Management Lecture 12 Org Structure Theories

							Principles of Management

 Theories of Organization Design
    Nature of Organization Design
•    Organization Design is the process of developing and
     implementing an appropriate organization structure.
•    The process involves an ongoing series of decisions
     about the combination and application of structural
     elements that are used to form the organization
     structure.
•    In the course of its life, the organization structure rarely
     remains constant.
•    Organization design is concerned with four questions:
    1. What should be the units of the organization?
    2. Which units should be grouped together, and which should be
       kept separated?
    3. What size and shape should the various units assume?
    4. What is the appropriate placement and relationship of the
       various organizational units?
     Theoretical Approaches
• Classical Approach
• Henri Fayol, Lyndall Urwick, Luther
  Gullick, and Chester Bernard are among
  the many who contributed to the classical
  approach to organization design.
• Max Weber’s “theory of bureaucracy” is
  one of the most enduring concepts.
        Behavioural Approach
• Rensis Likert’s Systems
  – System 1: A traditional organization design that relies
    heavily on formal authority and the hierarchical chain
    of command
  – System 4: A ideal form of organization design that
    relies on manager-employee collaboration, uses a
    wide array of motivational processes, and encourages
    freer interaction among organization members.
  – System 2 and 3: Represent intermediate stages
    between emphasizing managerial authority and
    emphasizing manager-employee collaboration.
       Behavioural Approach
• Sociotechnical System Theory
  – Organization design must take into account the
    interaction of the organization members, the
    technological system used to produce goods or
    services, and the degree of interaction with the
    external environment.
  – Whatever the nature of this interaction, the
    technological system can affect employee attitudes,
    ideas, and satisfaction.
  – The theory does not explain the origins and causes of
    events within the social system or the interaction
    among the social system, the technological system,
    and the environment, so its practical application is
    sometimes limited.
         Behavioural Approach
•   The Contingency Approach
    – Applies to organization design in two ways:
      1. There is no single best way to design an
         organization’s structure.
      2. The alternative ways to organize may not be
         equally effective.