According to the bureaucratic theory of Max Weber, bureaucracy is the basis for the systematic formation of any organisation and is designed to ensure efficiency and economic effectiveness. It is an ideal model for management and its administration to bring an organisation's power structure into focus.

Technical rationality – It is a system based on impersonality's provided they have the right skills and qualifications. Second, behaviour of people is controlled by impersonal behaviours.

What is theory?

Theory – built from selected concepts to explain, understand or appreciate the phenomenon of interest.

Concepts – categories for sorting, organising and storing information relevant to the phenomena of interest.

Phenomena of interest – what a person wants to explain, understand or appreciate.

Different perspectives Modern

• Reality is objective: theory purpose is to describe it faithfully, avoiding biases (positivism)

• Organisations are clear entities that have clear reality, which is objective, and a matter of collecting enough data and observations.

• Focus on quantitative studies (reliable/valid)

• Objectivist epistemology (representational/generalizable knowledge) Symbolic

• Interpretation plays an essential role in our understanding of the world

• Focus on qualitative studies/ethnography (credible/trustworthy)

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Post-modern

• Critically appreciate phenomena, becoming aware of power relations

• Central role of language and discourse as they both shape understanding.

• Constructivist/reflexive epistemology (power shapes knowledge) Traditional ideas of Management

Organisations as rational instruments.

• Efficiency – relations between cost and benefit

• Effectiveness – how good is the final result Founding fathers of management

Principle of management (1916) by Henry Fayol

• Division of work; authority; discipline; unity of command and direction;

subordination; centralisation; hierarchy

• Remuneration; equity; tenure; initiative

Scientific management (1915) by Fredrick W. Taylor

• He observed what people did and practiced/experimenting on the best ways to maximise efficiency.

o Search for the “one best way”

• Worker is “stupid and phlegmatic … resembles the ox”

o Ox (worker) needs to be guided. They need to be told what to do by the manager.

• Stated goal:

o maximise prosperity (both for employer and employees) by achieving maximum efficiency.

• Not aimed at exploiting workers. Rather, aimed at making the most out of the effort of each worker.

Rationalisation & Bureaucracy (1922) by Max Weber

According to the bureaucratic theory of Max Weber, bureaucracy is the basis for the systematic formation of any organisation and is designed to ensure efficiency and economic effectiveness. It is an ideal model for management and its administration to bring an organisation's power structure into focus.

Technical rationality – It is a system based on impersonality's provided they have the right skills and qualifications. Second, behaviour of people is controlled by impersonal behaviours.

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Scientific Management principles (Taylorism) 1. Analyse of workers perform their task:

• Observe what they do

• Collect their informal knowledge

• Experiment ways of improving performance 2. Codify new methods in written standards and procedures

3. Select workers who have the right skills and attitude for the task and train them to perform it according to procedures

4. Establish desired performance level and develop a pay system that rewards for exceptional performances

Summary – Measure time to undertake work and monitor whether productivity matches procedure.

Criticism of ‘Taylorism’/Scientific Management Every worker is treated as a commodity.

Anomie (Durkheim)

• Lack of the usual social or ethical standards in an individual or group.

• Loss of sense of belonging

• Breakdown of moral order Alienation (Marx)

• Sense of exclusion and separation from our creative products

• Exclusion and deprived of fruits of work.

Ignores tacit knowledge

• Non codifiable expertise and Know how Rationalisation & Bureaucracy (1922) by Max Weber

• Legitimation; authority, ideal types

• Technical rationality

o Rationality – human behaviour is all guided by human behaviour. Rationality is connecting actions to objectives in a logical manner.

Weber’s sociology

Objective: Understand the subjective meaning that actors attach to actions within a specific social context.

Types of rationality

• Technical

• Value-based

• Affective

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• Traditional

Each type of rationality is connected to a different set of principles.

Types of Authority/governance

• Traditional

• Charismatic

• Legal/rational

Weber’s description of modernity Weber’s bureaucracy

• Division of work

• Hierarchy (based on expertise)

• Formal selection

• Formal rules

• Impersonality

• Non-ownership of means of production

• Career

The above are an expression of legal rational form of legitimacy (technical rationality).

References

Daft, R., Murphy J. & Willmot, H. 2014 Organization Theory and Design: An International Perspective. Cengage, Andover.

Cooke, B. (2003) The Denial of Slavery in Management Studies. Journal of Management Studies. 40, 8, pp. 1895-1918.

Lecture 3 - Organisations as rational tools - Contingency theory

Beyond ‘one best way’: contingencies

Contingency Theory (1960s-1970s): Aston school by Tom Burns, George Stalker, Joan Woodward, Derek Pugh

• Empirical studies on organizations: organizations tend to have a similar design if they have similar size or use similar technologies.

• There is not one best way to structure an organisation, or to manage it.

• Design must fit contingencies.

Inspired by Taylor’s idea of empirical studies.

• Organisations need to be designed to fit their environment.

Being organised (Lawrence & Lorsch 1967)

Being organised mean to differentiate, which is to divide a complex task into simpler ones.

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• Tasks are given to most qualified person with the right specialisation skills (due to work experience or academic)

Second, to integrate activities towards a common goal, purpose and direction.

• This is done through reporting lines, coordinating roles, and grouping people with similar tasks

How can we differentiate (through specialisation)?

Can specialise by:

• Product

• Role – functional specialisation – e.g. accountant, marketer

• Area – geographical or market area

• Customer – type of client at architectural or law firm Integration Mechanism

• Hierarchy integration –

• Technology – project management system. If it is too rigid, then it might encounter problems with unpredictability.

• Culture/social norms – unwritten roles that make behaviour predictable.

Each of the systems, alone, is not sufficient to guarantee absolute coordination. But, they can together combine to create a sufficient degree of coordination to match the challenges of speciation/differentiation.

Basic structural forms Functional (“U form”)

Grouping people/units who perform similar tasks.

Group people together to perform similar tasks. I.e. Accountants with accountants.

Looking after the same technical aspect of the problem.

• Coordinate through hierarchy and normative rules.

Low overheads (due to only 1 line of command), focus on efficiency and specialisation Divisional (“M form”)

Organisation is split into self-sufficient, autonomous business units.

More people focused on coordinating each business unit. Each business unit would serve a different market.

• Gives autonomy but increases overheads, more stringent hierarchy High overheads (due to multiple lines of command), focus on integration and responsiveness

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Matrix

Units are differentiated along two or more dimensions (each person reports to 2 or more bosses)

• Differentiate across multiple dimensions and reporting lines. Increases complexity of management, but sometime only way to deal with highly complex environment.

Requires high level of integration.

High complexity, very demanding for staff members

Types of Structures Functional

Suitable for organisations that have shared specialised knowledge Divisional

Suitable for organisations that offer different services to different markets Matrix structure

Vertical structure.

Aligned with core element of project – will require other members from another group to help.

A matrix structure:

• Accommodates multiple cross-functional groups

• Reporting relationships are set up as a grid

• Effective for developing new activities and for coordinating complex multiple interdependencies

• Requires a different skillset than the traditional hierarchical model.

Advantages & Disadvantages of matrix structure Advantage

1. A flexible resource pool

• The entire area/unit/department forms the resource pool for projects in a matrix structure, providing flexibility. The best resources can be picked for the job at hand, making available the best expertise for each project.

2. Less downtime for resources

• Juggling several projects at once should allow for people’s skills to be used more efficiently. This reduces downtime or slow periods, as individuals can pick up on other project tasks when another project is slack.

3. Sharing knowledge across the organization

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• Working with different managers and across projects helps breaking down information silos, increasing communication within the organization.

4. Develop broader individual capabilities

• A matrix helps develop individuals with broader perspectives and skills who can deliver value across the organization, and it functions as a professional development tool.

Disadvantage

1. Ambiguity and conflicts 2. Stress

3. Inefficiencies

No one best way: design trade-offs (Burns & Stalker 1966)

Low task uncertainty fits High task uncertainty fits Mechanistic structure

• High formalisation

• Focus on control, planning and procedures

• Top-down decisions, low participation

Emphasis on control & compliance (high standardisation)

Organic structure

• Low formalisation

• Focus on learning, feedback, mutual adjustment

• Encourage initiative, high

participation, open communication

Emphasis on learning & adaptation

(low standardisation)

Different task interdependence Types of interdependences:

• Pooled interdependence – task needs to be coordinated with general level of coordination. Shared objectives.

• Sequential interdependence – people operating in assembly line. Group of people with logical and sequential orders. Ideal level of interdependence and coordination.

• Reciprocal interdependence - constantly changing behavior. I.e. Surgeons in operating theatre working together on a patient. Degree of interdependence and coordination is higher.

Reciprocal interdependence – need shared values, integrating roles and functions

Table of Contents

Table of Contents

Lecture 2 – Classic Theory

Lecture 3 - Organisations as rational tools - Contingency theory