Organic

Report
INTRODUCTION TO THE
THEORY OF ORGANIZATIONS
Alberto Veira Ramos
[email protected]
INTRODUCTION
TYPES OF ORGANIZATIONS: ETZIONI
CLASSICAL THEORIES
CONFLICT AND POWER THEORIES
HUMAN RELATION THEORIES
ORGANIZATIONAL ANALYSIS
COMPLEXITY
FORMALIZATION
CENTRALIZATION
ORGANIZATIONAL GOALS AND EFFECTIVENESS
ORGANIZATIONAL SIZE
ORGANIZATIONAL TECHNOLOGY
THE ENVIRONMENT
ORGANIZATIONAL CULTURE
LEADERSHIP AND GOVERNANCE
INTRODUCTION
 Modernization and development of secondary
groups (organizations)
 Different types of Organizations
 Typology according to Amitai Etzioni


Type of control
Type of conduct
CLASSICAL THEORIES
 Frederick Taylor
 Scientific Management
 Henri Fayol
 Administrative Theory
 Max Weber
 Theory of Bureaucracy:
 Luther Gulick & Lindall Urwick
 “Papers on the Science of Administration”
 Others
HENRI FAYOL
 French mine engineer (1841-1925)

“L´administration industrielle et générale” (1916)
 Focused on the administrative aspects of the
organizational structure
 Identified two basic managerial functions:


Coordination
Specialization
 Need of “Formalization” and “Rationalization”
 His ideas inspired the creation of an academic journal
devoted to study the functioning of organizations:
“Papers on the Science of Administration”, edited by
Gulick and Urwik in 1937
 His ideas were applied in 1949 by Mooney and Reyley,
two top executives from GM
HENRI FAYOL
 Coordination

The division of labor & specialization


Chain of command


Never more than one supervisor per subordinate
Hierarchical structure


Organize departments (according to specialization principles)
Pyramidal
Authority & Responsibility
Never more subordinates than those that can be supervised efficiently
 It determines the number of levels of hierarchy an organization should
have (according to Fayol the limit is somewhat between 5 and 10)
 Delegation of authority is a necessity


Exceptionality:
Routine tasks to the less skilled
 Complex tasks to the more skilled

HENRI FAYOL
 Specialization
 Individuals performing similar tasks must be grouped into one
“Department”
 Identifies two main functions:
Executive functions: directly oriented to accomplish the main
goals of the organization
 Support or Staff functions: oriented to provide support to the
former (e.g.: legal counseling)

HENRI FAYOL
 Executive functions:
 Forecast & Plan: set the strategic goals
 Organize: assemble the necessary means to accomplish the
goals and assign specific tasks to personnel: design the
“Organigramme”
 Command & direct: lead the personnel, it requires
extraordinary interpersonal skills
 Coordinate: harmonize activities of different departments
(avoid “animosity” that may derive from written
communication)
 Control: monitoring, measuring performance, set corrective
actions
HENRI FAYOL
 Formalization and Rationalization
 Must be designed and promoted from the top of the
organizational pyramid (not at workshop level as in Taylor)
 Distinguish clearly between “positions” within the hierarchy
and the individuals (persons) who occupy those positions
 Provide managers with clear procedures and protocols to avoid
the “Human Factor”
 Common interest must be place above individual interest
 Fayol perceived the need for involving and motivating the
worker by
Creating an adequate atmosphere at the workplace
 Treatment based on equity (job guarantee)
 “Esprit de corps” (team spirit)

HENRI FAYOL
 Fayol established 7 qualities a leader should have:
 Good health and physical “vigeur”
 Intelligence
 Moral qualities
Perseverance
 Courage (to accept responsibilities)
 Committed to duty and to the general interest





Educated and cultivated
Expertise on the professional domain
Knowledge on management
“Art de manier les hommes” Art on the way to handle men
HENRI FAYOL
 Tasks attributed to top managers
 Set the strategic plan (along with owners of the firma)
 Design the organizational structure (Organigramme)
 Hire competent advisors and collaborators,
 defining their salaries and career prospects according to their
competence
 Define the rules regulating the way personnel must behave
 Define the communication channels
 Meet regularly with advisors and collaborators (and listen to
their suggestions)
 Read the reports and react in consequence
 Monitor the budgets
 Report to the owners the state of the business
HENRI FAYOL
 Tasks attributed to intermediate (middle-rank)
managers








Set the plan to accomplish the strategic goals established by
the top managers in the shortest possible period of time
Attend the meetings organized by the top managers
Coordinate with other colleagues (meetings)
Define the structure of the department (identifying the
different functions)
Manage the personnel of the department (recruitment,
salaries, lay-offs)
Have initiatives and keep the top managers well informed
Increase their expertise by education and training
Control the costs
HENRI FAYOL
 Tasks attributed to operators
 Execution of orders received
 Identifying and signaling any difficulty for the correct
execution of the order
 Report how orders have been executed
 Coordinate with other operators
MAX WEBER
 German Lawyer, Economist and Sociologist (1864-1920)
 Broader perspective than merely Administrative Theory
 Considered the founding father of the sociology of
organizations due to his studies on bureaucracy and the
importance of rationalization in industrial societies
 Interested on the analysis of the administrative systems
generated historically by different cultures or societies
 Believed that historically cultural factors (values &
beliefs) and not only economic factors had influenced the
configuration of administrative (bureaucratic systems),
particularly under the capitalist regime
MAX WEBER
 Interested on identifying the distinctive features of
administrative organization under capitalism

Not the result of class struggle (something constant over
history and not a peculiarity of Capitalist societies)
 Focused on the study of the growing rationalization
process taking place in all domains and at all levels
of social life in industrial societies (in capitalist as
well as in socialist ones)
 Typology of systems of authority and domination:



Charismatic
Traditional
Legal & Rational
MAX WEBER
 Charismatic authority



Source of authority is a charismatic leader
Followers attribute the leader superior moral qualities (usually in
exceptional critical times)
Administrative system is unstable: depends on the wishes and
appetites of the leader. Once the leader dies or disappears transition
problems may arise
 Traditional authority




Source of authority is the tradition
Administrative positions are patrimonial (inherited)
Loyalty is assured by personal allegiance
Administration is more stable than the charismatic
 Legal & Rational authority


Source of authority is the Law
Bureaucratic Administration
MAX WEBER
 In the real world these systems seldom exist in their




purest expression
In one given society (or organization) may very well
coexist different elements of each type of domination
Modern societies may keep elements derived from
traditions like the Monarchy
Modern democracies may produce charismatic leaders
One company funded by one entrepreneur may function
to a great extent led by his or her charisma, as well as by
established rational and legal procedures and protocols
in written documents

Let´s Remember Fayol’s description of a good manager!!!
MAX WEBER
 Rational & legal systems are superior because they
are more efficient on accomplishing tasks and all
Western societies had evolved into this direction

(idea inspired by the development of the Prussian army and
bureaucracy)
 Bureaucratic Administrations are technically
superior to any other form of Administration
 Charismatic leaders are useful only in times of crisis
and do not create stable administrative systems
because the replacement of the leader often entails
problems
MAX WEBER
 Main features of a Bureaucratic Administration:







Set of rules and procedures in written documents
All personnel and its decisions are subject to those written rules and
procedures. Their relations are impersonal and their decisions
devoid of personal interests
Division of labor and technical competence: members are employed
on the basis of their expertise and are given extensive education
Hierarchical structure of office is well defined: every position is
accountable to and supervised by a higher office
Individual performance is rewarded thanks to strict mechanisms of
control that apply to all personnel. Salaries paid in money
Existence of a professional career within the administration and a
personal commitment to it among its members whom must work
full time
Clear separation between property and control: equipment and
materials belong to the organization, not to those making use of it
MAX WEBER
 Advantages of Bureaucratic Administrations
 Promotes technical efficiency
 Protects personnel from discrimination
 Fits well into the cultural features (values) of Western societies
 Powerful on solving conflicts between members of the
personnel thanks to mere application of rules
 Disadvantages of Bureaucratic Administrations
 Mechanicism
 Insensible to human needs
 Promotes rigid conducts
 May hinder individual motivation
ROBERT K. MERTON
 Scholars started to ask themselves why by the late 1940’s
bureaucracy had started to show some worrying signs of
persistent inefficiency (slowness, excessive paperwork,
etc.)
 From a functionalist perspective, Merton established by,
under certain circumstances bureaucratic
administrations may result inefficient
 Social structures (as well as organizational structures)
influence the individual who must adapt to them.
 One type of “dysfunctional” adaptation is the Ritualism


Dysfunctional for the interests of the organization
Rational from the point of view of the individual
ROBERT K. MERTON
 “Bureaucratic Structure and Personality” (1957)
 Strict set of rules and procedures and disciplinary codes have
an influence on the person who must abide to them on a daily
basis
 It hinders risk-aversion making the primary target of the
employee to avoid being sanctioned
 Goal displacement: the means turn into ends
 Bureaucratic ritualism: officials stick primarily to the strict
compliance with the regulations (instrumental value)
prioritizing this even above the accomplishment of the
strategic goals of the organization (final value)
ROBERT K. MERTON
 Merton (1968)
 Defined cultural goals
 Structurally defined means to achieve the goals
 Depending on the acceptance/rejection of the goals and the
access or lack of access to the means, individuals may develop
different types of adaptation to society (or the organization)
ROBERT K. MERTON
 Five types of adaptation:
 Conformity occurs when individuals accept the culturally defined goals and the
socially legitimate means of achieving them. Merton suggest that most
individuals, even those who do not have easy access to the means and goals,
remain conformists
 Innovation occurs when an individual accepts the goals of society, but rejects or
lacks the socially legitimate means of achieving them. Innovation, the mode of
adaptation most associated with criminal behavior, explains the high rate of
crime committed by uneducated and poor individuals who do not have access to
legitimate means of achieving the social goals of wealth and power
 The ritualist accepts a lifestyle of hard work, but rejects the cultural goal of
monetary rewards. This individual goes through the motions of getting an
education and working hard, yet is not committed to the goal of accumulating
wealth or power
 Retreatism involves rejecting both the cultural goal of success and the socially
legitimate means of achieving it. The retreatist withdraws or retreats from society
and may become an alcoholic, drug addict, or vagrant
 Rebellion occurs when an individual rejects both culturally defined goals and
means and substitutes new goals and means. For example, rebels may use social
or political activism to replace the goal of personal wealth with the goal of social
justice and equality
MAIN SOCIOLOGICAL THEORIES
ACTIONALISM
Weber
CONFLICT
Marx
FUNCTIONALISM
Durkheim
Merton
THEORIES OF CONFLICT AND POWER
 Karl Marx
 Lenin
 Bruno Rizzi
 James Burnham
 Harry Braverman
 Robert Michels
THEORIES OF CONFLICT AND POWER
 Conflict oriented theories have their roots on Karl
Marx’s vision of society

Society is the historical result of interest conflicts that at any
given period are solved by the domination of one class by
another
 Functionalisits focused on the nature and origin of
order and social equilibria, paying little attention
to social problems and social change
 Conflictivists, on the contrary, focus on processes of
social change derived from conflict, which is a
permanent feature on any society
KARL MARX
 Karl Marx signaled that the typical conflict of the
capitalist society is the class struggle




Workers (proletarians)
Capitalists (property owners, bourgeoisie)
Their interests are divergent and conflict results in domination
Private ownership of means of production allows capitalists to
exercise political domination over the working class
 Marx associates political power with economic
domination and considers the State as a mere
instrument in the hands of the bourgeoisie.
 Bureaucracy is the executive arm of the State, thus, a
mere instrument for class domination and plays
an important role on the alienation process
KARL MARX
 Such perspective on bureaucracy led Marx to assume
that in a classless society bureaucracy should come
to and end
 As a result, Marx did not paid very much attention to
the bureaucratic phenomenon, its importance and its
decisive impact on the diffusion of rationalization
and on the future development of modern societies
KARL MARX
 Marx did, however, leave some writings about the
functioning of the bureaucracy from an
organizational point of view:





Incompetent
Dominated by the principle of Careerism
Main concern of bureaucrats is to keep status and prestige
“Infantile” attachment to symbols of status and power (to have
a big office, several assistants, secretaries, etc.)
The goal of serving citizens and the people becomes secondary
LENIN
 Lenin, once established in power, decided to follow
Marx´s ideas and implemented a 3 point plan to
undermine the Tsarist bureaucracy



Eligibility and revocability of functionaries
Salary reduction to the level of an unskilled worker
Simplification of tasks to make bureaucrats easily replaceable
and interchangeable
 Such plan did not work as expected and soon Lenin
realized that the new Soviet bureaucracy
increased in size and power
 Lenin admitted the need for a bureaucracy given the
rural (feudal) features of Russian population
LENIN
 The expansion of the Soviet bureaucracy was seen
as a temporary necessity in a time when a strong
central government was needed to transform the
predominately rural (feudal) Russian society into an
industrial one
 On the end, Soviet bureaucratic apparatus expanded
itself to levels not yet seen in Western societies
 Trosky criticized that the rapid expansion of Soviet
bureaucracy was caused by Stalin policies aimed to
merge Party and State institutions
THEORIES OF CONFLICT AND POWER
 Weber perspective suggesting that the expansion
of bureaucracy is to be associated with the need
for “rationalization” characteristic of any
modernization process and independent from the
ideological nature of the State or the
government was proved correct
THEORIES OF CONFLICT AND POWER
 Bruno Rizzi and the “Bureaucratic Collectivism”
 “La Bureaucratisation du Monde” (1939)
 Systems based on individual property change into ones based
on collective property (Soviet Union and fascist Italy)
 Soviet bureaucracy (“nomenklatura”) turned into the new
ruling class after having taken control over the means of
production
THEORIES OF CONFLICT AND POWER
 James Burnham and the “Technocratic Regime”
 “The Managerial Revolution” (1941)
 The growing complexity of organizations transforms managers
into the new ruling elite because of their technical knowledge
 Technocratic power is the new “post-capitalist” form of
domination
 Ownership, weather private or collective, is not the main
cleavage separating the dominating from the dominated.
 Instead, it is the control of the means of production
which divides societies into


Managers or Bureaucrats vs. the mass society
Conservative Machiavellian perspective (not Marxist)
THEORIES OF CONFLICT AND POWER
 Marxist theorists see current sociology as locked into the
capitalist paradigm and unable to envision something
other than a rational view for future organizations
 For Marxists, Human relations theories don't challenge
the exploitive nature of organizations and merely give
managers new psychological tools to control workers
 Hierarchy develops not as a rational means of
coordination but as an instrument of control and a
means of accumulating capital through the appropriation
of surplus value
 Rationality is an ideology itself
THEORIES OF CONFLICT AND POWER
 Harry Braverman
 “Labor and Monopoly Capital: The Degradation of Work in
the Twentieth Century” (1974)
 Taylorism:
Separation of conception from execution
 Monopoly over knowledge allows to control each step of the labor
process and its mode of execution
 The main goal of taylorist “rationalization” is the disassociation of
the skills of workers from the labor process

THEORIES OF CONFLICT AND POWER
 Harry Braverman (1974)
 “…organizational structures are not rational systems for
performing work in the most efficient manner; rather, they are
power systems designed to maximize control and profits. Work
is divided and subdivided not to improve efficiency but to
"deskill" workers, to displace discretion from workers to
managers, and to create artificial divisions among the work
force…”
 Workers become deskilled and "part of the machine"
 Modern organizations
deskill and segment workers
 reduce job security
 make work repetitive, mindless and boring

THEORIES OF CONFLICT AND POWER
 Machiavellism develops in Italy during the 1930’s
coinciding with the rise of fascism



Wilfredo Pareto
Gaetano Mosca
Robert Michels (pupil of Max Weber)
 Its main concern is the role of power as a fundamental
element on shaping social relations
 Social organization is very dependent on how power is
distributed and used in the society (or the organization)
 Robert Michels’ “Iron Law of Oligarchies” is one of
the few widely accepted and undisputed principles in
modern sociology
ROBERT MICHELS
 The “Iron Law of Oligarchies”
 “Zur Soziologie des Parteiwesens in der modernen
Demokratie” (1911)
 “On the Sociology of Political Parties” (1915)
 Increasing size and complexity makes very difficult (nearly
impossible) to govern (large) organizations on a purely
democratic way
 Modern organizations can only be of oligarchic
nature: Bureaucracy (organization) = Oligarchy
 This principle applies even to organizations committed to the
very idea of democracy, like socialist political parties and trade
unions
ROBERT MICHELS
 Five principles of the “Iron Law of Oligarchies”




1) The participation of all members of a large organization on the
decision making process is technically inviable. Thus it is imperative
to establish mechanisms for delegation or cooptation
2) Once a reduced number of “elected officials” are appointed in
charge of the governance of the organization they begin
concentrating the relevant information concerning the
functioning of the organization close to themselves
3) The leader (or leaders) begin to be seen as “irreplaceable” due to
their accumulation of specific knowledge and expertise
4) Once in a position of power, the leader will seek as a primary
objective to remain in power, identifying the survival of the
organization with his/her own


metamorphosis of the leader’s personality
5) Oligarchies eventually develop the “ideology of power” aimed at
emphasizing the need for internal harmony as the best way to
face the menaces coming from of external enemies
ROBERT MICHELS
 Why the “Iron Law of Oligarchies” always works?



All organizations that increase in size and complexity require the
participation of dilligent full-time experts on the decisionmaking process. Such individuals tend to become “irreplaceable”
The dichotomy between “internal democracy” and
“organizational efficiency” becomes more evident. Often
efficiency requires a strong and professional leadership which
can only come to the detriment of internal democracy
The very psychology of the masses makes strong leadership
unavoidable, even desirable
Apathy and incompetence make the majority of people unsuitable for
leadership roles
 Masses tend to be thankful to those who decide to exercise leadership
and often some “cult of personality” arises
 The only function of the masses is to chose a new leader from time to
time

ROBERT MICHELS
 Parliamentary regimes reinforce this dynamic
 Routine commissions
 Elected representatives are more visible than other members
 Leaders of different factions may eventually unite to face new
leaders arising from the masses
 Fundamental contradiction on the functioning of
democratic regimes




Parties are an indispensable requisite
Parties, to be successful need to be organized bureaucratically
Masses are not interested on taking active part on politics
Only egoism may motivate some individuals to take part in
political activity
ROBERT MICHELS
 Nonetheless, a democracy though undermined to
some degree by the oligarchic functioning of its
political parties is still an improvement with respect
to one of aristocratic nature because




Positions within the ruling elite are not transferred by
inheritance
Leaders need to have some abilities and acquire some merits
Elites (the “Political class”) are not a “closed” group
“Circulation of elites” (old elites vs. new elites)
ROBERT MICHELS
 Nonetheless, a democracy though undermined to some
degree by the oligarchic functioning of its political parties
is still an improvement with respect to one of aristocratic
nature because

Problem: the oligarchic nature of elites persists because all new elites
soon acquire the traits of oligarchic behavior (Iron Law)
“Bureaucracy happens (unavoidably because either centralization or
delegation leads to specialization and enhances information control).
If bureaucracy happens, power rises. Power corrupts…”
 “Large organizations give their officers a near monopoly of power”
 “The masses are incapable of taking part in the decision-making
process and desire strong leadership”



Class struggle over history simply generates new elites
Solution?: a direct relation between a charismatic leader and the
people its interests represent (Mussolini)
ROBERT MICHELS
 Critics to the “Iron Law of Oligarchies”
 Utterly deterministic
 Pessimistic
 Recent history has shown that democracies may
indeed evolve improving their “modus operandi”
 It has been observed that alternance on power do
limits the power of oligarchies
THEORIES OF CONFLICT AND POWER
 Jerry Pournelle and the “Iron Law of Bureaucracy”

In any bureaucracy,
The people devoted to the benefit of the bureaucracy itself always get in
control
 Those dedicated to the goals the bureaucracy is supposed to accomplish
have less and less influence, and sometimes are eliminated entirely


In any bureaucratic organization there will be two kinds of people:
1) Those who work to further the actual goals of the organization, and
 2) Those who work for the organization itself


The Iron Law states that in all cases, the second type of person will
always gain control of the organization, and will always write the rules
under which the organization functions
HUMAN RELATIONS
 Elton Mayo
 The Hawthorne Studies
 Chester Barnard
 “The Functions of the Executive”
 Douglas McGregor
 Theory “X” and Theory “Y”
 Abraham Maslow
 Hierarchy of needs
 Frederick Hertzberg
 Two factor theory
 William Ouchi
 Theory “Z” Japanese Management
 William Reddin
 3D Theory on “Managerial effectiveness”: There is no one “universal”
best way
HUMAN RELATIONS
 Reaction against extreme rationalism of the classical
theories


1) Exploring the role of groups within organizations (“Human
Relations” school)
2) Considering organization as an “Open System” within a
“Context” (the “Contingency Theory” school)
 Informal relations taking place at the workplace
constitute a psychological need for the individual
 Informal relations (primary groups) help to improve
working performance
HUMAN RELATIONS
 Motivation has a tremendous impact on our
performance
 Some studies have suggested that most persons
make use of about 20% to 30% of our real capacities
at the workplace
 The remaining capacity to increase our effort and our
commitment depends on our motivations
 Informal (primary) groups inside the organization
may play an important role on motivation
HUMAN RELATIONS
 Theories of motivation
 Theories of Factors: focus on identifying the “factors” that
determine motivation:
 Theories of Processes: focus on the mechanisms (“processes”)
through which motivation develops
 Theories of Reinforcement: derive from Skinner´s
“Psychological Conductism” and focus on the relationship
between stimulus and response (SR)
HUMAN RELATIONS
 Motivation and Culture
 The sociological perspective contemplates motivation as one
factor strongly attached to Culture
 Attitudes towards work determine to a great extent the
motivation and the incentives
 Modern management is oriented to take into account
individual and corporate values
HUMAN RELATIONS
 Classic works related to the “Human Relations”
school

Roethlisberger, Dickson and Elton Mayo


Barnard


Hawthorne Studies:
“Functions of the Executive”
McGregor

“The human side of the enterprise”
ELTON MAYO
 Australian psychologist (1880-1949)
 “The human problems of an Industrialized




Civilization” (1933)
Research on industrial and organizational
psychology (Hawthorne Studies)
Created the foundation for “Human Relations
Movement”
Criticized Taylor’s “Scientific Management”
approach
Opened the field for studying the nature of
motivation from both sociological and psychological
perspective
ELTON MAYO
 The Hawthorne Study:
 Late 1920’searly 1930’s
 Western Electric Plant at Hawthorne, Illinois (USA)
 Experiments to improve productivity
Length of rest and lunch breaks
 Illumination
 Payment plans
 Monitoring procedures
 Interviews (set the pattern for modern qualitative interview)

ELTON MAYO

The Hawthorne Study:

Illumination Study (November 1924)



Relay Assembly Test Room Study (1927-1932)






Assembly of telephone relays (35 parts - 4 machine screws)
Production and satisfaction increased regardless of IV manipulation
Workers’ increased production and satisfaction related to supervisory practices
Human interrelationships are important contributing factors to worker productivity
Bottom Line: Supervisory practices increase employee morale AND productivity
Interviewing Program (1928-1930)




Designed to test the effect of lighting intensity on worker productivity
Heuristic value: influence of human relations on work behavior
Investigate connection between supervisory practices and employee morale
Employees expressed their ideas and feelings (e.g., likes and dislikes)
Process more important than actual results
Bank Wiring Room Observation Study (November 1931 - May 1932)



Social groups can influence production and individual work behavior
RQ: How is social control manifested on the shop floor?
Informal organization constrains employee behavior within formal organizational structure
ELTON MAYO

The Hawthorne Study:

Illumination Study (November 1924)


Relay Assembly Test Room Study (1927-1932)




Demonstrated powerful influence of upward communication
Workers were asked for opinions, told they mattered, and positive attitudes toward company
increased
Bank Wiring Room Observation Study (November 1931 - May 1932)


Relationships between workers and their supervisors are powerful
Human interrelationships increase the amount and quality of worker participation in decision
making
Interviewing Program (1928-1930)


The mere practice of observing people’s behavior tends to alter their behavior (Hawthorne Effect)
Led future theorists to account for the existence of informal communication
Taken together, these studies helped to document the powerful nature of social relations
in the workplace and moved managers more toward the interpersonal aspects of
organizing.
ELTON MAYO
 The Hawthorne Study:





Workers should not be taken into consideration as individuals
isolated from the group
Informal primary groups have a decisive influence on the workers’
behavior
Productivity may increase depending on the social patterns of
informal interaction
The feeling of belonging to a group is more important than monetary
incentives and good working conditions
Managers should bear in mind those “social needs” and balance two
potentially conflicting elements:
The “logic of cost and efficiency”
 The “logic of worker’s sentiments”


The “scientific management “in an inadequate approach to
organizing work
CHESTER BARNARD
 American businessman (1886-1961)
 “The Functions of the Executive” (1938)
 Most organizations do not live for very long (except
for one in particular)
 This is because they miss to comply with two basic
goals:


Effectiveness: Attaining explicit goals
Efficiency : The extent to which an organization satisfies the
motives of individuals
CHESTER BARNARD
 “The Functions of the Executive” (1938)
 Setting goals
 Establish and maintain a system of communication
 An adequate system of communication (which involves
treating subordinates with respect) reinforces manager’s
authority
 Securing members will do their part
 An adequate system of incentives will assure that employees
will be motivated to do their work properly
CHESTER BARNARD
 “The Functions of the Executive” (1938)
 An adequate system of communication
 Channels of communication should be clear
 Should be accessible to everybody at any time
 Should be as direct as possible
 Communication centers must be managed by competent
employees
 Communications should be authenticated
CHESTER BARNARD
 “The Functions of the Executive” (1938)
 Adequate structure of incentives
 Salary
 Non-material distinctions
 Work conditions
 Symbolic gratification (pride for a well done work)
 Persuasion
DOUGLAS McGREGOR
 American professor at MIT school of Management






(1906-1964)
“The Human Side of the Enterprise” (1960)
Contribution to management and motivational
theories
Considered for some the most influential book on
management of the 20th century
Proposed the so called Theory “X” and Theory “Y”
Managers can be divided into two groups, depending
on which of those theories they believe to be true
Importance of values and beliefs (and Culture!)
DOUGLAS McGREGOR
 Theory X:
 Assumes employees are inherently lazy and dislike working
 Employees have little ambition unless a very generous
incentive is promised
 Employees will avoid taking responsibilities
 Employees must be closely supervised by comprehensive
control systems
 A hierarchical structure is needed
 Narrow spans of control at each hierarchical level
 Need to rely on threat and coercion
 When something is wrong it is usually someone else’s fault
(not the system)
 It is the manager’s job to monitor closely employees’ work
DOUGLAS McGREGOR
 Theory Y:






Employees may be ambitious and self-motivated
Employees can be relied on to abide to some sort of self-control
Employees may enjoy doing their work and may find satisfaction in
doing so (source of motivation)
Employees may be responsible and have abilities for creative
problem solving
Organization may underuse employees’ talents
It is the duty of the manager to
promote and enhance self-control and
 self-responsibility among employees by
 creating a climate of trust and
 by communicating openly with subordinates and reducing
hierarchical distances and
 favoring the sharing of the decision-making process

ABRAHAM MASLOW
 American Psychologist (1908-1970)
 Hierarchy of needs
 Physiological
 Safety
 Love and belonging
 Esteem
 Self-actualization
 Maslow’s hammer
FREDERICK HERTZBERG
 The two-factor Theory
 Some factors cause job satisfaction and others cause
dissatisfaction
 To great extent based on Maslow’s principles but!
 Satisfaction and dissatisfaction is NOT a continuum
 Interviewed more than 200 engineers and
accountants about their jobs and what made them
happy being at it
FREDERICK HERTZBERG
 The two-factor Theory
 Hygiene factors: need to avoid dissatisfaction
Status
 Job security
 Salary and benefits
 Work conditions


Motivators: elements that cause satisfaction
Interesting tasks
 Responsibility
 Recognition


Difference between “Movements” and “Motivation”
FREDERICK HERTZBERG
 The two-factor Theory
 Importance of “job enrichment”
Promote employees to take part in planning and self-evaluation
processes
 Remove some elements of control to enhance self-accountability
 Create work units led entirely by employees
 Provide regular feed-back to employees initiatives and report to
them results on productivity (not only to top managers)
 Encourage employees to take on new challenging tasks
 Encourage employees to become experts

THEORY “Z”
 William Ouchi “Japanese Management”



“Theory Z: How American Business Can Meet the Japanese
Challenge” (1981)
Promote strong corporate culture and employee loyalty to the firm by
providing employment for life
Employment stability leads to high productivity and high morale and
satisfaction
Workers have sense of order, discipline, a moral obligation to work
hard, and a sense of cohesion with their fellow workers
 Workers will be participating in the decisions of the company to a
great degree
 Avoid making workers specialists into just a few simple tasks, instead
aim to increase their knowledge of the company and its
processes through job rotations and constant training (Quality
Circles)
 Slow paces of promotion: long term commitment with the firma is
required


Based on Edward Demings’ “14 points”
EDWARD DEMING’S POINTS











Improve constantly and forever the system of production and service, to improve quality and
productivity, and thus constantly decrease costs.
The responsibility of supervisors must be changed from sheer numbers to quality
Cease dependence on inspection to achieve quality
Institute leadership: The aim of supervision should be to help people and machines do a better job.
Institute training on the job
Drive out fear, so that everyone may work effectively for the company
Remove barriers that rob the hourly worker of his right to pride of workmanship.
Break down barriers between departments
Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust
Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of
productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low
quality and low productivity belong to the system and thus lie beyond the power of the work force.
 Eliminate work standards (quotas) on the factory floor. Substitute with leadership.
 Eliminate management by objective. Eliminate management by numbers and numerical goals.
Instead substitute with leadership.
Put everybody in the company to work to accomplish the transformation. The transformation is
everybody's job
THEORY “Z”
 Abraham Maslow

Managers must understand employees’ needs
 William Reddin


“Managerial Effectiveness” (1984)
3D Theory
There is no one best way for managing
 There are different types of managing which, depending on the
contest can be effective or not
 Task oriented manager (autocrat)
 Relationships oriented manager (developer)
 Task and relationship oriented (executive)
 Not strongly committed to task or relations (bureaucrat)
 Effectiveness ought to be measured by looking at the output
 The main an only way to evaluate the performance of a manager is not
evaluating what he/she does but what he/she accomplished

ORGANIZATIONAL ANALYSIS
 Three structural dimensions of organizations (B. Hodge):

Complexity
Vertical differentiation
 Horizontal differentiation
 Spatial differentiation


Formalization
Routine activities
 Highly specialized and educated professionals


Centralization
Power distribution
 Participation and Empowerment


Standardization

Achieve integration by setting consistent input processes or output
requirements
ORGANIZATIONAL ANALYSIS
 Complexity
 Vertical differentiation  determined by the number of
hierarchical positions between plant workers and the “Prezes i
dyrektor generalny” (CEO/PDG/DG).


Hall suggests measuring it by taking the number of positions in
each department and divide it by the total number of departments
Horizontal differentiation  determined by the number of
different tasks required to the functioning of the organization
Counting the number of specialists and educational levels
 Blau and Schoennher : Counting the number of departments and
sub-departments on the Organizational chart (“organigramme”)


Spatial differentiation  determined by the concentration or
dispersion of the different units of the organization
LOW HORIZONTAL COMPLEXITY
CEO
Marketing
Production
HHRR
Finances
(Produkcja)
(Zasoby Ludzkie)
(Finanse)
HIGH HORIZONTAL COMPLEXITY
Director General
Ventas
Investigación de
Mercados y
publicidad
Compras
Producción del
Producto A
Producción del
Producto B
RRHH
Finanzas
Contabilidad
LOW VERTICAL COMPLEXITY
Presidente
Występek
Asystent wykonawczy
Vicepresidente
Marketing
Vicepresidente
Operaciones
Vicepresidente
RRHH
Vicepresidente
Financiero
Adjuntos
De Marketing
Adjuntos de
Producción
Adjuntos de
RRHH
Adjuntos de
Dirección Financiera
HIGH VERTICAL COMPLEXITY
Director general
Presidente
Vice. Ejec. Marketing
Vice. Ejec. Operaciones
Vice. Ejec. RRHH
Adj. Vice
Adj. Vice
Ayudantes
Vice. Finanzas
Adj. Vice
Ayudantes
Adj. Vice
Ayudantes
Ayudantes
ORGANIZATIONAL ANALYSIS
 Increasing differentiation may lead to dehumanization of
work. A key issue facing many managers today is how much
tasks should be differentiated
 Many organizations are delayering hierarchies to facilitate
communication, gain other efficiencies, and reduce costs
 A typical worker stationed in a home-based mobile office
would travel to customers or clients and log in sales or service
calls on a lap top computer


Some companies claim that mobile office workers increased by 15 to 20
percent the amount of time employees spend with customers or clients
Some concerns regarding home-based mobile office workers include
overwork and safety
 The level of complexity is determined largely by the
amount of the three types of differentiation that exists.
Complexity is often related to size, but not always so. Small
companies can be complex (a medical clinic)
ORGANIZATIONAL ANALYSIS
 Integration involves the various means that the organization
uses to pull together the highly differentiated tasks into
cohesive output
 Integration, or coordination, is the prime responsibility of
managers. The functions of management—decision-making
and influence—imply coordinating and integrating.

Formalization



Centralization



Routine activities
Highly specialized and educated professionals
Power distribution
Participation and Empowerment
Standardization

Achieve integration by setting consistent input processes or output
requirements
ORGANIZATIONAL ANALYSIS
 Formalization:
 All organizations need to make sure that
Goals are accomplished
 Individuals behave accordingly (cooperation) to expectations


Rules, norms and procedures are established to ensure
members of the organization will behave in a proper
“predictable” manner
How to approve a line of credit for a new client
 How to accept a patient and direct him/her to the proper specialist



The higher the level of formalization (bureaucratization) the
lower the level of autonomy of workers
Organizations using technology based on routine activities
tend to be more formalized than those requiring highly
educated specialists
ORGANIZATIONAL ANALYSIS
Formalization
High
Freedom of action
Self-control
High
Low
Low
Routines
ORGANIZATIONAL ANALYSIS
+
+
Alienation
Formalization
Alienation
_
+
Formalization
_
+
Professionalization
ORGANIZATIONAL ANALYSIS
 Formalization:
 Some organizations (hospitals) require both
highly routinized activities (Admission department)  highly
standardized procedures
 highly specialized activities (Surgery department)  self-control
of highly educated professionals



All organizations need a minimum level of formalization
Even those whose members are subjected to a great deal of
uncertainty regarding their daily tasks


The police: dealing with unexpected emergencies but still it may be
formally established when and how to make use of the gun
ESeC: European Socioeconomic Classification of Occupations

Routine-ization of occupations
ORGANIZATIONAL ANALYSIS
 Centralization:
 Refers to the distribution of power within the organization; the
levels at which strategic decision-making is adopted
 Pyramidal distribution vs. Cone distribution (Robbins)
Decision-making at the top level of the cone
 Execution at the base of the cone
 Information channel (line stretching from the vortex of the cone to
its base)
 At each level it is important how close or far a person is from the
information line
 Importance of position within the organizational chart
(“organigramme”) but also the access to strategic information

• maintenance workers
• mass media
ORGANIZATIONAL ANALYSIS
POWER
DISTRIBUTION
Information
Adapted from
S. Robbin
Top level of power
Position of an
individual or a group
ORGANIZATIONAL ANALYSIS
 Centralization:

An organization is highly centralized


An organization is decentralized



If all decisions are made at the top levels of the hierarchical pyramid
If employees of middle and lower levels can make decisions regarding
their tasks
According to Max Weber, those highly competent bureaucrats
situated at the lower levels of the structure should be able to make
decisions regarding tasks falling within their field of expertise
Empowerment: when employees possess both information and
autonomy to organize their own work.

Highly decentralized organizations rely on this practice to increase
motivation and job satisfaction (thus, job performance) among their
employees
ORGANIZATIONAL ANALYSIS
High
Influence,
power and
participation
None
CEO’s
Plant Managers Dept. chiefs Employees
ORGANIZATIONAL ANALYSIS
 Centralization:
 Spans of Control refers to the number of immediate
subordinates’ positions that a superior position controls or
coordinates
 In the past, a suggested span of control was from five to seven
 The thinking on spans of control now has shifted to looking at
a number of factors including:
the ability and experience of the manager,
 the ability and experience of subordinates,
 the nature of the task being performed,
 the spatial differentiation, and
 the amount and type of interaction needed by the supervisor.


Another way to think about spans of control is whether an
organization employs a tall or flat structure
ORGANIZATIONAL ANALYSIS
 Organizations must differentiate work in order to
accomplish the job.
 Managers must then integrate the various tasks into a
coordinated whole
 The span of control can be wider…



the more competent the manager and subordinates are
the less geographical dispersion exists
the more routine the tasks of the subordinates are
 The span of control will be narrower


the more differentiated the work is
the more complex is the job of integration
 Not one best way  the work of the manager can hardly
be routinized by formalization
ORGANIZATIONAL ANALYSIS
 Standardization:
 It can help achieve integration by reducing the uncertainty or
unpredictability of tasks
 Setting consistent input
Dealing with only one supplier of raw materials
 Organizations may standardize human resources by hiring only
graduates of certain MBA programs or requiring training or
certification


Setting consistent processes


How to do something, such as preparation of fast food or
manufacturing certain fabric
Setting consistent output requirements

Textile industry in developing countries
ORGANIZATIONAL ANALYSIS
 Other instruments for achieving integration (B.J. Hodge)

Liaison roles
horizontal linking positions between two units or departments at the
same level of the organization
 production and shipping depts. need to coordinate their activities


Teams


Culture


organizing employees and managers into work and inter-unit groups
in order to enhance communications, coordination, and control
informal and unwritten rules, norms, and values that are commonly
shared by organizational members
Information Systems
how the system gathers, processes, analyzes, and distributes
information.
 E-mail, networks, video, conference calling, and LAN networks


Informal organization
ORGANIZATIONAL ANALYSIS (B.J. HODGE)
 The organization chart shows
 the formal organization that is the officially sanctioned
structure
 delineates the authority, or reporting relationships, that exist
in the organization.
 The informal organization
 represents the de facto relationships that are not necessarily
sanctioned by the organization, even though they may be
perceived as actually existing
 personal characteristics and patterns of social relationships
that may not be captured in the formal structure are everpresent and important to the formal structure
ORGANIZATIONAL ANALYSIS (B.J. HODGE)
 The informal organization (B.J. Hodge)
 It is impossible to separate the roles and the relationships from
people.
 Evolves from people working in organizations that are
political.
 Is often the result of flaws, vagueness, incompleteness, or
inefficiencies in the formal design, or because of changes in
organization faces.
 In theory, in a perfect organization, the informal organization
would either not exist or would be of little importance.
 Virtually all organizations have an informal organization.
 Skilled managers understand and utilize both the formal and
informal organization to accomplish their objectives.
DIFFERENTIATION (B.J. HODGE)
 Organizations today must accomplish complex work
 It is virtually impossible for an individual to accomplish
all of the tasks that are required to deliver products and
services
 To carry out its mission more efficiently, organizations:



Must divide its work into many tasks
Must allocate tasks to different workers
Workers apply their skills to a limited part of the total product or
service (part of their talent may be underused which may lead to
alienation and demotivation)
 Organizations tend to differentiate in three different
ways:



horizontally
vertically
spatially
INTEGRATION (B.J. HODGE)
 Organizations must divide up work (differentiation)
 Integration is the necessary coordination among the various
tasks to ensure that the overall goals of the organization are
achieved
 In smaller organizations, integration can often be achieved by
direct contact and supervision of one or two key people
 In large organizations that are highly differentiated often turn
to both formal and informal integrating means

Formal structures include:





formalization (through rules, policies, and procedures)
centralization
spans of control
standardization
Informal or non-structural integrating means include:

liaison roles, teams, culture, and information systems
MECHANISTIC AND ORGANIC (HODGE)
 The mechanistic and organic structures are prototypes
and represent extremes

Mechanistic organizations have
high vertical and horizontal complexity,
 high formalization,
 high centralization,
 narrow spans of control, and
 high standardization.


Organic organizations have
low vertical and horizontal complexity,
 low formalization,
 high decentralization,
 broad spans of control and
 low standardization.

 Rarely one of the pure forms is the most appropriate
STRUCTURAL DESIGN (B.J HODGE)
 According to contingency theory, five contextual
factors must be considered in selecting the proper
balance in the structural design:





Goals
Size
Technology
Environment
Culture

Leadership and governance
ORGANIZATIONAL GOALS
 Organizational Goals (definition):
 Mission statements, official goals, or, strategic objectives


Operative goals


set forth the officially chartered purpose of organizations (before operative
goals are established)
derived from official goals, are more specific statements about what the
organization, division, department or business unit intends to do
Operational goals

very specific and narrowly stated goals of the organization
 Organizations have short-term and long-term goals.
 Short-term goals


those that an organization hopes to accomplish within a year or specific
accounting cycle. (Amazon.com, 1st  to build traffic, 2nd  visitors would
become shoppers and revenues would follow)
Long-term goals



those that cannot be accomplished in the short run
these goals may be for as long as ten to twenty years
In practice it is difficult to plan much beyond three to five years.
ORGANIZATIONAL GOALS
 Organizational Goals (definition):

Strategic goals


These statements are broad, but they state the direction the
organization is taking and often the philosophy of the organization
Operative goals
Stated in measurable outcomes
 They set standards and guide what people in the organization should
be doing
 Market
 Financial Performance
 Resource
 Innovation
 Productivity
 Management Development
 Employee Performance and Attitudes
 Social Responsibility and Ethical Behavior

ORGANIZATIONAL GOALS
 Organizational Goals (importance):
 It is important to have a united set of goals
 The overall mission of the organization needs to be set before operative
goals can be developed to support the mission
 Organizations that are divided into many units and departments need
some unifying purpose.


Highly centralized organizations


will pass down specific and detailed goals
De-centralized organizations


If left on their own, they end up working at cross-purposes and detract from
the organization’s larger purpose
may give lower-level managers more discretion in setting direction at the
operative and operational levels.
Even though there is a natural sequencing of goal setting, many effective
organizations build an elaborate feedback system that allows ideas to
flow up and down the chain of command, as well as across units
 There is no one best way to implement them; it depends on
the organization in question
ORGANIZATIONAL GOALS (ETHICS)
 Organizational Goals (ethics):
 Much of what organizational members do on a day-to-day
basis involves ethics
 Ethical dilemmas have five characteristics:
1) Actions have extended consequences.
 2) Managers have alternatives and can make choices.
 3) Outcomes are mixed—not all of the consequences are totally
positive or negative.
 4) Consequences are uncertain.
 5) Decisions that managers make have personal implications—they
affect people.

ORGANIZATIONAL GOALS (ETHICS)
 Brady suggests an approach that balances two quite different
views on ethics: ethical utilitarianism and ethical formalism

Ethical utilitarianism is based on the works of Jeremy Bentham






Ethical correctness is judged by consequences, and is guided by the “greatest
happiness principles.”
Actions that produce good outcomes are ethical.
Actions that produce pain or suffering are unethical.
Ethical judgment is essentially that of cost/benefit analysis.
If the positive outcomes outweigh the negative consequences, then the action
is deemed ethical.
Ethical formalism is based on the works of Emanuel Kant




Kant believed that we could know what is ethical before we know the
consequences.
Ethics are based on laws, principles, or widely held beliefs or values.
Actions that violate these are considered unethical.
Formalism emphasizes universality and consistency in the application of rules.
ORGANIZATIONAL GOALS (ETHICS)
 Organizational Goals (ethics):







Ethics play a major role in setting and measuring goals
Ethics will determine what are the core values of the organization.
Ethics will provide a strong impetus for certain types of goals and
eliminate others from consideration
Organizations often use a form of ethical formalism, whereby they
use a common set of beliefs, rules, and principles to guide the action
of their organizations
The achievement of goals should be done in such a way as to be
consistent with the accepted principles
An organization might also apply utilitarian ethics, whereby they
judge their actions, after the fact, by whether the consequences are
positive or negative
www.bradyservices.com
ORGANIZATIONAL GOALS
 Other factors to bear in mind related to goals include:
 Who are the beneficiaries of the organization
 What is the relevant time frame for specific goals
 What is the relative importance of specific goals
 Organizations have multiple constituents or beneficiaries
 Primary
 Secondary
 Examples:


Justice system (judges, criminals, victims)
Private corporation (shareholders, clients, workers)
 Because an organization has multiple constituencies, they will have
multiple goals, some of which may be in conflict.




Employees
Owners and Shareholders
Suppliers,
Members of the communities served by the firma

Patients, students, transport commuters, etc.
ORGANIZATIONAL GOALS
 Managing Goals and Objectives (conflict):
 In a perfectly rational world, managing diverse goals would not
be a significant problem
 Goal setting is often a political process.
 Coalitions form within the organization.
 Stakeholders might have goals that are different from internal
goals.
 What seems rational to one member or group may appear to
be misguided, wrong, or irrational to another.
 Individuals or groups operate with hidden goals or agendas.
ORGANIZATIONAL GOALS
 Managing Goals and Objectives (conflict):

Because of the previously cited problems, organizations have explicit
ways of establishing goals. But to fully understand how goals are set,
we need to examine
the formal process
 the political process


Managing goals is frequently a process of
managing conflict
 pursuing negotiations
 bargaining


Compromises may result in
some winners and some losers—a win-lose scenario
 all parties are better off and a win-win situation develops
 Classic problem: employees prefer to have a very high rate of pay, but
this may frustrate the organization’s ability to remain competitive, or
it may compromise stockholders’ targeted return rates

ORGANIZATIONAL GOALS
 Managing Goals and Objectives (conflict):
 Conflict is a fact of organizational life, so it can never be
eliminated entirely
 The organization needs to recognize conflict
In the formal level
 by establishing procedures and mechanisms for goal negotiation
and bargaining
 In the informal level (greatly influenced by culture)
 Goal conflict at informal level can reveal what is really going on
 Should provide feedback to managers on whether established
goals are realistic and workable
 This information needs to be taken into account in the formal
goal-setting process

ORGANIZATIONAL GOALS
 Managing Goals and Objectives (conflict):
 Satisficing
Goals are not always fully met
 Managers may be satisfied with less than perfect or complete goal
achievement


Two additional techniques are available for managing multiple
and potentially conflicting goals.
Setting priorities
 means that some goals will take priority over others
 Sequencing of goals
 assumes that all goals will eventfully be met, but some will be
met before others

ORGANIZATIONAL GOALS
 “The concept of goals is among the most important and
most controversial concepts to be confronted in the study
of organizations.”
 Hodge’s key points regarding organizational goals:




1) Without goals, organizations wander aimlessly and cannot
survive long.
2) Goals provide a road map or direction. The very definition of an
organization delineates the importance of goals. Goals establish a
future direction, provide legitimacy, and provide standards.
3) The goals an organization selects will determine the markets it
serves, how it will service those markets, where it will operate, the
structure it will use, and so forth.
4) Goals also provide a basis for measurement and a way to judge
effectiveness. Change and adjustment needs to be based on feedback
regarding the accomplishment of goals.
EXAMPLES OF GOAL DEFINITION
 http://www.procterundgamble.de/
 http://jp.pg.com/
 http://www.pg.com/pl_PL/
 http://www.pg.com.ua/
(Germany)
(Japan)
(Poland)
(Ukraine)
ORGANIZATIONAL EFFECTIVENESS



Goals and effectiveness are related but the term effectiveness is unclear
Whether an organization is effective or not may depend on who is asking the question
Internal effectiveness



Efficiency: it maximizes outputs with respect to the costs of inputs and the costs of the transformation of those
inputs into outputs
Emotional or affective health is the concern of the Human Relations School: workers are happy and satisfied
The goal approach


Defines effectiveness in terms of “if,” and “how well,” an organization accomplishes its goals.
For this to work, goals must be measurable. There are at least 3 problems:




Resource acquisition



If the goals are ill defined, complex or inappropriate, the mere attainment of these goals does not guarantee effectiveness.
If the goals do not represent the diverse interests of important stakeholders, the organization may find itself in trouble.
Many times the meeting of one goal means that a conflicting goal cannot be achieved.
Focus on the organization’s ability to acquire adequate resources from the external environment to meet its
objectives (the basis of the systems resources model).
While acquiring resources is necessary, this alone does not give us a comprehensive picture of organizational
effectiveness
Performance from the stakeholders’ perspective


According to this perspective, organizations are effective to the extent that key groups are least minimally satisfied
Because stakeholders have conflicts, this approach forces the difficult issue of whose claims are the most important
ORGANIZATIONAL EFFECTIVENESS
 Contradictions Model


This model argues that the idea of trying to characterize a whole
organization as totally effective is problematic.
Four central assumptions drive the model.
1) Organizations face complex environments that place multiple and
conflicting demands and constraints on them. It may not be possible
to meet all of these conditions.
 2) Organizations have multiple conflicting goals. It is impossible to
maximize achievement of all goals.
 3) Organizations face multiple internal and external stakeholders, and
it may be impossible to meet all of their conflicting demands.
 4) Organizations must manage multiple and conflicting time
demands. There may be a tradeoff between satisfying short-term and
long-term demands.


This model does not suggest one best way of assessing effectiveness;
rather, it makes us cognizant of these potential contradictions.
ORGANIZATIONAL EFFECTIVENESS
 Competing Values Model


No single measure of effectiveness is, by itself, satisfactory.
This approach relies on a two dimensional approach depending on the main focus of the
organization is placed



internal vs. external
control vs. flexibility
The combination of these two-dimensions yields four distinct approaches.




Human Relations Model
 Internally focused and desire flexibility (Team culture  collaboration  “do it together”)
 Cohesion, morale, mutual support, human resource development
Open Systems Model
 Externally oriented and flexible (Entrepreneurial culture  innovation  “do it first”)
 Flexibility and creativity, control of resources, responsive to environmental changes
Internal Process Model
 Internally focused and control-oriented (Hierarchical culture  control  “do it right”)
 Clear lines of authority, stability, predictability
Rational Goal Model
 Externally focused and flexible (Rational culture  competition  “do it fast”)
 Clarity of tasks, efficiency, measurable outcomes, predictability
ORGANIZATIONAL EFFECTIVENESS
 There is not one best approach to effectiveness; we
must determine



why we want to measure effectiveness
the appropriate time frame
apply the proper model to the type of organization in question
ORGANIZATIONAL EFFECTIVENESS
 Balance Scorecard




In the 1990’s, a variety of approaches to effectiveness have emerged
that recognize the multidimensional nature of performance
Many of these approaches are direct products of the TQM movement
Robert Kaplan and David Norton have developed a balanced
scorecard approach.
To be successful, a firm must succeed in
financial performance
 internal operational performance
 customer performance
 innovation and learning performance


A good balanced scorecard approach must contain both leading and
lagging measures
ORGANIZATIONAL ANALYSIS
 Factors conditioning organizational structure
 Size



Technology





Geert Hofstede
Schein
Leadership and governance


Systems Theories
Culture


Joanne Woodward
Charles Perrow
James Thompson
Environment


Peter Blau
Richard Schoennher
Hersey and Blanchard
Strategic design

Chandler
ORGANIZATIONAL SIZE
 Service and manufacturing companies often use
different measures and definitions of size:


1) Financial and market measures, such as asset value,
revenues, or market share.
2) Concentration levels, such as the percent of business for the
top three to five businesses.



automakers vs pizzerias
3) Number of markets that an organization serves, or the
number of products they offer. Markets can include both
domestic and foreign locations.
4) The number of employees working for the organization.

largely the result of the technology and industry
ORGANIZATIONAL SIZE
 Definitions of size (examples):
 How to measure the size of a University?
 1) The total number of students.
 2) The percent of total students in the country/region/state who attend a
particular University.
 3) If it is a private university—the percent of the target market who
attend.
 4) For a research university, the number of dollars received in contracts
and grants, and the number of articles published.
 A private company?
 Nº of workers? Nº of clients?
 A hospital?
 Nº of beds? Nº of doctors?
 An NGO?
 Nº of volunteers? Hired professionals? People served?
ORGANIZATIONAL SIZE
 Organizational growth:
 Auto repair workshop: the effects of growth (and
success) can be seen on

task differentiation:


Hiring mechanics specialized on different areas
increasing support functions:

Hiring bookkeepers, marketing experts, accountants
ORGANIZATIONAL SIZE
 Organizations that grow in size
 Become more formalized and complex
 Formalization and complexity are the direct result of the need
to divide the increased work in the organization
 the desire to achieve greater specialization




Growth in rules and regulations
More job specialization
More administrative layers
SIZE AND COMPLEXITY
High
Complexity
Y´
X´
Y
X
“Complexity increases along
with size but at a decreasing rate”
(P. Blau)
Low
300
800
2300
Size (nº members)
2800
ORGANIZATIONAL SIZE
 Differences between large and small organizations:
 Number of employees, size of sales and revenues, market
share, and other measures related to size will be larger in the
larger organization.
 Large organizations will tend to be more formalized than small
organizations; they will have more layers of management,
more rules and procedures.
 More complex organizational charts in the larger organization.
 Larger companies will tend to have broader product and
service lines, perhaps organized into divisions, whereas,
smaller organizations will not.
 Larger organizations will tend to have power over suppliers,
and maybe even buyers. Smaller organizations will not.
HUMOR
 http://www.glasbergen.com/business-computer-
cartoons/
ORGANIZATIONAL SIZE
 Organizational Birth:
 Primary activity is to invent a new product or service, create a
new technology, or improve an existing product or service.
 The organization is not necessarily officially created (might be
an adhocracy).
 It is organic, and the entrepreneur is firmly in control.
 The critical task in this first stage is survival; between 60 and
75 percent fail in the first six years because of the liability of
newness.
 At some point, outside talent needs to be brought in to create
some structure and permanence
 Often the transition between the entrepreneur and
professional managers is very difficult and rocky
ORGANIZATIONAL SIZE
 Many small businesses are started by entrepreneurs who
understand a craft, a process, technology, or a market
niche from a technical viewpoint.
 The entrepreneur may be a great cook, mechanic,
computer programmer, salesperson, and so forth.
 As the business grows, he or she needs help in
administrative support areas where he or she either has
little interest and/or significantly fewer skills.
 Even though the entrepreneur may not have these skills,
it is still difficult to give up control of these areas, and
that often becomes a major stumbling block for new
firms as they start to move through the life cycle
ORGANIZATIONAL SIZE
 Emergent structure:
 If the new venture solves the financial, market, and managerial
problems of its birth, it must then
provide leadership,
 establish clear goals,
 differentiate departments,
 divide labor,
 delegate responsibilities,
 develop a hierarchy.



This stage is referred to as a collectivity stage
The critical task, at this point, is to balance
the need for a formal structure with
 the need to continue to grow and adapt to external conditions

ORGANIZATIONAL SIZE
 The formal organization:
 Over time, but at a slower pace, the organization moves
towards more formalized structure and bureaucracy.
 There is now a time of greater stability and predictability.
 The formalization stage is marked by greater reliance on
traditional bureaucratic mechanisms of control.
 The organization may expand into more markets and
geographical areas.
 It may need more complex structures, such as divisions.
 Organizations must balance
the need for control and structure with
 the need to remain flexible and innovative.

ORGANIZATIONAL SIZE
 Dinosaurs and Turnarounds:
 Once-successful organizations sometimes reach the point at which
bureaucratic controls no longer work.
 To deal with increasing complexity, managers write more and more
complex rules that inhibit control and communication rather than
enhancing it.
 This stage is called the elaboration stage because of the need to
elaborate on bureaucratic mechanisms.
 Often, organizations will utilize teamwork and self-management of
shared values and norms to replace bureaucratic rules and procedures.
 These changes are labeled in a variety of ways, including re-inventing,
downsizing, restructuring, re-engineering.



1) Restructuring refers to re-configuring organizational units or departs.
2) Re-engineering refers to re-configuring the work process.
3) Rethinking refers to reevaluation of the organization—its identity, its
purpose, and its methods and capabilities.
ORGANIZATIONAL SIZE
 Organizational decline




The organization’s inability or reduced capacity to cope
with this environment.
Organizations generally do not decline rapidly; rather, it happens in
a slow, agonizing retreat described as a “downward spiral.”
Decline is hard to reverse because, in many cases, the decline
exacerbates the difficulty of obtaining resources.
Decline has five distinct stages:
1) Blinded—failure to detect environmental pressure.
 2) Inaction—failure to decide on corrective action, misinterpretation
of information, noticeable decline.
 3) Faulty action—faulty decision and/or faulty implementation of
solutions.
 4) Crisis—last chance for reversal, given a favorable environment and
a slow decline.
 5) Dissolution—given a hostile environment—quick demise; given a
favorable environment—slow decline.

ORGANIZATIONAL SIZE
 Should organizations grow?
 Growth may be pursued
 to gain power over suppliers, buyers, regulators
 to profit from economies of scale
 It may have, however, dysfunctional consequences
 Diminishing returns
 Need for adaptation
 Cultural change
 In recent years, because of technological and
environmental changes, smaller organizations are
beginning to be able to achieve economies of scale
that were formerly reserved for large organizations
ORGANIZATIONAL SIZE
 The advantages of small size:
 1) Downsizing. As organizations grow, they tend to increase
administrative structures and develop more specialization. Downsizing
often involves eliminating some layers and, perhaps, broadening job
descriptions and responsibilities.
 2) Redesign: redesigning a formerly bureaucratic structure into a flatter,
more organic organization with fewer layers of hierarchy. It may also mean
elimination of certain divisions. This could result in selling off or spinning
off divisions
 3) Virtual organizations: subcontracting out much of their work in
order to achieve the advantages of smaller size and flexibility. They
sometimes do this to such an extent that they become a shell or an
umbrella organization. www.nike.com
 4) Coordination and control: changing the culture. To make a large
organization behave like a smaller organization, managers often have to
change the underlying corporate culture. Large companies can emphasize
small firm values, such as entrepreneurship, risk-taking, closeness to
customers, decentralized authority, individual responsibility,
innovativeness, responsiveness, etc.
ORGANIZATIONAL SIZE
 Is growth good?
 It depends on how do we define it!!!
 Advantages of size
 Need for downsizing
ORGANIZATIONAL TECHNOLOGY
 Technology is a major factor in the contingency model of
organizations
 Technology refers to the knowledge, tools,
machines, information, skills, and materials
used to complete tasks within organizations, as
well as to the nature of the outputs of the
organization
 Popular meanings related to “high tech” or “low tech” are
too limiting.
 Two questions must be answered to guide our thinking:


1) How does the organization get its work done?
2) How can management control that technology?
ORGANIZATIONAL TECHNOLOGY
 Technology:
 The technology used in an organization causes an organization
to structure or organize a certain way and also affects
individual conduct of members
 Efficiencies are gained, there are also costs in training, human
resource dislocations
 Three levels of technology:
1) Core Technology—used to characterize the entire organization;
 2) Work unit or department technology;
 3) Interdependent relationships that result from the flow of work
between work units.

ORGANIZATIONAL TECHNOLOGY
 Technology
 Joan Woodward’s 1950's study of British manufacturing
companies. She developed a three-category scheme for
classifying organization-level technology:

1) Unit or Small Batch



(Hull & Collins: traditional  Skilled craftsmen or technological 
skilled programmers and automatization)
2) Mass or Large Batch
3) Continuous Process or Flow.
 Woodward’s work also identified a contingency
relationship between technology and structure.



1) The unit or small batch needed an organic structure.
2) The mass or large batch needed a mechanistic/bureaucratic
structure.
3) The continuous process or flow needed an organic structure.
ORGANIZATIONAL TECHNOLOGY
 Technology:




Special attention needs to be focused on service as a core technology.
Services tend to be intangible.
Examples include teaching, medical services, legal services, banking,
etc.
Differences between services and manufacturing can be seen by
examining the extreme or prototypical cases on five dimensions:
1) Tangibility—which refers to the concreteness or abstractness of
output. Services tend to be more intangible.
 2) Standardization—services tend to be less standardized and more
tailored to customer needs.
 3) Customer participation—services directly involve the customer
in the process.
 4) Timing—services require simultaneous production and
consumption.
 5) Labor intensity—services, in general, tend to be more labor
intensive.

ORGANIZATIONAL TECHNOLOGY
 Managing Service Technology:


Managing service technology is somewhat different from managing
manufacturing technology.
The Ashton Group developed a scale for classifying technology based
on three factors:
automation of equipment;
 workflow rigidity; and
 specificity of evaluation.





These are combined into a workflow integration scale.
High levels of automation, greater rigidity of work, and more precise
measures of operations characterize organizations with technologies
that scored high on work integration.
Low scores indicate the opposite.
Services tend to score low on workflow integration,

thus service organizations should be managed with organic
organizational structures that include low formalization, low
specialization, and decentralization.
ORGANIZATIONAL TECHNOLOGY
 Technology
 This framework was developed by Perrow,
 Technology is defined on the dimensions of
exceptions/variety
 analyzability





High-task variety jobs have many exceptions to standard
operating procedures.
Low variety technologies permit little flexibility,
High variety permits greater flexibility.
Examples:
jobs at pizza carryout are low variety;
 at a marketing department, high variety.

ORGANIZATIONAL TECHNOLOGY
 Technology
 The second dimension is analyzability.
 Tasks characterized by readily available information, that is
easily obtained, are high analyzability tasks.
 Those characterized by unavailable information or information
difficult to obtain are designated as low-analyzability tasks.
 High-analyzability tasks can usually be standardized or
programmed (even the resolution of problems).
 Low-analyzability tasks are uncertain, ambiguous, and
complex.

Problem solvers must rely on judgment, instincts, intuition, and
experience.
ORGANIZATIONAL TECHNOLOGY
 Technology
 Based on these two dimensions, Perrow developed
four categories:




1)
2)
3)
4)
Routine—low variety/high analyzability;
Engineering—high variety/high analyzability;
Craft—low variety/low analyzability;
Non-routine—high variety/low analyzability.
 ESeC
CHARLES PERROW’S MODEL
Variability/diversity of tasks
Few exceptions
Many exceptions
Undefined
Analyzability
Problem solving protocols
Craft
(Artisanship: glass)
Non-routine
(aerospace)
Non-routine
Routine
(Steel)
Engineering
(Heavy machinery)
Routine
Well-defined
Adapted from Perrow
ORGANIZATIONAL TECHNOLOGY
 Technology
 James Thompson developed a technology framework (which
has been elaborated on by others) that focuses on the nature
of interdependence and coordination among departments.
There are three essentials questions about interdependence
that must be asked:



1) How much does one unit or department depend on another to
complete work?
2) What is the nature of that interdependence?
3) How can we achieve the necessary coordination?
 Mediating Technology (pooled interdependence)
 Long-linked technologies
 Intensive technology (reciprocal interdependence)
ORGANIZATIONAL TECHNOLOGY
 Task Design and Technology:
 Fitting People to Jobs: The Traditional
Industrial Ethic.





Jobs are regarded as nearly inflexible, as determined by the
technology, and people are seen as being flexible enough to fit
the job.
People can be selected and trained.
This approach is conducive to job specialization and for
assembly-line operations.
In many cases, human beings are not infinitely malleable.
People may not be able to adapt, and this can cause disruption
ORGANIZATIONAL TECHNOLOGY
 Task Design and Technology:
 Fitting Jobs to People: The Task of the
Postindustrial Society.






Here the capabilities of the available labor force take precedence over
the technology.
The skills, abilities, and aspirations of the labor force are analyzed,
and a technology is adopted that results in jobs that are consistent
with the available skills and abilities.
This view has led to job redesign and job enrichment efforts.
The idea is to create more challenging and motivating jobs.
However, some workers may prefer highly structured jobs with little
responsibility.
Thus, these approaches have not solved all of the problems, and the
sociotechnical approach suggests that the set of relationships
between individuals, organizations, tasks, and technology may be
more complex
ORGANIZATIONAL TECHNOLOGY
 Task Design and Technology:
 Sociotechnical Systems: A Middle Ground.






Here we combine both approaches outlined above.
This approach explicitly considers both people and technology.
The whole person is considered, and the range of factors that
impinge on the human-machine interface is explicitly considered.
This approach assumes that technology cannot be fully understood
apart from the relationship to people.
The design of tools, equipment, and process must consider human
aspects, including strength, durability, range of motion, and the
ability to socially interact in the conduct of one’s job.
Also, the design must take into account the degree to which humans
can adapt through learning, conditioning, and experience
THE ENVIRONMENT
 The Environment
 Managers should formulate strategies and conduct
the organization in such a way so as to maximize the
organization’s fit with the environment. Three
associated tasks are:



1. Knowing the environment
2. Adapting or responding to the environment
3. Changing the environment
THE ENVIRONMENT
 The Environment
 Uncertainty can come from three aspects of the
environment

1. Complexity


2. Change


number of sectors or elements of the environment relevant to the
organization.
Since an organization has limited capacity to monitor the
environment, increasing levels of change and complexity cause
uncertainty.
3. Munificence (means there are abundant resources)
When resources become scarce, they create uncertainty for an
organization because it becomes more dependent on others for the
vital resources it needs.
 This dependence can also occur when there are large power
differences between organizations, such as between Wal-Mart and its
suppliers.

THE ENVIRONMENT
Abundance
Stable
Simple
Complex
Scarcity
Adapted from
S. Robbins
Dynamic
ORGANIZATIONAL CULTURE
 Organizational Culture:
 Organization culture vs general societal culture
 Two levels of organizational culture:


1) observable traces or indicators, such as architecture, artwork,
dress, language, stories, myths, behavior, formal rules, rituals,
ceremonies, and appearances; and
2) unobservable forces present in the organization, such as norms,
assumptions, ideology, values, and shared perceptions.
 Culture is the pattern or configuration of these
two levels of characteristics that orients or
directs organizational members to manage
problems and their surroundings
 Weber’s Trains (self-interest) and Railroads (values)
ORGANIZATIONAL CULTURE
 Five Elements of Corporative Culture:

Values
Desirable
 Desired


Rites (formal and informal)
Protocol
 Company parties / CEO public speech


Symbols


Heroes


Company logos
Founding father’s of the organization
Norms
Dressing codes
 Schedules (time at office)

ORGANIZATIONAL CULTURE
 Six Dimensions of Corporative Culture

Employee oriented vs task oriented


Process oriented vs goal (result) oriented


Taylorism vs Human Relations School
Flexibility/autonomy vs protocols and rules
Corporatism vs professionalism
Level of education
 Self-identification with corporate values


Open system vs closed system


Loose control vs strict control


Acceptance of new members
Regarding expenditures and use of means
Normativism vs pragmatism

Client oriented vs norm oriented (Public/Bureaucratic)
ORGANIZATIONAL CULTURE
 Geert Hofstede and William Ouchi
 Organizational cultures are influenced greatly by the
national culture
 Hofstede has proposed five dimensions



1) Individualism-Collectivism
2) Uncertainty Avoidance
3) Power Distance


Importance of hierarchy
4) Masculinity-Femininity
Assertiveness
 Salary vs working environment


5) Time Orientation (Confusion Dynamism)

Short term vs long term goals
ORGANIZATIONAL CULTURE
 Organizational Culture
 Four Views Based on Four-Leading Scholars
 Schein’s


Scholz’s


Topology of Culture Formation
Fombrun


Stages of Culture Formation
Levels of Culture
Louis

Multiple Cultures
ORGANIZATIONAL CULTURE
 Schein’s Stages of Culture Formation
 Leader characteristics, such as age, training, background,
gender, and experience, are important in the formation of
culture
 Confrontation of
intimacy,
 role differentiation
 peer relationship issues


Creativity and stability issues must be confronted.
Much of the early success, based on innovation and creativity,
comes into conflict
 Needs for more predictability and stability


The organization matures and has to confront growth and
survival issues
ORGANIZATIONAL CULTURE
 Scholz’s Topology of Culture Formation
 Culture develops along three dimensions
 1) Evolutionary dimension.
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2)Internal dimension.
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Not all organizations follow a sequence, nor is any one stage better than another.
The stages are: the stable stage, the reactive stage, the anticipating stage, the exploring stage, and the
creative stage.
The internal conditions within the organization affect the culture.
For example, an organization that uses standardized production processes would create conditions for
a culture that is constant and process oriented. The result is a consistency culture that places a high
value on standard procedures and consistency outputs, as illustrated by McDonald’s.
On the other hand, a professional organization with employees possessing varied skills and high levels
of professional expertise is likely to foster development of a culture that emphasizes individualism and
professionalism. This type of culture is referred to as a clan or involvement culture.
3) External dimension.
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The external environment will impact the development of culture.
A complex and dynamic environment is likely to develop a culture that values flexibility,
innovativeness, and risk taking.
 The external focus can be manifested in two different ways: as an adaptability culture based on
innovations and/or attempts to change in response to the environment, or as a mission culture
with a focus on meeting customer needs.
Conversely, an organization facing a simple and stable environment is likely to
adopt a culture that features conservatism, risk aversion, and bureaucracy.
ORGANIZATIONAL CULTURE
 Fombrun—Levels of Culture
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1) Societal level.
Culture represents the values, attitudes, and meanings that members
bring to the organization.
 The educational system, political system, economic conditions, and
social structure of the larger society may influence this.
 The organization operates within this general cultural atmosphere and
is influenced by it.
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2) Industrial level.
There are some similarities and differences of culture between
industries.
 The majority of organizations within an industry may espouse certain
dominant values. (the banking industry vs Silicon Valley).
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3) Organizational level.
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The organizational level must be understood in terms of both the
individual organization and as a function of the larger society and
industry in which the organization finds itself.
ORGANIZATIONAL CULTURE
 Louis—Multiple Cultures
 Louis suggests that organizations are not simply a single
monolithic culture. Large organizations often develop
different cultures at different sites or loci within the
organization. Subcultures can develop among different levels
in the organization or within different divisions or
departments
LEADERSHIP AND GOVERNANCE
 Hersey, P. and Blanchard, K. H.
 “Management of Organizational Behavior” (1972)
 There is no single "best" style of leadership
 Effective leadership depends on
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the person or group that is being influenced,
the task, job or function to be accomplished
 A good leader develops “the competence and
commitment of their people so they’re self-motivated
rather than dependent on others for direction and
guidance”
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Four combinations of competence and commitment make up the
development level
Four types of leadership styles
HERSEY & BLANCHARD MODEL
HERSEY & BLANCHARD MODEL
HERSEY & BLANCHARD MODEL
LEADERSHIP AND GOVERNANCE
 Governance and control
 Theoretical background
 Methodological approaches (Ficha 7)
Holistic: individual behavior is result of structures; focus on
Explain structures and their change
 Individualistic methodology: structures are created by individuals
acting rationally; focus on explaining individual behavior
 Rational choice theories
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• Agency theories (Jensen & Meckling 1976)
• Transaction cost theories (Williamson 1981)
LEADERSHIP AND GOVERNANCE
 Governance and control
 Agency theory is concerned about the relationship between
principals (owners) and agents (employees).
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Agency theory assumes that agents will act in opportunistic ways; therefore,
appropriate contracts and monitoring is necessary to reduce agency costs.
Organizations are seen as a series of contractual relationships between principals
and agents.
Agency costs are the costs associated with monitoring agent behavior and
enforcing contracts.
 Transaction cost economics focuses on how to maximize
efficiency of transactions by determining the proper boundaries of
the organization. That is, what should be done internally vs. what
should be contracted for on the outside.
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A transaction is defined as the exchange of goods and services among groups
within the organization or across organizational boundaries.
A transaction cost is an explicit fee or cost associated with a transaction, or an
implicit cost of monitoring and controlling a transaction.
Develop professionalism and/or externalize services which are not at the core
activity of the organization to reduce costs
LEADERSHIP AND GOVERNANCE
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Organizational economists use the term “cost” to refer to a wide range of problems that owners
must remedy in order to create an organization that allows for wealth maximization.
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1) Bounded rationality.
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2) Opportunism.
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Information related to exchanges or transactions is not evenly distributed. One participant is likely to have more than
another. Agency theory has used this concept to explain opportunism and moral hazard. It assumes that agents have
certain information about their own behavior and shortcomings that is not available to the principal, or a contractor may
have information that is not available to the principal. In order to reduce this asymmetry in information, costs are
incurred in gathering additional information and using various governance mechanisms. Information asymmetry, in
part, is what motivates key decisions as to which tasks should be conducted within or outside the organization.
4) Asset specificity.
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Principals and agents often have different goals and will seek their own self-interest. The theory states that agents will
not always fulfill their obligations because they prefer leisure to work and are subject to shirking. This problem is
referred to as moral hazard—workers will not put forth the agreed-upon effort.
3) Information Asymmetry.
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Owners and managers are unable to process all of the available information, and face uncertainty in transactions or
contract relationships. Because of this, employees, suppliers, and contractors may be in a position to take advantage of
the owner. Therefore, costs are incurred by the owner in gathering and processing information in order to reduce these
costs.
Assets that are very specific and fixed can reduce the flexibility of an organization. That is, it may be hard to transfer
them to another purpose or to sell them at a reasonable level. The decision to invest or not to invest in specific assets has
implications on how the organization governs its relationship with employees and other firms.
5) Small Numbers.
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An organization may incur a transaction problem when it is faced with only a small number of potential trading partners
(an oligopoly). The major problem with this situation is that an organization can more easily be exploited by a trading
partner.
LEADERSHIP AND GOVERNANCE
 Mechanisms for control: Owners try to protect their interests by
 Creating either behavioral contracts or outcome-based contracts
 Pay-for-performance at the CEO level
 Markets as disciplinary forces
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The stock market, labor market, and debt market, can provide feedback about the company’s
performance.
The price of the company’s stock can result in managerial rewards or punishments
 Bureaucratic control
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1) Comprehensive job descriptions and performance appraisal systems.
2) Statistical or numerical control systems.
3) Budgeting and accounting systems.
4) Work rules or procedural guidelines.
 Clan control
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Bureaucracies can become inefficient
Clan control utilizes the shared norms, values, and beliefs of organizational members to
ensure that people pursue common goals and objectives.
It doesn’t eliminate all transaction costs but it does reduce problems of opportunism

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