organization theory and design Ch09 notes

1、Chapter 9: Organization Size, Life Cycle, and DeclineOrganization Size: Is Bigger Better?Pressures for GrowthOrganizational size is a contextual variable, and it influences design and functioningOrganizations often experience pressures for growth, even at the expense at making the best products and

2、showing the greatest productsToday, the business world has entered an era of the mega-corporationCompanies in all industries, from aerospace to consumer products to media, strive for growth to acquire the size and resources needed to compete on a global scale, to invest in new technology, and to con

3、trol distribution channels and guarantee access to marketsOther pressures include that many execs have found that firms must grow to stay economically healthy, and to stop growing is stagnantTo be stable means that customers may not have their demands fully met or that competitors will increase mark

4、et share at the expense of your companyWal-mart, for example, keeps growing because execs have “inferiority complex and are ingrained with the idea that to stop growing is to stagnate and dieDilemmas of Large SizeLarge OrganizationsEconomies of Scale: Huge resources and economies are scale are neede

5、d, as only large company could build a massive pipeline in Alaska, for exampleGlobal Reach: Have the resources to be a supportive economic and social force in difficult times. Wal-Mart gave employees $1000 for emergency assistance when Katrina hit, for exampleVertical Hierarchy, Mechanistic: standar

6、dizedComplex: offers hundreds of functional specialties within the organizationStable Markets: companies can have a presence that stabilizes a market for years if theyre well established“Organization Men: The organization can provide longevity, raises, and promotionsSmall OrganizationsResponsive, Fl

7、exible: These are the crucial requirements for success in a global economyRegional Reach: Quick reaction to changing customer needs or shifiting environmental and market conditionsFlat Structure, Organic: They have a free-flowing management syle that encourages entrepreneurship and innovationSimple:

8、 Smaller amount of people, less resources, less departments, etc.Niche Finding: Done through encouraging innovationEntrepreneurs: Come up with ideas for new small businessesBig-Company/Small-Company HybridThe paradox is that the advantages of small companies sometimes enable them to succeed, and hen

9、ce, grow largeMost of the 100 firms on Fortune magazines list of the fastest-growing companies in America are small firms characterized by an emphasis on being fast and flexible in responding to the environmentSmall companies can become victims of their own success as they grow large, shifting to a

10、mechanistic structure emphasizing vertical hierarchiesGiant companies are “built for optimization, not innovationThe “big-company/small-company hybrid combines a large corporations resources and reach with a small companies simplicity and flexibility, for instance, by using a divisional structureOrg

11、anizational Life CycleA perspective on organizational growth and change that suggests that organizations are born, grow older, and eventually dieStages of Life Cycle DevelopmentEntrepreneurial StageEmphasis is on creating a product or service and surviving in the marketplaceThe founders are entrepre

12、neurs and they devote their full energies to the technical activities of production and marketingOrganization is informal and nonbureaucraticControl is based on owners personal supervisionGrowth is from a creative new product or serviceCrisis: Need for LeadershipMust adjust structure to accommodate

13、growth or bring in strong managers who can focus on management issuesMany businesses fail because they are unsuccessful at the transition out of this stageCollectivity StageStrong leadership is obtained and the organization begins to develop clear goals and directionDepartments are established along

14、 with a hierarchy of authority, job assignments, and a beginning division of labourCommunication and control are still relatively informal but formal systems begin appearingCrisis: Need for DelegationLower-level employees gradually find themselves restricted by the strong top-down leadershipLower-le

15、vel managers begin to acquire confidence in their own functional areas and want more discretionAn autonomy crisis occurs when top managers, who were successful because of their strong leadership and vision, do not want to give up responsibilityFormalization StageInvolves the installation and use of

16、rules, procedures, and control systemsCommunication is less frequent and more formalEngineers, HR specialists, and other staff may be addedTop management becomes concerned with issues such as strategy and planning and leaves the operations of the firm to middle managementProduct groups or other dece

17、ntralized units may be formed to improve coordinationCrisis: Too Much Red TapeOrganization seems bureaucratized and innovation is restrictedNeed to eliminate unnecessary red tapeElaboration StageThe solution to the red tape crisis is a new sense of collaboration and teamworkManagers develop skills f

18、or confronting problems and working togetherBureaucracy may have reached its limit, and social control and self-discipline reduce the need for additional formal controlsFormal systems may be simplified and replaced by manager teams and task forcesTeams are often formed across functions or divioionsF

19、or example, Apple Computer is in this stageCrisis: Need for RevitalizationMay enter periods of temporary declineA renewal may need to occur every 10 to 20 yearsOrganization could shift out of alignment with the environmentBecomes inflexibleOften replace top managersDiagram of Life Cycle:Organization

20、al Characteristics during the Life CycleOrganizational Bureaucracy and ControlWhat Is Bureaucracy?Weber perceives it as a threat to basic personal liberties, but recognizes it as the most efficient possible way of organizing and notes that it focuses on rational ways of control6 Characteristics of B

21、ureaucracy Identified by WeberRules and proceduresEnable activities to be performed in a routine/predictable mannerSpecialization and Division of LabourEach employee has a clear taskHierarchy of AuthorityAllows supervision and controlTechnically qualified personnelHire employees based on expertise,

22、rather than nepotism, etc.Separation of position and incumbentIndividuals did not “own jobWritten communications and recordsProvide organizational memory and continuitySize and Structural ControlFormalizationThe degree to which an organization has rules, procedures, and written documentsTends to be

23、higher in large organizationsCentralizationThe level of hierarchy with authority to make decisionsDecisions tend to me made at the topPersonnel ratiosThe proportions of admin, clerical, and professional support staffNumber of top administrators tend to decrease with size, as economies of scale are r

24、ealizedClerical staff tends to increase as organizations grow in order to deal with greater communication and reporting requirementsProfessional staff tends to increase to meet the need for specialized skillsPercentage of Personnel Allocated to Admin and Support ActivitiesBureaucracy in a Changing W

25、orldAdvantages of BureaucracyProvides an effective way to bring order to large groups of people and prevent abuses of power by establishing a hierarchy of authority and specific rules and proceduresImpersonal relationships based on roles rather than people reduce the favoritism and nepotism characte

26、ristic of many preindustrial organizationsProvides for systematic and rational ways to organize and manage tasks too complex to be understood and handled by few individuals, thus greatly improving the efficincy and effectiveness of large organizationsDisadvantages of BureaucracyCan hinder attempts t

27、o respond to a changing environmentCan cause inefficiencies having to do with intelligence and communicationDelays movement of info“Every time you add a layer of bureaucracy, you delay the movement of info up the chain of commandAnd you dilute the info because at each step some details are taken out

28、Organizing Temporary Systems for Flexibility and InnovationIncident command system (ICS)Developed to maintain the efficiency and control benefits of bureaucracy yet prevent the problems of slow response to crisesThe basic idea is that the organization can glide smoothly between a highly formalized,

29、hierarchical structure that is effective during times of stablitity and a more flexible, loosely structured one needed to respond well to unexpected and demanding environmental conditionsMoves from a bureaucratic structure to a flat structure in times of uncertaintyProfessionalismCreating a standard

30、 of behaviour can act as a substitute for bureaucracyIt is the length of formal training and experience of employeesA form of organization called “professional partnership has emerged that is made completely of professionals, including medical practices, law firms, and consulting firmsOrganizational

31、 Control StrategiesBureaucratic ControlThe use of rules, policies, hierarchy of authority, written documents, standardization, and other bureaucratic mechanisms to standardize behaviour and assess performancePrimary purpose is to control employee behaviourTo make it work, managers must have authorit

32、y to maintain control over the organizationWeber identified 3 types of authority that could explain the creation and control of a large organization:Rational-legal authority: based on employees belief in the legality of rules and the rights of those in authority to issue commandsTraditional authorit

33、y: based on the belief in traditions and the legitimacy of the status of people exercising authority through those traditionsCharismatic authority: based on devotion to the exemplary character or heroism of an individual and the order defined by him or herMarket ControlA situation that occurs when p

34、rice competition is used to evaluate the output and productivity of an organizationThe idea originated in economicsRequires that outputs be sufficiently explicit for a price to be assigned and that competition existMarket control was once used primarily at the level of the entire organization, but i

35、t is increasingly used in product divisionsClan ControlThe use of social characteristics, such as corporate culture, shared values, commitments, traditions, and beliefs, to control behaviourIt is important when ambiguity and uncertainty are highHigh uncertainty means the organization cant put a pric

36、e on its services, and things change so fast that rules and regulations are not able to specify every correct behaviourMany people may be hired because they are committed to the organizations purposeOrganizational Decline and DownsizingDefinition and CausesOrganizational decline is a condition in wh

37、ich a substantial, absolute decrease in an organizations resource base occurs over a period of timeIt is often associated with environmental decline in the sense that an organizational domain experiences either a reduction in size or shape3 factors are considered to cause organizational decline:Orga

38、nizational atrophyOccurs when organizations grow older and become inefficient and overly bureaucratizedOrganizations ability to adapt to its environment deterioratesOften, it follows a long period of success, which it takes advantage of and fails to adapt to the new environmentFor example, Blockbust

39、er had trouble adapting to the new world of video-on-demand and digital downloadingVulnerabilityReflects an organizations strategic inability to prosper in its environmentOften happens to small organizations that arent fully establishedThey are vulnerable to shifts in consumer tastes or in the econo

40、mic health of the larger communityThese companies must redefine their environmental domain to enter new industries or marketsEnvironmental decline or competitionDecline refers to reduced energy and resources available to support an organizationWhen environment has less capacity to support organizati

41、ons, the organization has to either scale down or shift to another domainNew competition increases the problemA Model of Decline StagesBlinded StageThe internal and external change that threatens long-term survival and may require the organization to tighten upThe organization may have excess person

42、nel, cumbersome procedures, or lack of harmony with customersWith timely info, alert execs can bring the organization back to top performanceSolution: develop effective scanning and control systemsInaction StageDenial occurs despite signs of deteriorating performanceLeaders may try to persuade emplo

43、yees that all is wellSolution: leaders must acknowledge decline and take prompt action to realign the organization with the environment through new problem-solving approaches, increasing decision-making participation, and encouraging expression of dissatisfaction to learn what is wrongFaulty Action

44、StageOrganization is facing serious problems, and indicators of poor performance cant be ignoredFailure to adjust to the declining spiral at this point can lead to organizational failureLeaders are forced to consider major changesSolution: retrenchment, including downsizing. Also, reduce employee uncertainty by clarifying values and providing infoCrisis StageOrganization still hasnt been able to deal with decline effectively and is facing a panicOrganization m