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UNIT - 1

Organization Structure

Dimensions of Organization Structure

What makes up the term organization structure Three components as the core dimensions of organizational structure are: Complexity Formalization Centralization

Core Dimension contd.

Formalization : refers to the degree to which jobs within an organization are standardized. Formalization has been defined as the extent to which rules, procedures, instructions and communications are written. Formalization would be measured by determining if the organizations has a policies and procedures manual, assessing the number & specificity of its regulations, reviewing job descriptions to determine the extent of elaborateness and detail, and looking at other similar official documents of the organization.

Formalization contd.
Organizations use formalization because of the benefits that accrue from regulating employees behavior. Standardizing behavior reduces variability. Formalization tends to be inversely related to level in the organization. Most popular techniques : Selection : Organizations do not choose employee at random. Procedure : To ensure standardization of work process. Policies : Provide greater leeway than rules do.

Core Dimension
Centralization : Most problematic of the three components. The term refers to the degree to which decision making is concentrated at a single point in the organization. A high concentration implies high centralization, whereas a low concentration indicates low centralization or what may be called decentralization.

Centralization contd.
Centralization can be described more specifically as the degree to which the formal authority to make discretionary choices is concentrated in an individual, unit, or level, thus permitting employees minimum output into their work. Centralization is concerned only with the formal structure not the informal organization. It looks at decision discretion.

It reduces the probability of information overload, facilitate rapid responses to new information, provides more detailed input into a decision, instills motivation, and represents a potential vehicle for training managers in developing good judgement.On the other hand, centralization adds a comprehensive perspective to decisions and can provide significant efficiencies.

Decentralization contd.
The balance between centralization and decentralization : There are choices about which decisions to decentralize & which to centralize. Choosing decision areas to delegate is frequently regarded as a problem of selecting the proper balance between centralization and decentralization. According to Koontz & ODonnell such a balance is the key to effective decentralization.

Design for Organizational Control

Organizations are made up from subunits; what occurs within subunits is controlled by subunits members. Control over subunits depends on the interrelationships between subunits. These connections may be tight or loose, flexible or fixed, open or closed.

Organizational Design

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

Organizing is a subject of the larger activity of managing. it is the process by which the structure of an organization is created & maintained. The word organization may be used to refer to the process of organizing, the structure that evolves out of this process and the processes/activities that take place within it. All activities involving two or more persons entails the formation of an organization.

Organization Design refers to the process of coordinating the structural elements of an organization in the most appropriate manner.

Classical & Neoclassical Theory

The Quest for the One Best Design Classical organizational theorists (such as Weber, Taylor ) believed that a universally best way to design organizations exists, an approach based on high efficiency. Neoclassical organizational theorists (such as McGregor,Argyris ) their approach emphasizes the need to pay attention to basic human needs to succeed and express oneself.

Classical View Point Contd.

The classical theorists on the whole, with scientific management stream consider the three streams of classical theories briefly i.e. Bureaucracy : The rigid structures, fixed jurisdictions, impersonal rules and mundane routine, often results in delays, produces inertia, encourages buck-passing, leads to wastage of resources, and causes frustration.

The Classical View Point contd.

Administrative Theory : It views organizations as power centered & does not provide underpinning 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.

Neoclassical View Point

The neoclassical theory recognizes the primacy of psychological and social aspect of the worker as an individual and his relations within and among groups and the organization. The Neoclassical viewpoint thus gave birth to human relations movement and provided the thrust toward democratization of organizational power structures & participative management.

The Evolution of Organization Theory

Meaning : The current state of organization theory is the result of an evolutionary process. Theories have been introduced, evaluated and refined over time ; new insights tend to reflect the limitations of earlier theories.

Evolution of Contemporary Organization Theory

Approximate Time Frame System Perspective Ends Perspective Central theme 1900-1930 Closed Rational Mechanical efficiency (Taylor, Fayol ,Max Weber) 1930-1960 Closed Social People & human relations (Elton Mayo, McGregor, Bernard) Type 2 1960-1975 Open Rational Contingency designs (Herbert Simon, Katz & Kahn, Joan W, Charles Perrow) Type 3 1975-? Open Social Power & Politics (March, Simon, Pfeffer) Type 4

Theoretical Type 1 classification

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

1. The early approaches to organization theory in this century conceived of organizations as mechanical devises to achieve goals. Management could design formal relationships, rules, and the like but there were informal patterns of communication, status, norms, and friendships created to meet the social needs of organization members.


Types contd.
3. Argued that properly aligning structure to its contingency variables would facilitate the achievement of the organizations goals. Conversely, implementation of the wrong structure could threaten the organizations survival. Political nature of the organizations. The outcome of the political struggles among coalitions within the organization for control.


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 argued were universally applicable & could be taught in schools and universities.

14 Principles
Division of Work Authority Discipline Unity of command Unity of direction Subordination of individual interest to the general interest 7. Remuneration 1. 2. 3. 4. 5. 6.

14 Principles contd.
8. Centralization 9. Scalar chain 10.Order 11.Equity 12.Stability of tenure of personnel 13.Initiatives 14.Esprit de corps. Promoting team spirit

Frame Work contd.

Type 1 theorists contd. Max Weber & Bureaucracy : A German sociologist, proposed ideal type organizational structure. Ralph Davis : Introduced Rational Planning Perspective. It offered a simple & straightforward model for designing an organization.

Max Webers Theory of Bureaucracy(1929)

Theory of authority structures Ideal type of organization Negative Connotation Prototype for all organizations today. Complex organizations.

Max Webers Theory of Bureaucracy(1929)

1) 2) 3) 4) 5) 6) 7) FEATURES: Division of Labour Authority Hierarchy Formal Selection Formal Rules & Regulations Impersonality Career Orientation Centralization of Authority

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 organizations 7) Bureaucratic Rules 8) Cannot assimilate influx of new techniques NO REAL WORLD ORGANIZATION EXACTLY FOLLOWS THE WEBER MODEL.

Frame Work contd.

Type 2 theorists Elton Mayo : Hqwthorne Studies Chester Bernard : Introduced the notion of Cooperative System. Douglas McGregor :Two distinct views of human beings : one basically negative Theory X and other positive Theory Y. Warren Bennis and the Death of Bureaucracy

Frame Work contd.

Type 3 theorists Herbert Simon : He argued that organization theory needed to go beyond superficial& oversimplified principles to a more open, rational & contingent design. Katz and Kahn : Have investigated the environmental structure relationship. Joan Woodward, Charles Perrow & James Thompson have made an impressive case for the importance of technology in determining the appropriate structure for an organization. It also include those who advocate organization size as an important factor influencing structure.

Frame Work contd.

Type 4 theorists March & Simon : Cognitive Limits to Rationality. Pfeffers Organizations : As Political Arenas

Millers Integrative Framework

Strategic Dimension Challenge Predicted Structural Characteristics Scanning of markets to discern customer To understand & manage more products, requirements; low formalization; decentrcustomer types, techno- alisation; extensive use of coordinate committees & task force logies & markets To understand & cater to consumer preferences Moderate to high complexity; extensive scanning & analysis of customer reaction &competitors strategies; moderate to high formalization & moderate decentralization High complexity; low formalization ; decentralization


Market Differentiation

To select the right Breadth Innovation range of products, services, customers & territory Breadth Stability Cost Control

High complexity; high formalization ; high centralization To produce standardized High formalization ;high centralization products efficiently

Factors Affecting Organizational Design

Although many things can affect the choice of an appropriate structure for an organization, the following five factors are the most common: size, life cycle, strategy, environment, and technology.

Organizational size The larger an organization becomes, the more complicated its structure. When an organization is small such as a single retail store, a two-person consulting firm, or a restaurant its structure can be simple. In reality, if the organization is very small, it may not even have a formal structure. Instead of following an organizational chart or specified job functions, individuals simply perform tasks based on their likes, dislikes, ability, and/or need. Rules and guidelines are not prevalent and may exist only to provide the parameters within which organizational members can make decisions. Small organizations are very often organic systems.

As an organization grows, however, it becomes increasingly difficult to manage without more formal work assignments and some delegation of authority. Therefore, large organizations develop formal structures. Tasks are highly specialized, and detailed rules and guidelines dictate work procedures. Interorganizational communication flows primarily from superior to subordinate, and hierarchical relationships serve as the foundation for authority, responsibility, and control. The type of structure that develops will be one that provides the organization with the ability to operate effectively. That's one reason larger organizations are often mechanisticmechanistic systems are usually designed to maximize specialization and improve efficiency.

Organization life cycle Organizations, like humans, tend to progress through stages known as a life cycle. Like humans, most organizations go through the following four stages: birth, youth, midlife, and maturity. Each stage has characteristics that have implications for the structure of the firm. Birth: In the birth state, a firm is just beginning. An organization in the birth stage does not yet have a formal structure. In a young organization, there is not much delegation of authority. The founder usually calls the shots. Youth: In this phase, the organization is trying to grow. The emphasis in this stage is on becoming larger. The company shifts its attention from the wishes of the founder to the wishes of the customer. The organization becomes more organic in structure during this phase. It is during this phase that the formal structure is designed, and some delegation of authority occurs. Midlife: This phase occurs when the organization has achieved a high level of success. An organization in midlife is larger, with a more complex and increasingly formal structure. More levels appear in the chain of command, and the founder may have difficulty remaining in control. As the organization becomes older, it may also become more mechanistic in structure. Maturity: Once a firm has reached the maturity phase, it tends to become less innovative, less interested in expanding, and more interested in maintaining itself in a stable, secure environment. The emphasis is on improving efficiency and profitability. However, in an attempt to improve efficiency and profitability, the firm often tends to become less innovative. Stale products result in sales declines and reduced profitability. Organizations in this stage are slowly dying. However, maturity is not an inevitable stage. Firms experiencing the decline of maturity may institute the changes necessary to revitalize. Although an organization may proceed sequentially through all four stages, it does not have to. An organization may skip a phase, or it may cycle back to an earlier phase. An organization may even try to change its position in the life cycle by changing its structure.As the life-cycle concept implies, a relationship exists between an organization's size and age. As organizations age, they tend to get larger; thus, the structural changes a firm experiences as it gets larger and the changes it experiences as it progresses through the life cycle are parallel. Therefore, the older the organization and the larger the organization, the greater its need for more structure, more specialization of tasks, and more rules. As a result, the older and larger the organization becomes, the greater the likelihood that it will move from an organic structure to a mechanistic structure.

Strategy How an organization is going to position itself in the market in terms of its product is considered its strategy. A company may decide to be always the first on the market with the newest and best product (differentiation strategy), or it may decide that it will produce a product already on the market more efficiently and more cost effectively (cost-leadership strategy). Each of these strategies requires a structure that helps the organization reach its objectives. In other words, the structure must fit the strategy. Companies that want to be the first on the market with the newest and best product probably are organic, because organic structures permit organizations to respond quickly to changes. Companies that elect to produce the same products more efficiently and effectively will probably be mechanistic.

Environment The environment is the world in which the organization operates, and includes conditions that influence the organization such as economic, social-cultural, legal-political, technological, and natural environment conditions. Environments are often described as either stable or dynamic. In a stable environment, the customers' desires are well understood and probably will remain consistent for a relatively long time. Examples of organizations that face relatively stable environments include manufacturers of staple items such as detergent, cleaning supplies, and paper products. In a dynamic environment, the customers' desires are continuously changingthe opposite of a stable environment. This condition is often thought of as turbulent. In addition, the technology that a company uses while in this environment may need to be continuously improved and updated. An example of an industry functioning in a dynamic environment is electronics. Technology changes create competitive pressures for all electronics industries, because as technology changes, so do the desires of consumers. In general, organizations that operate in stable external environments find mechanistic structures to be advantageous. This system provides a level of efficiency that enhances the long-term performances of organizations that enjoy relatively stable operating environments. In contrast, organizations that operate in volatile and frequently changing environments are more likely to find that an organic structure provides the greatest benefits. This structure allows the organization to respond to environment change more proactively.

Technology Advances in technology are the most frequent cause of change in organizations since they generally result in greater efficiency and lower costs for the firm. Technology is the way tasks are accomplished using tools, equipment, techniques, and human know-how. In the early 1960s, Joan Woodward found that the right combination of structure and technology were critical to organizational success. She conducted a study of technology and structure in more than 100 English manufacturing firms, which she classified into three categories of core-manufacturing technology: Small-batch production is used to manufacture a variety of custom, made-to-order goods. Each item is made somewhat differently to meet a customer's specifications. A print shop is an example of a business that uses small-batch production. Mass production is used to create a large number of uniform goods in an assembly-line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion. Equipment may be sophisticated, and workers often follow detailed instructions while performing simplified jobs. A company that bottles soda pop is an example of an organization that utilizes mass production. Organizations using continuous-process production create goods by continuously feeding raw materials, such as liquid, solids, and gases, through a highly automated system. Such systems are equipment intensive, but can often be operated by a relatively small labour force. Classic examples are automated chemical plants and oil refineries.

Organizational Culture

Organizational Culture
Definition: A common perception held by the Organizations members; a system of shared meaning. The essence of culture: Innovation & risk taking Attention to detail Outcome Orientation People orientation Team orientation Aggressiveness Stability

1. 2. 3. 4. 5. 6. 7.

Organizational Resistance To Change

Structural inertia Limited Focus Group Inertia Threat to Expertise Threat to Established Power relationships Threat to established resource allocations

Overcoming Resistance To Change

Education & communication Participation Facilitation & support Negotiation Manipulation & co-operation Coercion Three Step Process to Change

Unfreezing to Movement to Refreezing




The culture-specific approach gives definite information about individual cultures. Culture-general believes that one should first have an understanding and awareness of cultural issues before specific information is given. This is to reduce the chance of stereotyping.

Cultural Jeopardy

Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

The ability to be open to learning about and accepting of different cultural groups.

Cultural Sensitivity

Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

A belief that racial differences produce an inherent superiority of a particular race. Racism

Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

A generalization of characteristics that is applied to all members of a cultural group. Stereotype

Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

A subconscious belief in negative stereotypes about ones group that results in an attempt to fulfill those stereotypes and a projection of those stereotypes onto other members of that group.

Internalized oppression

Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

A belief in the inherent superiority of one pattern of loving over all and thereby the right to dominance.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

To make a difference in treatment on a basis other than individual character.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

The recognition and acknowledgement that society is pluralistic. In addition to the dominant cultural, there exists many other cultures based around ethnicity, sexual orientation, geography, religion, gender, and class.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

An attitude, opinion, or feeling formed without adequate prior knowledge, thought, or reason.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

The belief in the inherent superiority of one sex (gender) over the other and thereby the right to dominance.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

A body of learned beliefs, traditions, principles, and guides for behavior that are shared among members of a particular group.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

To judge other cultures by the standards of ones own, and beyond that, to see ones own standards as the true universal and the other culture in a negative way.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

As a biological concept, it defines groups of people based on a set of genetically transmitted characteristics.


Prejudice Ethnocentrism Stereotype Sexism Multiculturalism Cultural Sensitivity Ethnicity Racism Race Internalized Oppression Discrimination Heterosexism Culture

Sharing a strong sense of identity with a particular religious, racial, or national group.


Primary & Secondary Dimensions of Diversity

Primary dimensions are aspects of ourselves that we cannot change. They are things people know about us before we even open our mouths, because they are physically visible (except sexual orientation). When people feel they are being stereotyped based on primary dimension, they can be very sensitive about it. Secondary dimensions are elements we have some power to change. People are less sensitive about secondary dimensions. We also have the choice of whether to disclose this information or not; we can conceal these characteristics.

Primary & Secondary Dimensions of Diversity

Work Background Income Geographic Location

Sexual Orientation Race Gender Physical Qualities

Parental Status

Ethnicity Age Marital Status Military Experience


Religious Beliefs
Loden and Rosener

Communicating Across Cultural Lines

Communication is one of the most basic means of getting your idea across, but when it comes down to communicating with someone outside your comfort zone things can become a little unnerving. We have some suggestions that may alleviate those apprehensions.

Leads to

Cultural Competency

Individuals Path to Cultural Competency

Learning is like a journey, in that, it is a path that we follow to enlightenment. A model developed by David Hoopes, gives us a model to cultural competency. His outline illustrates the development of cultural competency in every one of us. Competency implies having the capacity to function effectively. It will be interesting to see where, we as individual, fit into this continuum.


Multiculturation Selective Adoption Appreciation/Valuing Acceptance/Respect Understanding Awareness Ethnocentricity

Individuals Path to Cultural Competency

Ethnocentricity This is a state of relying on our own, and only our own, paradigms based on our cultural heritage. We view the world through narrow filters, and we will only accept information that fits our paradigms. We resist and/or discard others. Awareness This is the point at which we begin to realize that there are things that exist which fall outside the realm of our cultural paradigms. Understanding- This is the point at which we are not only aware that there are things that fall outside our cultural paradigms, but we see the reason for their existence.

Individuals Path to Cultural Competency

Acceptance/Respect - This is when we begin allowing those from other cultures to just be who they are, and that it is OKAY for things to not always fit into our paradigms. Appreciation/Value- This is the point where we begin seeing the worth in the things that fall outside our own cultural paradigms. Selective Adoption - This is the point at which, we begin using things that were initially outside our own cultural paradigms. Multiculturation- This is when we have begun integrating our lives with our experiences from a variety of cultural experiences.

Continuum of Cultural Competency in the Workplace

Even though, we may be culturally sensitive, our work environment may not be at the same level. This can be attributed to the numerous people employed and the different ideologies they possess. As you review this continuum, one can see how these steps parallel those in the Individuals path to Cultural Competency.

Continuum of Cultural Competency

Cultural Competence Cultural PreCompetence Cultural Blindness Cultural Incapacity

Cultural Proficiency

Cultural Destructiveness


Continuum of Cultural Competency

Cultural Destructiveness is the most negative. It is the attitudes, policies, and practices that are destructive to cultures and the individuals within these cultures. A system that adheres to a destructive extreme assumes that one race or culture is superior and eradicates lesser cultures because of their perceived subhuman condition. Bigotry coupled with vast power allows the dominant group to disenfranchise, control, exploit, or systemically destroys the less powerful population.

Cultural Incapacity occurs when agencies do not intentionally seek to be culturally destructive, but rather have no capacity to help people from other cultures. This system remains extremely biased, and believes in the superiority of the dominant group. It assumes a paternal posture towards lesser groups.

Continuum of Cultural Competency

Cultural Blindness is characterized by a well intended philosophy; however, the consequence of such a belief can often camouflage the reality of ethnocentrism. This system suffers from a deficit of information and often lack the avenues through which they can obtain needed information. While these agencies often view themselves as unbiased and responsive to the needs of minority people, their ability to effectively work with a diverse population maybe severely limited.

Cultural Pre-competence implies movement towards reaching out to other cultures. The pre-competent agency realizes its weaknesses in working with people of other cultures and attempts to improve that relationship with a specific population.

Continuum of Cultural Competency

Cultural Competence is characterized by acceptance of and respect for differences, continuing self assessment regarding culture, careful attention to the dynamics of differences, and continuous expansion of cultural knowledge and resources.

Cultural Proficiency is the culmination point on the continuum is characterized by holding culture in high esteem. These agencies actively seek to hire a diverse workforce.