Organisational Structure Size Design Organizational Design 151

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Organizational Design


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Organizational Design

Introduction

Definition Classical & Neoclassical Approaches : Contingency approach

Mechanistic organization Organic organization Simple structure Machine bureaucracy

Interorganizational Designs Technology as a factor in OD


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Introduction

Organizing is a subject of the larger activity ofmanaging. it is the process by which the structureof an organization is created & maintained.

The word organization may be used to refer to theprocess of organizing, the structure that evolves outof this process and the processes/activities that takeplace within it.

All activities involving two or more persons entails

the formation of an organization.


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Definition

Organization Design refers to the process ofcoordinating the structural elements of anorganization in the most appropriate manner.


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Classical & Neoclassical Theory

The Quest for the One Best Design

Classical organizational theorists (such as Weber, Taylor

) believed that a universally best way to designorganizations exists, an approach based on highefficiency.

Neoclassical organizational theorists (such asMcGregor,Argyris ) their approach emphasizes the needto pay attention to basic human needs to succeed andexpress oneself.


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The Evolution of Organization Theory

Meaning : The current state of organizationtheory is the result of an evolutionaryprocess. Theories have been introduced,

evaluated and refined over time ; newinsights tend to reflect the limitations ofearlier theories.

Types : 1 through 4


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Evolution of Contemporary Organization Theory

ApproximateTime Frame

1900-1930 1930-1960 1960-1975 1975-?

SystemPerspectiveEndsPerspective

Centraltheme

Closed

Rational

Mechanicalefficiency

(Taylor, Fayol,Max

Weber)

Closed

Social

People &human relations

(Elton Mayo,McGregor,Bernard)

Open

Rational

Contingencydesigns

(Herbert Simon,Katz & Kahn,Joan W, Charles

Perrow)

Open

Social

Power &Politics

(March,Simon,Pfeffer)

Theoreticalclassification

Type 1 Type 2 Type 3 Type 4

Based on W. Richard Scott, Theoretical Perspectives, in Marshall W. Meyer, ed.,Environments & organizations


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Types

1. The early approaches to organization theoryin this century conceived of organizations asmechanical devises to achieve goals.

2. Management could design formalrelationships, rules, and the like but therewere informal patterns of communication,

status, norms, and friendships created tomeet the social needs of organizationmembers.


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Types contd.

3. Argued that properly aligning structure to itscontingency variables would facilitate theachievement of the organizations goals.

Conversely, implementation of the wrongstructure could threaten the organizations

survival.

4. Political nature of the organizations. Theoutcome of the political struggles amongcoalitions within the organization for control.


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Classical View Point Contd.

The classical theorists on the whole, withscientific management stream consider thethree streams of classical theories briefly i.e.

Bureaucracy : The rigid structures, fixedjurisdictions, impersonal rules and mundaneroutine, often results in delays, produces

inertia, encourages buck-passing, leads towastage of resources, and causes frustration.


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The Classical View Point contd.

Administrative Theory : It views organizationsas power centered & does not provideunderpinning the elements of a democratic

form of organization. Scientific Management : Concerned with

micro aspects such as physical activities of

work through time and motion study &examination of men-machine relationships.


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Neoclassical View Point

The neoclassical theory recognizes theprimacy of psychological and social aspect ofthe worker as an individual and his relations

within and among groups and theorganization.

The Neoclassical viewpoint thus gave birth tohuman relations movement and provided the

thrust toward democratization oforganizational power structures &participative management.


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Developing Framework

Type 1 theorists : Known as classical school,models that would apply in all situations.

Frederick Taylor & Scientific Management

Henri Fayol & Principles of Organization :He proposed 14 principles that he arguedwere universally applicable & could be taught

in schools and universities.


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14 Principles

1. Division of Work

2. Authority

3. Discipline

4. Unity of command

5. Unity of direction

6.

Subordination of individual interest to thegeneral interest

7. Remuneration


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14 Principles contd.

8. Centralization

9. Scalar chain

10. Order

11. Equity

12. Stability of tenure of personnel

13.

Initiatives14. Esprit de corps. Promoting team spirit


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Frame Work contd.

Type 1 theorists contd.

Max Weber & Bureaucracy : A Germansociologist, proposed ideal type

organizational structure.

Ralph Davis : Introduced Rational PlanningPerspective. It offered a simple &

straightforward model for designing anorganization.


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Max Webers Theory of

Bureaucracy(1929)

Theory of authority structures

Ideal type of organization

Negative Connotation

Prototype for all organizations today.

Complex organizations.


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Max Webers Theory of

Bureaucracy(1929)

FEATURES:

1) Division of Labour

2) Authority Hierarchy

3) Formal Selection

4) Formal Rules & Regulations

5) Impersonality

6) Career Orientation

7) Centralization of Authority


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EFFECT / IMPACT ON OB

Positive Effects :

1) Hierarchy & Specialization, Productivity

2) Stability

Negative Effects / Dysfunctions

1) Conflicts and differences

2) Distorted communication

3) Dull, gray, conditioned organization man.

4) Group Think

5) System of control & authority

6) No informal organizations7) Bureaucratic Rules

8) Cannot assimilate influx of new techniques

NO REAL WORLD ORGANIZATION EXACTLY FOLLOWS

THE WEBER MODEL.


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Frame Work contd.

Type 2 theorists

Elton Mayo : Hqwthorne Studies

Chester Bernard : Introduced the notion ofCooperative System.

Douglas McGregor :Two distinct views ofhuman beings : one basically negative

Theory X and other positiveTheory Y. Warren Bennis and the Death of Bureaucracy


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Frame Work contd.

Type 3 theorists Herbert Simon : He argued that organization theory

needed to go beyond superficial& oversimplifiedprinciples to a more open, rational & contingent design.

Katz and Kahn : Have investigated the environmentalstructure relationship.

Joan Woodward, Charles Perrow & JamesThompson have made an impressive case for theimportance of technology in determining the appropriatestructure for an organization.

It also include those who advocate organization size asan important factor influencing structure.


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Frame Work contd.

Type 4 theorists

March & Simon : Cognitive Limits toRationality.

Pfeffers Organizations : As Political Arenas


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Millers Integrative Framework

Strategic Dimension Challenge Predicted Structural Characteristics

Innovation

To understand &

manage more products,customer types, techno-logies & markets

Scanning of markets to discern customer

requirements; low formalization; decentr-alisation; extensive use of coordinatecommittees & task force

Market

Differentiation

To understand & caterto consumer prefer-

ences

Moderate to high complexity;extensive scanning & analysis of

customer reaction &competitorsstrategies; moderate to high formalization& moderate decentralization

Breadth Innovation

To select the rightrange of products,services, customers

& territory

High complexity; low formalization ;decentralization

Breadth StabilityHigh complexity; high formalization ;high centralization

Cost ControlTo produce standardized

products efficiently

High formalization ;high centralization

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Organisational Structure Size Design Organizational Design 151