1. Organization Size, Life Cycle, and Control
Chapter Eight
Organization Size,
Life Cycle, and Control
©2001
South-Western College Publishing
Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e

2. Differences Between Large and Small Organizations
Economies of
scale
Global reach
Vertical hierarchy
Mechanistic
Complex
Stable market
“Organization men”
SMALL
Responsive
Flexible
Regional reach
Flat structure
Organic
Simple
Niche finding
Entrepreneurs
Source: Based on John A. Byrne,
“Is Your Company Too Big?”
Business Week, 27 March 1989,

3. 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):

4. Organization Characteristics During Four Stages of Life Cycle1.
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): ; Robert E. Quinn and Kim Cameron; “Organizational
Life Cycles and Shifting Criteria of Effectiveness,” Management Science 29 (1983):

5. 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

6. 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

7. 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):

8. Management Control Systems Used as Part of Bureaucratic Control
Subsystem
Budget
Statistical reports
Reward systems
Operating procedures
Content and Frequency
Financial, resource expenditures, monthly
Non-financial outputs, weekly or monthly, often computer-based
Annual evaluation of managers based on department goals and performance
Rules and regulations, policies that prescribe correct behavior, continuous
Source: Based on Richard L. Daft and Norman B. Macintosh,
“The Nature and Use of Formal Control Systems for Management
Control and Strategy Implementation,” Journal of Management
10 (1984):

9. Major Perspectives of the Balanced Scorecard
Financial
Do actions contribute to improving financial performance?
Examples of measures: profits,
return on investment
Customers
How well do we serve our customers?
Examples of measures: customer satisfaction, customer loyalty
Internal Business Processes
Does the chain of internal activities and
processes add value for customers and
shareholders?
Examples of measures: order-rate
fulfillment, cost-per-order
Mission
Strategy
Goals
Learning and Growth
Are we learning and changing?
Examples of measures: continuous process improvement, employee retention, new product introductions
Sources: Based on Robert S. Kaplan and David P. Norton, “Using
The Balanced Scorecard as a Strategic Management System,”
Harvard Business Review, January-February 1996, 71-79;
Chee W. Chow, Kamal M. Haddad, and James E. Williamson,
“Applying the Balanced Scorecard to Small Companies,”
Management Accounting 79, No. 2 (August 1997), 21-27; and
Cathy Lazere, “All Together Now,” CFO, February 1998,

10. 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.

11. 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.