Economics and Organsations Week 6 Mintzberg’s Contingency Approach – Structural Configurations

5 Basic ‘Pulls’ within an Organisation See H6b Fig IV-1

5 Basic ‘Pulls’ within an Organisation Strategic Apex - Centralise Operating Core - Professionalise Middle Line - Balkanise (divide and rule) Technostructure - Standardise Support Staff - Collaborate

Structural Configurations Combinations of the ‘building blocks’ to form the actual structural forms organisations 5 structural forms Each structural form has: A dominant part of the organisation A key coordinating mechanism One of the 5 basic pulls is dominant Each structure is a logical configuration Not all organisations fit exactly into one of the 5 There is a strong ‘systems’ approach

The Simple Structure Diagrams on H7

Simple Structure Prime coordinating mechanism Key Part Main Design Parameters Contingency factors Direct supervision Strategic Apex Centralisation, organic structure Young, small, non-sophisticated technical system Simple dynamic environment Possibly extreme hostility Not fashionable

Features of simple structure Risky - depends on single person Strong sense of mission/purpose Can be seen as restrictive, undemocratic

Machine Bureaucracy

Machine Bureaucracy Prime coordinating mechanism Key Part Main Design Parameters Contingency factors Standardisation of processes Technostructure Behaviour formalisation, job specialisation, functional grouping,large units Old, large, regulating non-automated technical system, simple stable environment external control not fashionable

Features of Machine Bureaucracy Obsession with control Highly efficient for repetitive tasks in conditions of certainty Serious ‘people problems’ – nature of work – conflict between engineering efficiency and individual satisfaction Does not react well to change – may need to revert to simple structure to accomplish major change

Professional Bureaucracy

Professional Bureaucracy Prime coordinating mechanism Key Part Main Design Parameters Contingency factors Standardisation of skills Operating Core Training, Horizontal job specialisation, decentralisation Complex, stable environment Non-regulating, non-sophisticated technical system Fashionable

Features of Professional Bureaucracy Frequently seen as a repertoire of standard programmes, resulting in ‘pigeon-holing’ High levels of decentralisation, little control of output or processes, SO recruitment is vital Large expenditure on training and development Democratic and gives staff autonomy and empowerment Not good at innovation

Divisionalised Structure

Divisionalised Structure Prime coordinating mechanism Key Part Main Design Parameters Contingency factors Standardisation of outputs Middle line Market grouping, Performance control, limited vert. Decentralisation Diversified markets (products), old and large, high power needs of middle-managers, fashionable

Structure of Divisionalised firm

Development of divisionalised firm Integrated form By-product form Related product form Conglomerate form

Features of Divisionalised Structure Divisions as ‘quasi-autonomous units’ Each division can take an appropriate structural form – most common id machine bureaucracy Contrast divisionalised with decentralised Sharp distinction between HQ and divisional staff – Strategy and Operations Divisionalised structure solves many of the problems of the large machine bureaucracy Divisions can be seen as portfolio of operations, or an integrated set of units

The Adhocracy

Prime coordinating mechanism Key Part Main Design Parameters Contingency factors Mutual adjustment Support staff (operating core in Operating adhocracy) Liaison devices, organic structure,selective decentralisation, horizontal job specialisation, market and function together Complex, dynamic environment, often young, sophisticated operating system - automated

Two types of Adhocracy OPERATING ADHOCRACY – Innovates and solves problems directly on behalf of its clients. Admin work and operating work are blended together e.g. consultancy firm, advertising agency ADMINISTRATIVE ADHOCRACY Undertakes projects to serve itself, so it has its own operating core e.g. Research department, Hi-tech companies

Features of Adhocracy Strategy formation is widespread Semi-independent and ever-changing work constellations Youth is a condition of adhocracy – so is there a limit to size? Ad has more democracy and less bureaucracy There will be ambiguity, interdependence, ever-changing relations, few procedures, demanding personal relationships Poor at routine tasks – inefficient – mutual adj

Concluding pentagon Configurations as a set of pulls on any organisation Configurations as ‘pure types’ Configurations as basis for structural hybrids Configurations as basis for structural transition

Mintzberg’s Concluding Pentagon

Some important Hybrids Professional Adhocracy – reaction to growth and age in adhocracy – this may undermine its strongest feature, innovation Administrative Bureaucracy may even move toward machine bureaucracy to cope with routine – and isolate creative sections from routine – e.g. University Research Centre White collar machine bureaucracy – has elements of professional bureaucracy

Beyond Five! A sixth configuration Mission Configuration Prime coordinating mechanism – Socialisation or Standardisation of Norms Key Part – Ideology or organisation culture Main Design Parameters - indoctrination

Strengths of Contingency Approach Highlights interrelation of organisation, environment, and technology Management can improve organisation effectiveness by understanding these relationships and designing appropriate structure Gives a useful typology of specie or types of organisation Stresses value of organic forms in innovation Modern ecological view stresses inter-organisational relations

Weaknesses of Contingency Approach Unrealistic and oversimplified model of managerial activity Causal link between contingency factors and structure not proven – correlation exists but is causal? Causality may reverse – large org and environment Plays down importance of power and choice – very deterministic Simplified versions put too much emphasis on environment Weak at dealing with multiple contingency factors

Few tests have taken links as far as effectiveness Lack of precision in defining variables The concept of ‘an organisation’ is too concrete – reflects its functionalist paradigm High emphasis on functional interdependence – but organisations demonstrate schism and conflict Theory originally intended as positive, but frequently used as normative – ‘one best way’ for a specific organisation?

Comments on Case Study Approach Usually involve insights from more than one theory Require thought, insight and lateral thinking No simple ‘correct’ answer – assumptions Require more thought and less writing Theory to be used not repeated Usually improved answers if discussed with other(s) before writing

The Symphony case – real company but disguised SRI Develops new seeds and initial basic seed Largest UK see breeder 95% of income from royalties from SSS 10 years to bring new seed to market – Bio-technology has reduced this

SSS Produces mass quantities of seed – who, how? Selling company Three broad ranges of seeds – cereals, forage crops and potatoes 30+ full-time salesmen – plus large back-up staff Uses agricultural merchants as distributors