Chapter 1ORGANIZATION THEORY: An Overview

SOURCE: ROBBINS & BARNWELL, 2002

Points to PonderWithout organization we couldnt live like what are today. Any comments?

Points to Ponder

Suppose you, as a group, had a grant of 800 million rupiah as an initiating fund to enhance the competitive advantage of the alumni. It should be done within one year. What would you do?

NEW ORGANIZATION FEATURESDYNAMIC GLOBAL ECONOMYBE CUSTOMER RESPONSIVEPROFITABILITY THROUGH COST AND GROWTHREDEFINITION OF ORGANIZATION CAPABILITIES AS THE DNA OF COMPETITIVENESSLEARNING TO CHANGE: ADAPTATION AND TRANSFORMATIONMANAGERIAL INNOVATIONKEEPING UP TO TECHNOLOGY INNOVATIONATTRACTING, RETAINING, AND MEASURING COMPETENCE AND INTELLECTUAL CAPITALCHANGING EMPLOYEE DEMOGRAPHICS, E.G. MORE WOMEN IN THE WORKFORCE

Current TrendsOrganizations now function in a global economy.International expansion can provide a competitive advantage: Entering different countries may provide large numbers of potential customers.Building production facilities in countries with low-cost labor may prove cost-efficient. The rapid increase in telecommunications and information technology enables work to be done more rapidly, efficiently, and effectively around the globe.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Current Global ChangesEuropean Economic CommunityNorth American Free Trade AgreementThe Growth of AsiaJapan, China, Singapore, Hong Kong, and Malaysia are significant economic forces. General Agreement on Tariffs and Trade (GATT)McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Microsoft Employees Who Have Left the Company for Other BusinessesCompanyWhat It DoesDefectors from MicrosoftSource: Reprinted by permission of the Wall Street Journal, Copyright 2000 Dow Jones & Company, Inc. All Rights Reserved Worldwide. License number 397221136576.CrossgainBuilds software around23 of 60 employeesXMl computer languageViAirMakes software for Company declines towireless providers specifyCheckSpaceBuilds online paymentCompany says a good service for small businesses chunk of its 30 employeesdigiMineSells data mining serviceAbout 15% of 62 employees inaddition to the 3 foundersAvogadroBuilds wireless notification 8 of 25 employeessoftwareTellme NetworksOffers information like stockAbout 40 of 250 employees;quotes and scores over theanother 40 from the formerphoneNetscape

TRENDS TOWARD INTERNATIONAL AND GLOBAL ENTERPRISEGROWTH IN INTERNATIONAL INVESTMENT AND TRADEGROWTH OF MULTINATIONAL ENTERPRISES (MNEs), DIVERSE NATIONAL CONTEXT OF OPERATIONSINTERNATIONAL, MULTINATIONAL WORK FORCECROSS-NATIONAL TRANSFER OF MANAGEMENT AND MANAGEMENT PRACTICES

THEMES IN CHANGING AND DEVELOPING ORGANIZATIONSPEEDFLEXIBILITYINTEGRATIONINNOVATIONMINDSET: ALLOW IDEAS, COMPETENCIES EMERGE AT ALL LEVELS THROUGH:- LEARNING- SHARING KNOWLEDGE- GROUPING PHYSICAL AND INTELLECTUAL ASSETS

Ratio of Market Value to Book Value for Selected CompaniesAnnualMarketBookRatio of Sales Value Value Market toCompany($ billions) ($ billions) ($ billions) Book ValueeBay1.230.83.97.9Microsoft28.4254.158.34.4Intel26.8142.135.44.0General Motors Corp.182.120.09.42.1Nucor (Steel)4.83.92.31.7J. C. Penney32.35.06.4.78Note: The data on market valuations are as of June 16, 2003. All other financial data is based on the most recently available balance sheets and income statements.

CEO Remuneration in U.S. DollarsCOUNTRYUnited StatesBrazilFranceArgentinaGermanyJapanMexico CEO TOTALREMUNERATION$ 1,404,000 597,000 540,000 861,000 422,000 546,000 649,000CEO/MANUFACTURINGEMPLOYEE TOTALREMUNERATION MULTIPLE 31 60 15 48 11 11 46McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

What is an organization?

a consciously coordinated social entity with a relatively identifiable boundary functions on a relatively continuous basis to achieve common goals

Organization TheoryWhat is organization theory?

The discipline that studies the structure and design of organization

organization is the unit of analysis

effectiveness used as the parameter to be achieved

Organization StructureWhat is organization structure?

How tasks are allocatedWho reports to whomThe formal coordinating mechanisms and interaction patterns that will be followed

Component:

Complexity: degree of specialization (extent of differentiations)number of levels in hierarchygeographical dispersionFormalization:rules and procedure to direct behaviorCentralization:The focus of decision making authority

Organization DesignWhat is organization design?

the management side of organization theory

concerns with: constructing changing organizations structure to achieve the organizations goals

The Framework of This Book

Determinants of organization Structure StrategyOrganization sizeTechnologyEnvironmentPower-controlApplicationsManaging the environmentManaging organizational changeManaging organizational cultureManaging organizational evolutionOrganization StructureOrganization EffectivenessOrganizational DesignsDesign optionsBureaucracyAdhocracy

Points to Ponder

How do we know if an organization is successful?What are the components of an effective organization?What determines the structure of an effective organization?How is an effective organization designed?What theory can be used to solve organization problems, i.e. ineffective organization?

The Metaphors:

Sapu Lidi metaphor

Biological metaphor:Organization is a biological being

Organization as a system:System is a set of interrelated and interdependent parts arranged in manner that produces a unified whole within the constraint of a larger system or environment.

Life Cycle PerspectivePattern of predictable stages through which organization proceeds:

Entrepreneurial stageFormation stageInfancyCollective stageClarification of missionsCommitment to goalsFormalization-and-control stageStabilizationRoles are definedElaboration-of-structure stageDiversifies its product and serviceGrowth opportunities are searchedDecentralizationDecline stage

FormationGrowthMaturityDeclineEntrepreneurial stage:Ambiguous goalsHigh creativityCollectivity Stage:Informal communication and structureHigh commitmentFormalization-and-control stage:Formaliza tion of rulesStable structureEmphasis of efficiencyElaboration-of-structure stage:More complex structureDecentralizationDiversified marketsDecline stage:High employee turnoverIncreased conflictcentralization

InputsTransformation ProcessOutputSystemENVIRONMENT

Characteristics of an Open System:

Environment awareness: Interdependency with its environmentFeedback mechanism: Continually receive information from the environmentCyclical characterNegative entropy-capability to: repair it self, maintain its structure, import more energy to live and growSteady state Constancy of the processMovement toward growth and expansionBalance of maintenance and adaptive activitiesHas a relatively identifiable boundary (that differentiate who is and who is not part of the organization)Equifinality: There are thousand ways to go to Rome

CH. 2: THE EVOLUTION OF ORGANIZATION THEORY

Type 1 TheoristsFrederick Taylor and Scientific Management: simple structure will maximize organization efficiencyHenry Fayol and Principles of Organization: 14 principles of organization management (e.g. Division of work, unity of command, centralization, etc.)Max Weber and Bureaucracy: bureaucracy as an ideal type of efficient structureRalf Davis and rational Planning: contingency of structure to organizations objectives

Type 2 TheoristsElton Mayo and the Hawthorne Studies: group works, attitude, and human relationship play significant roles in structuring an organizationChester Barnard and Cooperative System: the role of informal organization, managers as communication facilitators to stimulate subordinates high level of effortsDouglas McGregor and Theory X Theory YWarren Bennis and the Death of Bureaucracy: flexible adhocracies as the ideal organizational form

Type 3 TheoristsHerbert Simon and Principle Backlash: studying of conditions under which Type 1 and Type 2 principles were applicableKatz and Kahns Environmental Perspective: organization needs to adapt to its changing environmental demandsJoan Woodward, Charles Perrow, and James Thomson and The Case of Technology: type of technology determines appropriate structureAston Group and Organization Size: different organization size will determine the organization design

Type 4 TheoristsMarch and Simons Cognitive Limits to Rationality: the presence of conflicting goals will limit the function of managers rationality in making decisionsJeffrey Pfeffer and Organizations as political Arenas: organizations are coalitions composed of varying groups and individuals with different demands. Organization design represents the result of power struggles by these diverse coalitions

CHAPTER 3: ORGANIZATIONAL EFFECTIVENESSWhat is effectiveness? Is it different from efficiency?What does it mean effectiveness is a necessary condition for survival? Can an organization die?What are the parameters used to explain organization effectiveness?

FOUR APPROACHES TO ORGANIZATION EFFECTIVENESS

A THREE-DIMENSIONAL MODEL OF ORGANIZATIONAL EFFECTIVENESSFLEXIBILITYCONTROLPEOPLEORGANIZATIONMEANSENDS

A FOUR MODEL OF EFFECTIVENESS VALUESFLEXIBILITYCONTROLPEOPLEORGANIZATIONMeans: FlexibilityEnds:StabilityEnds: acquisitionOf resourcesMeans: AvailabilityOf informationMeans: PlanningEnds: SkilledWork forceEnds: Productivityand efficiencyMeans:CohesiveWork forceRATIONAL-GOAL MODELOPEN SYSTEMMODELINTERNAL-PROCESS MODELHUMAN-RELATIONSMODEL

EIGHT CRITERIA OF EFFECTIVENESS

CRITERIA OF ORGANIZATION EFFECTIVENESS

Effectiveness Criteria(Gross; in GIBSON, ET. AL., 1973)Acquiring resourcesBeing efficient or cost-effectiveProducing outputsDeveloping administrative and technical functionsInvestmentBehave according to ethical code of conductSatisfying the needs of organization members

Effectiveness Criteria

Integrative Concepts in Understanding Organizational Effectiveness

StrategiesMaintenanceAdaptivenessParametersOrganizational-Affirmation of the mission-Operational adjustment-Commitment of people-Continuous experimentation and learning-Facilitative leadership-Movement into new markets -Innovative alliance-Efficiency-Effectiveness

EFFECTIVENESS CRITERIA VS. TIMEShort termMiddle term Long term

Maintenance:Adaptation: Survival- Production- Investment- Efficiency- Development- Satisfaction

The Process of Developing Organizational EffectivenessTIMESHORT-RUNINTERMEDIATE-RUNLONG-RUNINVENTINGTHE FUTUREADAPTATION PROCESSMaintenanceAdaptivenessAdaptivenessMaintenanceCHANGING SITUATIONPARAMETER OF THE PROCESSEffectivenessEfficiencyENVIRONMENTOrganization

CHAPTER 4: DIMENSIONS OF ORGANIZATION STRUCTURECOMPLEXITY: the degree of differentiation that exists within an organization (horizontal, vertical, spatial)FORMALIZATION: the degree to which jobs within the organization are standardized (high-low, verbal-written)CENTRALIZATION: the degree to which decision making is concentrated at a single point in the organization or the dispersion of authority to make decisions within the organization (centralized-decentralized)

COMPLEXITYHORIZONTAL DIFFERENTIATION: the degree of differentiation between units based on the orientation of members, the nature of the tasks they perform, and their education and training. Include in this definition are:

SPECIALIZATIONFUNCTIONAL OR DIVISION OF LABOR (jobs are broken down into simple and repetitive tasks) SOCIAL (hiring professionals who hold skills that cannot be routinized)

DEPARTEMENTALIZATION (creating groups of specialists based on: numbers, functions, product or service, client served, geography, work process)

COMPLEXITY VERTICAL DIFFERENTIATION: the depth in the structure, the number of hierarchical levels (many layers-tall, few levels-flat) in the organization. Include in this definition:

SPAN OF CONTROL (defines the number of subordinates that a manager can direct effectively)

COMPLEXITY SPATIAL DIFFERENTIATION: the degree to which the location of an organizations offices, plants, and personnel are dispersed geographically

FORMALIZATIONIs the degree to which jobs within the organization are standardized. High formalization means the job incumbent has minimum amount of discretion over what is to be doneIs directed to ease coordination by creating: simplicity, uniformity, consistency

FORMALIZATION TECNIQUESEMPLOYEE SELECTION: to screen in the right people and screen out the undesirableROLE REQUIREMENTS: define the expectation on how the role incumbent is supposed to behaveRULES, PROCEDURES, AND POLICIES: Rules: explicit statements that tell employee what she ought or ought not to doProcedure: a series of interrelated sequential steps that employee ought to follow to accomplish her job tasksPolicy: guidelines that set constraints on decisions that employee makesTRAINING: to instill employees preferred work behavior and attitudeRITUALS: developed to stigmatized an employee that she is loyal and can be trusted

CENTRALIZATIONIs the degree to which the formal authority to make discretionary choices is concentrated in an individual, unit or level (usually high in the organization hierarchy), thus permitting employee (usually low in the organization level) minimum input into her workIt is needed to respond to the need of: speedy actions, detailed input into decision, motivation to participate, efficiency and effectiveness of the decision made.Point to ponder: how do you explain the relationship among CENTRALIZATION, COMPLEXITY, AND FORMALIZATION?

DETERMINANTS OF ORGANIZATION STRUCTURESTRATEGYORGANIZATION SIZETECHNOLOGYENVIRONMENTPOWER-CONTROL

Ch. 5: Organization StrategyWhat is organization strategy?Basically it considers means and ends in structuring organization cycles.

The determination of basic long-term goals and objectivesThe adoption of courses of actionThe allocation of resources necessary for carrying organization goals

Two strategy modes:

Planning modes: strategy is a plan or explicit set of guidelines developed in advanceStructured and systematic pre-set ways to achieve goalsEvolutionary mode:Strategy is not necessarily well-thought-out and systematicStrategy evolves over time as a pattern in a stream of significant decisions

Strategic DimensionsFour dimensions and their structural implications:Innovation: to what degree does an organization introduce major new products or services?Market differentiation: to what degree does an organization strive to create customer loyalty by uniquely meeting a particular need?Breadth: to what degree does an organization need to cater variety of customers, their geographic range, and the number of products Cost control: to what degree does an organization tightly control costs, refrain from unnecessary innovation or marketing expenses, and cut prices?

Thesis: strategy vs. structureFour theoretical perspectives:

Chandlers strategy-structure thesisMiles & Snows contemporary strategy-structure theoryPorters competitve strategyMillers integrative framework

The Strategy Imperative:

ENVIRONMENTAL FACTORSANDORGANIZATIONALCAPABILITIESSTRATEGYSTRUCTURE

Chandlers (1960) strategy-structure thesis :

A Harvard historian: Alfred ChandlerStudied the relationship between organization strategy and its structureStructure is a product of time (organization growth and ambition develop over time) and product diversification. Efficient structure for an organization with a single product strategy is one that is simple: high centralization, low formalization, and low complexity

Chandlers thesis (1960) :

LOWHIGHSIMPLEFUNCTIONALDIVISIONALSINGLE PRODUCTDIVERSIFIED PRODUCT

Miles & Snows (1978) contemporary strategy-structure theoryBased on the rate of change of products and markets, there are four types of strategy:

Defender limited products, narrow market segment

Prospectors finding and exploiting new-product and market opportunities

Analyzers move into new products or new markets

Reactors inconsistent and unstable pattern

Miles & Snows (1978) strategic typology

ENVIRONMENT STRATEGY CONTINUUM

LITTLE CHANGEAND UNCERTAINTYRAPID CHANGEANDHIGH UNCERTAINTYDEFENDERREACTORANALYZERPROSPECTOR

PORTERS (1980) COMPETITIVE STRATEGIESFROM HARVARD GRADUATE SCHOOL OF BUSINESSNO ORGANIZATION CAN SUCCESSFULLY PERFORM AT AN ABOVE-AVERAGE LEVEL BY TRYING TO BE ALL THINGS TO ALL PEOPLEMANAGEMENT MUST SELECT A STRATEGY THAT WILL GIVE ITS ORGANIZATION A COMPETITIVE ADVANTAGETHE CHOSEN STRATEGY SHOULD UNDERLINE ORGANIZATIONS STRENGTHS AND COMPETITORS WEAKNESSESTHE ORGANIZATION SHOULD PUT ITS STRENGTH WHERE THE COMPETITOR ISNTTHREE STRATEGIES: COST LEADERSHIP, DIFFERENTIATION, AND FOCUS

PORTERS (1980) THREE COMPETITIVE STRATEGIES: (1) COST-LEADERSHIP STRATEGYIT IS CHOSEN IF AN ORGANIZATION SETS OUT TO BE THE LOW-COST PRODUCER:

the organization is a cost leader

The products or services offered must be comparable to those offered by its competitors

Cost advantage should be achieved by efficiency of its: operations, labor costs, access to raw materials, etc.

PORTERS (1980) THREE COMPETITIVE STRATEGIES: (2) DIFFERENTIATION STRATEGYIT IS CHOSEN IF AN ORGANIZATION SETS OUT TO BE UNIQUE IN ITS INDUSTRY IN WAYS THAT ARE WIDELY VALUED BY BUYERS:

the organization should put emphasis on: high quality, extraordinary service, innovative design, technological unusual capabilities, or unusual-positive brand image

The key is that the attribute chosen must be different from those offered by its competitors

Example: Toyota reliability, Haagen Daz quality ingredients in ice cream, Telkom committed to you

PORTERS (1980) THREE COMPETITIVE STRATEGIES: (3) FOCUS STRATEGYIT IS CHOSEN IF AN ORGANIZATION, NARROW SEGMENT, SETS OUT TO GAIN ADVANTAGE ON:

Cost (COST FOCUS)

Differentiation (DIFFERENTIATION FOCUS)

THE ORGANIZATION WILL SELECT A SPECIFIC-NARROW MARKET SEGMENTS, TAILOR ITS STRATEGY TO SERVE THEM, AND TRIES TO EXPLOIT THEM

MILLERS (1987) INTEGRATIVE FRAMEWORK

Ch. 6: Organization SizeWhat is organization size? Basically it is the total number of employees.

Peter Blau: size is the most important condition affecting the structure of organization. As size increases, so do the structural differentiation

The Aston Group (Great Britain): - increase in size is associated with greater specialization and formalization- an increased scale of operation increases the frequency of recurrent events and the repetition of decisions; which makes standardization preferable

Meyer: the effects of size on structure is unidirectional; that is: size caused structure but not the reverse

Ch. 7: TECHNOLOGYWhat is technology? Basically it refers to:

The information, equipment, techniques, and processes required to transform inputs into outputsThe use of devices to produce products or servicesThe way how inputs are converted into outputs

TECHNOLOGY VS. STRUCTURE:WOODWARD STUDYThere are three types of production technologies:Unit production: manufacture custom-made productsMass production: make large-batche or mass-produced productsProcess production: heavily automated continuous-process producers

TECHNOLOGY VS. STRUCTURE:WOODWARD STUDY

TECHNOLOGY VS. STRUCTURE:PERROWS KNOWLEDGE-BASED TECHNOLOGY STUDYIt is argued that control and coordination methods should vary with technology type.The more routine the technology, the more highly structured the organization should be.Four types of technology:

Routine technology: well defined and analyzable work problems, with few variability of tasksEngineering technology: well defined and analyzable work problems, with many variability of tasksCraft technology: ill defined and unanalyzable work problems, with few variability of tasksNonroutine technology: ill defined and unanalyzable work problems, with many variability of tasks

PERROW S TECHNOLOGY-STRUCTURE PREDICTION

THOMPSONS TECHNOLOGICAL UNCERTAINTY STUDY

THOMPSONS TECHNOLOGY CLASSIFICATIONINPUTOUTPUTABCDLONG-LINKED TECHNOLOGYCLIENT ACLIENT BTRANSFORMATIONPROCESSMEDIATING TECHNOLOGYRESOURCES

ABCDTRANSFORMATIONPROCESSOUTPUTINPUTFEEDBACKINTENSIVE TECHNOLOGY

SUMMARY: ROUTINE VS. NONROUTINE TECHNOLOGY

SUMMARY: TECHNOLOGY VS. STRUCTURE

Chapter 8: ENVIRONMENTHOW ENVIRONMENT CAN AFFECT THE STRUCTURE OF AN ORGANIZATION?

Key Ideas: System PerspectiveEnvironment is everything outside an organizations boundaryOrganization interacts with its environmentOrganization develops monitoring and feedback mechanisms to identify and follow its environment, senses changes, and make appropriate adjustmentThe capability of the organization to do adjustment will strongly affect its survivival

ORGANIZATION AND ITS ENVIRONMENT: GENERAL VS SPECIFICTHE ORGANIZATIONLABORUNIONGOVERNMENTCOMPETITORSUPPLIERSCUSTOMERSPUBLICPRESSUREGROUPSTRADEASSOCIATIONSTAKEHOLDERSPOLITICSSOCIALMILIEUECOLOGYLEGALSYSTEM

MAJOR ENVIRONMENT CHANGES TECHNOLOGY: GLOBAL TECHSOCIAL: ENVIRONMENT MOVEMENTECONOMICS: HIGH OIL PRICEPOLITICAL: STRATEGIC ALLIANCES

CONTRIBUTORSBURNS & STALKER: STABLE VS. CHANGING ENVIRONMENTEMERY AND TRIST: LOW VS. HIGH UNCERTAINTYLAWRENCE & LORSCH: LOW VS. HIGH COMPETITIVE

BURNS AND STALKER: STABLE VS. CHANGING ENVIRONMENT

EMERY & TRIST: LOW VS. HIGH UNCERTAINTY

LAWRENCE & LORSCH: LOW VS. HIGH COMPETITIVE ENVIRONMENTSSTUDY: PLASTIC, FOOD, AND CONTAINER INDUSTRIESPLASTIC INDUSTRIES: HIGHLY COMPETITIVE, LIFE CYCLE OF ITS PRODUCT IS SHORT, WITH RAPID NEW PRODUCT AND PROCESS DEVELOPMENT, INNOVATION IS HIGH, LEVEL OF UNCERTAINTY IS HIGH, CLARITY OF INFORMATION FROM ITS ENVIRONMENT IS LOWTHE MORE THE ENVIRONMENT IS COMPETITIVE, UNCERTAIN, AND TURBULENTLY CHANGING, THE MORE THE NEEDS OF THE ORGANIZATION TO DO DIFFERENTITATION AND INTEGRATION

ENVIRONMENT AND RESOURCES AVAILABILITY STABLEDYNAMICSIMPLECOMPLEXABUNDANTSCARCE

Chapter 9: Power-ControlTHOSE IN POWER SELECTING A STRUCTURE THAT WILL, TO THE MAXIMUM DEGREE POSSIBLE, MAINTAIN AND ENHANCE THEIR CONTROL

John Childs (1972) Strategic Choice Argument: the significant discretionary latitude of managers for making choicesAutonomy of decision makers will affect the choice of organization structure. The size, environment, technology, and strategy explain only 50% - 60% of the variability in structure.Organizational effectiveness is not an optimum point of achievement. It is the managers discretion in selecting the most satisfactory, and yet achievable, effectiveness.Organizations have the power, exercised by their managers, to control their hostile environment.Perceptions and evaluations of events are important intervening link between environments and the actions of organizations

Interplay Of Decision Maker And The Organizations InterestDECISION MAKERSINTERESTORGANIZATIONSINTEREST

Factors Affecting The DecisionsDivergent interestNon-rationalityDominant coalitionPower sources: > hierarchy, > control resources, > network centrality

Decision Discretion in the Power-control Model: ORGANICMECHANISTICDECISION

DISCRETION

Chapter 10ORGANIZATIONAL DESIGN OPTIONS

Designing OrganizationCONSTRUCTING, DEVELOPING, CONFIGURATING, AND ESTABLISHING AN ORGANIZATION STRUCTURE IN ORDER TO ENHANCE ORGANIZATION CAPABILITIES IN ACHIEVING ITS GOALS.

IT REFERS TO THE CREATION OF MEANS AND PLANS TO FACILITATE THE ATTAINMENT OF ORGANIZATION GOALS

FIVE BASIC ELEMENTS IN DESIGNING ORGANIZATION

OPERATING CORE: employees who perform the basic work related to the production of products and services STRATEGIC APEX: top-level managers who are charged with the overall responsibility for the organization MIDDLE LINE: managers who connect the operating core to strategic apexTECHNOSTRUCTURE: analysts who have the responsibility for affecting certain forms of standardization in organizationSUPPORT STAFF: people who fill the staff units, who provide indirect support services for the organization

Five Optional Structural DesignSIMPLE STRUCTUREPROFESSIONAL BUREAUCRACYMACHINE BUREAUCRACYDIVISIONALADHOCRACY

Designing the Elements

Structure and Design

Chapter 11 BUREAUCRACY:ORGANIZATIONAL DESIGN OPTION

BUREAUCRACY: MAX WEBERA DESCRIPTION OF AN IDEAL ORGANIZATION.A RATIONAL TYPE OF DESIGN THAT MAXIMIZES THE EFFICIENCY OF ORGANIZATIONAL OPERATIONS.ITS UNDERLINED PREDICTABILITY, RELIABILITY, AND STABILITY IN ORGANIZING FUNCTIONS WITHIN ORGANIZATION.ORGANIZATION GOALS ARE CLEAR AND EXPLICIT.POSITIONS ARE ARRANGED IN A PYRAMIDAL HIERARCHY.

BUREAUCRATIC DESIGN: ITS CHARACTERISTICS

DIVISION OF LABOR: job is broken down into simple, routine, and well defined tasks. WELL-DEFINED AUTHORITY HIERARCHY: top-level managers should supervise and control the lower ones. HIGH FORMALIZATION : formal rules and procedures to ensure uniformity behaviorsIMPERSONAL NATURE: individual involvement, personalities and personal preferences cannot interfere the job to be done.EMPLOYMENT DECISIONS BASED ON MERIT: selection decision and promotion are based on technical expertise, competence, and performance.CAREER TRACKS FOR EMPLOYEES: based on tenure, loyalty, and high commitment.DISTINCT SEPARATION OF MEMBERS ORGANIZATIONAL AND PERSONAL LIVES: rational-impersonal conduct of organizations activities must be maintained.

POSITIVE QUALITIES OF BUREAUCRACYCREATION OF STABILITY OVERTIMEEMPLOYEES WILL BE GUARANTEED TO BE TREATED FAIRLY AND OBJECTIVELYFAVORITISM WILL BE DIMINISHEDREDUCE UMBIGUITY, INCREASE UNIFORMITY OR STANDARDIZATION OF PROCEDUREHIERARCHY OF AUTHORITY MAKES LINE OF AUTHORITY CLEAR

NEGATIVE QUALITIES OF BUREAUCRACYCONFORMITY, RELIABILTY, AND PREDICTABILITY WILL LEAD TO INFLEXIBILITY (MERTON)RULES AND REGULATIONS BECOME ENDS RATHER THAN MEANS (MERTON, SELZNICK)RULES AND REGULATIONS DEFINE MINIMUM LEVELS OF PERFORMANCE. THEY ENCOURAGE APATHY TO PERFORM ABOVE MINIMUM (GOULDNER)BUREAUPATHIC BEHAVIOR EMERGED. DECISION MAKERS USE RULES AND REGULATION TO PROTECT THEMSELVES FROM MAKING ERRORS. THEY HIDE BEHIND RULES. dont blame me. I was just following the rules (THOMSON).EMPLOYEE ALIENATION AS A RESULT OF HIGH SPECIALIZATIONCONCENTRATION OF POWER IN HIGH-RANK HIERARCHY

ANOTHER SIDE OF BUREAUCRACYIT WORKS! And ITS STILL POPULAR!EFFECTIVE IN MANAGING LARGE SIZE ORGANIZATIONNATURAL SELECTION IN TERM OF ONLY THE BEST WILL SURVIVE FAVORS BUREAUCRACY THE PROFESSIONAL BUREAUCRACY HAS EMERGED.IT IS GOOD IN MAINTAINING CONTROL, ESPECIALLY WITHIN TURBULENT ENVIRONMENT

Chapter 12 ADHOCRACY: AN ORGANIC ORGANIZATIONAL DESIGN

ADHOCRACYAN ORGANIC TYPE OF ORGANIZATION DESIGN.IS A RAPIDLY CHANGING, ADAPTIVE, USUALLY TEMPORARY SYSTEM ORGANIZED AROUND PROBLEMS TO BE SOLVED BY GROUPS WITH DIVERSE PROFESSIONAL SKILLS.AN EXCELLENT VEHICLE FOR RESPONDING TO CHANGE, FACILITATING INNOVATION, AND COORDINATING DIVERSE SPECIALISTS.

ADHOCRATIC DESIGNSMATRIXTHEORY ZCOLLATERAL FORMNETWORKTASK FORCECOMMITTEE DESIGNCOLLEGIAL FORM

THE MATRIX DESIGN

IS A STRUCTURAL DESIGN THAT ASSIGNS SPECIALISTS FROM SPECIFIC FUNCTIONAL DEPARTMENTS TO WORK ON ONE OR MORE INTERDICIPLINARY TEAMS, WHICH ARE LED BY PROJECT LEADERS. IT HAS A DUAL CHAIN OF COMMAND: (1) NORMAL VERTICAL HIERARCHY WITHIN FUNCTIONAL DEPARTMENT; (2) THE PROJECT MANAGER IT HAS A DUAL FOCUS: FUNCTION AND PRODUCTTHREE CONDITIONS THAT FAVOR MATRIX: (1) ENVIRONMENTAL PRESSURES FROM TWO OR MORE CRITICAL SECTORS: (2) INTERDEPENDENCE BETWEEN DEPARTMENTS; (3) ECONOMIES OF SCALE IN THE USE OF INTERNAL RESOURCESTWO TYPES OF MATRIX DESIGN: (1) PERMANENT; (2) TEMPORARY

THE MATRIX: ITS ADVANTAGESITS ABILITY TO FACILITATE COORDINATION WHEN THE ORGANIZATION HAS COMPLEX AND INTERDEPENDENT ACTIVITIESIT FACILITATES THE EFFICIENT ALLOCATION OF SPECIALISTSIT CREATES: (1) INCREASED ABILITY TO DEVELOP RAPID RESPONSES TO CHANGING ENVIRONMENTS; (2) INCREASED MOTIVATION BY PROVIDING DEMOCRATIC WORK CULTURE

THEORY Z (WILLIAM OUCHI)

COLLATERAL FORMTHE USE OF ENTREPRENEURSHIP WITHIN A LARGE BUREAUCRACY (=INTRAPRENEURING)A LOOSELY STRUCTURED ORGANIC DESIGN THAT COEXIST WITH A BUREUCRACYTYPICALLY CONSIST OF SMALL TEAMS THAT ARE GIVEN THE INDEPENDENCE AND RESOURCES TO FUNCTION FULLY

THE NETWORK STRUCTUREA SMALL CENTRAL ORGANIZATION THAT RELIES ON OTHER ORGANIZATIONS TO PERFORM MANUFACTURING, DISTRIBUTION, MARKETING, OR OTHER CRUCIAL BUSINESS FUNCTIONS ON A CONTRACT BASISEXAMPLE: AMAZON.COMCOLLATERAL FORMNETWORK

COMMITTEE DESIGNCOLLEGIAL FORM

THE NETWORK STRUCTUREA SMALL CENTRAL ORGANIZATION THAT RELIES ON OTHER ORGANIZATIONS TO PERFORM MANUFACTURING, DISTRIBUTION, MARKETING, OR OTHER CRUCIAL BUSINESS FUNCTIONS ON A CONTRACT BASISEXAMPLE: AMAZON.COM

THE TASK FORCE STRUCTUREA TEMPORARY STRUCTURE FORMED TO ACCOMPLISH A SPECIFIC, WELL-DEFINED AND COMPLEX TASK THAT INVOLVES A NUMBER OF ORGANIZATIONAL SUBUNITSEXAMPLE: RIGHTSIZING TASK FORCE OF AN OIL COMPANY

THE COMMITTEE FORM STRUCTUREA TEMPORARY STRUCTURE FORMED TO ACCOMPLISH A SPECIFIC, WELL-DEFINED AND COMPLEX TASK THAT INVOLVES REPRESENTATIVES FROM SUBUNITS WITHIN THE ORGANIZATIONTYPES: (1) TEMPORARY (=TASK FORCE); (2) PERMANENT

THE COLLEGIAL FORMCONSIST OF HIGHLY PROFESSIONALS IN MANY FIELDSFULL DEMOCRACY IN DECISION MAKINGDECENTRALIZED, WITH VERY MINIMUM GUIDELINE TO WORKEXAMPLE: LAB WORKS IN UNIVERSITY

TOMORROW ORGANIZATIONS(PETER DRUCKER & TOM PETERS)FLAT, LESS HIERARCHICAL, MORE DECENTRALIZEDFLEXIBLE, LOW IN FORMALIZATION, MORE ADHOCRATICWILL WORK ACROSS ORGANIZATION BOUNDARIESRISKS AND UNCERTAINTIES BECOME PART OF STRATEGIC ORGANIZATION CHALLENGESWILL LIKE LARGE SYMPHONY ORCHESTRAS, CONSIST OF SPECIALISTS AND PROFESSIONAL IN DIFFERENT FIELDSBECOME INFORMATION-BASED