Organization Size, Life Cycle, and Decline Chapter Nine Organization Size, Life Cycle, and Decline Thomson Learning © 2004

Differences Between Large and Small Organizations Economies of scale Global reach Vertical hierarchy Mechanistic Complex Stable market Career longevity and stability SMALL Responsive Flexible Regional reach Flat structure Organic Simple Niche finding Entrepreneurs Thomson Learning © 2004 Source: Based on John A. Byrne, “Is Your Company Too Big?” Business Week, 27 March 1989, 84-94.

Organizational Life Cycle Streamlining, small-company thinking Large Development of teamwork Continued maturity S I Z E Addition of internal systems Decline Crisis: Need for revitalization Provision of clear direction Crisis: Need to deal with too much red tape Creativity Crisis: Need for delegation with control Crisis: Need for leadership 1. Entrepreneurial Stage 2. Collectivity Stage 3. Formalization Stage 4. Elaboration Stage Small ORGANIZATION STAGES OF DEVELOPMENT Sources: Adapted from Robert E. Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33-51; and Larry E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review 50 (July-August 1972): 37-46. Thomson Learning © 2004

Organization Characteristics During Four Stages of Life Cycle 1. Entrepreneurial 2. Collectivity 3. Formalization 4. Elaboration Characteristic Nonbureaucratic Prebureaucratic Bureaucratic Very Bureaucratic Structure Informal, one-person show Mostly informal, some procedures Formal procedures, division of labor, specialties added Teamwork within bureaucracy, small-company thinking Products or services Single product or service Major product or service with variations Line of products or services Multiple product or services lines Reward and control systems Personal, paternalistic Personal, contribution to success Impersonal, formalized systems Extensive, tailored to product and department Innovation By owner-manager By employees and managers By separate innovation group By institutionalized R&D Goal Survival Growth Internal stability, market expansion Reputation, complete organization Top Management Style Individualistic, entrepreneurial Charismatic, direction-giving Delegation with control Team approach, attack bureaucracy Sources: Adapted from Larry E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review 50 (July-August 1972): 37-46; G. L. Lippitt and W. H. Schmidt, “Crises in a Developing Organization,” Harvard Business Review 45 (November-December 1967): 102-12; B. R. Scott, “The Industrial State: Old Myths and New Realities,” Harvard Business Review 51 (March-April 1973): 133-48; Robert E. Quinn and Kim Cameron; “Organizational Life Cycles and Shifting Criteria of Effectiveness,” Management Science 29 (1983): 33-51. Thomson Learning © 2004

Weber’s Dimensions of Bureaucracy and Bases of Organizational Authority 1. Rules and procedures Specialization and division of labor Hierarchy of authority Technically qualified personnel Separate position and incumbent Written communications and records LEGITIMATE BASES OF AUTHORITY Rational-legal Traditional Charismatic Thomson Learning © 2004

Percentage of Personnel Allocated to Administrative and Support Activities Line employees 75 Percentage of Employees Top administrators 50 Professional staff 25 Clerical Small Large Organization Size Thomson Learning © 2004

Three Organizational Control Strategies TYPE Bureaucratic Market Clan REQUIREMENTS Rules, standards, hierarchy, legitimate authority Prices, competition, exchange relationship Tradition, shared values and beliefs, trust Source: Based upon William G. Ouchi, “A Conceptual Framework for the Design of Organizational Control Mechanisms,” Management Science 25 (1979): 833-48. Thomson Learning © 2004

Evaluation of Control On the Job Workbook Activity Evaluation of Control On the Job Your job responsibilities How your boss controls Positives of this control Negatives of this control How you would improve control 1. 2. 3. 4. Thomson Learning © 2004

Evaluation of Control At the University Workbook Activity Evaluation of Control At the University How Prof. A (small class) controls How Prof. B (large class) controls How these controls influence you What you think is a better control Item 1. 2. 3. 4. Thomson Learning © 2004