1. Organization Size, Life Cycle, and Control
Dr. Horace Holmes Jr
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2. Objectives Advantages of Large verses Small Size
Examine Historical Need for Bureaucracy
Explore Organization Life-Cycle
Examine Mechanisms for Organizational Control
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3. Is Bigger Better?
Organizations often experience pressures for growth because of:
Organizational Goals: Pushing firm to meet new challenges and become a more complete unit.
Executive Advancement: The larger the organization, the more opportunities to advance.
Economic Health: Associated with growth or through economies of scale that comes with size
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4. Large Versus Small
Many organizations today that are small have a flat organic structure.
As They grow, they shift to a mechanistic structure and fail to reward entrepreneurial approach.
Big company/small hybrid may be a solution.
Large or growing firms can retain flexibility and customer focus by decentralizing and cutting hierarchical layers.
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5. Large Versus Small
Average size of industrial organizations is decreasing in united States, Britain, and Germany
Organization Size and Bureaucracy
Bureaucracy, as envisioned by Max Weber, is a logical, rational form compared to other bases for organizations like status, favoritism, family connections, or feudalism.
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6. Characteristics of Bureaucracy Include:
Rules and procedures.
Specialization and division of labor.
Hierarchy of authority
Technically qualified personnel
Separation of position and incumbent.
Written Communication and records.
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7. Basis of Authority
Rational-Legal: Employee believes organization as legitimacy and superiors have right to issue orders.
Traditional: Belief in sanctity of tradition.
Charismatic: Devotion to exemplary individual and willingness to follow them.
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8. Size and Structural Characteristics
Formalization: Large organizations have greater formalization(I.e., more rules, procedures, and written documents.
Decentralization: As organizations grow larger, decisions cannot be passed to top or senior managers will be overload. Thus larger organizations should have greater decentralization or authority to make decisions more dispersed.
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9. Continued Complexity: Vertical Complexity (number of Levels.
Horizontal Complexity (number of departments or jobs, and
Sometimes greater spatial complexity (more locations) as they grow.
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10. Bureaucracy in a Changing World
As Weber anticipated, bureaucracy met needs of industrial age well.
With today’s rapid environmental changes, machine-like bureaucracy may not work as well.
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11. Organizational Life Cycle
When organizations enter new life cycle, a new set of rules emerge for how organization functions internally and how irt relates to its environment.
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12. Stages Entrepreneurial:
a. Known for creativity with control based on owner’s personal supervision.
b. Followed by crisis from need for leadership.
c. 84% of businesses that get by first year still fail within 5 years because they cannot get by this crisis.
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13. Characteristics Personal and paternalistic control systems.
Innovation by owner manager.
Top goal is survival.
Top[ management style is entrepreneurial.
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14. 2. Collectivity Known for development of clear goals and directions.
Followed by autonomy crisis as managers want more freedom.
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15. Characteristics
Rewards are personal and aimed at those who contribute to organization’s success.
Innovation comes form employees and managers.
Goal is growth.
Top management style is charismatic with direction giving.
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16. 3. Formalization: Known for addition of internal systems.
Followed by crisis of needing to deal with too much red tape.
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17. Characteristics Rewards are imprsonal and ghrough formalized systems.
Innovation by separate innovation groups.
Goals are internal stability and market expansion.
Top Management style is delegation with control.
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18. 4. Elaboration:
Mature organizations known for development of teamwork through task forces and manager teams frequently cutting across company divisions.
Sometimes followed by periods of temporary decline with a crisis of need for revitalization.
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19. Characteristics
Rewards extensive and tailored to product and department.
Innovation by institutionalized R & D.
Goals are for reputation.
Top management style is on team approach with attacks on excessive bureaucracy.
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20. Three Organizational Control Strategies
Type Requirements
Bureaucratic Rules Standards, hierarchy, legitimate, Authority
Market Prices, Competition exchange relationship
Clan Tradition, shared values and belief, trust.
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21. Balanced Scorecard
Is a comprehensive management control system that balances tradition financial measures with operational measures relating to a company’s critical success factors.
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22. Four Major Perspectives
Financial performance.
Customer service
Internal business processes
The organization’s capacity for learning and growth.
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