Organizational Design

1. Principles and Practices of
Management
Organizational Design
Dr. Adel Alsaqri

2. Learning Outcomes
1. Distinguish between charismatic, traditional and legitimate forms of
authority.
2. State the main characteristics of a bureaucratic organization structure as
specified by Max Weber.
3. Distinguish Fayol’s six managerial activities and the main ideas of the
classical management school.
4. Distinguish Mintzberg’s ten management roles.
5. Identify the writers who comprise the early contingency approach and
state their main individual contributions.
6. Discuss the strengths and weaknesses of early ideas on the design of
organization structure and the practice of management.
7. Identify the influence of early organization design ideas on contemporary
organizations.

3. Why study organization design?
• almost 60 per cent of organization around the USA had experienced
organizational redesign in the last two years
• further 25 per cent had undergone it three or more years ago
• The design of an organization: is the outcome of senior
management’s decision about its corporate strategy which refers to
establishing the aims of a company and the means by which these
will be achieved.
• Organization design refers the integration of structure, people,
rewards and processes to support the implantation of that corporate
strategy.

4. Organizational Design

5. Max Weber’s Bureaucracy
• Max Weber, a German sociologist and philosopher was the first to
introduce organizational design through his theory of bureaucracy.
• Weber studied societies in history and distinguished three different
types of authority – traditional, charismatic and legitimate authority.
• Bureaucracy is the form of organization structure associated with
legitimate authority

6. Characteristics of bureaucracy
Bureaucracy
has
Job
specialization
Authority
hierarchy
Formal
selection
Rules and
procedures
Impersonality
and
impartiality
Recording

7. Max Weber’s Bureaucracy
• Weber believed that an organization based on legitimate authority
would be more efficient than one based on either traditional or
charismatic authority
• Weber’s model gave little consideration to people’s behaviours or
their attitudes
• The strength of bureaucracy lies in its standardization.
• Employee behaviour is controlled and made predictable.
• This ensures that different people in the same organization carry out their
work in a similar way.
• The bureaucratic emphasis is on stability, fairness and predictability

8. Henri Fayol and managerial activities
• Fayol identified six managerial activities that supported the operation
of every organization and needed to be performed to ensure its
success.
• Although his list of management activities was originally developed over 80
years ago, it continues to be used to this day.

9. Henri Fayol and managerial activities

10. Henri Fayol and managerial activities
• The six management activities are interrelated.
• For example, a company management team begins by forecasting the
demand for its product (e.g. steel wire).
• Once it is clear that there is a market for the product, the next activity,
planning, will take place.
• planning involved ‘making a programme of action to achieve an objective’.

11. Henri Fayol and managerial activities
• organizing involves breaking down the main task into smaller pieces, and
distributing them to different people
• Commanding defined as ‘influencing others towards the accomplishment
of organizational goals
• It is also called directing, motivating or leading.
• To do this, managers must possess knowledge of the tasks to be done and of the
people who are to do them.
• coordinating, involves ensuring that the various tasks previously distributed
to different employees through organizing are being brought together and
synchronized with one another.
• Coordination can be achieved through emails, meetings and personal contacts
between the people carrying out their unique job tasks

12. Henri Fayol and managerial activities
• Controlling involves monitoring how the objectives set out in the plan
are being achieved, with respect to the limitations of time and budget
that were imposed.
• Although Fayol’s six managerial activities have been presented as a
sequence, in reality they occur simultaneously in a company
• Fayol’s ideas are referred to as the classical theory of organizations or
management.

13. Classical Management School
• Classical theory considered that there was one, best organization
structure which would suit all organizations, irrespective of their size,
technology, environment or employees.
• This structure was based on the application of certain key principles
reflecting the ‘logic of efficiency’, which stressed:
• functional division of work;
• hierarchical relationships;
• bureaucratic forms of control;
• narrow supervisory span;
• closely prescribed roles.

14. Criticism of classical management
• At the beginning of the twentieth century many new companies were
established.
• those who managed these organizations had no model or experience to fall
back on and had no choice but to develop their own principles and theories
as to what to do to run them well.
• Fayol’s principles were criticized by various writers. Their criticisms
included that he:
• misleadingly proposed a single, standardized organizational model as the
optimum one;
• promoted a militaristic, mechanistic organization, which stressed discipline,
command, order, subordinates and esprit de corps;

15. Criticism of classical management
• overlooked the negative consequences of tight control and narrow task
specialization, which can demotivate employees and hinder efficiency;
• overemphasized an organization’s formal structure, while neglecting
processes such as conflict management, decision making and
communication;
• underestimated the complexity of organizations; based his ideas on
unreliable personal knowledge, rather than systematic research evidence;
• lacked a concern with the interaction between people;
• underestimated the effects of conflict;
• underrated the capacity of individual workers to process information;
• misunderstood how people thought.

16. Henry Mintzberg’s managerial roles
• While Henri Fayol focused on managerial activities, Henry Mintzberg,,
studied the different roles performed by managers.
• studied chief executives in large and medium-sized companies
• distinguished ten managerial roles which he classified under the three
headings of interpersonal, informational and decisional,

17. Henry Mintzberg’s managerial roles

18. Henry Mintzberg’s managerial roles

19. Henry Mintzberg’s managerial roles

20. Contingency approach
• asserts that the appropriate solution in any specific organizational
situation depends the circumstances prevailing at the time.
• argues that,
• to be effective, an organization must adjust its structure in a manner that
takes into account the type of technology it uses, the environment within
which it operates, its size and other contextual factors.

21. contingency approach
• The contingency approach holds that:
• there is no one best way to design an organization;
• an organization’s structure must ‘fit’ its environment;
• the better the fit between an organization’s structure and its environment,
the more effective it will be;
• employees’ needs are best met when a company is properly structured and
its management style is appropriate for the task in hand.

22. Early contingency approach
• organization design is an on-going management task
• Weber’s bureaucratic organization structure, described earlier in this
session, is said to be appropriate for (matches) a stable environment, while
a turbulent company environment requires a more flexible organization
structure.
• contingency approach was a reaction to management thinking in the first
half of the twentieth century which was dominated by the search for the
‘one best way
• Weber and Fayol all recommended single, universal solutions to management
problems, often in the form of laws or principles
• Subsequent contributions to the contingency school came from many different
researchers who studied wage payment systems, leadership styles and job design.

23. early ideas on the design of organization
structure and the practice of management
• The main debate within the contingency approach to organization
structuring is between two of its sub-schools –
• the determinists and the strategic choice thinkers
• The determinists assert that ‘contextual’ factors, like an organization’s size, ownership,
technology or environment, impose certain constraints on the choices that their
managers can make about the type of structure to adopt.
• strategic writers contend that a company’s structure is not predetermined in this way.
• Instead they say that it is always the outcome of a choice made by those in positions of
power.

24. Environmental determinists
• Several writers have had an interest in the relationship between a
company’s environment and its structure
• Some of them argue that company success depends on securing a
proper ‘fit’ or alignment between itself and its environment
• environmental determinism means that the environment determines
organization structure.

25. Differentiated and integrated organization
structures
• During the 1960s, Paul Lawrence and Jay Lorsch (1967) built on the
work of Burns and Stalker, using the concepts of differentiation and
integration.
• Differentiation refers to the process of a firm breaking itself up into subunits,
each of which concentrates on a particular part of the firm’s environment.
• A university differentiates itself in terms of different faculties and departments or
colleges and schools
• subunits developing their own goals, values, norms, structures, time frames and interpersonal
relations that reflect the job that they have to do, and the uncertainties with which they have
to cope.

26. Differentiated and integrated organization
structures
• Differentiation can take two forms
• Horizontal differentiation is concerned with how work is divided up between
the various company departments and who is responsible for which tasks.
• Vertical differentiation is concerned with who is given authority at the
different levels of the company’s hierarchy.

27. Contemporary organization
• consideration of the decisions that managers make about their
organizations within their environments
• strategic choice and environment are central concepts
• Strategic choice holds that managers who control an organization make a
strategic choice about what kind of structure it will have.
• They also manipulate the context in which their company operates, and how
its performance is measured.
• The decisions about the number of hierarchical levels, the span of
control, division of labour and so on, are ultimately based on the
personal beliefs and political manoeuvrings of the senior executives
who make them.

28. Contemporary organization
• Strategic choice researchers have criticized the deterministic writers on a
number of issues:
• The idea that an organization should ‘fit’ its environment
• Different companies might be competing in the same market; yet making different strategic
choices
• The idea that cause and effect are linked in a simple (linear) manner
• Organization are complex where managers might make different decisions. Thus, the idea
that organization merely adopt to their environment is too simple view
• The assumption that the choice of organization structure is an automatic reaction to
the facts presented
• Managers make decision based on their interpretations of situations, and that varies from one
and another.
• The view that choices of organization structure are not political
• It neglects the variations between managers’ perceptions and interpretations

29. Commentators of Organizational Design and
Structure

30. Ahead of next class
• Read Chapter 18 (Leadership).
• Work on the google case study – Restructure strategy