Research Note 84-72

ORGANIZATIONAL STRUCTURES, PROCESSES, AND PROBLEMS:

A LITERATURE REVIEW AND TAXONOMY

Arvind Ehambri, Murray M. Daiziel, and Stephen A. Williamson

McBer and Company

Glenda Nogami and William R. Sanders,

0 Contracting Officer's Representatives

Submitted by

T. 0. Jacobs, Chief

LEADERSHIP AND MANAGEMENT TECHNICAL AREA

and

Joyce L. Shields, Director

MANPOWER AND PERSONNEL RESEARCH LABORATORYDT C

______nn'LE-CTE

Research Institute for the Behavioral and Social Sciences

May 1984

Approved for public release; distribution unlimited.

This report, as submitted by the contractor, has been cleared for release to Defense Technical Information Center

(DTIC) to comply wvith regulatory requirements. It has been given no primary distribution other than to DTIC

anervile aTila.bTe vilewsoug DpInins adoor feenpcntainedine ths he athosa e heia authorm on.

asdrille aailablTe ofily topiron d/Cor otherngreerencedrvices epch as NaioalT etoeo the hnicls fratndN.

should not be contstrued as an official Depattment of the Army position, policy, or decision, unless so designated

by other official documentation.J

84 05 11 030

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Organizational Structures, Processes, and

Problems: A Literature Review and Taxonomy Final Report S. PERFORMING ORG. REPORT NUMBER

7. AUTNORIi) S. CONTRACT OR GRANT NUMBER(&)

Arvind Bhambri, Murray M. Dalziel,

Stephen A. Williamson MDA 903-80-M-8914

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AREA & WORK UNIT NUMBERS

McBer and Company

137 Newbury Street 2Q263731A792

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ATTN: PERI-RL IS. NUMBER OF PAGES

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IS. SUPPLEMENTARY NOTES

This research was technically monitored by Dr. Glenda Nogami and Mr. William

R. Sanders of ARI.

IS. KEY WORDS (Continue on ,o,eree eide it neceep end Identify by block number)

Leadership in military Organizational structures

Military organizational framework Problem diagnosis

Organizational effectiveness Problem intervention

Organizational problems

Organizational processes

2& JITRACT (Camta. --..m .. N n.ew*et md d eyi by block numbr)

his report provides a limited review of the literature on organizational

structure, processes, and associated problems that are amenable to diagnosis

and remediation by either leaders or organizational consultants. Within this

limited scope, dominant technology impact on structure and process is discussed

and guidelines are provided for the development of a strategy of organizational

diagnosis focusing on either structure or organizational process antecedents.

84 05 00

D IFo.I 1rc u n TncO j1 or l o v st s rsOo r6 IDnrt ft 

SECumrY CLASSIFICATION OF T IS PAGE (When Dots Entered)
TABLE OF CONTENTS

page

I. Introduction 1

II. Major Schools in Organization Theory 3

III. The Organizational Contexct 20

IV. Organizational Structure 32

V. Problem Diagnosis and Intervention 55

Accession For

DTIC TAB

Unannoun ed

Just if ication

Distribution/4

Availability Codes

Avail and/or

Dist Special
LIST OF TABLES " .

pjp

Table 1: The Anticipated and Unanticipated Consequences of the Bureaucratic Form 4

Table 2: Classical Management School 7

Table 3: The Human Relations School 8

Table 4: Argyris's Organizational Properties,

Psychological, Health, and Psychological Sickness 10

Table 5: The Decision Theory School 12

Table 6: Open Systems Theory 14

Table 7: Toward a General Contingency Model of

Organization-Environment Relations 17

Table 8: Dimensions of Organizational Environments 22

Table 9: Propositions for Organizations: The Implications of Dimensions of the Environment 25

Table i0: Conditions for the Matrix 39

Table 11: The Matrix Form - Problems 43

Table 12: Relationship between Organizational Processes

and Organizational Structures 54

Table 13: Client Problems 56

Table 14: A Guide for Interpreting Scores on the

Climate Dimensions 57

Table 15: A Partial Listing of Univariate Measures

of Organizational Effectiveness 61

Table 16: Performance Indicators (or Symptoms) for

: Problem Diagnosis 64

Table 17: Classification of Organizational Problems

by Contextual Variables 65

Table 18: Key Domains to Be Researched for Structure

or Process Intervention 68

iv

i . . . .. .. .. ~K
LIST OF TABLES (continued) -

page

Table 19: Taxonomy of Structural and Process

Dimensions for WEQ 69

Table 20: Conversion of Supervisory Index into

Suggested Spans of Control 76

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LIST OF FIGURES -

page

Figure 1: Functional Structure 34

Figure 2: Mixed Structure 37

Figure 3: The Matrix Design 40

Figure 4: Matrix Design in a Manufacturing Firm 41

Figure 5: Linkage Chart for Hypothetical Organization 72

Figure 6: Scoring Chart for Supervisor Index 75

vi

III Now
I. INTRODUCTION

This study has two objectives: (1) to present a review of

organizational structures and processes in ways which can be applicable to the Army's OE effort; and (2) to relate these findings to a diagnostic method which Organizational Effectiveness

Staff Officers (OESOs) can use to enhance their OE efforts.

The notion of organizational structure in the military poses

a large question mark. While private industry innovated in the

1960s and 1970s with a variety of designs, the Army has remained

wedded to traditional staff-line hierarchies. This is reflected

in the literature. There is a scarcity of references to military organizations as organizational structures. Rather, social

and behavioral science literature tends to focus on individual

roles, the problems of socialization, and the behavior of the

primary group. Indeed, because there is evidence that the behavior of primary groups has a significant impact on military

performance (see George, 1971, Aran, 1974), much recent research

has concentrated on this aspect without examining how primary

groups are aggregated into fuller structures or the processes

which keep sets of primary groups intact. Organizational structure is seen as invariant, and characterized largely by the

chain of command. However, primary groups do not exist in a

vacuum. They have tasks to perform, and they have to coordinate

with other groups. In relating to other groups they have to

make decisions about how to implement orders. These are the

cornerstone variables which make for organizational structure.

Organizational processes bind these structures together and make

it possible for the structure to exist. While TOE requirements

and IG inspection specifications limit the flexibility of commanding officers to change structures, it is still necessary to

ask how tasks are really structured and coordinated and what

processes exist. The key diagnostic principle we employ is to

ask the following questions:

2. Are the organizational processes compatible with the

way the organization is currently structured?

2. Is the way the organization is structured compatible

with the type of environment it faces?

We believe it is still possible to ask these questions in relatively fixed structures. As we shall point out in Section IV,

the major organizational forms can exist in actuality even

though the organizational chart specifies one type of structure.

Section II of this study examines the major attributes and

shortcomings found in the major schools of organizational

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theory. The purpose of this chapter is to detail the-mange- of

variables which are examined in an organizational study.

Section III outlines a framework for looking at the context

in which organizations operate.

Section IV is the key section outlining structural variables

and organizational-process dimensions and the way they link together. Section V discusses how these frameworks can be utilized in an organizational effectiveness effort.

Section V relates the findings of previous sections to the

problems encountered by DESOs in the field.

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II. MAJOR SCHOOLS IN ORGANIZATION THEOR'

As organizations have grown to be a pervasive fact of life

in the past century, many theories have been developed to describe and explain their functioning. Many authors have also

done extensive reviews and critiques of these theories (Mintzberg,

1979; Bedeian, 1980; Silverman, 1971; Perrow, 1979; Miles, 1980;

Khandwala, 1977), and they are primary references for this

section.

Among the earliest theoretical works was that of the German

social scientist Max Weber (1947), now often called the

Bureaucracy School. Weber viewed organizations as mechanistic

structures and proposed bureaucracy as an "ideal" organization

that would be most efficient in achieving the organization's

goals. The properties of a bureaucracy were described to include division of labor, specialization, hierarchy of authority, and coordination through rules and procedures, all designed in an impersonal way to achieve maximum efficiency.

Critics of this school charged that the impersonal design of

the bureaucracy resulted in many unanticipated consequences

that detracted from its intended efficiency (Herzberg, 1968).

It was argued that the formality of the structure led to alienation of employees and demotivated workers. This school of

thought has been most prominent in thinking about military organizations. Recent studies have focused on the development of

the properties of bureaucracy in the military (Deagle, 1973;

Faras, 1977; Meiwald, 1970; Palen, 1972; Rycroft, 1975).

The key variables of bureaucracy and their consequences are

shown in Table 1.

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Table I

- The Anticipated and Unanticipated Consequences

of the Bureaucratic Form

ANTICIPATED CONSEQUENCES

BUREAUCRACY Efficiency

Hieranrhy of authority Equit

Rules and procedures Spedialization and divion o UNANTICIPATED CONSEQUENCES

Employment of qualifrd personnel Alienation of employees

Formal communications Apathy

Detailed job descriptions Red tape

Impersonality Ridit

Lack of coodination

Inefficiency

Work to rules

ResiKnce to change

A..

(From Khandwala, P. N. The Design of Organizations. New

York: Harcourt Brace Jovanovich, 1977, p. 137.)

-4-

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.,,

.. The Classical Management School of Fayol and Taygv (and

also Urwick, 1948; Brech, 1957; Mooney and Reily, 1939; Gulick,

1937) is distinguished by its emphasis on management processes.

Whereas Taylor focused on increasing productivity on the shop

floor through the use of time and motion study, Fayol examined

management as a whole. He, and others in this school, stressed

the need for setting clear management objectives and making

detailed specifications of the functions to be carried out.

Performance was expected to be optimal by organizing activities

into departments, delegating authority, and establishing formal

relationships among employees. They also advocated strict

upper limits on the executive's span of control (O'Shaughnessy,

1976). This school of thought is similar to the bureaucracy

school in that organizations are viewed as impersonal systems

in which precision in job definitions, incentives, and responsibilities are best for achieving the organization's objectives.

Both these schools stress "rational" structural variables much

more than "human" personality and motivation variables, and

this has been a major criticism. One other important criticism

of this school is about its tendency to state general proposi-

* tions such as "A manager's span of control should be no greater

than six" (Khandwala, 1977). It overlooks the variations that

occur in practice (and prove to be effective in different situations) (Dale, 1952), and represents a description of the management process that is overly compartmentalized and simplistic

(Mintzberg, 1973). The key attributes of this school are sum- .t marized in Table 2.

The Human Relations School of organizational theory received

its major impetus from the productivity experiments at the Hawthorne plant of Western Electric in the late 1920s (Roethlisberger and Dickson, 1947). The experimenters found that certain

observed increases in productivity could be explained only by

group norms and individual motivations rather than objective

work conditions. Subsequent researchers focused on several related "behavioral" aspects of organizations. One theorist

(Khandwala, 1977) has described the various subsets of the Human

Relations School as group dynamics (the structure and functioning of work groups), nonformal organization (the structure of

nonformal activities, norms, relationships, and communication

patterns), and style of supervision (employee orientation, participative management, autocratic versus democratic leadership).

The work groups are viewed as satisfying fundamental individual

needs and hence become integral parts of the organization design

(Cartwright and Lippitt, 1957; Seashore, 1954; Collins and

Guetzkow, 1964; Hare, Borgatta, and Bales, 1966; Likert, 1961).

The formal organization chart represents only a part of the

overall organization and informal processes play a key role

(Walker and Guest, 1952; Dalton, 1959). Finally, supervision

and leadership styles are seen as important determinants of employee commitment, motivation, and performance. (Halpin and

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iWiner, 1957; Katz and Kahn, 1953; Likert, 1961; Fleishffan--]}61;

Lewin, 1958; Tannenbaum and Kahn, 1957). Some of the key attributes of this school, and its criticisms, are summarized in

Table 3.

V-6.

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Table 2

Classical Management School

Key Attributes

- Clear goals and objectives

- Detailed job descriptions to the lowest level - Hierarchy of sections and departments - Clear authority delegation

- Limited and prescribed communication channels - Formal relationships among employees - Standardized work flow

- Authoritative leadership styles

- Predominantly downward communication flow

- Narrow, predetermined span of control

Criticisms

- Overly rational and simplified role of management

- Slow to adapt - Propositions too specific. Effective only in limited

(stable) situations - Inadequate consideration of human needs and motivations

-"4

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Table 3

The Human Relations School

Key Attributes

- High worker morale leads to high productivity. - Work groups satisfy social needs.

- Effective leadership combines a concern for people with a

concern for task effectiveness. - Participative leadership leads to high morale. - Human factors in organizations are critical to

organizational assessment.

Criticisms

- Social needs and the need for recognition are overemphasized at the expense of the need for security and

self-actualization. - Designed managerial behavior often makes unrealistic

assumptions about reality. - Implication that conflicts can always be resolved to

2mutual satisfaction is naive. , - Increased research complexity in human relations has been

done at the expense of applicability.

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To counter the criticism of excessive focus by humanrelations theorists on man's social needs, the Human Resources

School has stressed the need for self-actualization (McGregor,

1960; Argyris, 1956). McGregor's Theory Y states that all

individuals have the potential for being effective performers

if the work climate is designed appropriately. Argyris has

defined six organizational properties as criteria for differentiating the effective and the ineffective organization (see

Table 4). This school also shares some of the criticisms of

the human relations school; i.e., an overemphasis on the motivational properties of people and a lack of emphasis on

structural factors.

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Table 4

Argyris's Organizational Properties, Psychological

Health, and Psychological Sickness

Organizational properties contributing Organizational properties contributing

to psychological sickness I orgardnisationl to psychological health o organizational

4 members members

One part controls the whole (organiza- The whole is created and controlled

tion)-for example. in a hierarchical or- through the interrelationships of all

naization, the top management controls parts; the situational logic, not the

the rest of the organization whims of one part, guides the behavior

of the whole

Awareness of plurality of but not of Awareness of of of how Aaeesoplrltofparts btnto Aaresofpatterns ofparts, o o

their relationship - specialization may various departments are linked together

cuse this

Achieving objectives related to the parts Achieving objectives related to the whole

(suboptimizatiem) organization

Inability to influence internally oriented Ability of the organization as an organ- core activities; internal core is the organi- ism to influence internally oriented core zational structure, goals, processes, and so activities "it" desires; flexible organiza.

e (a rigid structure is what Argyris hl tional structure

in mind)

Inability to influence externally oriented Ability of the organization as an organ- core activities-that i% activities aimed at ism to influence externally oriented core the environment; an organization that activities "it" desires; pro-active (as

feels fenced in by its environment against a "reactive") organization

i!'4 Nature of core activities influenced by the Nature of core activities influenced by

present only (shortsightednes) past, present, and future

..

(From Khandwals, P. N. The Design-of Organizations. New York:

Harcourt Brace Jovanovich, 1977, p. 193.)

'

(Prom Khandwala,_____. __h Desi.:'n ofO-nztos e ok
- The work of March and Simon (1958) is the archetrpre.of-the

Decision Theory School, which utilizes the individual perspec- Stive in Studying the decision-making process in organizations - (Simon, 1960; Cyert and March, 1972). To them, an individual

intends to be rational in his decision making in terms of evaluating the costs and benefits of various alternatives before

making *a decision. This process is carried out, however, in

the absence of perfect information and with limited capacity to

process the available information. This limits the *search"

for alternatives and results in "satisficing" rather than "maximizing" behavior. It also sets in process routine patterns of

behavior within the organization to deal with recurrent stimuli

(e.g., each time an order is received, certain steps are immediately put into operation), and a tendency to use rules of

thumb in decision making. Decision making is, therefore, very

predictable except when a problem situation arises.- Then a

search for a solution is made, but it is usually a local search

and leads to incremental rather than radical change. The

decision-theory equivalent of an organization structure is a

collection of these decision programs, and the organization's

goals are achieved through a series of means-ends hierarchies.

A major difference of the decision-theory school compared

with the schools of thought discussed earlier is that it is

descriptive rather than normative. It tells you what happens,

not what should happen. The key attributes of this school are

described in Table 5.

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Table 5

- The Decision Theory School

Key Attributes

- Organization's goals broken down to departmental subgoals

- Means-ends hierarchy

- Satisficing behavior

- Sequential and limited search processes

- Specialization of activities and rules

- Rules and programs for recurring situations

- Training and indoctrination to channel individual's

-:behavior

- Divide goals and tasks into programs to reduce

interdependencies - Unobtrusive control mechanisms

- Change individual behavior by changing decision-making

premises

Criticisms

- Inadequate consideration of human needs

- Descriptive rather than normative

- Does not deal adequately with variations across firms

'- 2 -.
The Systems Theorists view the organization as aj~ste._

with a supply of resources (input), a conversion proces .--

(throughput), and the production of objects (output)(Silverman,

1971; Katz and Kahn, 1966). As systems, each organization has

a set of interdependent parts (Leavitt, 1965; Thompson, 1967)

and a series of needs to be satisfied for survival (Etzioni,

1961; Parsons, 1951; 1960). The Open Systems theorists are

distinguished from the Closed Systems theorists in that the

former view the import and export of energy as taking place

with respect to the external environment (Von Bertalanffy,

1950, 1956; Katz and Kahn, 1966, 1978; Lmery and Trist, 1960).

They have criticized the Closed System theorists for not

recognizing fully the dependence of organizations on inputs

from their environment, and for overemphasizing principles of

internal functioning. The Open Systems approach Nbegins by

identifying and mapping the repeated cycles of input, transformation, output, and renewed input which comprise the organizational pattern" (Katz and Kahn, 1978, p. 33). The

various generic subsystems of an organization are: the production or technical subsystem that is concerned with the

throughput; production-supportive structures to provide a

continuing source of production inputs; an institutional supportive function to maintain favorable relations with other

structures in society; maintenance structures to insure the

availability of human resources; adaptive structures to generate appropriate responses to changes in the environment; and

a managerial subsystem to coordinate and control the various

substructures. These are the various subsystems used by Open

Systems theorists to describe organizational functioning. Their

implications for the subsystem's values and organizational

mechanisms are shown in Table 6. The criticism leveled against

this theory is that though it highlights the interrelationships

between the many subsystems of the organization, it does not

examine in sufficient detail the implications of these interrelationships for organization design.

p-

-13-
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TABLE 6

OPEN SYSTEMS THEORY

Formal Subsystems of Organizations:

Their Functions, Dynamics, and Mechanisms

Subsystem

Structure Function Dynamic Mechanisms

I. Prcuction: pri- Task accomplish- Proficiency Division of

mary processes ments: energy labor: settransformation ting up of job

within organiza- specification . tion and standards.

II. Maintenance of Mediating be- Maintenance Formalization

working structure tween task de- of steady of activities

mands and human rate into standard

needs to keep legitimized

structure in procedures:

operation setting up of

system rewards; socialization of new

members

III. Boundary systems

A. Production-sup- Transactional Specifically Acquiring conportive: pro- exchanges at focused mani- trol of sources

curement of ma- system bounda- pulation of of supply;

terials and man- ries organizational creation of

power and pro- environment image.

duct disposal

B. Institutional Obtaining social Societal man- Contributing to

system support and ipulation and community, ini legitimation integration fluencing other

social structure.

(From Katz, D., and Kahn, R. L. The Social Psychology of Organizations.

New York: John Wiley, 1978, second edition, p. 84.)

-14- * *' "%*%% * . -' * . .,* ' . . , .o . . -....- . .- % . . , . , . . . . . .. 
TABLE 6 (continued)

Subsystem

Structure Function Dynamic Mechanisms

IV. Adaptive Intelligence, re- Pressure for Making recomsearch and de- change mendations for

velopment, plan- change to

ning management.

V. Managerial 1. Resolving Control - Use of sancconflicts tions of

between authority.

hierarchical

levels

2. Coordinating Compromise Alternative

and direct- vs. inte- concessions;

ing func- gration setting up

tional sub- machinery for

structures adjudication.

. 3. Coordinating Long-term Increasing

external re- survival; op- volume of

quirements timization, business; addand organi- better use of ing functions;

zational re- resources, controlling

sources and development environment

needs of increased through abcapabilities sorbing it or

changing it;

restructuring

organization.

(From Katz, D., and Kahn, R. L. The Social Psychology of Organizations.

New York: John Wiley, 1978, second edition, p. 84.)

Is -15-
The Contingency School theorists essentially posit the "If

A, then B" kind of relationship between key contextualu&Si--_.

ables and elements of organizational structure. In many ways

it is a compromise with practice for the theorists in search of

the "ideal organizational form." The central questions asked

by this school are: "Upon what key contextual variables is the

effectiveness of an organization's design contingent? What

patterns of relationships exist between these key contextual

variables and elements of structure?"

These questions have been addressed by many researchers.

Burns and Stalker (1961) studied the relationship between the

rates of technological and market change and the pattern of

management practices. They found two very different patterns

that were both effective but under different environmental

conditions. The "mechanistic" system, which has precisely defined methods, duties, roles, and hierarchy, was very effective in relatively stable environmental conditions. The "organic" system, with high lateral interaction and a less formal

definition of methods and roles, worked best under changing

environmental conditions.

Lawrence and Lorsch (1967) reached essentially the same

conclusion. They studied the degree of "differentiation" (defined as the difference in cognitive and emotional orientation among managers in different functional departments) among departments within the same firm, and the degree and type of

"integration" (defined as the quality of the state of collaboration among departments) required across departments within the

firm. Their findings showed that dynamic and complex environments require considerably more differentiation among departments than relatively stable and simple environments. Also, a

high degree of differentiation necessitated a sufficient level

and quality of integrative mechanisms working across departments. These general relationships are well summarized in

Table 7.

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TABLE 7

Toward a General Contingency Model of

Organizat ion-Environment Relations

STRUCTURAL FLEXIBILITY

High LoW

(Organic) (Mechanistic)

Complex and Dynamic Environment Complex and Stable Environment

Description: Organization Description: Organization

High operating in an environment operating in an environment

(Differentiated) consisting of a large number consisting of a large number

of different components all of different but relatively

rapidly changing, stable components.

Examples Aerospace Firm Example: Multiple-line

Insurance Company

STRUCTURAL

DIFFERENTIATION

Simple and Dynamic Environment Simple and Stable Environment

Descriptions Organization Description: Organization

LoW operating in an environment operating in an environment

(Undifferen- consisting of a few basically consisting of a few basically

tiated) similar components all similar but relatively

rapidly changing. stable components.

Example: Custom Handling Example: Container

Systems Producer Manufacturer

(From Kiles, R. R. Macro Organizational Behavior. Santa Monica, CA: Goodyear,

1980, p. 273.)

-17-

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The two researchers discussed above related organiationdesign with the degree of complexity and the rate of change in

the environment. But there are also contingency theorists who

have studied the effect of an organization's technology, defined as "the techniques used by organizations in work-flow

activities to transform inputs into outputs" (Porter, Lawler

and Hackman, 1975), and organization design. These include

Thompson (1967), Perrow (1967), Udy (1959), Hickson et al.

(1969), and Woodward (1958, 1965, 1970). Various typologies of

technology have been proposed.

Thompson's typology includes: "long-linked technology,"

characterized by serial interdependence of a number of different operations (assembly line); "mediating technology," characterized by processes that join together otherwise independent

elements of a system (banks); and "intensive technology," characterized by the use of a variety of techniques to solve a

particular problem (construction companies).

Perrow focused on the routine versus nonroutine dimension,

and Woodward studied patterns of organization in firms with

unit production, mass production, and process production. Woodward also found that successful unit-production firms and

process-production firms were typified by fewer rules and more

flexibilty in interpersonal relations relative to the massproduction firms. In the mass-production category, successful

firms actually emphasized tighter controls and specialization. These "contingent" relationships between dimensions of the

technological process and effective organization design are

also corroborated in the other research cited above.

The contingency school, based on its empirical research and

logical propositions, has grown to be in many ways the most

important influence on the practice and research in organizaton

design. Critics tend to decry the attitude of external determinism that it suggests. Must organizations always adapt to

the environment? Contingency theorists would answer in the

affirmative.

One final school of theory that should be mentioned is the

Institutional School (Selznick, 1949, 1957; Pfeffer, 1976).

Selznick differentiates between an "organization" as a "lean,

no-nonsense system of consciously coordinated activities" and

an "institution," which is "more nearly a natural product of

social needs and pressures." According to this school, the key

tasks of leaders are:

1. "The definition of institutional mission and role,"

done so as to take into account the strivings,.inhibitions, and competencies that exist within the

organization, and the external expectations that

determine what must be sought or achieved if the

institution is to survive.

-, ,, ,, -, , , . . -. , , , .. . . .• -. • . ... . ., . .. .. .. -.-. .. - -'7,
2,. "The institutional embodiment of purpose" so tat policy

is built into the organization's social struc 'e. --

3. "The defense of institutional integrity" as a means of

survival. Institutional survival means maintaining the

values and distinctive identity of the institution.

4. "The ordering of internal conflict." This means the

effective management of internal interest groups so as

to win the consent of constituent units and allowing

emergent interest blocs a wide degree of representation

while maintaining an appropriate balance of power.

-19-
III. THE ORGANIZATIONAL CONTEXT

Thus far, we have reviewed brief summaries of organization

theorists with different points of view about organizations.

From the variety of theories available, it is obvious that the

answers to the questions raised by organizational design do not

lend themselves to easy recipes for managerial decisions. The

contingency school has also pointed out that in designing the

proper structure for his organization, the manager is constrained by a number of factors largely outside his control.

For this reason, no one structure is ideal for all organizations. Each organizational design must be suited to its own

-A combination of internal and external pressures. The central

question then becomes:

"Given the kind of environment I must work in, and given

the kinds of pressures I have no control over, how should I

structure those elements of the organization which I can

control, so as to achieve an optimum level of performance?N

In this section we will explore the implications of the

first part of this question, namely, understanding the environment and other contextual factors that constrain the

design of the organization.

Military organizations exist in comparatively different

environments from civilian organizations. A key variable, as

Lang (1965) points out, is the policy-making environment. For

instance, the decision to abolish or revive conscription is

largely outside the control of operating managers in the military. Yet its effect on organizational structure is something

with which military leaders have to cope. Moskos (1977), for

example, qrgues that the shift to an all-volunteer force implies

changes in the reward structure of the military: heavier emphasis on job-specific rather than institutional rewards, and

greater use of civilians, with an accompanying change of structure. Because military environments are somewhat different,

the variables in this section contain a framework for looking

at the context in which organizations operate.

-20-
, . . .- . 'n~m" I1 1"1r ln'r I "n ". I.l- - r1 n

-Analysis of the Environmentl

The reason for the importance given to understanding the

environment is that features of the environment cause managerial uncertainty regarding the suitability of decision

alternatives (Miles, 1980). Miles also synthesizes the most

important dimensions of uncertainty for managerial decision

makers as:

- Uncertainty regarding information availability, accuracy,

and clarity;

- Uncertainty regarding cause-effect relationships;

- Uncertainty regarding outcome preferences;

- Uncertainty deriving from time span of definitive

feedback;

- Uncertainty deriving from the inability to assign

probabilities to events.

The organization has to be able to cope with all these kinds of

uncertainty by creating managerial roles and units that "buffer

its technological core" (Thompson, 1967). For example, a manufacturing firm faced with a great deal of uncertainty regarding the procurement of raw materials may buffer its core production

process against fluctuations by setting up a sophisticated inventory control system. Thus, it is necessary to understand

the nature and source of uncertainty that the organization

faces.

From the research on dimensions of the environment (Table 8)

three distinct clusters of environmental dimensions have emerged (Miles, 1980). The three clusters are composed of 1) static

dimensions, 2) dynamic dimensions, and 3) receptiveness dimensions. The static cluster includes environmental complexity,

routineness of organization-environment relations, degree of

interconnectedness among environmental components, and the extent to which important environmental parts are in direct or

indirect contact with the focal organization. The dynamic

cluster includes the change rate and the unpredictability of

IDefining what the organization's environment actually is

is not always a simple question. (Terreberry, 1968; Dill, 1958;

Nall, 1977). Hall distinguishes between the General Environment, which must be of concern to all organizations--the economy, demographic changes, and so On--and the Specific Environment, such as other organizations with which it interacts or

particular individuals who are crucial to it. As Miles (1980)

points out, the general environment has an impact on both the

focal organization and members of the surrounding organization.

-21-
Table 8

Dimensions of Organizational Environments

ORGANIZATIONAL THEORISTS

AND RESEARCHERS DIMENSIONS

The--Vita

Emery and Tris (1965); Disconnected Interconnected

lbrreberry (1966) Placid Turbulent

Thompson (1967Mooeeu Heterogeneious * StableShifting Aldrich (1972) SaityInstability

Concentrated Disprsed

Lean capacity Rich caaIty Domain consensus Domain dissenaus

Homogeneity Heterogeneity Placidness Turbulence

Mutability Immutability

Child ('1972) Stable Variable

simple Complex

Researchers: iea liea

Dil0 (956) Homogeneous Heterogeneous Stable Rapidly shifting Unified Segmeted

Bums and Stalker (1961) Low volatility High volatility

Lawrence and Lorsch (1969) Low diversity High diversity stabl Dynamic

Duncan (1972) Simple Complex Static Dynamic

Tosi, Aidag, and Storey (1973) Low volatility High volatility Madet Market -ovkk. 1hrological

Composite Composite Hinings, at aW. (1974) Stable Unpattemned variability Predictable Unpredictable variability Low feedback assurance High feedback assurance Causal knowledge Causal knowledge speciict Specfct

Speed Speed Osborn and Hunt (1974) Homogeneity Heterogeneity Low dependency High dependency Penning* (175 Low copeiyHigh copext Low demand volatility High demand volatility

*Sparceness Resourcefulness

A(From Miles, R. H., Macro Organizational Behavior. Santa

Monica, CA: Goodyear, 1980, p. 221.)

-22-
change. The effect on the organization of these six dimensions

is conditioned by dimensions in the last cluster, receptive -"

ness, which includes resource scarcity, output receptivity, and

domain-choice flexibility. These three clusters together influence the level of decision-making uncertainty in organizations-- -: 'and have definite implications for organization design.

Linkages to the military's external environment are discussed in Bachman, 1975; Cotton, 1975; Kelleher, 1978. The effect of the change from conscription to recruitment, for exam-

-" ple, adds the environment of a competitive labor market as an

implication in military structures; at the same time it changes

the relationship to civilian environments--making some of them

more remote (Van Doorn, 1975).

These implications/propositions are stated below:

_ The more complex the environment in terms of the number

of different groups you have to interact with,

1) the more the need for internal differentiation of

roles;

2) the more the need for complex coordination and integrative mechanisms;

3) the more the need for sophisticated boundary spanning

units.

* The more routine the demands of the environment in terms

of repetitiveness and similarity,

1) the more programmed the organization's responses can

be;

• .2) the more automated its operations can be.

* The greater the interconnectedness between components of

the environment,

1) the more the need for multilateral strategies on the

part of the organization;

2) the more the need for interdisciplinary work teams;

3) the more the need for participatory decision making;

4) the more the need for coordinated responses.

* The greater the remoteness of important elements of the

*environment n (in the sense that important agents of change

are not in direct contact with the organization),

-. 1 -23-
- *.. -1) the more difficult it is to anticipate and.&ppe..with

events;

2) the greater the need to build buffers against uncertainty.

* The greater the rate of change of key components of the

i; environment,

1) the more planning-oriented the organization;

2) but the more unpredictable the change in terms of

unpatterned variability that cannot be anticipated by

the planning process;

3) the more flexible the organizational tasks and

internal roles;

4) the more participative the top-management style;

5) the more important frequent performance reviews are.

" The higher the scarcity of input resources in the

organization's environment,

1) the more efficiency-oriented and standardized its ..< operations;

2) the more the exercise of centralized control by top

management over the input system.

" The more receptive the environment to the organization's

outputs,

1) the greater the internal uslack" within the

organization;

2) the more risk-taking and innovative top management

can be.

* The greater the flexibility that can be exercised by top

management in choosing its domains of operations,

1) the less likely are the restrictive impacts of the

I' environmental dimensions listed above.

These propositions are summarized in Table 9.

Organization Goals

The goals that an organization is expected to achieve and

the function it fulfills in society is an important contextual

-24- -14- 2• 2 1 
l..-. . .t .. ._.__._-_-- '-p.-~. -.- - - - _____.. Ha _

Table 9

-Propositions for Organizations:

The Implications of Dimensions of the Environment

Complexity Internal Differentiation

Coordination and Integration

Sophisticated Boundary

Spanning Units

Routineness Programmed Responses

Automated Operations

Interconnectedness Multilateral Strategies

Interdisciplinary Work Teams

Participative Decision Making

Coordinated Responses

Remoteness Buffers Against Uncertainty

Rate of Change Planning Orientation

Unpredictability of

Change Flexible Organizational Tasks

and Internal Roles

Participative Decision Making

Frequent Performance Reviews

Scarcity of Resources Efficiency Orientation

Standardization

Centralized Control Over

Inputs

Receptiveness to

Outputs Internal Slack

Risk Taking and

Innovativeness

Flexibility in Domain

Choice Restrictive Impacts of

Environment Dimensions

Decrease

-25-
variable that influences the design of the organization.,

(Richards, 1978).

Etzioni (1964) distinguished between three types of organizational goals. Organizations with economic goals produce

services and goods for consumption by outsiders. Organizations

with order goals attempt to "control actors who are deviants"

(e.g., mental hospitals, prisons). Organizations with sociocultural goals attempt to create new cultures or contribute to

the preservation of a cultural heritage or specialize in the

application of culture (e.g., universities, research organizations, or professional organizations). Etzioni also found

that economic organizations rely primarily on remunerative

control schemes, order organizations rely on coercive control

measures, and sociocultural organizations need voluntary compliance based on charismatic leadership or strong personal

identification with the mission of the organization.

Blau and Scott (1962) have a typology based on the "prime

beneficiary" of the organization, as below:

"Mutual benefit" (primarily benefiting the membership)

*Business concerns" (benefiting the owners)

"Service organizations" (benefiting the clients)

"Commonweal organizations" (benefiting the public at

large)

The major internal problem facing the organization varies with

each type: internal democracy for mutual-benefit organizations, efficiency for business concerns, a professional structure for service organizations, and a bureaucratic structure

for commonweal organizations.

Goals also influence the design of the organization to the

extent that they supply criteria for assessing organizational

effectiveness and member contribution (Scott, 1977). Goals

that are stated unambiguously, that are not subject to constant

change, and that are readily operationalized into "hard," particularly quantitative performance criteria, exert a greater

structural influence than those that are equivocal, ephemeral,

and abstract (Miles, 1980).

One can also distinguish between goals on the extent to

which they are actually realized (Steers, 1977). Official

goals are "the general purposes of the organization as put

forth in the charter, annual reports, public statements by key executives" and are usually publicized widely to secure the

support of important external groups. Operative goals designate organizational intentions or. what the organization is

trying to achieve (Perrow, 1961). Finally, Operational goals

are those "for which there are agreed-upon criteria for evaluating the extent to which organizational activities contribute

-26-

, .. ~~~~~~.. . . .. . . . ... . ... '. . . .'.. .. .-.-... ....... .- ..-.. ,-
' ~~~ ~ . AP .. : . .i

to goal attainment." It is when goals reach an operat4onal--

level, as in management-by-objectives systems, that they can be

counted on to serve reliably as forms of structure within or- 4": ganizations, and the variance between levels and units in terms

of operational goals can serve as an indicator of the degree of

structural differentiation within organizations. This differen-

* tiation of operational goals takes place both vertically and

horizontally (Kast and Roesenzweig, 1974).

The implications of the organizational-goal structures for

Adesign include:

* The more business oriented the organization, the more it -. views internal efficiency as the primary criterion of

performance.

* The more the organization is oriented toward mutual

benefit, the more the use of internal democracy and

participatory processes.

* The more the organization is oriented toward servicing

clients, the more the use of professionals and professional codes of performance, and of knowledge and ex-

* pertise.

e The more the organization is oriented toward the general

public, the more bureaucratic it tends to become.

* The more equal the balance between operative goals and

operational goals, the more performance-oriented the

organization will be, and the more measurable the overall organizational performance will be.

e The more specific and measurable the operational goals,

the more the performance evaluation and reward systems

are based on predefined standards.

o The more the horizontal differentiation of goals,

the more the need for specialized departments and

the greater the need for integrative mechanisms.

Technology

As part of our review of the contingency school, we have Ii already mentioned some of the research linking organizational

design to the technological imperatives faced by the organization. The role of technology in changing the structure of the

military is a key debate in current military sociology. Janowitz (1971) argues that the increasing complexity of technology forces key changes in the organizational structure of

the military. Some recent studies have disputed this (Gamnier,

B'm

, 1975, Hackr 1977n;emntby-ob974) Hover, osts ofa thee studies hone eibl sfrm -27-v fsrutr iti r
1.ae at a macro level, not related to day-to-day work -0.o or-.--

design. Khandwala (1977) lists several propositions relating

the research on work flow and technology to organizational

design, as below:

Propositions

I. The more strategic the location of a department or a work

unit in the work flow of an organization--as judged by how

well it copes with task uncertainties, the swiftness with

which its actions affect the organization's outputs, the

nonsubstitutability of its functions, and the pervasiveness

of its work connections with other departments--the greater

is its power.

2. The higher the wage rate of operations personnel in a

society or an industry, the more capital-intensive is the

operations technology employed by organizations functioning in that society or industry, and vice versa.

3. The more technologically sophisticated and complex the

industry, the more capital-intensive is the operations

technology of the organizations functioning in that

industry.

4. The more capital-intensive the operations technology of an

organization gets, the more active become the operatives'

needs for job security, growth, self-actualization, power,

autonomy, and participation in decision making.

5. The more capital-intensive the organization's operations

technology gets, the more sophisticated become the organization's control and incentive system; the more professionalized its work force gets; and the more organic and participative is supervision at the operating levels.

6. The greater the importance of diversification to top management, the less oriented the organization's technology

is to standardized mass outputs and the more oriented it

is to customized outputs.

7. The more the operations technology of an organization is

geared to standardized mass outputs of goods or services,

the more vertically integrated and decentralized the or-

" ganization tends to become and the more sophisticated is

its control and information system; the more rigidly

- departmentalized and structured are its activities; and

the more attention needs to be paid by management to human

relations to maintain a given level of morale among operatives.

8. The larger the organization, the wider its distribution

network; the more technologically complex its external

7; -28-
- environment, and the more restrictive the environnentpwhe

more extensively does the-organization use an electronic

data processing system.

9. The greater the use of an electronic data processing

system, the more it facilitates decentralization, and the

more it permits quicker and more integrated decision

making.

10. The more quantifiable the informational inputs or outputs

of a department, the greater is the impact of the computer

on the administrative structure of the department in terms

of increased power of EDP specialists, reorganization of

the work flow, and greater complexity in the job of the

departmental manager.

Khandwala also explores the implications for design based

on whether an organization is involved in the production of

goods or the provision of services.

11. The more the organization is geared to the production of

goods rather than services, the greater is the mechanization of operations, and the lower is the extent of face-toface transactions with the organization's customers.

12. The more the organization is geared to the production of

goods rather than services, the more sensitive--other

things being equal--are the relations between management

and workers, and the greater is the pressure for growth,

full utilization of capacity, and vertical integration.

13. The more the organization is geared to the production of

services rather than goods, the more of a "service to the

client" ideology it holds, the more oriented it is to

marketing and customized operations and the more decentralized and organically managed it is.

14. The more the organization is geared to the production of

goods that can be sold from inventory, the greater is its

management's concern with operating efficiency and a wide

distribution network; the more standardized are the organization's operations; and the more vertically integrated does the organization strive to be.

IS. The more the organization is oriented to selling goods

-prior to their manufacture, the more it is characterized

by project groups and a matrix structure.

-~~~~~~~~~~~~~~~~... ..... . , .- - - . .-. . . .. . - . . . -. .- - . . . . . ... .
"..;* -

Age and Size

Two contextual variables that are related to the organization structure are the age and size of the firm. Mintzberg (1979) does an extensive review of the literature and proposes

several hypotheses:

- The older the organization, the more formalized its behavior. As organizations age, much of the work is repetitive and hence becomes more predictable and amenable to A formalization. (Starbuck, 1965; Samuel and Mannheim,

1970; Inkson, Pugh, and Hickson, 1970).

- Structure reflects the age of founding of the industry.

On the basis of work by Stinchcombe (1965) and others, he

proposes that patterns of similarity exist between organizations operating within an industy, and that the age

of the industry influences these patterns.

% - The larger the organization, the more elaborate its structure; that is, the more specialized its tasks, the more

differentiated its units, and the more developed its administrative component. It tends toward a taller administrative hierarchy, and toward more sophisticated control

and information systems. Chandler (1962) and Scott (1971)

point out typical structural patterns as firms grow. They

integrate vertically, taking over some activities from its

suppliers and customers; then it diversifies with new

products and markets, and this necessitates further differentiation and more sophisticated integration. Childers

(1971) confirms this model for military organizations.

- The larger the organization, the larger the size of its

average unit; and the larger the organization, the more

formalized its behavior. As the size of the organization increases, the span of control of its executives and

managers also increases. Mintzberg points out that with

increasing size, positions in the organization become

more specialized, and the units more differentiated, each

*. unit thus becoming easier to manage. Unit size is also

influenced by the rate of growth; an organization grows

continuously but its structure is changed only in

discrete steps.

' The formalization in the behavior of the larger organization is similar to that in the older organization.

Size also leads to repetition and hence predictability

that can be formalized.

.30.
, . %7...

Human Resources

A final contextual variable that has critical implications

J for evaluating the design of the organization is the human re- - sources available to the organization. The effect of this variable on the military has been discussed extensively (Janowitz,

1973, 1972; Fabyanic, 1976; Garnier, 1973; Cotton, 1975). They - - basically examine changes in reward structure--compensation, . promotion policy--rather than structural dimensions. As Porter

et al. point out, if employees tend to be especially skilled

and well educated, it is likely that a high degree of formal

specification and standardization of activities, and the imposition of close and severe controls, would result in an inef-

. ficient use of human resources, from both the individual's

standpoint and the organization's standpoint, possibly resulting in frustration and overt resentment. The reverse situation

%'. is also possible, i.e., structuring operations as if the work

force had high skills when this is not the case can also result

in insecurity and frustration.

The distribution/dispersion of skills in the organization

can also be critical. If one part of the organization has a

significantly different level of skills compared with others,

the structural configuration must also differentiate appropriately. Finally, needs, personality traits, and cultural influences upon the work force which an organization attracts need

to be considered, for these variables affect not only their performance but also how they will perceive the organization's system. The differing expectations of enlisted men and officers,

for example, is cited by Margiotta (1976), and Bachman (1975)

as a key tension in integrating formal military structures.

.."

'F

-31-

.+''* .* " 9** ,* . . . :* . . . . ...... :," +"" *'' *' -, ', ",, -=,a
-6.. -.. "

IV. ORGANIZATION STRUCTURE

Just as there are few factors completely beyond managerial

control, so are there few elements of structure completely

under managerial control. However, in designing the structure

and operating mechanisms of his organization, the manager has

greater discretion than he does in controlling features of the

contextual elements. Beishline (1950) clearly describes the

contemporary military structure as a functional hierarchy with

staff-line operations. Staff essentially support managers at

key locations in the structure. Palen (1972) argues that the

military, as a result of recruitment base, education, and careerism, is moving towards a "bureaucratic-managerial" model of

organization. Head (1973) in an analysis of military decision

making argues that the military is increasingly resembling a "professional-organization" model, in which decision making is

informed by inputs being made on the basis of role or expertise

0' rather than functional position. The straight functional model

is one which may have numerous variations in practice despite

formal lines of authority (Mintzberg, 1979). In this section,

we shall explore some ways of thinking about structure and

operating mechanisms, examining their effectiveness in different circumstances. In doing so we will be drawing upon the

2 writings of several authors not yet referenced in this report

(Ranson, Hinings, and Greenwood, 1980; Oldham and Hackman,

1981; Walton, 1981; Galbraith, 1973; Kolodny, 1979; Grinyer and

Yasai-Ardekani, 1980; Griffin, 1980; Morris, Steers, and Koch,

1979; Tung, 1979; Allen, 1979; Pugh and Hickson, 1976; Child,

1977). These authors have all discussed different aspects of

the structural factors and operating mechansisms that constitute the organization design. Primary references, however,

will be the works of Child, Khandwala, and Mintzberg.

Groupings of Personnel. The organization chart is a pictorial

representation of the formal links between different units and

dimensions. It is this process of grouping that establishes

the systems of formal authority and builds the hierarchy of the

organization, and is a fundamental means to coordinate work in

the organization.

S4. The problem in grouping tasks together arises, however,

because tasks can be grouped together on a number of different

logical bases (Child offers a very comprehensive and lucid

review in this area). Possible bases for grouping are:

- 2

4%. l,. . . . . ..

.V..... .. . , , .. .... . .., .... .. .., ¢ , , % ; ;, , .; .. ; ;.; ; - . ,.,--.,. ... . . . . --,
-- .

-- Grouping by shared expertise

-- Grouping by function and work process

-- Grouping by product or service

-- Grouping by time horizon

-- Grouping by geographical location

These task-system logics can result in different kinds of

structures. Among the two most well known are the functional

and the product based structures.

The functional form groups activities that provide particular contributions to a product into separate departments, the

most common example being that of a firm with separate departments for manufacturing, marketing, finance, etc. This form is

used particularly often when the organization has a single or

closely related range of products or services serving one domes-

" tic market. Formal coordination is achieved by the General Manager. A simple functional structure is shown in Figure 1.

The functional form has a number of advantages:

-- Simple structure

-- Generally more efficient

-- Minimal conflict between departments, little overlap

-- Centralized coordination--economies on managerial

manpower

-- Maximum utilization of scarce resources--economies of

scale

-- Clear career paths for specialists

-- Creates peer groups with similar interests and expertise

The functional form is, however, frequently unable to cope

with diversification of products and markets (or services and

customers), particularly if these require different skills and

technologies. The functional form is inherently a centralized

structure. Thus, communication overloads, delays, and too much

top-management time on day-to-day decisions and conflicts may indicate a need to move towards a structure in which coordination is decentralized within a product (or service) group, or

division.

-33-
Figure I

Functional Structure

General Manager

L ., -IIII III I a

--. Finance Manufacturing Marketing

Manager Manager Manager

Financial Accounts Quality Production Sales Promotion

Planning Control

'I..

'

pFinance M~~~~~anfatrngMret g
.:...As the organization diversifies into multiple product lines .. ,or services and markets, the needs for coordination become more

complex. The company may simultaneously be competing in differ-

.'...ent markets, manufacturing different products, providing differ- . ent services, and using different technologies. At this stage,

--] each product, service, or market group may have needs similar

• .. :to an independent business, and a division form becomes more appropriate The divisions may be based on product lines or

:-: propriate geographical geographic areas, depending areas are on the whether greater product source groups of differen- or apeation. Its advantages are particularly pronounced if the

product markets on which the form is based face rapidly changing

oaenvironments with high competitive pressures necessitating quick

presponses. The divisional form has the advantage of directing specialized contributions to a common localized focus with de- centralized responsibility for coordination and decision making

The conglomerate organizaton is also an extension of the philosophy of the divisional organization. Here, however,ec

division is an autonomous firm and the degree of independence

is much higher. It may have evolved in response to a situation

where the size is very large, or the functional and geographic

4/, interdependence is extremely low. It is thus more adaptive

than the functional form. Its advantages are:

-- More responsive to environment

"' -- Functional specialists more aware of common product goals

.. Lends itself to easier performance measurement, e.g.,

profit centers

-- More effective communication

4' -- Conflicts resolved at lower level in organization

hierarchy

-- Better integration between functions

-- Motivates middle managers and provides early training in

, general management

-- Provides top management with more time for strategic

issues

* In certain situations, divisional forms have some major

disadvantages. There may not be a clearly superior basis on

which to create divisions in the first place. Livisionalization

by product or service may lead to poor coordination and even

competition between separate divisions dealing with the same

client, and geographic divisionalization may lead to duplication

of production facilities. There may also be conflicts between

-35- • .- , :- • • :, , -. ,, , : :-... -. -- . . . .. : ,-: , . , -* .. , .". . . - .. . . ' . -. . . . . 4. 4 4 ,, 4 4 "-"."', .' " ." . °," - "". " '.' - ,''' " ''."",' .''''- '.""," "' '' - " . . " " " -" . ,% . . ' . .' "- ". ' % %-''" . %' " . %' " ' 
.. -•----. . -o

divisions over the allocation of centralized resource. ;The. -

bottom-line performance orientation of the divisional otm that

is considered to be one of its advantages can also be dysfunctional. The alternative form that emerges is a Mixed structure.

It incorporates more than one logic of grouping activities.

Several variations of mixed structures are possible. For

example, the need for economies in production or research may

necessitate grouping all those activities into one function,

while segmenting responsibility for marketing activities by area

or product. This results in a structure as shown in Figure 2.

Alternatively, divisions may be operated as profit centers,

with centralized resources in, for example, Finance and Planning, as shown in Figure 2a.

A systematic method for analyzing the grouping of activities

is discussed in Child (1977) and has been reviewed in Appendix

The mixed structure that has become best known in recent

years, however, is the matrix, in which one logic of grouping

activities is superimposed totally on another. While there are

no discussions in the literature of the use of matrices in

Western military organizations, Herspring (1975) charts the

-; development of a dual hierarchy with increased internal controls in East Germany. Mahoney (1977) examines the uses of

matrix organization in the Soviet Union. Davis and Lawrence

(1977) define matrix as "any organization that employs a multiple command system that includes not only a multiple command

structure but also related support mechanisms and an associated

organizational culture and behavior pattern." They conclude

that the matrix is the preferred structural choice when three

basic conditions exist simultaneously.

The first condition is "outside pressure for dual focus."

This is why the matrix first came into widespread use in the

aerospace industry, where it is essential to focus intensive

attention both on complex technical issues and on the unique

.v project requirements of the customer. A balance of power was

needed between customer-specific project-oriented managers and

the managers of the engineering and scientific specialists.

.e The second condition for a matrix is "the requirement for

high information-processing capacity among organizational

members." This occurs when the kinds of demands placed on the

organization are changing and relatively unpredictable; the

simultaneous diversifications of products/services and markets

have increased the complexity of the organization's tasks; and,

:S"I finally, there is high interdependence among the people because

their tasks are highly interrelated. These three determinants

,-. of information load--that is, environmental uncertainty, opera-

:.:.- ..

,l... ............... ........... i , -;. ' " ',-<" ' 'v .-... -, ,,.. . • - .- -. . ,-. -..- *..
* ._ . . . . . . . . ., .. . .. . .. . ...

* Figure 2

Mixed Structure

General Manager

Manufacturing Manager Manager Manager •"Manager Research Product A Product B

• Development

" Figure 2a

General Manager

ml I

4jI I- I I

Manager Manager Manager Manager

Finance Corporate Division A Division B

Planning Production Production

Sales Sales

Promotion Promotion

R&D R&D

-37-
-p

.

,I

tional complexity, and task interdependence--determifmhe---

level of information-processing capacity needed within the

organization.

The third condition for a matrix requires that the organization be under "considerable pressure to achieve economies

of scale in human terms and high performance in terms of both

costs and benefits by fully utilizing scarce human resources

and by meeting high-quality standards." It is only when such a

pressure exists that resources need to be deployed in a flexible manner so that people can work on more than one task at a

time, and central facilities have high utilization through effective sharing among user groups.

These conditions are summarized in Table 10.

A typical matrix design discussed by Davis and Lawrence is

shown in Figure 3. The two arms of the diamond symbolize the

dual chain of command. In their typical case, the left arm has

the functional specialist groups, and the right arm has the

various products/projects/markets the organization services.

At the foot is the two-boss manager who is responsible for a

defined package of work, and draws upon functional assistance

and equipment resources from the superior on the left-hand side,

and works with performance targets and requirements from the

output oriented superiors on the right-hand side. The structure

thus attempts to retain the economic operation and development

of technical capability associated with the functional grouping

of common human resources, and to coordinate these resources in

a way which applies them effectively to different organizational

outputs (A matrix structure in a diversified manufacturing firm

is shown in Figure 4).

The logic of the matrix structure may be used in a temporary

form as with prolect teams. A project team may be set up to

draw resources from different functions for a special purpose,

usually for a limited period of time.

The matrix structure has several advantages:

- Preserves organizational flexibility and ability to

respond to changes

- Presence of formally designated multiple reporting relationships encourages open lines of communication in

organization as a whole

- Releases top-management time from operational coordination

- Develops general-management skills in subordinates, while

simultaneously preserving links with basic functions

-38-

..
7 P• 7. -- - - '-,' " -" _--" ____ iU a m .. ii i

TABLE 10

Conditions for the Matrix

Environmental pressure Behavioral linkage

Condition I Two or more critical sectors; Balance of power, dual command,

functions, products, services simultaneous decision making

markets, areas.

Condition 2 Performance of uncertain, Enriched information processing

complex and interdependent capacity

tasks

Condition 3 Economies of scale Shared and flexible use of

scarce human resources

- 1'. p

:.-.:

(Fro.Davs, E.v1.rondenLa sre arx B.R eading, Mia: e

Addison-Wesl e 97, p.ea20.)

1" -,' -39

':- Conitio 2 erfomanc of ncetain Enrche *noma ,n oesi.
:-. iFigure 3

- . tIrow1 v 7

="',The Matrix Design

GENERAL MANAGER

rzr.....-&rrt..a<' c.w wz r ,,,Cs- - , '- ~ - ~J r

44.

.L--"

(From Davis, So M., and Lawrence,. R. Matix. Reading,

MA: Addison-Wesley, 1977, p. 19.) "

-40-

o-. ,, . . . . . . . . . - .. -=:-- - . . - , . , . , , . - .. . ."- . ,; . .. . .,... ,. .. '-
4?.7

4. o"

Figure 4

Matrix Design in a Manufacturing Firm

General

Manager

Division Manager A Division Manager B

* -Production Manager Product . .. --anager 1

Development

Product

-. Manager 2

-41

4.

4..--4 -
W. 7 .-

However, in spite of these obvious advantages, th*atrx- . ,form also has some problems unless it is carefully managed.

For example:

- Tends to generate conflicting objectives and accountabilities at a personal level, creating a highly charged

political atmosphere. The balance of power between the

multiple-authority structures must be carefully maintained. In the matrix, conflict and stress are the price

that has to be paid for adaptability and change.

- Matrix structures generally incur greater administrative

costs. Mechanisms to simultaneously process information

along overlapping dimensions are needed.

Davis and Lawrence (1977) have summarized the problems they

have observed in organizations using the matrix form. These

have been shown in Table 11.

Job Specialization and Job Definition

Three interdependent questions that managers working with

the design of organizations have to answer are:

* -. How far should jobs be specialized?

- . To what degree of detail should the jobs be defined?

How much discretion should job holders be given?

One group of researchers (Aston Group) studied these questions in terms of "functional specialization," "role specialization," "standardization," and "formalization."

Functional specialization was the degree to which an activity common to the organization was performed by someone, or

a group of people, who performed that function and no other. * .' Role specialization was the extent to which specialist roles

existed within each of the activities of functional special- ization. Standardization, a measure of the depth of routin7-A .ization in an organization, was the extent to which each of

several organizational activities was subject to standard

procedures and rules. Formalization was the extent to which

procedures, rules, instructions, and communications were reduced to written form. These factors are all components of

"Structuring of Activities" whose objective is to allow the

organization to carry on many activities efficiently. StrucO turing also facilitates the coordination of many diverse activi-

.* ties. It gives a great deal of stability and predictability to

the ongoing activities, but at the expense of flexibility and

red tape.

-42-
Table 11

The Matrix Form - Problems

Problem Cure

1) Power Struggles - Derivative - Common superior plays strong

of ambiguity and shared power role

in the matrix - Encourage competition but

punish combat

1) Anarchy - Winner-take-all - Make coordination arrangementality ments explicit

3) Groupitis - Matrix structure - Educate managers about idea

viewed as group decision of matrix

making delays

4) Excessive Overhead - Dual - Ensure complete utilization

chains of command increase of managerial resources

managerial overhead

5) Navel Gazing - Task inter- - Increase marketing oriendependence leads to greater tation

focus on internal negotiations

at the expense of client - Institutionalize matrix

focus relationships so they

become routine

,-43-

5%o - . " . " ; ' ' ' . ' ' t . . .. . . . . . .
Several relationships between the organizational content

and decisions on "structuring" variables have been o served

that could be useful to the organization designer:

S. The larger the size of the organization, the wider the

range of activities and tasks. Therefore, specialization

of functions and division of labor become advisable, also

necessitating a greater use of formally defined duties and

operating procedures.

2. If the organization under study is part of a larger organization which is bureaucratized, the focal organization

will also structure its activities to a gredter extent.

3. The more integrated, interdependent, and automated the work

flow, the greater the need for standardization and

formalized structuring of activities.

4. If the requirements that management places upon the job are

such that:

- the job is concerned with purely routine, repetitive

tasks,

- it requires little imagination and creativity,

- it is relatively self-contained from other jobs,

-it is relatively unchanging over time,

then a high level of specialization and formalization would be

appropriate.

. 5. The nature of the human resources available to the organization need to be considered here. The greater their capacity, expe-tise, and flexibility (in terms of transferability

of expertise), the less the need for narrow specialization.

The more able and committed the personnel, the less the

need for precise job definitions. Finally, the degree of

specialization and formalization should, to the extent

possible, match the expectations held by the members of the

organization.

6. There must be congruence between the structuring of activiJ-1 ties and the personal and management style being encouraged

in the organization. If personal initiative is to be

encouraged, too much formalization and standardization will

be restrictive.

Child (1977) lists some symptoms that could indicate

underlying problems in the structuring of activities. For

example:

-44-
-Difficulties in achieving consensus between-.4Rrooanel

who are contributing to a common project may mean that

their jobs are overspecialized and their official frames

of reference do not overlap sufficiently with those of

their colleagues.

- Continuing rivalry between employees or departments

may result from too great a degree of overlap between

the functions they have been given or from a lack of

agreed-upon policy as to their respective areas of

authority and responsibility (frequently arises in

organizations with dual authority structures).

- Behavioral manifestations of withdrawal from jobs,

such as absenteeism, quitting, strikes, could be a result of overspecialization and formalization of roles.

Where the formalization is such that the employees cannot redefine their own roles and adjust to their preferences, the overt forms of withdrawal listed above could

result.

Hierarchy and Span of Control

These two elements determine the overall "shape" of the

organization. Hierarchy is a measure of the vertical span of

control and is the number of levels in the organization. The

horizontal span of control is the average number of persons

reportinq directly to a supervisor. Obviously, for a given

number of people the "taller" the hierarchy, the lower the

average span of control will be, and vice versa.

The number of hierarchical levels has two objectives. It

divides responsibility across vertical levels generally moving

from relatively strategy-oriented unstructured work at the top

levels to extremely structured operational work at the lowest

levels. It also coordinates the diverse work of subordinates

toward achieving organizational goals, and provides a mechanism

for the resolution of conflicts. As the number of levels in the

hierarchy increases, however, it leads to several other undesir- 4 able features. Tall structures involving many levels of manage91 ment raise administrative overheads. They can also lead to a

distortion of communication as it passes up and down the hierarchy. Frequently this also results in a dilution of top management control, and makes it difficult to distinguish between

responsibilities at different levels. Finally, it has also been

observed to have a detrimental effect on motivation, particular3y at the lower levels of a "tall" structure from which tht top

1.: seems to be in the clouds.

Many of these shortcomings of tall structures would suggest

that the number of levels be minimized. However, serious

-45-
$ - problems can also arise with wide spans of control. -. ' -

The span of control is an indirect measure of the range of

activities performed by individual subordinates; the larger the

span of control of a supervisor, the narrower the range of

activities performed by any individual is likely to be.

The span of control has implications for the level of supervision that is possible for the supervisor to exercise, for the

kinds of tasks that can be adequately performed by the group, *" and for the kind of interaction that can exist within the group

of subordinates and the supervisor. Many researchers have found

that small groups generate a greater sense of identity and lead

to higher morale.

In view of the often conflicting directives of research on

span of control and humber of hierarchy levels, the fundamental

question for the designer becomes: "What is the optimum balance

between the number of hierarchical levels and the average span

of control for a particular organization?"

Woodward (1965) did some pioneering research on the relationship between technology and span of control. She found that

effective firms in unit production (small batch) and process

production had small spans of control, whereas mass production

resulted in larger spans of control. Among the generalizable factors (Child, 1977) that should be used in deciding on an

optimum span of control -are:

-- The degree of interaction between the personnel, or

units of personnel, being supervised

-- The extent to which informal control and information

systems are used in the organization

-- The extent to which the activities of the subordinates

are complex and interdependent

-- The degree of dissimilarity of activities being

supervised

-- The incidence of new problems in the supervisor's unit

-- The degree of physical dispersion of activities

-- The extent to which the supervisor must carry out

nonmanagerial duties, and the extent of demands on his

time from other people and units

-- The extent to which the activities being carried out by subordinates are nonroutine

. '., ' . . . .: .: , . . . : ' . .. . "-46- .. .. . . .. .. . . . . , . . . ... .
-7 -- 77 -7757 7. 7 7 7- 7sr.r 7r 8_ .

The extent to which subordinates are not competent and

experts in their area of work mom -

. The greater the incidence of the factors listed above, the more

severe and complicated the burden of supervision. Hence, the

number of subordinates a person can manage effectively would be

smaller. In a mass-production system most of the above factors

would rate low and hence managers could operate effectively with large spans of control. The reverse would be true in a

job-order (unit) technology system.

One other factor needs to be mentioned before concluding

the discussion on span of control. Many organizations develop

staff departments to help in areas like planning, personnel,

finance, etc. To the extent that these groups relieve the

manager of some of his line responsibilities, his span of

control can be increased.

A systematic method for assessing the span of control was

developed by the Lockheed Missiles and Space Division and

discussed extensively in Child (1977). This is reviewed in

Appendix 2.

Process Dimensions of Organization Structure

In order to have the anatomical dimensions of the organization's structure function as intended, several processes need

to be in place. These will be discussed briefly below.

Integrative Mechanisms. Many of the choices made in designing

the anatomical structure of an organization lead to differentiation within the organization that increases as job specialization increases. The different roles and orientations that are

created as a result necessitate the creation of integrative

mechanisms, so that the efforts of diverse personnel are coordinated. Several integrative mechanisms are possible, such as:

-- Rules and programs

-- Hierarchical coordination -- Through plans -- Through direct contact -- Through liaison roles within departments -- Through task forces and teams

-- Through specific integrator roles

Through specific integrating departments

By evolving to a matrix organization

Factors that influence the choice of particular integrative

mechanisms are:

-- The degree of integration required in a particular

situation

-47-
- Situational difficulties in effecting particular forms

of integration

-- Costs of alternative mechanisms

Rules and programs achieve coordination via standardization

of job activities; coordination through plans is achieved by

integrating the contributions of different units; and, finally,

the more personal forms of integration, such as direct contact

and teams, do so-by exchange of information directly between

concerned people and the mutual adjustment of actions.

Rules and programs are the most economical means of integration, and often used in the traditional bureaucratic form of

organization. An elaborate system of rules and procedures is

worked out, over time, and formalized. This is appropriate when

most of the problems the organization/unit has to cope with are

of a recurring type and do not require innovative solutions

because this form of integration is also the least flexible.

In such a system, when conflicts and exceptions from the norm

arise, they are referred up the hierarchy to a point where the

concerned departments share a common boss. Integration through

rules and programs is thus supplemented with hierarchical coordination. As mentioned before, this system is appropriate when

the operating conditions are stable and predictable. A system

of coordination that is slightly more flexible than the use of

rules and programs is integration through plans and schedules,

because these can usually be modified.

As uncertainty increases, however, this system gets overloaded. Many of the decisions to be made become nonrecurring

decisions, which are constantly being referred up the hierarchy, creating decision-making delays and overloading upper

levels of the organization. Plans are being constantly reviewed

and modified.

To cope with higher levels of uncertainty, more flexible and

sophisticated mechansims have to be used. These are listed below in increasing level of sophistication (and increasing cost):

I. Direct contact between affected personnel.

2. Create a liaison role by giving special responsibility

to a staff member for interacting with departments

requiring frequent contact.

* 3. Set up temporary task forces with members from the

various functions and departments affected by a problem.

__. 4. If the problems affecting several functions and

departments constantly recur, replace the temporary

task force with a permanent group.

-48-

"; . . .. "-..... .. .. . . . .. .
- .5.- If the integration between some areas is getting too

complex, a special "Coordinator" can be appof~'d 6n-a

full-time basis.

* .' 6. The "Coordinator" can be upgraded to a "Coordinating

Department."

7. Finally, establish a sophisticated matrix system.

It should be stressed that most organizations do not need

to go all the way to #7 for their integration needs. The more

sophisticated the integration, the more the organizational costs

associated with it, and the amount of integration one needs is

directly related to the degree of differentiation one has.

Centralization vs. Delegation

Both "centralization" and "delegation" are strategies for

maintaining control in organizations. In a centralized

organization, control is exercised by a small group of people

at the top. The level of discretionary action on the part of

other managers is thus low. Delegation is the process of delegating specific decision-making powers to particular managers

at lower levels of the organization. Several arguments can be

listed both for an increased amount of centralization, and an

increased amount of delegation.

For increased centralization:

-- Easier coordination -- Consistent policies

-- Managerial economy

-- Proven judgment -- Tight control -- Quick decisions in crises

For increased delegation:

-- Relieves burden on senior managers -- Higher level of motivation and morale at lower levels -- Aids management development -- More adaptive and flexible -- More comprehensive performance-measurement system

The trade-offs between greater centralization and greater delegation obviously need to be made in the light of specific

situational needs. Some propositions are:

0 The larger the organization, the more difficult are

centralized control and decision making.

-49-
.....- ~ . ~ .~ .. ~ ,. ~ ~ ,. ~ ,. ~ _ ., -. .. .. - ' 7 . . .'7 , .. .. .. ,,; , ,''.

. ..

- 'The greater the geographic dispersion of orgamPatonal * * units, the greater the need for delegation.

. The more stable and predictable the environment, the

greater the possibility of using centralized control.

* The more professionalized the organization, in terms of

the number of professionals and the existence of

professional norms, the more decentralized it is.

Planning and Control Systems

The control and information system refers to the processes

in place for setting plans and monitoring performance through the use of formal information flows. The extent to. which a

formal and sophisticated information system is used to monitor

and control managerial performance has significant implications

for managerial behavior and organization design.

First, a formal measurement and evaluation system orients

the manager toward the goals he is expected to achieve. By defining performance objectives in a measurable way, they provide

an effective basis for performance evaluation and deciding on

rewards. Clearly defined objectives also provide constant feedback to the manager to let him know where he stands. They are

thus important motivators of performance. However, to serve

this end, the performance objectives must be perceived as being

fair and attainable. Thus, performance objectives must reflect

the environment within which the manager operates. If the

environment is unpredictable, the goals must be flexible and

reviewed frequently. If the environment is stable, more focused

goals are feasible and the reviews can focus on whether the

goals are attained rather than whether the goals were appropri- ate. Three criteria which are commonly suggested for evaluating the effectiveness of a management planning and control

system are:

-- the extent to which the system encourages goal congruence

between the manager's goals and the organization's goals (Does the system measure the manager on the areas that

you want him to focus on? Does it adequately coordinate

across departments?)

f -- the extent to which the system is fair, in the sense

that the manager is evaluated and rewarded on the basis

of performance largely within his control (Does it take

into account his interdependencies on other units and

people outside his department?)

-- the extent to which the system is feasible, in the sense

that data on the defined performance indicators are

-50-

-i. -- < . . .. : ... -, : . *. ° . . .* -. .. o . . •. . .. *.. . ._ . . .. ..... - ... ,..., o a . . , ' r - _ J . .- ' ,j ,." . .', , . , , . . , ,, : '" , - "- - . ', ,-e' '
- Obtainable at reasonable cost .

The second dimension for looking at the system is in terms

of its level of sophistication. Organizations with sophisticated information systems employ a relatively larger number of

specialists, which has several consequences. It institutes

formal procedures and controls, and it increases administrative

overheads. It also increases the possibilities of line-staff

conflicts. However, lit does have the advantage of making more

optimum use of resources, technology, etc., particularly where

the problem is complex and large amounts of data need to be

handled. In general, Khandwala (1977) observes that:

"The more competitive and innovation-rich the environment;

the more technologically sophisticated and complex the environment; the larger the organization; and the wider its distribution network, the more sophisticated and comprehensive is the

control and information system employed in the organization.

"The more professional the orientation of the top management--that is, the more it stresses both optimization and participation--the more sophisticated and comprehensive is the

control and information system employed by the organization."

Top-Management Style

Top-management style is an important variable in the design

of organizations. Quite often, it is top management's style

and preferences that lead to particular choices about an organization's strategy and structure. Conversely, the effectiveness of particular structural forms is better with particular

styles.

Khandwala (1977) lists five dimensions that constitute the

style of top management.

1) Risk-taking: whether risk-taking or risk-averse

2) Optimization: whether decisions tend to be judgmental . -and "seat of the pants," or planning and technocracy

dominated

' 3) Flexibility: whether there are mechanistic and rigid

*administrative relations with bureaucratic values, or

organic and flexible relations, with authority depending

on situational expertise

4) Participation: whether the orientation is toward individual decision making or team management

*61

-5,1-

x-;.'. - %* -. -,.* ... .:.-... . - .- .- ... ..- . . .
5) Coercion: the extent to which there are authortariap._

values and coercion is used to secure compliance

In terms of general propositions relating management style

with the contextual variables of the organization:

* A stable environment leads to a risk-averse, rigid, and

mechanistic style with formal authority.

. A large organization in a diverse and heterogeneous

environment leads to participative management style; if

',ethe environment is also turbulent, risk taking is also

added.

" A competitive, heterogeneous, turbulent environment

leads to flexibility and organic modes with situational

expertise and risk taking.

" A complex and heterogeneous environment leads to planning and technocracy-dominated and participative style. i7,, .,

" A simple, unrestrictive, and homogeneous environment

leads to nonparticipative and "seat of the pants"

management style.

.'-.

Training, Indoctrination, and Selection

The structure and processes discussed so far are all geared

towards coordinating the activities of the diverse groups of

*. people that form part of the organization. By selecting the

right people, appropriately training them, and indoctrinating

them into the culture of the organization and the behavior

patterns expected of them, the operation of the organizational

structure and processes is greatly facilitated.

By using the definitions that have been formulated for

L:- *' different organizational roles, the organization can specify

what knowledge and skills are required and use these criteria

to obtain appropriate people.

However, in most cases of reorganization, it is not pos-

* sible to acquire entire groups of new people. Training and

indoctrination then become more important; the objective is

similar, however, to that of selection, namely to ensure that

the job holder will be suitably qualified to carry out the role

the organization requires of him.

-- One point that may be mentioned here is that job special5ization, control, and training are highly interdependent.

* '- --- 52-

,' - :. " " v" . ,-" " "- . " - " """' .-.. -. " .. '' - -... .-.. ,,. ' . '. .. . - . .- ".- . .- . v . . ,.-. .,
Intensive'training to achieve particular behavior patterns is

also a means to coordinating the behavior of large grbe'fof'-

people. To the extent that one can predict and rely on the

performance of individuals, one can achieve effective organiza- -. tional performance through a lesser use of formal mechanisms.

Table 12 summarizes the relationships between organizational

processes and organizational structures.

-'.53-

...

V.T

4'!i

~-53
Table 12

Relationship between Organizational Processes and

-, Organizational Structures

GROUPING FORM

FUNCTIONAL DIVISIONAL MATRIX

Job Specialization High Moderate Mixed

Job Formalization High Moderate Moderate

Span of Control Large Low-Moderate Variable

Integrative

Mechanisms Rules & Plans; Task Forces;

Programs; Direct Con- Integrator

Hierarchical tact; Liaison Roles; Dual

Coordina- Roles Reporting

tion;

Plans

Delegation . Centralized Decentralized Variable

Authority

* * Planning and

Control Systems Formal Formal Flexible,

Budgets; Coordination; Depending

Central Decentralized on Specific

Monitoring Monitoring Project

& Coordination

Top-Management Style Authorita- Risk-taking, Flexible,

tive, Plan- Flexible Participative

ning-Dominated

Training and

Indoctrination Specific Specific Flexible

Skills Skills; Requirements

Transferable

hop

S--4.

." -54-
7. itV. -RRE V"' I

V. PROBLEM DIAGNOSIS AND INTERVENTION-w. ....

Previous sections have outlined the contextual factors,

structural dimensions, and organizational processes to be

considered in assessing organizations. Problems arise when .there are strains between these aspects. In this section, we

shall focus on how structure and process factors fit into a

framework for assisting organizations to become more effective.

Spencer and Cullen (1978) produce a typology of problems encountered in the OE literature. This is summarized in Table 13.

Task problems imply examining the job-specialization domain.

Should tasks be functionally specialized, for example? Should

there be more or less specialization? On the process side

training or selection systems should be examined. Are people trained for their jobs? Have the right people been selected?

Goal Problems imply problems with planning and control

systems and possibly management style. Hierarchy or span of

" control may also be a problem if they hinder communication of

mission.

Interdependence Problems involve problems in integration

systems and structurally around the grouping of personnel. For

instance, in some contexts collaboration will not be possible given a strong functional hierarchy.

Power Problems are centered around centralization or

decentralization of decisions as well as around top-management

style. Hierarchy and span of control can affect this domain,

particularly if the levels of the organization prevent real - discussion and participation in problems.

.' % Climate Problems may emanate from a variety of sources.

Table 14 from Williamson (1980) details how dimensions of

Litwin and Stringer's (1968) Organizational Climate Survey

Questionnaire (OCSQ) relates to organizational systems.

Z.,

1%°-5

[..-..-55-
Table 13

Client Problems

loctherd slake a Meet" owora rreft" 6 Sell a chdaCt & Nil. Ca ee

*ttiuetati/ea* (nriow/starmiardgP etcue Iittio~nal

teealett/

utructural

(ciw~iatiaI(eomileatles)

ean"agwrk decision nahiag tatiitatirn

.aaageot goals o bjectives geal eageeula goal mottLiag iealelagf goal problem strata" Objectves feetivatJOa3

4 cowwwwaleag.Aa) (commnication) conflict conflict interdependenc oars reolutaos reBstion I

laterqroup Iteraction Intertace oullainvaala

ttabogatim faciultatize, relatios

re"Vepwaratherity oprler/9"bordl. laaderskip pone probloe .4. "to. relatiAons authority

or .ganiuational Moral./kolioa took of calta/ellooto

footvetla rgenaive Clients problems

molturel asrwo Inorm/stafAardal ms alues "aI"i

* lateraetaws

Parentheses I indicate that the prblem am be elasif led Lat twea ctagelag.

(From Spencer, L. Ma, and Cullen, B. J. Taxonomnies of

Organizational Change: Literature Review and Analysis.

Boston: McBer and Company, 1978, p. 91.)

-56-
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. .o,

- Child (1977) lists five "warning signs of a structmEal ..

problem":

1. Overload (for example, top management working excessive

hours). This signals need for greater delegation, possibly

the establishment of indirect controls, the personal development of subordinates, and possibly increasing levels of

management below the chief executive.

2. Integration (for example, conflict between departments).

Solutions to this problem may involve reducing management

levels, regrouping activities or introducing new coordinating mechanisms.

3. Innovation or failures to innovate (for example, new

ideas that failed in development). In a fast-growing

business one solution is to house the research personnel in

a self-contained unit away from "the everyday operational

side of the organization." This frees them to pursue ideas

inside and outside'the organization. However, in a more

stable business it may be necessary to provide integration

between the research and operational parts of the organiza-

* tion.

4. Control (for example, employees have no clear definition

of responsibility). The classic solution is to provide job

descriptions. However, in a fast-changing situation this

.* may be the opposite from what would be effective. In that

situation more role flexibility and less standardization

may be necessary.

5. Withdrawal from Work (for example, AWOLs, or turnover).

Structures which create impersonality or remoteness can contribute to this prob.lem. A structural solution is to provide a regular procedure for reviewing their progress.

Problem diagnosis implies that we can measure the problem.

Table 15 outlines some measures which may be used to spot

.* problems. Steers (1977) reports several measures of organizational effectiveness. These are reproduced in Table 16.

From a diagnostic viewpoint, where should one start in trying to match problems to structural conditions or organizational

processes? As Section III suggests, the first step is in locating the contextual factors affecting the organization. Table 17

outlines a simple set of contextual variables which organizational interventionists can use to classify organizations. Accompanying each type are the typical problems which occur if

structural or process issues are not resolved.

*z Organizations with support missions generally face intergroup coordination problems, particularly support groups in complex environments (for example, maintenance battalion servicing

-60-
Table 15

A Partial Listing of Univariate Measures

of Organizational Effectiveness

Overall The degree to which the organization is accomplishing

Effectiveness all its major tasks or achieving all it objectives. A

general evaluation that takes in as many single criteria as possible and results in a general judgment about

the effectiveness of the organization.

Quality The quality of the primary service or product provided by

the organization. This may take many operational forms,

primarily determined by the kind of product or service

provided by the organization.

Productivity The quantity of or volume of the major product or service that the organization provides. Can be measured at

three levels: individual groups and total organization.

This is not a measure of efficiency, no cost/output ratio

is computed.

Readiness An overall judgment concerning the probability that the

organization could successfully perform some specified

task if asked to do so.

Efficiency A ratio that reflects a comparison of some aspect of unit

performance to the costs incurred for that per- formance. Examples: dollars per single unit of production, amount of down time, degree to which schedules, standards of performance, or other milestones are

met. On occasion, just the total amount of costs (money,

material, etc.) a unit has incurred over some period an

be used.

Profit or The return on the investment used in running the organiReturn zation from the owners' point of view. The amount of

resources left after all costs and obligations are met,

sometimes expressed as a percentage.

-61-
TABLE 15 (continued)

* -Growth An increase in such things as manpower, plant facilities,

assets, sales, profits, market share, and innovations. A

comparison of an organization's present state with its

own past state.

Utilization of The extent to which the organization successfully interEnvironment acts with its environment, acquiring scarce, valued resources necessary to its effective operation. This is

viewed in a long-term, optimizing framework and not in a

short-term, maximizing framework. For example, the

degree to which it acquires a steady supply of manpower

and financial resources.

Stabi~ity The maintenance of structure, function, and resources

through time, and more particularly through periods of

stress.

Turnover or

Retention Frequency or amount of voluntary terminations.

Absenteeism The frequency of occasions of personnel being absent

from the job.

Accidents Frequency of on-the-job accidents resulting in down time

or recovery time.

Morale A predisposition in organization members to put forth

extra effort in achieving organizational goals and objectives. Includes feelings of commitment. Morale is a

group phenomenon involving extra effort, goals communality, and feelings of belonging. Groups have some degree

* of morale, while individuals have some degree of motivation (and satisfaction). By implication, morale is

inferred from group phenomena.

Motivation The strength of the predisposition of an individual to

engage in goal-directed action or activity on the job.

This is not a feeling of relative contentment with various job outcomes as is satisfaction, but more akin to a

feeling of readiness or willingness to work at accomplishing the job's goals.

-62-
TABLE 15 (continued) -.

Satisfaction The degree of feeling of contentment felt by a person

toward his organizational role or job. The degree to

which individuals perceive they are equitably rewarded

by various aspects of their job situation and the organization to which they belong.

Internalization The acceptance of organizational goals by individuals and

of Organiza- units within the organization. Their belief that the

tional Goals organization's goals are right and proper.

Conflict- A bipolar dimension defined at the cohesion end by an

Cohesion organization in which the members like one another, work

well together, communicate fully and openly, and coordinate their work efforts. At the other end lies the organization with verbal and physical clashes, poor coordination, and ineffective communication.

Flexibility- The ability of an organization to change its standard

Adaptation operating procedures in response to environmental

changes, to resist becoming rigid in response to environmental stimuli.

Evaluations by Evaluations of the organization or organizational unit

External by those individuals and organizations in its environEntities ment with which it interacts. Loyalty, to confidence in,

and support given the organization by such groups as suppliers, customers, stockholders, enforcement agencies,

and the general public.

-. 3.

(From J. P. Campbell, "Research into the Nature of Organizational

Effectiveness. An Endangered Species?" Unpublished manuscript.

University of Minnesota, 1973. Used by permission of the author.

-63-

,'-¢' '.-'... " .- .-. .. '... .... . . ..... . . .- ... ... . .. '-'.-. ...- - ," -,. ., °.-....'*',,', . -
Table 16

Performance Indicators (or Symptoms)

for Problem Diagnosis

A. Behavioral Outcomes

: '-i

1. AWOL rates/causes?

2. Article 15's/frequency/causes?

3. Re-enlistment rates?

4. Task performance quality? (individuals)

B. Attitudinal Outcomes

1. Morale/climate?

2. Unit spirit, pride, identity?

C. Mission Effectiveness

I. Operational readiness?

2. ARTEP scores?

3. IG scores?

4. Other indicators of mission fulfillment?

D. Operational Efficiency

I. Operating within budget?

2. Productivity measures? • 3. Resource availability/utilization?

4. Task scheduling efficiency (timeliness)?

5. Individual overload?

.- 64-

/"- -. U..X
,. .-.-

Table 17

Classification of Organizational Problems by

Contextual Variables

Mission Environment Technology Common Problems

support complex complex Intergroup/within

group coordination and

clarity

support stable complex Within group

coordination

support complex simple Intergroup

coordination/

efficiency

support stable simple Behavioral

line complex complex Within group

coordination

and clarity

line stable complex Effectiveness

line complex simple Within group

coordination/

efficiency

line stable simple Behavioral

N

- -* _I

.9..

**.-'. ** ...-. . % .. - . . ... . .. .- s
groups geographically separate in combat exercise and d9indf'g

on other units for parts). Line organizations typically face

group coordination problems when faced with complex environments

(for example, actual combat situations). Both need a heavy emphasis on integrative mechanisms. However, the structural solutions may be different. The support group may require something

closer to a matrix. For example, the maintenance battalion may

set itself up with project teams to serve particular problems.

Alternatively, rather than existing as a separate functional or-

" ganization to a line organization, they actually become matrixed

across that organization. In other words, people working on a

particular problem would be working both for their maintenance

group and the line organization. This can only be accomplished,

.4 though, with well-thought-out integrative mechanisms (for example, someone who manages conflicts between both groups).

A matrix organization, however, in the line organization

would be dysfunctional, since the demands require immediate

response. Decision making in matrix organizations is diffuse,

which creates critical problems when a quick response is desired. In the case of the line organization in a complex

environment with complex technology, centralized coordination

may be necessary with mixed structure consisting of some

specialist groups (for example, nuclear-warhead specialists)

and some functional groups.

Organizations with complex environments and simple technologies often face operating efficiency problems. They spend

a lot of time trying to deal with the environment at the expense of internal operations. Planning and control systems are

critical in this situation. Structurally, job specialization

should include some roles which deal specifically with the

environment (boundary-spanning activities).

In stable environments with simple technologies the critical problem is motivation and problems typically are diagnosed

as behavioral. In this situation, examination of the way activities are structured is critical. This is a prime situation

for examining job design. Training and selection are also important, so that people with the right levels of skills are

selected and kept; people with overly high skills easily turnover. Since turnover may be fairly high at any rate, a selection and recruitment system suitable to meet demands is necessary.

Line organizations with stable environments and complex

technologies have problems with effectiveness unless selection

and training ensures a high calibre of technical expertise.

Managers may be unable to standardize jobs in certain technologies but effectiveness is also low if jobs are not formalized.

.4.t

,..4. ' - - . . , ; -, -. . .... . . -.. . . -. , . . . . .
Both support and line organizations facing complex environments and using complex technologies often face proble ff'bE

clarity ("what am I doing here?"). In this situation top-management style is important. The best leader for this situation

is directive and provides strong mission statements.

Therefore, lack of fit between contextual factors and structure and process leads to problems. However, as Spencer and

Cullen (1978) point out, most client problems are not stated in

structural or process terms. Often they are stated in general

terms or in terms of personality clashes or group conflict. A

diagnostic method gathers data and moves from the general symptoms to stated problems (best stated as gaps between actual and

ideal). Spencer and Cullen (1978) report nine major steps in

an organizational intervention:

1. Scouting

2. Entry

3. Data Collection

4. Analysis of Data

5. Data Feedback

6. Action by Client

7. Follow-up Technical Assistance and Support

8. Evaluation

9. Termination

Gathering data about structure and process through interviews or observation is one way of establishing whether strains

exist in these areas. The key questions guiding this process

reflect the major dimensions reported previously. These are

summarized in Table 18. Key strains have been summarized

previously.

How people perceive.the organization and the key strains

they perceive as a result of structures and systems may be established through a questionnaire such as the Work Environment

Questionnaire (WEQ) (Dalziel, Klemp, and Cullen, 1978). Table

19 presents a taxonomy of WEQ scales by the structural dimensions and process dimensions which are implied by gaps between

actual and ideal on the WEQ. This is based on a content analysis of the scales. It implies that both process and structure

should be looked at jointly. One scale may imply strains

against several dimensions. Thus, if there were a gap on order

and organization at the unit level, we would look at the integration methods in the organization (how groups are coordinated, for example), as well as the grouping of personnel (does

* purely functional form limit the unit's ability to get the

resources it needs?). We would also look at job specialization (are jobs set up in such a way that it's a problem coordinating activities?) For example, should roles be less

specialized to allow a better flow of information? Locating

-67-
Table 18

Key Domains to Be Researched

for Structure or Process Intervention

Organizational Context

" What is the mission of the organization?

" What type of external environment does tne organization

face? Uncertain? Changing? Distant? etc.

, What technologies are utilized? Complex? Simple? Changing?

Organizational Structure

* How are people grouped in the organization? By

function? By division? Matrix? Project Teams?

* How are jobs designed? Functions specified? Roles

specialized? Jobs standardized? Jobs formalized?

* How many levels and what is the span of control in the

organization?

Organizational Process

e What integrative methods are used in the organization?

* Are decisions centralized or decentralized?

* What are the planning and control systems?

o What is top management's style?

r e What are the human-resource systems? Training?

Introduction? Selection?

Outcomes

e Does the organization meet its mission?

' Does it operate efficiently?

* What are the key strains people face?

-6-.

- ~~~...... ,.... .,. ... -,-.......-.--.......... .. .....
Table 19

Taxonomy of Structural and Process Dimensions for WEQ

-Structural Dimensions

Organizational Grouping of Job Special- Levels & Span

Process Dimensions Personnel ization of Control

Integration Order & Order & Supervisor

Method Organization Organization Planning/

(Unit) (Unit) Organizing

Pressure Pressure Skills

Centralization/ Pressure Pressure

Decentralization Job Responsibility

Planning and Con- Order & Teamwork Supervisor

trol Systems Organization Planning/

(Post) Organizing

Standards Skills

.1'*-* Enforcement

Top-Management Standards Support

Style Enforcement Services

Order & Equity

Organization -4 (Post)

Training, Indoc- -- Personnel -- Supervisor

trination, and Training Individual

Selection -- Supervisor Support

Individual -- Supervisor

Support Task Facil-

-- Supervisor itation

Task Facil- -- Supervisor

itation Planning/ -- Job Enrich- Organizing

ment Skills

'-9

°.

, .. -69-
the key strain is a critical step in deciding what thesjruc. -

tural or process intervention should be. This intervention

will not be easy. Effective interventions depend on a variety

of competencies and skills outside the scope of this study.

However, locating the right match of structure and design,

given the context of the organization, is the first step in

building strong organizations.

'a.17

'a..'. Oo. 7

at.°..

A:-

'a. -70-
* . - - .. .. * . . - .

Appendix I

Analysis for Grouping of Activities

The logic underlying the grouping of activities has been to

group people in such a way that it matches the intensity and

complexity of communication and information-sharing needs.

There are a number of methods of systematically studying this

issue. Both Child (1977) and Mendes (1980) provide detailed

descriptions of methods derived from systems analysis. These

are the key steps:

1. List:

a) -- Who gives information to whom

-- Who receives information from whom

b) Types of information (e.g., documents, orders, memos)

c) Frequency of communication

d) Methods of communication (e.g., telephone, meeting, etc.)

e) Who makes decisions with whom

f) How they make decisions (e.g., meeting, informal,

written order)

g) For any particular function or person, who in the

organization is most crucial for that function or person

to accomplish his or her mission.

2. Summarize these data in flow charts.

3. Draw up a matrix of interrelationships--Figure 1 from Child

(1977) is an example of one.

4. It makes sense for activities that are required to be together for coordination to be clustered in the organization.

This matrix can be used to cluster activities depending on

the intensity of communication required. For example, the

matrix in Figure 5 suggests that sales installation and

engineering specifications should be closely related, by being merged into one department, by sharing quarters with

one another, or at least by having a common manager who rwould ensure coordination.

If two functions share the same data, then they should not

*. ? ... ' * - -' . '-' ... -,-, •-, - - - 71. -. - - . ..- .
0O;

Figure 5

-. Linkage Chart for Hypothetical Organization

2 3 4

Actvity Market Order Marketing Sales Engineering Etc

.research handling programming installation specification

Order Reasons for linkage key: Required closenes key:

handling C I. Co-ordination required 6. Absolutely necessary

2. Sharing of data 5 Especially important

S 3 I 3. Transfer of data 4. Important Marketing 4. Economy of effort S. Ordinar. closeness

programming 4 C-DrC 5. Use of same equipment 2 Unimportant

4..16. Effective control I Not desirable -"4 3 1, 2 + I3 etc

-5' Sales

S3 1 +3 Erngineering

specifications I - I r

6

Factory Type of communication key:

programming Withineach boa A Face-to-face

B Telephone 7 Reasons for Linkage C Written

Stock D Formalmtin'

control Required Type of

Closenes communication etc

Etc

is

%".

.% %

li !:!(From Child, 3. Organization. London: Harper & Row, 1977,

b m p. 81.)

ro.,.. .. :-..- .-............. .. .. -. *-9-:9-*'-, .- "- ,%' ,"- .. '- ",-" "."-- -.- ' . -. --- '-- .'• --...
-. .,.* -I.HI

be-physically separated unless the information is autoLMd 'n5

both have equal access to the data base.

In general, these functions, persons, or tasks requiring

frequent or intensive communications should be grouped together.

Ii

.. '73

*4.:i

44.2

4-,4

. -4. , ' ' ", m . . . - .''. '-% , - % ,"'''% ".-'.k_,% % -' '. - - " - ", - - % -" ". .
,-. * . w.-.---•

Jo.-T

Appendix 2

Analysis for Span of Control

This method was developed by the Lockheed Missiles and

Space Division to study problems it felt were arising owing to

excessively narrow spans of control, and is described in Child

(1977).

Seven factors were identified as most critical for

evaluating span of control:

1. Sim-.larity of functions--the degree to which functions, - performed by the various components of personnel reporting

to a supervisor, are alike or different

2. Geographic contiguity--the degree of physical separation

* [- of components of personnel reporting to a supervisor

*3. Complexity of functions--the degree of difficulty of

nonsupervisory personnel to perform satisfactorily

4. Direction and control--the degree of attention subordi-

*'-, nates require for proper supervision of their actions

5. Coordination--the degree to which the supervisors must

spend time keeping the organizational relationships between

'- their components and the rest of the organization properly

balanced or correlated

6. Planning--the importance, complexity, and time requirements on supervisors for reviewing the objectives,

output requirements, and necessary actions to accomplish

their unit's mission

7. Organizational assistance--the extent to which the

*, supervisor receives assistance from other supervisors or

their assistants.

Figure 6 describes a point chart that can be used to assess

these functions. Thes. can be added to form a supervisor index.

" Table 20 outlines suggested span of control based on an empirical analysis reported in Child (1977) of the relationship between the supervisory index and span of control.

-74-

',;,..." "'.; '.,": ''-".. "..,. . -. .. " . .. . .. . , . .. . . ... .. ,". -. -. . . . .-"
FIGURE 6

Scoring Chart for Supervisor Index - -7

Elements in the supervisory burden of managers and their assessment

Element Degree of supervisory burden, and points allocated

Similarity of Identical Essentially Similar Inherently Fundamenfunctions alike different tally distinct

1 2 3 4 5

GeograpLical All All in one Separate Separate Dispersed

contiguity together building buildings, locations, geographic

one plant one geo- areas

location graphic

area

2 3 4 5

Complexity Simple Routine Some Complex Highly comof functions repetitive complexity varied plex, varied

3 4 6 8 10

Direction Minimum Limited Moderate Frequent Constant

and control super- super- periodic continuing close

required vision and vision super- supervision supervision

training vision

3 6 9 12 15

Co-ordination Minimum Relation- Moderate Consider- Entensive

required relation- ships limited relation- able close mutual nonships with to defined ship easily relation- recurring

others courses controlled ship relationship

2 4 6 8 10

Planning Minimum Limited Moderate Consider- Extensive

required scope and scope and scope and able ef- effort recomplexity complexity complexity fort re- quired;

quired areas and

guided policies not

only by charted

broad

policies

2 4 6 8 10

(From Child, J. Organization. London: Harper & Row, 1977, p. 62.)

-7 -
Table 20

Conversion of Supervisory Index into Suggested

Spans of Control

Suggested Standard

Supervisory Index Spans of Control

40-4 2 4-5

37-39 4-6

34-36 4-7

31-33 5-8

28-30 6-9

25-27 7-10

22-24 8-11

6

(Adapted from Child, J. Organization. London: Harper &Row,

-75a-
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