Foundations of organization design

1. Foundations of organization design Coordination, organizational parts and configurations orgNET, Research in Sociology, 2011

2. Feeding Mintzberg’s Structure in Five with background info Perhaps, 2 of the most influential approaches in the Sociology of Organizations (citation criteria) Henry Mintzberg (1993) Structure in Five. Designing Effective Organizations Richard W. Scott (1998) Organizations. Rational, Natural and Open Systems Brings forth a pattern of internally analyzing organizations Orders the main directions of accumulating knowledge in the area of sociology of organizations orgNET, Research in Sociology, 2011

3. Scott’s way of understanding the evolution of theories 2 criteria of classifying organizations • The relation between organizations and their external environment • Organizations functioning as systems Applying the 2 criteria generates the following classification of organizations: orgNET, Research in Sociology, 2011

4. Assuming that organizations operate as machines Theories assuming organizations as rational and closed systems (1900 -1930) the machine metaphor (see Modern Times, C. Chaplin) • Taylor seeking the perfect standardization of work processes and workers’ skills • Fayol describing theprinciples of direct supervision (e.g. unity of command, scalar chain, span of control) • Weber highlighting the importance of formal structure (produced by formal rules and procedures) orgNET, Research in Sociology, 2011

5. Assuming that organizations operate as social collectivities Theories assuming organizations as natural and closed systems (1930-1960) Hawthorne experiment (George Elton Mayo and Fritz Roethlisberger): social relations do matter and people are not motivated only by economic incentives McGregor’s X and Y theories: management is grounded in 2 different philosophies Bernard’s theory of cooperation within organizations: organizations are cooperative systems orgNET, Research in Sociology, 2011

6. Discovering the external environment Theories assuming organizations as rational and open systems (1960 – 1970) Contingency theories – a class of behavioral theories that claims that there is no best way to design an organization, lead a company, take decisions Organizational adapting is determined by 2 factors: its internal characteristics and the conditions of its external environment orgNET, Research in Sociology, 2011

7. Assuming that organizations operate as living organisms Theories assuming organizations as natural and open systems the living organism metaphor (akin to Aristotel’s organicist theory) Pfeffer and Salancick – the resource dependence theory [organizations can adapt to survive] Hannan and Freeman – populations of organizations, competing for resources [the environment selects the organizations that must survive, based on how their internal structure fits the external conditions] orgNET, Research in Sociology, 2011

8. Shifting to Mintzberg’s approach There are 5 basic means of achieving (mechanisms of) coordination Mutual adjustment (informal communication/adaptation among workers) Direct supervision (one brain coordinates several hands: one takes responsibility for the work of others) Standardization (of work processes, of outputs, and of skills): on the drawing board before work actually starts orgNET, Research in Sociology, 2011

9. Which is the proper mechanism of coordination? Factors determining the proper mechanism The problem of brains: the number of group members [n(G)] Mutual adjustment or direct supervision The problem of work: the complexity of work [c(W)] Standardization of work processes, or standardization of outputs/skills, or mutual adjustments orgNET, Research in Sociology, 2011

10. The structure of organization The division of labor in several work tasks & the mechanisms of coordination generate the structure of organization (i.e. this defines the interrelation among different parts: formal & informal) Is there one best way to design the structure? Yes: the approach assuming organizations as rational and closed systems No: the approach assuming organizations as rational and open systems How should the structure be designed? Formal rules & rigid flow of authority (Weber or Fayol) Depends on the internal and external conditions of the organization (Mintzberg) orgNET, Research in Sociology, 2011

11. Forms of division of labor 1st form: The division of labor in work tasks performed by the operating core 2nd form: The division of labor in administrative work & basic work – the administration of work is performed by managers 3rd form: The division of labor into those who supervise the basic work (i.e. managers) & those who standardize the basic work (the analysts of the technostructure) 4th form: The division of labor into those standardize the basic work and those who support the different levels of the organization (the support staff) The operating core, the strategic apex and the middle line managers are placed in the flow of authority The technostructure and the suport staff are off the flow of authority orgNET, Research in Sociology, 2011

12. The 5 parts of an organizational structure The operating core: comprises people who perform the basic work/produce the basic products and services Functions: • Secure the inputs for production • Transform the inputs into outputs • Distribute the outputs • Provide direct support (e.g. maintenance, inventorying etc.) orgNET, Research in Sociology, 2011

13. The 5 parts of an organizational structure The strategic apex: the managers placed at the top of the flow of formal authority (i.e. managers of manager or manager who directly supervises) Major duties: • Direct supervision (e.g. allocate resources, issue work orders, authorize decisions, resolve conflicts etc.) • The management of the organization’s boundary conditions (e.g. development of high level contacts and tapping these for information or resource access) • The development of the organization’s strategy (streams of decisions for responding to the pressures of the external environment & for tailoring the strength points) orgNET, Research in Sociology, 2011

14. The 5 parts of an organizational structure The middle line managers: the chain of middle line managers joints the strategic apex to the operating core Tasks performed: • Collects feedback info of the performance of his/her unit & and passes some of it to the managers above; • Intervenes in the flow of decision (makes suggestions for change) • Allocate resources to and designs the strategy for his/her unit • Elaborate rules and plans • Direct supervision • Manage boundary condition at his/her level orgNET, Research in Sociology, 2011

15. The 5 parts of an organizational structure The techostructure: encompasses the analysts that design, plan and change the operating work flow; make the work of others more efficient (via working on standardization schemes) The support staff: encompasses all the units that support the organization, being placed outside the flow of formal authority orgNET, Research in Sociology, 2011

16. Organizational configurations It follA mixture of situational factors (objective realities – size, age, type of environment etc.) and subjective choices made by the strategic apex It follows that, analyzing the division of labor, the mechanisms of coordination and the organizational parts, we can bring about: Simple structure (based on direct supervision & with the strategic apex as a key part) Machine Bureaucracy (based on standardization of work processes & with the technostructure as a key part) Professional Bureaucracy (based on standardization of skills & with the operating core as a key part) Divisionalized Form (based on standardization of outputs & with the middle line as a key part) Adhocracy (based on mutual adjustments & with the support staff /operating core as a key part) orgNET, Research in Sociology, 2011

17. Final remarks When studying internal organizational networks, we assume organizations operating as natural systems When studying external organizational networks, we assume organizations operating as open systems Based on Mintzberg’s key findings, we must have in mind, when studying internal /external organizational networks: • Formal and informal relations (see the means of achieving coordination) • Each organizational part builds external relations with the environment in the process of managing the organization’s boundaries The capacity of building organizational networks is determined by: (1) the conditions of the environment & (2) the organizational configuration orgNET, Research in Sociology, 2011

18. Glossary Middle management – include all members that are not in the strategic apex or operating core (i.e. middle line managers: managers in the flow of formal authority) Staff vs. line – staff positions advise line positions in taking decisions (i.e. the technostructure), whereas line positions have the formal authority to take decisions orgNET, Research in Sociology, 2011