intuition and improvisation;
2. Engineering technologies: characterised by high task variability combined with high task analysability, e.g. laboratory technicians and banks. There are many exceptions to standard practices, but the employees possess the knowledge needed to solve these problems because of highly specialised training;
Nonroutine technologies: characterised by tasks with high variability and low analysability, e.g. research and development departments and consultancy. There are a high number of problems encountered in nonroutine technologies, but the lack of methods for solving these problems create constant uncertainty.
4 key principles of Agile Structure:
- Customer focus: Agile structures are designed to meet the needs of customers, and customer feedback is used to inform and guide decision-making.
- Cross-functional teams: Agile structures are made up of small, cross-functional teams that work together to achieve common goals. These teams are self-organizing and empowered to make decisions without waiting for approval from higher-ups.
- Iterative and incremental work: Agile structures prioritise a process of continuous improvement, with work completed in short, iterative sprints. This allows for rapid feedback and adaptation to changing circumstances.
- Flexibility: Agile structures are designed to be flexible and adaptable to changing circumstances, with the ability to pivot quickly in response to new information or market conditions.
The functional structure
The functional structure groups activities according to similar work performed so that within each unit, people do related work to accomplish a particular set of goals. This is used by organisations that have grown too complex for the simple structure. The primary advantage of a functional structure is that it creates specialisation and limits duplication of effort, and can therefore maximise economies of scale.
Disadvantages to functional structures:
* Goals of different units may conflict.
Employees may be more loyal to their function than to the organisation as a whole.
* These problems can produce functional silos, which are organisational units or systems operating in isolation.
* The activities of the functions have to be coordinated by a top executive. However, as only a limited number of people have an understanding of the bigger picture of the organisation, it increases pressure on certain individuals.
The multidivisional
The multidivisional (M-form) structure consists of a set of separate (often functionally structured) organisations. Each of these organisations is managed by a separate management team, but reports to executives in the headquarters. This structure is used when an organisation outgrows functional design and decision-making has to be distributed over more executives. The division management handles day-to-day operations of the business. The headquarters are responsible for financial controls, policymaking and long-range strategic developments.
There are three ways to group the units: similar products/production processes, customer type or geographical region of activity.
Adv
- The organisation can increase its size more than other structures, which offers the competitive advantage of having greater influence on their environment
- Provides better training for future executives than the functional structure. Divisional managers operate with the same responsibility as presidents of a functionally designed organisation
- Enhanced responsiveness to the needs of customers because the specialisation within the organisation allows greater focus on the specific businesses each division operates
- Profitability of each independent division can be determined and divisions can therefore be made accountable and compared
Dis
- Not as profitable as organisations using functional designs because every function is duplicated within each division. This is creating costs but producing redundant work.
- However, this disadvantage can be limited by centralising some functions
- Coordination costs are higher as the organisation is larger and requires more control systems, travel expenditures and demands for communication
Matrix structure
Network Organisations
Network organisations consist of multiple units organized around a central distribution channel that provides support, such as technical expertise and equipment. They encourage information sharing, democratic management, and innovation.
Example: A technology company collaborating with various suppliers, manufacturers, and distributors to create and deliver products.
Crowdsourced Organizations
Explanation: Crowdsourced organizations, also known as virtual organizations, utilize social media to establish and support their operations. Online platforms like eBay enable buyers and sellers to engage in economic exchanges through virtual contact.
Example: eBay connecting individuals worldwide to buy and sell various products through online auctions and transactions.
The value chain
The value chain emphasizes that each partner in a chain not only supplies inputs but also adds unique value to the output received by the end user. Value chains coexist with traditional organizational forms and complement them.
Example: A fashion brand working with designers, manufacturers, and retailers to create and sell high-quality, stylish clothing to customers.
Organisational life cycle theory
Organisational life cycle theory describes organisations as moving through phases. Each phase contains a crisis that threatens the organisation’s survival that either pushes the organisation forward into the next phase or into decline.
The five phases are:
- Entrepreneurial phase: the organisation is focused on creating and selling its product. Characteristics of this phase is a simple structure so that the entrepreneur can control activities personally and receive direct feedback. The leadership crisis is a result of top management’s inadequate integration, as the organisation needs professional management to be successful. The entrepreneur needs the crisis to be convinced of the importance of management. The crisis is resolved with centralised decision-making, renewed focus and professional management.
- Collectivity phase: the prominent concern for new managers is to manage the increased differentiation created by growth and establish a clear direction. The autonomy crisis is prompted by the lack of critical decision-making at the level where action needs to occur because managers find it hard to relinquish centralised control.
- Delegation phase: solves the autonomy crisis by delegating decision-making to lower levels in the hierarchy. The crisis of control is created when too much decentralisation leads to control loss.
- Formalization phase: creates formal rules and procedures that solve the crisis of control and ensure that decentralised decisions are made as the management desires.
The formal control mechanisms include planning, accounting and information systems.
Associated with RED TAPE CRISIS- workers dont like too much rules - Collaboration phase: pulls out the organization out of the red tape crisis by by employing teamwork and distribution of tasks so the responsibility is shared. The crisis of renewal is when management fails to allow for change and will lead to either a new of form of organization or or decline/death.
Examples of each case
Entrepreneurial phase:- needs to grow
Example: A tech startup founded by an entrepreneur who focuses on developing and selling a unique software product. The organization has a simple structure, with the entrepreneur personally controlling activities and receiving direct feedback. The leadership crisis arises when the organization realizes the need for professional management to succeed. It is resolved through centralized decision-making, renewed focus, and the introduction of professional management
Collectivity phase:-lower levels dont have enough autonomy
Example: After a period of successful growth, a small consulting firm expands its services and team. New managers face the challenge of managing increased differentiation and establishing a clear direction for the organization. The autonomy crisis occurs when managers find it difficult to relinquish central control, resulting in a lack of critical decision-making at lower levels
Delegation phase:- to much decentralisation
Example: A manufacturing company experiences further growth and decides to delegate decision-making to lower levels in the hierarchy. This phase addresses the autonomy crisis by empowering employees to make decisions independently. However, the crisis of control emerges when too much decentralization leads to a loss of control over organizational processes
Formalization phase:
Example: As a company matures, it enters the formalization phase, characterized by the creation of formal rules and procedures. The crisis of control is resolved by implementing these formal control mechanisms, including planning, accounting, and information systems. These measures ensure that decentralize decisions align with the management’s objectives
Organisational structures as open systems
According to Katz and Kahn
The organisational system evolves in response to internal (subsystem) and external (supersystem) pressures. Simultaneously, the organisation attempts to buffer its technical core so that there are no disruptions to the core transformation processes.
The organisation’s social structure passes through the following phases:
1. The support phase
differentiates the purchasing and sales activities from core production tasks. By creating separate formal units, production and service employees can focus on transforming raw materials into products. Integration is provided by a general manager.
- The maintenance phase
is introduced as the organisation grows and requires support activities to support its core production. Support activities include HR, accounting and public relations. Therefore, the organisation has differentiated the organisational structure to accommodate core activities. The maintenance activities are not dependent on the core activities (or purchasing and sales) and are therefore performed relatively independently
3. The adaptation phase
is applied again to facilitate organisational growth, as it allows the organisation to respond to environmental changes. Adaptive functions can include the development of new products and markets. At the adaptive phase, the organisational structure has fully integrated its activities.
