8-1
Organization Size and Organizational
Life Cycle
Anggraini Sukmawati
Program Studi Ilmu Manajemen, FEM-IPB
2024
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-2
Differences Between Large and Small Organizations
• LARGE
– Economies of scale
– Global reach
– Vertical hierarchy – Mechanistic
– Complex
– Stable market
– “Organization men”
• SMALL
– Responsive – Flexible
– Regional reach – Flat structure – Organic
– Simple
– Niche finding – Entrepreneurs
Source: Based on John A. Byrne,
“Is Your Company Too Big?”
Business Week, 27 March 1989, 84-94.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-3
Organizational Life Cycle
ORGANIZATION STAGES OF DEVELOPMENT
Entrepreneurial 1.
Stage
Collectivity 2.
Stage
Formalization 3.
Stage
Elaboration 4.
Stage Crisis:
Need to deal with too much
red tape Crisis:
Need for delegation with control Crisis:
Need for leadership Creativity
Provision of clear direction
Addition of internal systems
Development of teamwork
Crisis:
Need for revitalization
Decline Continued maturity Streamlining, small-company
thinking
S I Z E Large
Small
Sources: Adapted from Robert E. Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33-51; and Larry E. Greiner,
“Evolution and Revolution as Organizations Grow,” Harvard Business Review 50 (July-August 1972): 37-46.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-4
Organization Characteristics During Four Stages of Life Cycle
1.
Entrepreneurial
2.
Collectivity
3.
Formalization
4.
Elaboration Characteristic Nonbureaucratic Prebureaucratic Bureaucratic Very Bureaucratic Structure
Informal, one-
person show Mostly informal,
some procedures Formal procedures, division of labor, specialties added
Teamwork within bureaucracy, small- company thinking
Products or services
Single product or
service Major product or
service with variations
Line of products or
services Multiple product or services lines
Reward and control systems
Personal,
paternalistic Personal, contribution to success
Impersonal,
formalized systems Extensive, tailored to product and
department
Innovation
By owner-manager By employees and
managers By separate
innovation group By institutionalized R&D
Goal
Survival Growth Internal stability,
market expansion Reputation, complete organization
Top Management Style
Individualistic,
entrepreneurial Charismatic,
direction-giving Delegation with
control Team approach,
attack bureaucracy
Sources: Adapted from Larry E. Greiner, “Evolution and Revolution as Organizations Grow,”
Harvard Business Review 50 (July-August 1972): 37-46; G. L. Lippitt and W. H. Schmidt,
“Crises in a Developing Organization,” Harvard Business Review 45 (November-December 1967):
102-12; B. R. Scott, “The Industrial State: Old Myths and New Realities,” Harvard Business Review 51 (March-April 1973): 133-48; Robert E. Quinn and Kim Cameron; “Organizational Life Cycles and Shifting Criteria of Effectiveness,” Management Science 29 (1983): 33-51.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-5
Weber’s Dimensions of Bureaucracy and Bases of Organizational Authority
• BUREAUCRACY
1. 1. Rules and procedures
2. Specialization and division of labor 3. Hierarchy of
authority
4. Technically
qualified personnel 5. Separate position
and incumbent 6. Written
communications and records
• LEGITIMATE BASES OF AUTHORITY
1. Rational-legal
2. Traditional
3. Charismatic
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-6
Percentage of Personnel Allocated to Administrative and Support
Activities
50 75
25
0
Organization Size
Small Large
Line employees
Top administrators
Clerical Professional staff
Percentage
Employees of
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-7
Three Organizational Control Strategies
TYPE
Bureaucratic Market
Clan
REQUIREMENTS
Rules, standards, hierarchy, legitimate authority
Prices, competition,
exchange relationship
Tradition, shared values and beliefs, trust
Source: Based upon William G. Ouchi, “A Conceptual Framework for the Design of Organizational Control Mechanisms,” Management Science 25 (1979): 833-48.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-8
Management Control Systems Used as Part of Bureaucratic
Control
Subsystem Budget
Statistical reports Reward
systems Operating
procedures
Content and Frequency
Financial, resource expenditures, monthly
Non-financial outputs, weekly or monthly, often computer-based
Annual evaluation of managers based on department goals and
performance
Rules and regulations, policies that prescribe correct behavior,
continuous
Source: Based on Richard L. Daft and Norman B. Macintosh,
“The Nature and Use of Formal Control Systems for Management Control and Strategy Implementation,” Journal of Management 10 (1984): 43-66.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-9
Major Perspectives of the Balanced Scorecard
Mission Strategy
Goals
Internal Business Processes Does the chain of internal activities and processes add value for customers and shareholders?
Examples of measures: order-rate fulfillment, cost-per-order
Financial
Do actions contribute to improving financial performance?
Examples of measures: profits, return on investment
Learning and Growth Are we learning and changing?
Examples of measures: continuous process improvement, employee retention, new product introductions Customers
How well do we serve our customers?
Examples of measures: customer satisfaction, customer loyalty
Sources: Based on Robert S. Kaplan and David P. Norton, “Using The Balanced Scorecard as a Strategic Management System,”
Harvard Business Review, January-February 1996, 71-79;
Chee W. Chow, Kamal M. Haddad, and James E. Williamson,
“Applying the Balanced Scorecard to Small Companies,”
Management Accounting 79, No. 2 (August 1997), 21-27; and Cathy Lazere, “All Together Now,” CFO, February 1998, 28-36.
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-10
Evaluation of Control On the Job
Workbook Activity
1.
2.
3.
4.
Your job
responsibilities How your
boss controls Positives of
this control Negatives of
this control How you would
improve control
©2000
South-Western College Publishing Cincinnati, Ohio
Daft, Organizational Theory and Design, 7/e
8-11
Evaluation of Control At the University
Workbook Activity
1.
2.
3.
4.
Item
How Prof. A (small class) controls
How these controls influence you
What you think is a better control How Prof. B
(large class)
controls
