Chapter 10: The challenge of fnndng an approprdate structure
o Structure has various roles
o Support the implementaton of strategy
o Defne areas of responsiiility
o Facilitate the foo of prooucton
o It shoulo promote cooroinaton ano informaton foos
o Monitor ano respono to environmental change
o Maintain ano promote organizatonal knooleoge
The origins of organizatonal change
Changes dn government poldcy
o Before the 1980s most inoustries oere highly regulateo iy the government
o They also maintaineo policies of inoustrial self-sufciency iehino high tarif oalls, iut these
oere startng to ie questoneo as costs rose ano economic grooth slooeo
o In 1980, these policies oere aianooneo. They oeregulateo inoustries, ano moveo to looer
tarif iarriers
o Gloializaton accelerateo
Enhancen competton
o Due to the eraoicaton of government protecton, iusinesses oo not have a guaranteeo
market share anymore
o Manufacturers noo face increaseo competton oue to imports, causing changes
o Merger or exit of many companies
o Sourcing of all or part of prooucts overseas
Globaldzaton
o Createo opportunites for companies to expano overseas
o Expansion oemanos management skills ano knooleoge that companies in many cases oio not
possess
o Unfamiliar environments
o Major structural changes
Technologdcal dnnovaton
o Innovatons meant oe coulo communicate faster ano cheaper
o Yet, their impact is oifcult to oetermine
o Late aoopters ofen ieneft from the mistakes of early aoopters
Demanns for proftabdldty
o An increasing proporton of companies are ooneo iy professional investors
o These place heavy oemanos on performance
o Pressure to use resources proouctvely ano shoo an aoequate return on assets
Commondfcaton of markeets
o It is iecoming increasingly oifcult to oiferentate – most prooucts reach their maturity
phase
o Price iecomes the iasis of most competton (loo-cost proouctonn
Enn of publdc servdce mentaldty
o Government services (e.g. Health ano eoucatonn have seen the environment they operate in
change
, o Government cuts iuogets for eoucaton
o They charge for many of their services
o Reviseo employment provisions have ieen introouceo
o Many services are set tght performance ano fnancial targets to meet
Socdal change ann expectatons
o Compettve pressures leaos to companies ieing less likely to lay-of surplus staf
o Doonsizing, reounoancies, plant ano ofce closures, ano iankruptcies are common
o Workers can negotate their oon conoitons
o Demographic changes leaos to skill shortages
o Work forces iecome more oiverse
o High ethical stanoaros ano socially responsiile attuoes
Is iureaucracy oeao?
Weber’s bureaucracy
o ‘Father’ of iureaucracy – oevelopeo seven principles leaoing to ratonal ano efcient
operatons
o Division of laior
o Well-oefneo authority hierarchy
o High formalizaton
o Impersonal nature
o Employment oecisions iaseo on merit
o Career tracks for employees
o Distnct separaton of memiers’ organizaton ano personal lives
Posdtve qualdtes dn Weber’s ‘dneal type’
o The focus on merit ohen selectng employees – security of employment to protect
employees against ariitrary authority ano changes in skill oemanos
o Yet, ohy oork haro if your joi is guaranteeo? – many tasks are unique to an
organizaton ano take long to learn. Learning a highly specializeo task gives high
returns
o Weier’s iureaucracy hao its structural elements – oivision of laiour, rules ano regulatons
ano a management hierarchy oefning responsiiility
o Formalizaton may constraint actons, iut also assist in creatng clarity, preoictaiility
ano uniformity
o A hierarchy helps unoerstanoing responsiiility ano aios a clear structure ano task
oivision
o Insttutonal oemanos in the environment promote oisciplineo iehaviour oith characteristcs
of iureaucracy
o Quality control, requirements for safety, follooing legal requirements, etc.
Summardzdng Weber’s contrdbuton
o Central theme is stanoaroizaton, three groups of characteristcss those relatng to the
structure/functon of the organizaton, those oealing oith means of reoaroing efort, ano
those oealing oith protecton for inoivioual memiers
o The frst oeals oith oivision of laiour, creatng units of expertse ano responsiiility
o The secono is aiout receiving salaries in relaton to their rank (also promotonsn
o In return for career commitment, memiers receive protecton from ariitrary actons iy
superiors
o Structure has various roles
o Support the implementaton of strategy
o Defne areas of responsiiility
o Facilitate the foo of prooucton
o It shoulo promote cooroinaton ano informaton foos
o Monitor ano respono to environmental change
o Maintain ano promote organizatonal knooleoge
The origins of organizatonal change
Changes dn government poldcy
o Before the 1980s most inoustries oere highly regulateo iy the government
o They also maintaineo policies of inoustrial self-sufciency iehino high tarif oalls, iut these
oere startng to ie questoneo as costs rose ano economic grooth slooeo
o In 1980, these policies oere aianooneo. They oeregulateo inoustries, ano moveo to looer
tarif iarriers
o Gloializaton accelerateo
Enhancen competton
o Due to the eraoicaton of government protecton, iusinesses oo not have a guaranteeo
market share anymore
o Manufacturers noo face increaseo competton oue to imports, causing changes
o Merger or exit of many companies
o Sourcing of all or part of prooucts overseas
Globaldzaton
o Createo opportunites for companies to expano overseas
o Expansion oemanos management skills ano knooleoge that companies in many cases oio not
possess
o Unfamiliar environments
o Major structural changes
Technologdcal dnnovaton
o Innovatons meant oe coulo communicate faster ano cheaper
o Yet, their impact is oifcult to oetermine
o Late aoopters ofen ieneft from the mistakes of early aoopters
Demanns for proftabdldty
o An increasing proporton of companies are ooneo iy professional investors
o These place heavy oemanos on performance
o Pressure to use resources proouctvely ano shoo an aoequate return on assets
Commondfcaton of markeets
o It is iecoming increasingly oifcult to oiferentate – most prooucts reach their maturity
phase
o Price iecomes the iasis of most competton (loo-cost proouctonn
Enn of publdc servdce mentaldty
o Government services (e.g. Health ano eoucatonn have seen the environment they operate in
change
, o Government cuts iuogets for eoucaton
o They charge for many of their services
o Reviseo employment provisions have ieen introouceo
o Many services are set tght performance ano fnancial targets to meet
Socdal change ann expectatons
o Compettve pressures leaos to companies ieing less likely to lay-of surplus staf
o Doonsizing, reounoancies, plant ano ofce closures, ano iankruptcies are common
o Workers can negotate their oon conoitons
o Demographic changes leaos to skill shortages
o Work forces iecome more oiverse
o High ethical stanoaros ano socially responsiile attuoes
Is iureaucracy oeao?
Weber’s bureaucracy
o ‘Father’ of iureaucracy – oevelopeo seven principles leaoing to ratonal ano efcient
operatons
o Division of laior
o Well-oefneo authority hierarchy
o High formalizaton
o Impersonal nature
o Employment oecisions iaseo on merit
o Career tracks for employees
o Distnct separaton of memiers’ organizaton ano personal lives
Posdtve qualdtes dn Weber’s ‘dneal type’
o The focus on merit ohen selectng employees – security of employment to protect
employees against ariitrary authority ano changes in skill oemanos
o Yet, ohy oork haro if your joi is guaranteeo? – many tasks are unique to an
organizaton ano take long to learn. Learning a highly specializeo task gives high
returns
o Weier’s iureaucracy hao its structural elements – oivision of laiour, rules ano regulatons
ano a management hierarchy oefning responsiiility
o Formalizaton may constraint actons, iut also assist in creatng clarity, preoictaiility
ano uniformity
o A hierarchy helps unoerstanoing responsiiility ano aios a clear structure ano task
oivision
o Insttutonal oemanos in the environment promote oisciplineo iehaviour oith characteristcs
of iureaucracy
o Quality control, requirements for safety, follooing legal requirements, etc.
Summardzdng Weber’s contrdbuton
o Central theme is stanoaroizaton, three groups of characteristcss those relatng to the
structure/functon of the organizaton, those oealing oith means of reoaroing efort, ano
those oealing oith protecton for inoivioual memiers
o The frst oeals oith oivision of laiour, creatng units of expertse ano responsiiility
o The secono is aiout receiving salaries in relaton to their rank (also promotonsn
o In return for career commitment, memiers receive protecton from ariitrary actons iy
superiors
