The Organizational Age Chapter 20 The Organizational Age

Chapter Outline The Crisis of Growth: Inventing Formal Organizations Weber’s Rational Bureaucracy Rational Versus Natural Systems The Crisis of Diversification Rational and Natural Factors in Decentralization Bureaucracy and the Bottom Line

Characteristics of Formal Organizations Depends on a clear statement of goals. Requires suitable operating principles and procedures for pursuing these goals. Leaders must be selected and trained in the use of these operating principles.

Characteristics of Formal Organizations Clear lines of authority and communication must be established for issuing instructions,transmitting information, and coordinating the activities of different groups. Communications must be written, and written records must be kept and organized.

Weber’s Rational Bureaucracy Features to make bureaucracies rational: Functional specialization. Clear lines of hierarchical authority. Expert training of managers.

Weber’s Rational Bureaucracy Decision making based on rules and tactics developed to guarantee effective pursuit of organizational goals. Appointment and promotion based on merit rather than favoritism. Those appointed treat their positions as full-time, primary careers. Business is conducted primarily through written rules, records, and communications.

Natural System Approach to Organizations The principles of the natural behavior of people and groups apply to the behavior of bureaucratic organizations. Different groups within an organization pursue goals which often have little do with the goals of the larger organization. People often don’t adhere to the formal chain of command and instead create social relations that serve as bases for authority, influence, and communication.

Blau’s Theory of Administrative Growth Two major propositions: As organizations get larger, they must be broken down into units so that their activities can be controlled. As organizations become differentiated, the administrative component increases relative to the size of other components.

Decentralization of Organizations Giving the maximum number of subordinates discretion in running their part of the operation. Two elements: The responsibility for making decisions. The authority to carry them out.

Benefits of Decentralization Places decisions in the hands of those closest to the situation. Limits an organization’s dependence on any given decision maker. There is limited damage from bad choices made by any given person because each makes only a few decisions.