Organizational theories

Session guide: Organizational theories

Reading note: Organizational theories

DATE
TIME
FORMAT - Plenary participatory lecture
TRAINER
OBJECTIVES
At the end of this session, participants will be able to understand and appreciate:
1. Classical, neoclassical and modern theories of organization.
2. The research organization as a social system.
3. The importance of and process for goal setting in an organization.
4. The need for and methods of integration in an organization.
5. The concept of power in an organization.
6. Communication in the organization.
7. The process and models of decision making.
INSTRUCTIONAL MATERIALS
Exhibit 1 Organization theories
Exhibit 2 Taylor's Principles of Scientific Management
Exhibit 3 Weber's Bureaucratic Approach
Exhibit 4 Fayol's Principles of Management: Administrative Theory
Exhibit 5 Principles of the neoclassical approach
Exhibit 6 A modern approach to organization characteristics
Exhibit 7 A modern approach to organizations: the Systems Approach
Exhibit 8 A research organization as a social system
Exhibit 9 The importance of goal setting
Exhibit 10 The process of goal setting
Exhibit 11 The need for integration
Exhibit 12 Methods of integration
Exhibit 13 Organization-based power
Exhibit 14 Communication in the organization
Exhibit 15 The process of decision making
Exhibit 16 Models of decision making
REQUIRED READING
Reading note: Organizational theories
BACKGROUND READING
None.
SPECIAL EQUIPMENT AND AIDS
Overhead projector and chalkboard
Session guide: Organizational theories

Exhibit 1: Organization theories
Exhibit 2: Taylor's principles of scientific management
Exhibit 3: Weber's bureaucratic approach
Exhibit 4: Fayol's principles of management: Administrative theory
Exhibit 5: Principles of the neoclassical approach
Exhibit 6: Characteristics of modern approaches to the organization
Exhibit 7: Modern approaches to organization: The systems approach
Exhibit 8: The research organization as a social system
Exhibit 9: The importance of goal settings
Exhibit 10: The process of goal setting (management by objectives)
Exhibit 11: The need for integration
Exhibit 12: Methods of integration
Exhibit 13: Organization-based power
Exhibit 14: Communication in the organization
Exhibit 15: The process of decision making
Exhibit 16: Models of decision making

There are several theories which explain the organization and its structure (EXHIBIT 1).
Classical organization theory includes the scientific management
approach,Weber's bureaucratic approach, and administrative theory.
The scientific management approach is based on the concept of planning of work to
achieve efficiency, standardization, specialization and simplification. The approach to
increased productivity is through mutual trust between management and workers. Taylor
(1947) proposed four principles of scientific management:
science, not rule-of-thumb;
scientific selection of the worker;
management and labour cooperation rather than conflict; and
scientific training of workers.
Show EXHIBIT 2 and discuss these principles.
Weber's bureaucratic approach considers the organization as a part of broader society.
The organization is based on the principles of:
structure;
specialization;
predictability and stability;
rationality; and
democracy.
Show EXHIBIT 3, and discuss Weber's bureaucratic approach. Observe that this approach
is considered rigid, impersonal, self-perpetuating and empire building.
Administrative theory was propounded by Henry Fayol and is based on several principles
of management (EXHIBIT 4). In addition, management was considered as a set of planning,
organizing, training, commanding and coordinating functions.
Neoclassical theory emphasizes individual or group behaviour and human relations in
determining productivity. The main features of the neoclassical approach are individual,
work group and participatory management. Show EXHIBIT 5 and discuss the principles.
Show EXHIBIT 6 on a modern approach to organization characteristics. Modern theories
are based on the concept that the organization is an adaptive system which has to adjust to
changes in its environment. Discuss the important characteristics of the modern approach
to organizations. Modern theories include the systems approach, the socio-technical
approach, and the contingency or situational approach.
The systems approach considers the organization as a system composed of a set of inter-
related - and thus mutually dependent - sub-systems. Thus the organization consists of
components, linking processes and goals (EXHIBIT 7).
The socio-technical approach considers the organization as composed of a social
system, technical system and its environment. These interact among themselves and it is
necessary to balance them appropriately for effective functioning of the organization.
The contingency or situational approach recognizes that organizational systems are
inter-related with their environment and that different environments require different
organizational relationships for effective working of the organization.
Ask participants whether they consider the research organization as a social system. Since
scientists constitute the core resource in a research organization, their growth is as
important as the growth of the organization. A social organization is characterized by
complexity, degrees of inter-dependence between sub-systems, openness, balance and
multiplicity of purposes, functions and objectives. Show EXHIBIT 8 and discuss each of
these characteristics.
Now move to goal setting in an organization. Ask participants "Why should goals be set?"
Goals are set to increase performance and provide control. Show EXHIBIT 9 and discuss
how goal setting improves performance. How are goals set? Following management by
objectives, the process of goal setting involves five steps (EXHIBIT 10). First, the overall
objectives of the organization are set and then an action plan is evolved. The second step is
to prepare members in the organization for successful implementation of the action plan.
Individual goals are set in the third step. Periodic appraisal and feedback is the fourth step,
to ensure smooth implementation of the action plan. Finally, an appraisal of performance by
results takes place.
Now discuss the concept of integration and coordination in the organization. These are
controlling mechanisms for smooth functioning of the organization. Organizational
differentiation is the unbundling and re-arranging of the activities. Integration is re-grouping
and re-linking them. The need for integration arises in the face of environmental complexity,
diversity and change. Show EXHIBIT 11 and discuss some of the important reasons which
necessitate integration.
How is integration achieved? Obviously, the structure of the organization should facilitate
proper coordination and integration of different specialized units. What could happen were
the organizational structure not proper? Integration is achieved through vertical coordination
along the hierarchy, decision making levels, and span of control (EXHIBIT 12). There are
several methods to improve integration. These include rules and procedures and
professional training.
Next discuss the process in the organization, which involves the concept of power, decision
making and communication. Power refers to the ability to get an individual or group to do
something or to change in some way. Power could emanate from position, economic status,
knowledge, performance, personality, physical or ideological traits. Observe that power is
one of the strongest motives, and affects setting of objectives and availability of resources
in an organization. Next discuss the concept, and the various types of organization-based
power (EXHIBIT 13).
Communication is another important process in the organization and is a key mechanism
for achieving integration and coordination of the activities of specialized units at different
levels in the organization. Communication can be horizontal, downward or upward
(EXHIBIT 14).
Finally, discuss decision making in an organization. It begins with goal setting, identification
and evaluation of alternatives and the choice of criteria. Show EXHIBIT 15 and discuss the
important steps involved in decision making. There are several models of decision making
(EXHIBIT 16).
Exhibit 1: Organization theories
CLASSICAL ORGANIZATION THEORY
Scientific Management approach
Weber's Bureaucratic approach
Administrative theory.
NEOCLASSICAL THEORY
MODERN ORGANIZATION THEORY
Systems approach
Socio-technical approach
Contingency or Situational approach
Exhibit 2: Taylor's principles of scientific management
Science, not rule-of-thumb;
Scientific selection of the worker
Management and labour cooperation rather than conflict
Scientific training of workers
Exhibit 3: Weber's bureaucratic approach
Structure
Specialization
Predictability and stability
Rationality
Democracy
Exhibit 4: Fayol's principles of management: Administrative theory
Division of work (specialization)
Authority and responsibility
Discipline
Unity of command
Unity of direction
Subordination of individual interest
Remuneration of personnel
Centralization
Scalar chain
Order
Equity
Stability of tenure of personnel
Initiative
Esprit de corps
The concept of line and staff
Committees
Functions of management
- planning
- organizing
- training
- commanding
- coordinating
Exhibit 5: Principles of the neoclassical approach
INDIVIDUAL
WORK GROUP
PARTICIPATIVE MANAGEMENT
Exhibit 6: Characteristics of modern approaches to the organization
Systems viewpoint
Dynamic process of interaction
Multilevelled and multidimensional
Multimotivated
Probabilistic
Multidisciplinary
Descriptive
Multivariable
Adaptive
Exhibit 7: Modern approaches to organization: The systems approach
COMPONENTS
The individual
The formal and informal organization
Patterns of behaviour
Role perception
The physical environment
LINKING PROCESSES
Communication
Balance
Decision analysis
GOALS OF ORGANIZATION
Growth
Stability
Interaction
Exhibit 8: The research organization as a social system
Characteristics of the research organization


Complexity
Degree of inter-dependence between sub-systems
Openness of the social organization
Balance in the social organization
Multiplicity of purposes, functions and objectives
Exhibit 9: The importance of goal settings
Clarified what people have to do
Identifies problems and facilitates solution
Reduces ambiguity in work
Establishes a relationship between work and organizational achievements
Assists individuals to allocate time, efforts and personal resources
Provides a sense of accomplishment and contentment
Provide control over the people in the organization
Measures performance
Exhibit 10: The process of goal setting (management by objectives)
1. Setting overall organizational objectives and action plan
identifying key result areas
identifying measures of performance
stating objectives
agreement on objectives and goals
2. Develop the organization
3. Set individual objectives
4. Periodic appraisal and feedback
5. Appraisal by results
Exhibit 11: The need for integration
Environmental complexity, diversity and change
Increase in structural dimensions
Specialization
Across various specialized units - each pursuing individual objectives - to ensure that
organizational goals are being pursued
Conflict resolution
Better performance and productivity
Exhibit 12: Methods of integration
COORDINATING VERTICALLY THROUGH THE HIERARCHY
DETERMINING THE DECISION MAKING LEVEL
DECIDING THE SPAN OF CONTROL
Exhibit 13: Organization-based power
REWARD POWER
COERCIVE POWER
EXPERT POWER
CHARISMATIC POWER
Exhibit 14: Communication in the organization

UPWARD

HORIZONTAL

DOWNWARD

Exhibit 15: The process of decision making
SETTING ORGANIZATIONAL GOALS

ESTABLISHING PERFORMANCE CRITERIA

CLASSIFYING AND DEFINING THE PROBLEM

DEVELOPING CRITERIA FOR A SUCCESSFUL SOLUTION

GENERATING ALTERNATIVES

COMPARING ALTERNATIVES TO CRITERIA

CHOOSING AN ALTERNATIVE

IMPLEMENTING THE DECISION

MONITORING THE DECISION AND GETTING FEEDBACK
Exhibit 16: Models of decision making
Economic or Rational Choice model
Incremental Bargaining method
Simon's Bounded Rationality model
Peters and Waterman's Well Managed model
Quantitative techniques
Reading note: Organizational theories

Classical organization theory
Neoclassical theory
Modern theories
The research organization as a social system
Process in the organization
References

Organizational theories which explain the organization and its structure can be broadly
classified as classical or modern.
Classical organization theory

Taylor's scientific management approach
Weber's bureaucratic approach
Administrative theory

Classical organization theories (Taylor, 1947; Weber, 1947; Fayol, 1949) deal with the
formal organization and concepts to increase management efficiency. Taylor presented
scientific management concepts, Weber gave the bureaucratic approach, and Fayol
developed the administrative theory of the organization. They all contributed significantly to
the development of classical organization theory.
Taylor's scientific management approach
The scientific management approach developed by Taylor is based on the concept of
planning of work to achieve efficiency, standardization, specialization and simplification.
Acknowledging that the approach to increased productivity was through mutual trust
between management and workers, Taylor suggested that, to increase this level of trust,
the advantages of productivity improvement should go to workers,
physical stress and anxiety should be eliminated as much as possible,
capabilities of workers should be developed through training, and
the traditional 'boss' concept should be eliminated.
Taylor developed the following four principles of scientific management for improving
productivity:
Science, not rule-of-thumb Old rules-of-thumb should be supplanted by a scientific
approach to each element of a person's work.
Scientific selection of the worker Organizational members should be selected based on
some analysis, and then trained, taught and developed.
Management and labour cooperation rather than conflict Management should collaborate
with all organizational members so that all work can be done in conformity with the scientific
principles developed.
Scientific training of the worker Workers should be trained by experts, using scientific
methods.
Weber's bureaucratic approach
Considering the organization as a segment of broader society, Weber (1947) based the
concept of the formal organization on the following principles:
Structure In the organization, positions should be arranged in a hierarchy, each with a
particular, established amount of responsibility and authority.
Specialization Tasks should be distinguished on a functional basis, and then separated
according to specialization, each having a separate chain of command.
Predictability and stability The organization should operate according to a system of
procedures consisting of formal rules and regulations.
Rationality Recruitment and selection of personnel should be impartial.
Democracy Responsibility and authority should be recognized by designations and not by
persons.
Weber's theory is infirm on account of dysfunctions (Hicks and Gullett, 1975) such as
rigidity, impersonality, displacement of objectives, limitation of categorization, self-
perpetuation and empire building, cost of controls, and anxiety to improve status.
Administrative theory
The elements of administrative theory (Fayol, 1949) relate to accomplishment of tasks, and
include principles of management, the concept of line and staff, committees and functions of
management.
Division of work or specialization This increases productivity in both technical and
managerial work.
Authority and responsibility These are imperative for an organizational member to
accomplish the organizational objectives.
Discipline Members of the organization should honour the objectives of the organization.
They should also comply with the rules and regulations of the organization.
Unity of command This means taking orders from and being responsible to only one
superior.
Unity of direction Members of the organization should jointly work toward the same goals.
Subordination of individual interest to general interest The interest of the organization
should not become subservient to individual interests or the interest of a group of
employees.
Remuneration of personnel This can be based on diverse factors such as time, job, piece
rates, bonuses, profit-sharing or non-financial rewards.
Centralization Management should use an appropriate blend of both centralization and
de-centralization of authority and decision making.
Scalar chain If two members who are on the same level of hierarchy have to work
together to accomplish a project, they need not follow the hierarchy level, but can interact
with each other on a 'gang plank' if acceptable to the higher officials.
Order The organization has a place for everything and everyone who ought to be so
engaged.
Equity Fairness, justice and equity should prevail in the organization.
Stability of tenure of personnel Job security improves performance. An employee requires
some time to get used to new work and do it well.
Initiative This should be encouraged and stimulated.
Esprit de corps Pride, allegiance and a sense of belonging are essential for good
performance. Union is strength.
The concept of line and staff The concept of line and staff is relevant in organizations
which are large and require specialization of skill to achieve organizational goals. Line
personnel are those who work directly to achieve organizational goals. Staff personnel
include those whose basic function is to support and help line personnel.
Committees Committees are part of the organization. Members from the same or different
hierarchical levels from different departments can form committees around a common goal.
They can be given different functions, such as managerial, decision making, recommending
or policy formulation. Committees can take diverse forms, such as boards, commissions,
task groups or ad hoc committees. Committees can be further divided according to their
functions. In agricultural research organizations, committees are formed for research, staff
evaluation or even allocation of land for experiments.
Functions of management Fayol (1949) considered management as a set of planning,
organizing, training, commanding and coordinating functions. Gulick and Urwick (1937) also
considered organization in terms of management functions such as planning, organizing,
staffing, directing, coordinating, reporting and budgeting.
Neoclassical theory

Principles of the neoclassical approach

Neoclassical theorists recognized the importance of individual or group behaviour and
emphasized human relations. Based on the Hawthorne experiments, the neoclassical
approach emphasized social or human relationships among the operators, researchers and
supervisors (Roethlisberger and Dickson, 1943). It was argued that these considerations
were more consequential in determining productivity than mere changes in working
conditions. Productivity increases were achieved as a result of high morale, which was
influenced by the amount of individual, personal and intimate attention workers received.
Principles of the neoclassical approach
The classical approach stressed the formal organization. It was mechanistic and ignored
major aspects of human nature. In contrast, the neoclassical approach introduced an
informal organization structure and emphasized the following principles:
The individual An individual is not a mechanical tool but a distinct social being, with
aspirations beyond mere fulfilment of a few economic and security works. Individuals differ
from each other in pursuing these desires. Thus, an individual should be recognized as
interacting with social and economic factors.
The work group The neoclassical approach highlighted the social facets of work groups or
informal organizations that operate within a formal organization. The concept of 'group' and
its synergistic benefits were considered important.
Participative management Participative management or decision making permits workers
to participate in the decision making process. This was a new form of management to
ensure increases in productivity.
Note the difference between Taylor's 'scientific management' - which focuses on work - and
the neoclassical approach - which focuses on workers.
Modern theories

The systems approach
Socio-technical approach
The contingency or situational approach

Modern theories tend to be based on the concept that the organization is a system which
has to adapt to changes in its environment. In modern theory, an organization is defined as
a designed and structured process in which individuals interact for objectives (Hicks and
Gullet, 1975). The contemporary approach to the organization is multidisciplinary, as many
scientists from different fields have contributed to its development, emphasizing the
dynamic nature of communication and importance of integration of individual and
organizational interests. These were subsequently re-emphasized by Bernard (1938) who
gave the first modern and comprehensive view of management. Subsequently, conclusions
on systems control gave insight into application of cybernetics. The operation research
approach was suggested in 1940. It utilized the contributions of several disciplines in
problem solving. Von Bertalanffy (1951) made a significant contribution by suggesting a
component of general systems theory which is accepted as a basic premise of modern
theory.
Some of the notable characteristics of the modern approaches to the organization are:
a systems viewpoint,
a dynamic process of interaction,
multilevelled and multidimensional,
multimotivated,
probabilistic,
multidisciplinary,
descriptive,
multivariable, and
adaptive.
Modern understandings of the organization can be broadly classified into:
the systems approach,
socio-technical theory, and
a contingency or situational approach.
The systems approach
The systems approach views organization as a system composed of interconnected - and
thus mutually dependent - sub-systems. These sub-systems can have their own sub-sub-
systems. A system can be perceived as composed of some components, functions and
processes (Albrecht, 1983). Thus, the organization consists of the following three basic
elements (Bakke, 1959):
(i) Components There are five basic, interdependent parts of the organizing system,
namely:
the individual,
the formal and informal organization,
patterns of behaviour emerging from role demands of the organization,
role comprehension of the individual, and
the physical environment in which individuals work.
(ii) Linking processes The different components of an organization are required to operate
in an organized and correlated manner. The interaction between them is contingent upon
the linking processes, which consist of communication, balance and decision making.
Communication is a means for eliciting action, exerting control and effecting coordination
to link decision centres in the system in a composite form.
Balance is the equilibrium between different parts of the system so that they keep a
harmoniously structured relationship with one another.
Decision analysis is also considered to be a linking process in the systems approach.
Decisions may be to produce or participate in the system. Decision to produce depends
upon the attitude of the individual and the demands of the organization. Decision to
participate refers to the individual's decisions to engross themselves in the organization
process. That depends on what they get and what they are expected to do in participative
decision making.
(iii) Goals of organization The goals of an organization may be growth, stability and
interaction. Interaction implies how best the members of an organization can interact with
one another to their mutual advantage.
Socio-technical approach
It is not just job enlargement and enrichment which is important, but also transforming
technology into a meaningful tool in the hands of the users. The socio-technical systems
approach is based on the premise that every organization consists of the people, the
technical system and the environment (Pasmore, 1988). People (the social system) use
tools, techniques and knowledge (the technical system) to produce goods or services
valued by consumers or users (who are part of the organization's external environment).
Therefore, an equilibrium among the social system, the technical system and the
environment is necessary to make the organization more effective.
The contingency or situational approach
The situational approach (Selznick, 1949; Burns and Stalker, 1961; Woodward, 1965;
Lawrence and Lorsch, 1967) is based on the belief that there cannot be universal guidelines
which are suitable for all situations. Organizational systems are inter-related with the
environment. The contingency approach (Hellriegel and Slocum, 1973) suggests that
different environments require different organizational relationships for optimum
effectiveness, taking into consideration various social, legal, political, technical and
economic factors.
The research organization as a social system

Goal setting
Integration and coordination

An organization is a continuing system, able to distinguish and integrate human activities.
The organization utilizes, transforms and joins together a set of human, material and other
resources for problem-solving (Bakke, 1959). The main function of an organization is to
satisfy specific human needs in interaction with other sub-systems of human activities and
resources in the given environment. In a research organization, individual needs of
researchers are more often in conflict with organizational needs than in any other
organization. Therefore, growth of the organization should concurrently also promote growth
of the individual.
Characteristics of the research organization
Social organizations are characterized by their complexity, degree of inter-dependence
between sub-systems, openness, balance, and multiplicity of purposes, functions and
objectives (Huse and Bowditch, 1973).
Complexity A research organization consists of a number of individuals, groups, or
departments, each of which is a sub-system within the total system. The prevalence of
these sub-systems makes the organization complex.
Degree of inter-dependence of sub-systems The various sub-systems of the research
organization are inter-dependent which makes it further complex, as each sub-system has
its way of working, requirements, behaviour, etc.
Openness of the social organization Research organizations operate in the wider
environment of a larger organization or system, and are therefore open. They have to
function in harmony with environmental requirements, goals and functions. This may cause
conflicts in the organization unless the sub-systems are appropriately balanced.
Balance and the social organization Social organizations are highly dynamic. Forces such
as researchers, managerial hierarchy and various inputs from within and outside the
organization have to be balanced for the smooth functioning of the organization.
Multiplicity of purpose, functions and objectives Most research organizations have a
multiplicity of sub-systems, each of which has dynamic interactions with others. In the
research organization, a researcher can be viewed as a sub-system with specific needs,
goals and functioning, although those needs, goals and functioning may sometimes not
match those of the organization.
Goal setting
In an organization, goal setting is one of the control systems, a component of the appraisal
process and an effective tool for human resource management (Locke, 1968; Sherwin,
1976). The concept of goal setting is now used to increase the performance of the
organization as well as the individual through management by objectives. Drucker (1954)
suggested that management by objectives can be useful for managers for effectively
managing the future direction of the organization.
Importance of goal setting
Well specified and clear goals improve performance in an organization by:
making clear what people have to do;
solving specific problems related to the work as they emerge during the process of goal
setting;
reducing ambivalence in the assigned work and thus encouraging increasing efforts;
supporting people to find a connection between their work and the achievements of the
organization;
assisting individuals in allocating their time, efforts and personal resources to important
areas;
giving a feeling of accomplishment and contentment when specified goals are achieved;
and
providing some control over the people and their work in an organization. Goals are an
objective way of assessing performance in the organization.
There is a definite linkage between goal setting and performance. Latham (1981) reported
that
specified goals are better than vague or general goals,
difficult and challenging but attainable goals are better than relatively easy goals,
goals evolved through participation and accepted by workers are preferred to assigned
goals, and
objective and timely feedback about progress toward goals is better than no feedback.
The process of goal setting
Peter Drucker suggested thirty years ago that a systematic approach to goal setting and
appraising by results leads to improved organizational performance and employee
satisfaction. This concept of goal setting is now widely used in most organizations. The
process of goal setting (or management by objectives as it is often called) involves several
steps (Luthans, 1985):
(i) The first step in the process is setting general organizational objectives and preparing an
action plan. Goal setting is based on a top-down approach, and involves:
identifying key result areas in the organization,
identifying measures of performance,
stating objectives, and
evolving agreement between members of top management on the objectives and goals
set.
(ii) Once goals are formulated, the second step is to activate the system for implementation.
For successful implementation of such a system, it is essential to prepare the members in
the organization.
(iii) The third step is to set individual goals. Individual goals are decided jointly by superiors
and subordinates. Once goals are finalized, an action plan is developed for implementation.
(iv) The fourth step involves:
ensuring that work is carried out in the right direction,
identifying obstacles, and
making adjustments to eliminate obstacles.
(v) Finally comes appraisal of performance of the individual against the set targets. An
appraisal and feedback system is an important part of goal setting. The individual is given
feedback on his or her performance, and provided with suitable rewards and motivation.
Integration and coordination
Integration and coordination refer to integration of the objectives and activities of specialized
units or sub-systems in order to achieve the organization's overall strategic objectives.
Coordination and integration are necessary controlling mechanisms to ensure placid
functioning, particularly when organizations become large and complex. Integration aims at
ensuring that different sub-systems work towards common goals.
Integration of the organizational sub-systems relates to differentiation and division of labour
in the organization. Organizational differentiation means un-bundling and re-arranging of
activities. Re-grouping and re-linking them is organizational integration (Lawrence and
Lorsch, 1967). When different units are assigned different tasks and functions, they set
independent goals for performing the assigned tasks and function accordingly. In such
situations, integration of the activities of different sub-systems is necessary to facilitate
smooth working and to bridge communication gaps.
In research organizations, integration of research units and administrative units is very
important for the smooth functioning of research activities.
Need for integration
Integration and coordination is necessary for several reasons (Anderson, 1988):
As the organization encounters environmental complexity, diversity and change, it
requires more and more differentiation of its units. Need for integration also increases with
increase in structural dimensions.
Different specialized units are required to achieve broad strategic objectives rather than
only individual objectives. For the purpose of achieving these strategic objectives, a
research manager has to coordinate different units.
A research manager has to settle conflicts and disputes between different specialized
units. When different units are assigned different goals and tasks, conflicts are inevitable. A
manager needs to integrate and coordinate the work of different sub-units to effectively
resolve conflicts.
Managers also need to coordinate and integrate independent units or research stations to
ensure that their objectives and functioning are in consonance with overall organizational
goals and strategies.
The necessity for coordination increases with increased specialization, because increases
in specialized functions leads to decision making in specialized units or sub-units. This may
cause conflict.
Methods of integration
Within any large organization it is important to have proper communication systems to
enable different sub-systems to coordinate various activities and avoid obstacles in the work
environment. Lack of proper coordination often causes conflicts in an organization. To
ensure proper coordination in research organizations, the research manager has to take
care of behavioural dimensions (such as motivation and conflicts) while ensuring an efficient
overall structure.
Achieving integration
The structure of a research institution needs to be suitably designed to facilitate proper
coordination and integration of different specialized units. A poorly designed structure may:
hinder coordination and integration,
cause conflicts, and
lead to poor performance.
Coordinating vertically through hierarchy
Work is assigned to specialized units and coordinated by a manager. A hierarchy (vertical)
of authority evolves from lower to higher levels. A manager can use the following principles
of hierarchy of authority for integrating specialized units:
The unity of command principle. Every worker should report to only one manager.
The scalar principle. Decision making authority (and a chain of command) should be from
the top to lower levels.
Responsibility principle. A manager is accountable for the performance of his or her
subordinates. In turn, subordinates are responsible to their manager for their performance.
Determining the decision making level
A manager has to decide about the levels at which decisions are to be taken, and this would
depend upon the type, impact and values of decisions.
Deciding the span of control
Span of control refers to the number of specialized activities or personnel supervised by one
manager. There is no optimal number for a span of control and number of levels in the
hierarchy. In fact, span of control and hierarchy levels are inter-related and depend on
situational factors (Barkdull, 1963). Some of the important situational factors are:
Similarity of functions.
Complexity of supervised functions.
Direction and control needed by subordinates.
Coordination required by the manager.
Planning required by the manager.
Organizational help received by the manager.
Methods to improve integration
There are several ways to improve integration, the most common being through a hierarchy
of authority. For this, specialized units whose activities are inter-related could be put under
one manager.
Coordination can also be improved through
developing rules and procedures wherever possible,
providing professional training,
liaison roles, and
use of professional committees involving managers from different specialized units.
Using committees to improve coordination is more difficult than other methods, as it
requires considerable skills in group dynamics and technical knowledge on the part of the
chairperson of the committee. The person who takes this role must not be involved directly
in the work, but tries to assist managers in improving integration.
Process in the organization

Power in the organization
Communication in the organization

Norms for proper functioning of the organization are evolved through organizational
processes. These relate to power, decision making, communication, motivation and
leadership. Socialization also plays a significant role.
Power in the organization
Power refers to the ability to get an individual or group to do something or to change in
some way. Politics is a process to achieve power. Power is inter-related with authority and
influence. Bernard (1938) defined authority in terms of 'legitimate power.' Power is
considered as an essential element in any human organization so as to engender order and
coordinate various activities. Power provides one of the strongest motivations (Galbraith,
1952). It also affects the setting of objectives and the distribution of resources in an
organization. The source of power can be positional, economic, knowledge, performance,
personality, physical or ideological (Hicks, 1975). Organization-based power refers to the
power beyond the range of legitimate authority because of the position which a person has
in the organization (Milgram, 1974). This power can be controlled and transferred by the
organization.
Four categories of organizational power can identified, according to source (French and
Raven, 1959):
Reward power This refers to the control over rewards desired by others. This is given by
persons at a higher level or by decision-makers.
Coercive power This is the power to give punishment. This too is given by persons at a
higher level or by decision-makers.
Expert power This is based on personal skills, knowledge, training, experience, etc. It
cannot be transferred by the organization since it is person-specific.
Charismatic power This derives from the sensitivity of the owner. This facilitates
association with others.
In research organizations, as in other organizations, power plays a significant role. It
influences the organization's strategies, recruitment of competent scientists, behavioural
control system and changes in the organizational structure.
Communication in the organization
Communication is a basic element in organizational structure and functioning. It is the key
mechanism for achieving integration and coordination of the activities of specialized units at
different levels in the organization.
The communication process consists of seven steps (Shannon and Weaver, 1949):
message, encoding, transmitting, receiving, decoding, understanding and feedback.
Organizational communication can be horizontal, upward, and downward:
Horizontal (lateral) communication aims at linking related tasks, work units and divisions in
the organization. The importance of horizontal communication increases with task
specialization and diversity in organizational structure. The need for lateral or horizontal
communication was first stressed by Fayol (1949), when he suggested a 'gang plank'
between similar hierarchical positions.
Downward communication provides information from higher levels to lower levels. Being
superior-subordinate communication, it follows the chain of command through the line of
authority. Downward communication can be of four types (Katz and Kahn, 1966):
- communication designed to provide job rationale to produce understanding of the task and
its relation to other organizational tasks;
- communication about organizational procedures and practices;
- feedback to the subordinate about his or her performance; and
- communication to foster inculcation of organizational goals.
Upward communication serves as a control system for the organization.
In an agricultural research organization, a suitable blending of lateral, downward and
upward communication is required to effectively coordinate and integrate activities of
individual subsystems. The effectiveness of research results greatly depends upon proper
communication links among scientists, between scientists and agricultural extension
workers, and between extension workers and farmers.
In an agricultural research organization, there are several specialized sub-systems which
need to be integrated through horizontal communication. Downward communication
facilitates transmission of research results to actual users. Upward communication enables
flow of information from lowers level to the top level:
farmers extension workers scientists research manager DG and policy-makers
Organizational decision making
Decision making is choosing among alternatives. It starts with goal setting in the
organization, and entails searching for alternatives, analysing alternatives and choosing
criteria. Decisions may pertain to
broad policies or plans for the organization,
programmes and projects to achieve goals, or
operations of programmes and management systems.
The process of decision making involves nine steps (Hicks and Gullet, 1975; Anderson
1988):
(i) Setting organizational goals.
(ii) Establishing performance criteria.
(iii) Classifying and defining the problem.
(iv) Developing criteria for a successful solution.
(v) Generating alternatives.
(vi) Comparing alternatives to criteria.
(vii) Choosing an alternative.
(viii) Implementing the decision.
(ix) Monitoring the decision and getting feedback.
Models of decision making
There are five major models for decision making in an organization (Gortner, Mahler and
Nicholson, 1987). They are:
The economic or rational choice model, as used in bureaucratic organizations. It is based
on rational choice among well reasoned and logical alternatives.
Incremental bargaining, commonly used in resolving conflicts through negotiation.
Simon's bounded rationality model, which is used as an aggregative model in
administrative practices. This model is suitable as a consultant-assisted method for policy
making.
Peters and Waterman's well managed model (also called the garbage can or non-decision
making model) aims at formulating a descriptive model of choice which focuses on the
expressive character of decision making in the organization. It does not consider rationality
and incrementation. This method is based on an empirical perception of how successful
organizations are being run.
Quantitative techniques of decision making. Decisions have to be made under varying
conditions of certainty or uncertainty, with different degrees of risk (Luthans, 1985).
Certainty decisions are largely made by managers at lower levels under known conditions
with known outcomes. For such decisions, nearly complete information is available.
Quantitative techniques are not usually required to make certainty decisions. However,
calculus and a few mathematical programming techniques can be useful.
Risk decisions are more difficult to make than certainty decisions because of limited
information and the possibility of several outcomes for each alternative. Most risk decisions
are taken at higher levels. For risk decisions, probability techniques (objective and
subjective probability) are widely used.
Decisions under uncertainty are the most intricate. For such decisions, probability
techniques are of limited help. However, minimax analysis and Bayes's procedure can be
used in refining the decision making process under conditions of uncertainty. Minimax
analysis attempts to calculate the worst outcome that can occur for each alternative,
whereas Bayes's procedure is based on the concept of expected value and assumes that
each possible outcome has an equal chance of occurring.
References
Albrecht, K. 1983. New systems view of the organization. pp. 44-59, in: Organization
Development. Englewood Cliffs, NJ: Prentice-Hall.
Anderson, C.R. 1988. Management: Skills, Functions and Organization Performance. New
York, NY: Allyn and Bacon.
Bakke, W.E. 1959. Concept of social organization. pp. 16-75, in: Haire, M. (ed), Modern
Organization Theory, New York, NY: John Wiley.
Barkdull, C.W. 1963. Span of Control: A method of evaluation. Michigan Business
Review, 15(3).
Bernard, C. 1938. The Functions of the Executive. Cambridge, MA: Harvard University
Press. See pages 65-114.
Burns, T.G., & Stalker, G.M. 1961. The Management of Innovation. London: Tavistock
Institute.
David, S.M., & Lawrence, P.R. 1978. Problems of matrix organizations. Harvard Business
Review, May-June: 131-142.
Drucker, P.F. 1954. The Practice of Management. New York, NY: Harper.
Fayol, H. 1949. General and Industrial Management, translated by Constance Storrs.
London: Pitman.
French, J.R.P., Jr., & Raven, B. 1959. The bases of social power. pp. 156-
165, in: Cartwright, D. (ed), Studies in Social Power. Ann Arbor, MI: University of Michigan.
Galbraith, J.K. 1956. American Capitalism: The Concept of Countervailing Power. Boston,
MA: Houghton Mifflin.
Gortner, H.F., Mahler, J., & Nicholson, J.B. 1987. Organization Theory. Reading, MA:
Dorsey Press. See pages 244-266.
Gulick, L., & Urwick, L. (eds) 1937. Papers on the Science of Administration. New York, NY:
Institute of Public Administration.
Hellriegel, D., & Slocum J.W., Jr. 1973. Organization theory: a contingency
approach. Business Horizons, April, 1973.
Hicks, G.H., & Gullet, C.R. 1975. Organizations: Theory and Behaviour. New York, NY:
McGraw-Hill. See pages 245-259.
Huse, E.F., & Bowditch, J.L. 1973. Behaviour in Organizations. The Philippines: Addison-
Wesley. See pages 27-44.
Katz, D., & Kahn, R. 1978. The Social Psychology of Organizations. New York, NY: John
Wiley.
Latham, G.P. et. al., 1981. Goal setting and task performance: 1969-80. Psychological
Bulletin, July: 125-152.
Lawrence, P.R., & Lorsch, J.W. 1967. Differentiation and integration in complex
organizations. Administrative Science Quarterly, June: 1-47.
Locke, E.A. 1968. Toward a theory of task motivation and incentives. Organizational
Behaviour and Human Performance, May: 157-89.
Luthans, F. 1985. Organizational Behaviour. Singapore: McGraw-Hill. See pages 257-262
and 599-610.
Milgram, S. 1974. Obedience to Authority. New York, NY: Harper & Row.
Pasmore, W.A. 1988. Designing Effective Organizations, New York, NY: John Wiley. See
pages 87-109.
Roethlisberger, F.J., & Dickson, J.W. 1943. Management and the Worker. Cambridge, MA:
Harvard University Press.
Seiznick, P. 1949. TVA and the Grass Roots. Berkeley, CA: University of California Press.
Shannon, C.E., & Weaver, W. 1949. The Mathematical Theory of Communication. Urbana,
IL: University of Illinois Press.
Sherwin, D.S. 1976. Management of objectives. Harvard Business Review, May-June: 149-
160.
Taylor, F.W. 1947. Principles of Scientific Management. New York, NY: Harper.
Tosi, H.L., Rizzo, J.R., & Carroll, S. 1986. Managing Organizational Behaviour. New York,
NY: Pitman.
Von Bertalanffy, L. 1951. General systems theory: a new approach to the unit of
science. Human Biology, December.
Weber, M. 1947. The Theory of Social and Economic Organization. Translated by Talcott
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Woodward, J. 1965. Industrial Organization. Oxford: Oxford University Press.










Structure of an organization

Session guide: Structure of an organization
Reading note: Structure of an organization
Type of organizational structure
Choosing the organizational structure
References

DATE
TIME
FORMAT - Plenary participatory lecture
TRAINER
OBJECTIVES
At the end of this session, participants should be able to understand and appreciate:
1. The concept of an organization.
2. Principles of organizational structuring.
3. Traditional and modern types of organizational structure.
4. Considerations in choosing an organizational structure.
INSTRUCTIONAL MATERIALS
Exhibit 1 The concept of an organization
Exhibit 2 Features of an organization
Exhibit 3 Structure of an organization
Exhibit 4 Considerations in designing organizational structure
Exhibit 5 Principles of organizational structure
Exhibit 6 Rationale for assembling institution units
Exhibit 7 Types of organizational structure
Exhibit 8 Line-discipline organization
Exhibit 9 Line-commodities and production areas
Exhibit 10 Rubber Research Institute of Malaysia
Exhibit 11 Matrix organization
Exhibit 12 Where matrix is best
Exhibit 13 Requirements for a matrix organization
Exhibit 14 Responsibilities and interest of matrix research organization
Exhibit 15 Questions concerning the management of a matrix research organization
Exhibit 16 Modified matrix organization
Exhibit 17 An integrated national research system (Chart 1)
Exhibit 18 An integrated national research system (Chart 2) (administration and support services)
Exhibit 19 Executive and other committees
REQUIRED READING
Reading note: Structure of an organization.
BACKGROUND READING
None.
SPECIAL EQUIPMENT AND AIDS
None.
Session guide: Structure of an organization

Exhibit 1: The concept of an organization
Exhibit 2: Features of an organization
Exhibit 3: Structure of an organization
Exhibit 4: Considerations in designing organizational structure
Exhibit 5: Principles of organizational structure
Exhibit 6: Rationale for assembling institutional units
Exhibit 7: Types of organizational structure
Exhibit 8: Line-discipline organization
Exhibit 9: Line-commodities and production areas organization
Exhibit 10: Hierarchical structure of the Rubber Research Institute of Malaysia
Exhibit 11: Matrix organization
Exhibit 12: Where the matrix approach is best
Exhibit 13: Requirements for a matrix organization
Exhibit 14: Responsibilities and interests of matrix research organisations
Exhibit 15: Questions concerning the management of a matrix research organization
Exhibit 16: Modified matrix organization
Exhibit 17: An integrated national research system - Chart 1
Exhibit 18: An integrated national research system - Chart 2
Exhibit 19: Executive and other committees

Initiate discussion by asking participants what is meant by an organization. Leavitt defined
an organization as a particular pattern of structure, people, task and techniques. Show
EXHIBIT 1 and discuss various definitions of an organization. Observe that there are
common features in all these definitions (EXHIBIT 2).
The structure of an organization is the manner in which various sub-units are arranged and
inter-related. Show EXHIBIT 3 and discuss the importance of structure in providing
guidelines on hierarchy, authority of structure and relationships, linkage between different
functions and coordination with environment. Structure is composed of three components:
complexity, formalization and centralization. Discuss each of these components. Complexity
is the degree to which activities within the organization are differentiated. Such
differentiations may be horizontal, vertical or spatial.
What are the important considerations in designing an organization? Add your own
observations to the responses of participants. As EXHIBIT 4 shows, in designing an
organization due consideration has to be given to ensure clarity, understanding, de-
centralization, stability and adaptability.
Now discuss the theoretical basis for organizational structuring. The basic principles are
specialization, coordination, de-centralization and centralization, and line and staff
relationships. Show EXHIBIT 5 and discuss each of these.
Specialization is division of work into components or units in which people specialize. It can
be vertical (kinds of work at different levels in the organization) or horizontal (division into
departments). Specialization facilitates application of special knowledge for achievement of
goals. This increases the efficiency of the organization. Disadvantages of specialization
would include adverse effects on fundamental work attitudes, relationships and
communication.
Coordination is integration of activities of specialized units towards the common objective.
This involves placement of different units in the organization together or separately and
deciding on patterns of relationship and communication. Coordination is achieved through
hierarchy of authority. This involves important principles of organization. Unity of command
is being responsible to and receiving orders from only one superior. The scalar principle
ensures a chain of command in a straight line from top to bottom. Since this is not always
desirable or possible, employees could also relate with each other on a 'gang plank.' The
responsibility and authority principle establishes the need for authority along with
responsibility for accomplishing tasks. Span of control refers to the number of specialized
units of persons under one management. Discuss the situational factors which affect the
span of control. Departmentalization is the process of grouping different types of functions
and activities of the organization. Departmentalization may be functional, by product, or by
users, territory, process, equipment, etc.
Another important principle of organizational structuring is whether decision making is
delegated to lower levels (de-centralized) or concentrated at the top (centralized). Observe
that organizations have different blends of centralization and de-centralization.
Line authority refers to the superior-subordinate relationship through the hierarchy of
authority. Line employees are directly responsible for achieving organizational goals. Staff
employees aid and support line employees in their work. Thus, they have different functions
and goals, which could lead to conflicts, but they should be avoidable. Ask participants
about conflict between line and staff in their organizations. Issues in conflict resolution will
be discussed in another module.
Ask participants whether the structure of an organization should remain stable throughout or
change in response to environmental changes. Obviously, the organization has to respond
to changes in the environment as they affect its working.
One of the principles of management discussed during the previous session was
'departmentalization.' This principle is concerned with sectioning an institute into
administrative units to enhance the probability of the institute achieving its goals by
implementing its plans within the limits of its capabilities. There are two rationales used for
assembling, or sectioning, institutional units. These are concerned with (1) the grouping of
the institute's staff into administrative units, and (2) the flow of authority and responsibility
within an institute. Show EXHIBIT 6. Each of these rationales is to be discussed in
conjunction with subsequent exhibits.
Now discuss different types of organizational structure. They could be classical or modern
(EXHIBIT 7). The classical organizational structure includes simple centralized design,
bureaucratic organization and divisionalized organization. The simple centralized design is
suited for smaller organizations, where power, decision making authority and responsibility
for goal setting are vested in one or two persons. The bureaucratic structure is suited where
standard methods and procedures are employed for ensuring work performance. The
divisionalized organization refers to a multiproduct or service design.
Show EXHIBIT 8. One of the first things that one notes about this exhibit is that it has been
departmentalized by discipline. This is a comfortable grouping for scientists. It is the way
universities are departmentalized and most of the early research institutes used a similar
approach.
EXHIBIT 8 also demonstrates a line organization in which the line of authority flows in an
unbroken chain from the chief executive to the lowest organizational level, with each
subordinate having one person to report to. In the previous session, when we were
discussing management principles, this was called the scalar principle.
Another way of departmentalizing an institute is by commodity and production areas. Show
EXHIBIT 9 and discuss. Ask participants if they have examples from their institutes of
departmentalization by discipline, as in EXHIBIT 8, or by commodity, as shown in EXHIBIT
9.
EXHIBIT 10 provides an example of an institute that has been departmentalized by several
of the rationales that were shown in EXHIBIT 6. Briefly show EXHIBIT 6 again. Then go
back to EXHIBIT 10 and ask the participants to group the Rubber Research Institute
departments, divisions and groups under the rationales of EXHIBIT 1.
The departments can be grouped thus:
DISCIPLINARY FUNCTIONAL
Biology Extension and Development
Chemistry and Technology Research Support and Services
The divisions and groups can be grouped thus:
DISCIPLINARY COMMODITIES AND PRODUCTION
AREAS
FUNCTIONAL
Plant Protection and
Microbiology
Plant Science Product Development
Tapping and Exploitation
Physiology
Soil Management Engineering and Testing
Analytical Chemistry Crop Management Specification and Quality
Control
Polymer Physics and Processing Computer Unit Extension and Development
Applied Economics and
Statistics
Research Stations
In the Rubber Research Institute example, it is not clear exactly where some of the sections
should be placed. Take for example, the Plant Protection and Microbiology groups.
Microbiology clearly is a discipline, but what about plant protection? Does this include
mechanical weed control during early stages of growth? Does it include irrigation practices?
If plant protection includes many disciplinary approaches then it would be better placed
under the commodities and production areas category.
Show EXHIBIT 11. This is a relatively new form of organization that involves two
intersecting chains of command and two approaches to departmentalization. One way of
departmentalization is almost always according to projects or programmes, the other
usually being either disciplinary or functional. This form of management has evolved as
clients or funding organizations have begun to place more emphasis on results - i.e.,
completed projects which have attained their technical, fiscal and schedule goals.
Exhibit 11 also shows a disciplinary organization which has been overlaid with a project
organization to make a matrix organization. Both project directors and disciplinary
department directors report to the institute director. As shown in the exhibit, Project A draws
4 staff members from the Plant Physiology Department. The check () indicates that the
project manager for Project A was drawn from the Virology Department.
When Project A is completed or terminated, the staff members will return to their disciplinary
departments. For the duration of the project, however, they will report to and receive
direction from the project manager on project matters. The disciplinary department
directors, however, normally maintain responsibility for personnel and administrative
matters, such as salary reviews and personnel development activities.
Show EXHIBIT 12. Ask the participants for examples of situations where a matrix structure
may be best. Now discuss the benefits of a matrix organization. A number of comments
might be made regarding each of these benefits. For example, 'effective use of specialists'
refers to an ability within an organization to use specialists across divisional lines. This
means that a good chemist, for example, may have opportunities to work on other projects
outside his or her department, and does not have to rely only on projects within his or her
department. The environment is also important, especially when one considers disciplines
to stimulate new research projects and ideas. Equipment and facilities considerations may
be equally important. Not only is there a tendency for there to be more and better
equipment and facilities within a matrix management system, the equipment and facilities
tend to be utilized more, and are therefore more cost effective.
Next discuss the disadvantages of a matrix organization. Matrix management definitely
requires teamwork, communication and certain types of personalities. Functional officers or
divisions are often reluctant to release personnel and other resources to projects in other
divisions. 'Empire building' is a problem in this context. Likewise, specialists feel
comfortable working with their technical peers and colleagues within their own department,
and might feel ill at ease being transferred - even temporarily - to another division.
Show EXHIBIT 13 and discuss each of the four points. It is useful to discuss at which level
or office in the organization these requirements should be met. Show EXHIBIT 14 and
discuss. The exhibit is self-explanatory, with the possible exception of the term 'efficiency'
under disciplinary or functional management, and 'effectiveness' under project
management. Efficiency in disciplinary or functional management refers to managerial
efficiency in managing financial, equipment and other resources. Effectiveness in project
management refers to the effectiveness of the project in achieving its goals and objectives.
Managerial efficiency, of course, can greatly influence the effectiveness or lack of
effectiveness of a project. It is possible, nonetheless, to have an effective project which was
not efficiently managed. While discussing EXHIBIT 14, it might be useful to refer to EXHIBIT
15.
EXHIBIT 16 shows a modified matrix organizational structure. Here, as with the matrix
structure, staff members are assembled from several divisions to carry out a project under
the leadership of a project manager. In the modified matrix case, however, the project
manager reports to his or her department head instead of to the institute director. A
modified matrix structure is also used for complex activities in uncertain environments, as in
the case with the matrix structure. However, when the project tends to be small, it is often
more efficient to use the modified matrix approach. In EXHIBIT 16, the circle around the
staff number for a project from a department indicates that the project manager is located in
this department. For example, the project manager for Project B is in the Genetics
Department.
EXHIBITS 17, 18 and 19 show how a national research system could be integrated by using
a matrix organizational approach. EXHIBIT 17 shows how programmes and projects under
the Senior Deputy Director for Commodities, Production Areas and Extension, draw on the
staff and facilities of the disciplinary central and regional research institutes. In such an
arrangement, the Senior Deputy Director focuses on programme productivity. The Deputy
Directors for the Central and Regional Agricultural Research Institutes focus on the
technical quality of the output of their institutes, in support of the national programmes.
In EXHIBIT 17, the circles at an intersection of the matrix indicates staff drawn from an
institute's department to work on a project, the number denoting the number of people
drawn from the department and the check () indicating from where the project manager
was drawn. For example, in Project 'B' of the Fields Crops Programme, three people from
Regional Research Institute 2 are conducting this project. Two staff members are from the
Irrigation and Salinity Department and one person, who is also the project manager, is from
the Soil Physics Department. For project matters, the project manager will report to the
head of the Field Crops Programme for the duration of the project. As can be seen from this
figure, some project managers may be drawn from institutes, as in the preceding example,
or they may come from the programme staff, as is the case for Project 'A' under the Animal
Husbandry Programme.
EXHIBIT 18 shows how support services and administration relate to the research
institutes. The Deputy Directors for these two areas are responsible for organizing them for
the national research system and ensuring that quality is maintained. The institute directors
are concerned with the productivity of these services in assisting the institute to carry out its
work. There are different ways by which administrative control and reporting requirements
can be exercised in the organization, as shown in EXHIBIT 14. Ask the participants to make
suggestions.
Communication is very important in an agricultural research organization. A common way of
aiding the communications process is to establish committees to address important areas
for the organization. EXHIBIT 19 shows an Executive Committee, together with committees
for Quality Control, for Productivity, for Support Services and for Administration. Discuss
with the participants the need for these committees, as well as their suggested composition
and meeting schedule. Are other committees needed?
Exhibit 1: The concept of an organization
"...organization is a particular pattern of structure, people, tasks and techniques.. "
Source: Leavitt, H.J. 1962. Applied organization and readings. Changes in industry:
structural, technical and human approach. in: Cooper, W.W., et al. New Perspectives in
Organization Research. New York, NY: Wiley.
"... a system which is composed of a set of subsystems..."
Source: Katz, D., and Kahn, R.L. 1978. The Social Psychology of Organizations. New York,
NY: Wiley
Exhibit 2: Features of an organization
Composed of individuals and groups of individuals
Oriented towards achievement of common goals
Differential functions
Intended rational coordination
Continuity through time
Exhibit 3: Structure of an organization
Definition
"... institutional arrangements and mechanisms for mobilizing human, physical, financial and information
resources at all levels of the system..."
Utility
Division of work into activities
Linkage between different functions
Hierarchy
Authority structure
Authority relationships
Coordination with the environment
Components
Complexity
Formalization
Centralization
Source: Sachdeva, P.S. 1990. Analytical framework for the organization and structure of
NARS.
in: Organization and Structure of NARS: Selected Papers. The Hague: ISNAR.
Exhibit 4: Considerations in designing organizational structure
CLARITY
UNDERSTANDING
DE-CENTRALIZATION
STABILITY AND ADAPTABILITY
Exhibit 5: Principles of organizational structure
Specialization
Horizontal
Vertical
Coordination
Unity of command
Scalar principle
Responsibility and authority principle
Span of control
Departmentalization
- functional
- product
- users
- territory
- process or equipment
De-centralization and centralization
Line and staff relationships
Exhibit 6: Rationale for assembling institutional units
Grouping of staff
Disciplinary
Functional
Commodity or production area
Geographical
Project
Flow of authority
Line
Matrix
Modified matrix
Exhibit 7: Types of organizational structure
Classic organizational structure
Simple centralized design
Bureaucratic organization
Divisionalized organization
Modern organizational design
Project organization
Matrix organization
Adhocracy or Organic organizational structure
Exhibit 8: Line-discipline organization
LINE-DISCIPLINE ORGANIZATION

Exhibit 9: Line-commodities and production areas organization
LINE-COMMODITIES AND PRODUCTION AREAS ORGANIZATION

Exhibit 10: Hierarchical structure of the Rubber Research Institute of
Malaysia
MALAYSIAN RUBBER RESEARCH AND DEVELOPMENT BOARD RUBBER
RESEARCH INSTITUTE BOARD

Exhibit 11: Matrix organization
MATRIX ORGANIZATION

Exhibit 12: Where the matrix approach is best
Matrix organizations have been found to be best for complex activities in uncertain
environments
Benefits
Effective use of specialists
Job security for specialists
Friendly environment for specialists
Equipment and facilities: more and better
Disadvantages
Stress
Specialists with several bosses
Project managers requiring several specialists or shared specialists
Functional managers providing shared specialists
Sacrifice of territorial incentive
Exhibit 13: Requirements for a matrix organization
- Well-defined charters
- Communication
- Planning
- Teamwork
- Willingness to compromise
- Good management skills
Exhibit 14: Responsibilities and interests of matrix research organisations
RESPONSIBILITIES AND INTERESTS OF MATRIX RESEARCH ORGANISATIONS

Exhibit 15: Questions concerning the management of a matrix research
organization
Which functions should be in the project office and which in should remain in the
functional organization?
What is the project manager's role in performance evaluation of functional specialists?
Should the functional specialists be located with the functional manager or with the project
manager?
How are the functional managers accountable for the outputs of their subordinates?
What is the functional manager's role in goal setting, progress monitoring and
performance evaluation?
How can functional managers' and project managers' pay be linked to performance,
meeting objectives, or both?
How can functional managers get more exposure to customers, and how can project
managers become more inclined to fund the development of corporate resources?
How can competition among functional organizations (or between functional and project
organizations) be minimized when these organizations have similar capabilities and
interests?
Exhibit 16: Modified matrix organization
MODIFIED MATRIX ORGANIZATION

Exhibit 17: An integrated national research system - Chart 1
AN INTEGRATED NATIONAL RESEARCH SYSTEM - CHART 1
Exhibit 18: An integrated national research system - Chart 2
AN INTEGRATED NATIONAL RESEARCH SYSTEM - CHART 2
Exhibit 19: Executive and other committees
EXECUTIVE AND OTHER COMMITTEES
Reading note: Structure of an organization

Structure
Designing organizational structures
Principles of organization structure

The term organization has been defined in several ways. Leavitt (1962) defines it as a
specific configuration of structure, people, task and techniques. Structuredescribes the form
of departments, hierarchy and committees. It influences the organization's efficiency and
effectiveness. People refers to the skills, attitudes and social interaction of the members of
the organization. Task refers to the goals of the individual and the
organization. Techniques refers to the methodical approach used to perform tasks.
Organizational structure thus refers to the institutional arrangements and mechanisms for
mobilizing human, physical, financial and information resources at all levels of the system
(Sachdeva, 1990).
Organization is also defined as a system incorporating a set of sub-systems (Katz and
Kahn, 1978). These sub-systems are related group of activities which are performed to
meet the objectives of the organization.
Organization has been viewed differently by numerous theorists. However, all definitions
usually contain five common features:
composed of individuals and groups of individuals;
oriented towards achieving common goals;
differential functions;
intended rational coordination; and
continuity through time.
Structure
Structure is thus an integral component of the organization. Nystrom and Starbuck (1981)
have defined structure as the arrangement and interrelationship of component parts and
positions in an organization. It provides guidelines on:
division of work into activities;
linkage between different functions;
hierarchy;
authority structure;
authority relationships; and
coordination with the environment.
Organizational structure may differ within the same organization according to the particular
requirements.
Structure in an organization has three components (Robbins, 1989):
Complexity, referring to the degree to which activities within the organization are
differentiated. This differentiation has three dimensions:
- horizontal differentiation refers to the degree of differentiation between units based on the
orientation of members, the nature of tasks they perform and their education and training,
- vertical differentiation is characterized by the number of hierarchical levels in the
organization, and
- spatial differentiation is the degree to which the location of the organization's offices,
facilities and personnel are geographically distributed;
Formalization refers to the extent to which jobs within the organization are specialized.
The degree of formalization can vary widely between and within organizations;
Centralization refers to the degree to which decision making is concentrated at one point
in the organization.
Designing organizational structures
Some important considerations in designing an effective organizational structure are:
Clarity The structure of the organization should be such that there is no confusion about
people's goals, tasks, style of functioning, reporting relationship and sources of information.
Understanding The structure of an organization should provide people with a clear picture
of how their work fits into the organization.
De-centralization The design of an organization should compel discussions and decisions
at the lowest possible level.
Stability and adaptability While the organizational structure should be adaptable to
environmental changes, it should remain steady during unfavourable conditions.
Principles of organization structure
Modern organizational structures have evolved from several organizational theories, which
have identified certain principles as basic to any organization.
Specialization
Specialization facilitates division of work into units for efficient performance. According to
the classical approach, work can be performed much better if it is divided into components
and people are encouraged to specialize by components. Work can be specialized both
horizontally and vertically (Anderson, 1988). Vertical specialization in a research
organization refers to different kinds of work at different levels, such as project leader,
scientist, researcher, field staff, etc. Horizontally, work is divided into departments like
genetics, plant pathology, administration, accounts, etc.
Specialization enables application of specialized knowledge which betters the quality of
work and improves organizational efficiency. At the same time, it can also influence
fundamental work attitudes, relationships and communication. This may make coordination
difficult and obstruct the functioning of the organization. There are four main causal factors
which could unfavourably affect attitudes and work styles. These are differences in:
goal orientation;
time orientation;
inter-personal orientation; and
the formality of structure (Lawrence and Lorsch, 1967).
Coordination
Coordination refers to integrating the objectives and activities of specialized departments to
realize broad strategic objectives of the organization. It includes two basic decisions
pertaining to:
(i) which units or groups should be placed together; and
(ii) the patterns of relationships, information networks and communication (Anderson, 1988).
In agricultural research institutions, where most of the research is multidisciplinary but
involves specialization, coordination of different activities is important to achieve strategic
objectives. Efficient coordination can also help in resolving conflicts and disputes between
scientists in a research organization.
Hierarchy facilitates vertical coordination of various departments and their activities.
Organizational theorists have over the years developed several principles relating to the
hierarchy of authority for coordinating various activities. Some of the important principles
are discussed below.
Unity of Command Every person in an organization should be responsible to one superior
and receive orders from that person only. Fayol (1949) considered this to be the most
important principle for efficient working and increased productivity in an organization.
The Scalar Principle Decision making authority and the chain of command in an
organization should flow in a straight line from the highest level to the lowest. The principle
evolves from the principle of unity of command. However, this may not always be possible,
particularly in large organizations or in research institutions. Therefore Fayol (1949) felt that
members in such organizations could also communicate directly at the same level of
hierarchy, with prior intimation to their superiors.
The Responsibility and Authority Principle For successfully performing certain tasks,
responsibility must be accompanied by proper authority. Those responsible for performance
of tasks should also have the appropriate level of influence on decision making.
Span of Control This refers to the number of specialized activities or individuals supervised
by one person. Deciding the span of control is important for coordinating different types of
activities effectively. According to Barkdull (1963), some of the important situational factors
which affect the span of control of a manager are:
similarity of functions;
proximity of the functions to each other and to the supervisor;
complexity of functions;
direction and control needed by subordinates;
coordination required within a unit and between units;
extent of planning required; and
organizational help available for making decisions.
Departmentalization
Departmentalization is a process of horizontal clustering of different types of functions and
activities on any one level of the hierarchy. It is closely related to the classical bureaucratic
principle of specialization (Luthans, 1986). Departmentalization is conventionally based on
purpose, product, process, function, personal things and place (Gullick and Urwick, 1937).
Functional Departmentalization is the basic form of departmentalization. It refers to the
grouping of activities or jobs involving common functions. In a research organization the
groupings could be research, production, agricultural engineering, extension, rural
marketing and administration.
Product Departmentalization refers to the grouping of jobs and activities that are associated
with a specific product. As organizations increase in size and diversify, functional
departmentalization may not be very effective. The organization has to be further divided
into separate units to limit the span of control of a manager to a manageable level (Luthans,
1986). In an agricultural research institution, functional departments can be further
differentiated by products and purpose or type of research.
In contrast to functional departmentalization, product-based departmentalization has the
advantage of:
less conflict between major sub-units;
easier communication between sub-units;
less complex coordination mechanisms;
providing a training ground for top management;
more customer orientation; and
greater concern for long-term issues.
In contrast, functional departmentalization has the strength of:
easier communication with sub-units;
application of higher technical knowledge for solving problems;
greater group and professional identification;
less duplication of staff activities;
higher product quality; and
increased organizational efficiency (Filley, 1978).
Departmentalization by Users is grouping of both activities and positions to make them
compatible with the special needs of some specific groups of users.
Departmentalization by Territory or Geography involves grouping of activities and positions
at a given location to take advantage of local participation in decision making. The territorial
units are under the control of a manager who is responsible for operations of the
organization at that location. In agricultural research institutions, regional research stations
are set up to take advantage of specific agro-ecological environments. Such
departmentalization usually offers economic advantage.
Departmentalization by Process or Equipment refers to jobs and activities which require a
specific type of technology, machine or production process.
Other common bases for departmentalization can be time of duty, number of employees,
market, distribution channel or services.
De-centralization and Centralization
De-centralization refers to decision making at lower levels in the hierarchy of authority. In
contrast, decision making in a centralized type of organizational structure is at higher levels.
The degree of centralization and de-centralization depends on the number of levels of
hierarchy, degree of coordination, specialization and span of control. According to Luthens
(1986), centralization and de-centralization could be according to:
geographical or territorial concentration or dispersion of operations;
functions; or
extent of concentration or delegation of decision making powers.
Every organizational structure contains both centralization and de-centralization, but to
varying degrees. The extent of this can be determined by identifying how much of the
decision making is concentrated at the top and how much is delegated to lower levels.
Modern organizational structures show a strong tendency towards de-centralization.
Line and Staff Relationships
Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend
throughout the hierarchy (Koontz, O'Donnell and Weihrich, 1980). Line employees are
responsible for achieving the basic or strategic objectives of the organization, while staff
plays a supporting role to line employees and provides services. The relationship between
line and staff is crucial in organizational structure, design and efficiency. It is also an
important aid to information processing and coordination.
In an agricultural research organization, scientists and researchers form the line.
Administrative employees are considered staff, and their main function is to support and
provide help to scientists to achieve organizational goals
It is the responsibility of the manager to make proper and effective use of staff through their
supportive functions. The staff may be specialized, general or organizational (Anderson,
1988). Specialized staff conduct technical work that is beyond the time or knowledge
capacity of top management, such as conducting market research and forecasting. General
staff consists of staff assistants to whom managers assign work. Organization staff (such as
centralized personnel, accounting and public relations staff) provide services to the
organization as a whole. Their role is to integrate different operations across departments.
Line and staff personnel have different functions, goals, cultures and backgrounds.
Consequently, they could frequently face conflict situations. A manager has to use his skills
in resolving such conflicts.
Type of organizational structure

Classical organizational structure
Modern organization designs

An important issue in organizational structuring is whether the structure of an organization
should be dynamic and change according to changes in the environment or remain stable in
the face of such changes. Since an organization exists in an external environment, it cannot
remain indifferent to changes in its external milieu. However, the extent of changes would
depend upon the degree of influence the changing environment exerts on the efficient
functioning of the organization and sub-units.
Organizations can have simple to complex structures, depending upon organizational
strategies, strategic decisions within the organization and environmental complexities. The
structure of the organization can be traditional (bureaucratic) or modern (organic), according
to needs.
The traditional organizational structure is mechanistic and characterized by high complexity,
high formalization and centralization. The classical organization structure designs are
simple, centralized, bureaucratic and divisionalized. Modern organizational designs include
project organization, matrix design and adhocracy design.
Classical organizational structure
In a simple centralized organizational structure, power, decision making authority and
responsibility for goal setting are vested in one person at the top. This structure is usually
found in small and single-person-owned organizations. The basic requirement of a simple
centralized structure is that it has only one or two functions, and a few people who are
specialists in critical functions. The manager is generally an expert in all related areas of
functions and is responsible for coordination. Thus, the organization has only two
hierarchical levels. However, this structure has to become more complex for growth,
diversification or other reasons.
The Bureaucratic Organization
In large organizations and under well defined conditions, organization structure may be
bureaucratic. The essential elements of a bureaucratic organization are:
the use of standard methods and procedures for performing work; and
a high degree of control to ensure standard performance.
Figure 1 illustrates a bureaucratic organizational structure.
Figure 1. Bureaucratic organizational structure

Mintzberg (1981) has identified two types of bureaucracies. They are standard and
professional bureaucracy. Standard bureaucracy is based on efficient performance of
standardized routine work. Professional bureaucracy depends upon efficient performance of
standardized but complex work. Thus, it requires a higher level of specialized skills. The
structure of standard bureaucracy is based on functions, large technical staff and many mid-
level managers. In contrast, professional bureaucracy has few mid-level managers.
The Divisionalized Organization
Divisionalized organizational design refers to a multiproduct or service design that
separates different products or services to facilitate management planning and control.
Different divisions in the organization can further have simple centralized or functional
designs, depending upon their size and activities. This type of organizational design is
favoured when different kinds of products or services require different kinds of
management.
Modern organization designs
Modern approaches to organizational design include project, matrix and adhocracy types.
Project design
Project design is also called the team or task force type. It is used to coordinate across
departments for temporary, specific and complex problems which cannot be handled by a
single department. This design facilitates inputs from different areas. Members from
different departments and functional areas constitute a team, in which every member
provides expertise in their area of specialization. Such a structure generally coexists with
the more traditional functional designs. An illustration of project type of the organizational
structure is given in Figure 2.
Figure 2. A Project-type organization

Matrix Organization
The matrix design blends two different types of designs, namely project and functional
organizational designs (Kolodny, 1979). Since the project type of organizational design is
not considered stable, the matrix design attempts to provide permanent management
structures by combining project and functional structures. The main advantage of this
combination is that the matrix design balances both technical and project goals and
allocates specific responsibilities to both. Technical goals refer to how well work is done,
while project goals relate to issues such as type of work to be done and its costs. Figure 3
shows a very simplified matrix organization design in which department heads have line
authority over specialists in their departments (vertical structure). Functional specialists are
assigned to given projects (horizontal structure). These assignments are made at the
beginning of each project through collaboration between appropriate functional and project
managers.
Figure 3. Matrix organizational structure
Matrix organizations are not without their problems (Davis and Lawrence, 1978):
Responsibility and jurisdiction are not clearly defined in matrix organizations. Bosses are
also not clearly identified. Consequently, matrix organizations could lean towards chaos and
disorder, and even lead to power struggles unless power between line and project manager
is skilfully balanced.
Within the organization, matrix organizations may encourage the formation of cliques
since all decisions are made in a group. This could reinforce group loyalties and create
inter-group conflicts.
Matrix organizations need more human resources, particularly during initial periods. This
means higher overheads and increased expenditure.
Matrix organization forms are usually found at the lower level of the organization.
Adhocracy
Adhocratic structures are also called 'free form' or organic organization structures. They
stress managerial styles which do not depend upon formal structures. They are well suited
for complex and non-standard work and rely on informal structures. An adhocratic structure
is flexible, adaptive and organized around special problems to be solved by a group
consisting of experts with diverse professional skills (Robbins, 1989). These experts have
decision making authority and other powers. The adhocratic Structure is usually small, with
an ill-defined hierarchy. Such a design is suitable for high technology and high growth
organizations where an arranged and inflexible structure may be a handicap. Figure 4
illustrates an adhocratic type of organizational structure.
Figure 4. Adhocratic organizational structure

Choosing the organizational structure
Organization design is a continuous process. While a simple design is needed for simple
strategies, complex designs are necessary when organizational strategies involve complex
interactions.
The choice of any type of organizational design should be in consonance with the
organizational requirements, strategy and environment. The simple centralized and
bureaucratic organizational design based on functional departmentation focuses on work
and is thus better suited for getting work done efficiently. The team or project type of
organizational design is appropriate where inputs from several functional areas are
required. The divisional structure is appropriate if performance and results are to be
assessed. Matrix and adhocratic designs focus on coordination and relationship.
References
Anderson, C.R. 1988. Management: Skills, Functions and Organization Performance. USA:
Allyn and Bacon.
Barkdull, C.W. 1963. Span of Control: A method of evaluation. Michigan Business
Review, 15 (3):.
Cleland, D.L., & King, W.R. 1968. Systems Analysis and Project Management. New York,
NY: McGraw-Hill.
Davis, S.M., & Lawrence, P.R. 1978. Problems of Matrix Organizations. Harvard Business
Review, 56 (3):
Fayol, H. 1949. General and Industrial Management. Translated by Constance Storrs.
London: Pitman.
Filley, A.C. 1978. The Complete Manager: What Works When. Champaign, IL: Research
Press.
Gullick, L., & Urwick, L. (eds) 1937. Papers on the Science of Administration. New York,
NY: Institute of Public Administration.
Katz, D., & Kahn, R.L. 1978. The Social Psychology of Organizations. New York, NY: John
Wiley.
Kolodny, H.F. 1979. Evolution to a Matrix Organization. Academy of Management
Review, 4 (4): 543-544.
Koontz, M., O'Donnell, C., & Weihrich, H. 1980. Management. New York, NY: McGraw-Hill.
Lawrence, P.R., & Lorsch, J.W. 1967. Differentiation and Integration in Complex
Organizations. Administrative Science Quarterly, 12 (1): 1-47.
Leavitt, H.J. 1962. Applied organization and readings. Changes in industry: structural
technical and human approach. pp. 55-70, in: Cooper, W.W., Leavitt, H.J., & Shelly, M.W.
(eds) New Perspectives in Organization Research. New York, NY: John Wiley.
Luthans, F. 1986. Organizational Behaviour. Singapore: McGraw-Hill.
Mintzberg, H. 1981. Organization design: fashion or fit. Harvard Business Review, Jan-Feb:
103-116.
Nystrom, P.C., & Starbuck, W.H. (eds) 1981. Handbook of Organizational Design (Oxford:
Oxford University Press).
Robbins, S.P. 1989. Organization Behaviour. Concepts, Controversies and
Applications. New Delhi: Prentice-Hall of India.
Sachdeva, P.S. 1990. Analytical framework for the organization and structure of NARS. in:
Organization and Structure of NARS: Selected Papers. The Hague: ISNAR.
Tosi, H.L., Rizzo, J.R., & Carroll, S. 1986. Managing Organizational Behaviour. New York,
NY: Pitman.


Organizational design and change

Session guide: Organizational design and change
Reading note: Organizational design and change
References

DATE
TIME
FORMAT
TRAINER - Plenary participatory lecture
OBJECTIVES
At the end of this session, participants will be better able to understand and appreciate:
1. The effect on organization structure of changes in the external environment.
2. Interlocking systems of an organization.
3. The concept, attributes and process of organizational effectiveness.
4. Approaches, processes and techniques for OD.
INSTRUCTIONAL MATERIALS
Exhibit 1 Interlocking systems of an organization
Exhibit 2 Processes towards organizational effectiveness
Exhibit 3 Attributes of an effective organization
Exhibit 4 Approaches to OD
Exhibit 5 Processes of OD
Exhibit 6 Socio-technical systems approach for organization re-design
Exhibit 7 Techniques of OD
REQUIRED READING
Reading note: Organizational design and change
BACKGROUND READING
None.
SPECIAL EQUIPMENT AND AIDS
Overhead projector and chalkboard
Session guide: Organizational design and change

Exhibit 1: Interlocking systems of an organization
Exhibit 2: Processes towards organizational effectiveness
Exhibit 3: Attributes of an effective organization
Exhibit 4: Approaches to organizational development
Exhibit 5: Processes of organizational development
Exhibit 6: Socio-technical systems approach to organization re-design
Exhibit 7: Techniques of organizational development

Initiate the discussion by asking participants how the external environment affects the
working of their organizations. Obviously, no organization can exist in isolation from the
external environment, which includes ecology, government policies, trade systems,
technological environment and cultural beliefs. Changes in these could affect specific sub-
units in the organization or may affect the organization as a whole.
Show EXHIBIT 1. Observe that the organization is composed of four interlocking systems.
The first is the technical system which makes up the primary productive axis of the
organization. The second is the social system, which refers to people in the organization
and their activities. The third is the administrative system, referring to administrative
policies, systems and procedures used in operating the organization. The fourth is the
strategic system, which performs the steering function of the organization.
Ask participants to define organizational effectiveness and distinguish it from organizational
efficiency. Effectiveness is the degree to which an organization achieves its goals.
Efficiency relates to use of resources in achieving organizational goals. Organizational
effectiveness is influenced by evaluation, adaptation, graduation and innovation (EXHIBIT
2).
What are the important attributes of an effective organization? Show EXHIBIT 3 and discuss
each of these. The overall effect is to increase the effectiveness of the organization by
incorporating changes in its structure.
The need for organizational development (OD) arises in the context of changes in
technology, knowledge, product and services, and the social system. This involves changes
in beliefs, attitudes, values and structure.
Now discuss different approaches to OD. Show EXHIBIT 4. Group dynamics is based on
process consultation at small-group level, using group methods, sensitivity training and
related approaches. The behaviour modification school rearranges rewards to reinforce
selected target behaviour in employees. The systems approach considers the four
interlocking components of the organization: the technical system, the social system, the
administrative system and the strategic system. The socio-technical approach considers the
environment, technical system and social system as determinants of organizational design,
re-design or development. Finally the environment, which induces changes resulting in
socio-technical arrangements in the organization.
OD involves various interventions to change the structure, processes, behaviour or values
of individuals. This consists of eight elements. Show EXHIBIT 5 and briefly discuss these
elements.
Briefly discuss the socio-technical system approach for organization re-design (EXHIBIT 6).
Observe that while this creates a balance between the organization and its changing
external environment, it is not the most appropriate approach when compared to traditional
designs.
The techniques of OD can be traditional or modern. Show EXHIBIT 7. Traditional
techniques consist of sensitivity training or a group approach, grid training and survey
feedback. Sensitivity training induces sensitivity to group processes. Grid training is an
instrumental approach to laboratory training and helps in group development as well as
learning among group members. Grid training is completed in six stages (EXHIBIT 7). The
survey feedback technique involves a study of the units of analysis or the organization as a
whole. Using a questionnaire, it covers issues in leadership, organizational climate and
satisfaction (EXHIBIT 7). There are four important modern organization development
techniques. The process consultation approach attempts to help diagnose and solve
important problems of organizations by taking into account the processes which take place
within a group or between groups and consultants. The third-party approach is largely used
to resolve inter-personal and inter-group conflicts. Team building aims at improving overall
performance through task orientation. Observe that this will be discussed in detail in a
subsequent session. Transactional analysis is used to analyse group dynamics and
interpersonal communication.
Exhibit 1: Interlocking systems of an organization
TECHNICAL SYSTEM
SOCIAL SYSTEM
ADMINISTRATIVE SYSTEM
STRATEGIC SYSTEM
Exhibit 2: Processes towards organizational effectiveness
EVALUATION
ADAPTATION
GRADUATION
INNOVATION
Exhibit 3: Attributes of an effective organization
Change is an ongoing organizational process
Structural designs are temporary
Learning is built into the organization
Lateral relationships become increasingly more important
Linkages and close relationships are developed with elements in the external environment
Decision making depends on lateral relationships and mutually satisfactory arrangements
Management's role changes from control to leadership
People-management practices are involvement oriented rather than control oriented
Exhibit 4: Approaches to organizational development
GROUP DYNAMICS
BEHAVIOUR MODIFICATION SCHOOL
SYSTEMS APPROACH
SOCIO-TECHNICAL APPROACH
ENVIRONMENT
Exhibit 5: Processes of organizational development
PROCESS ANALYSIS
SKILL BUILDING
DIAGNOSTIC
COACHING OR COUNSELLING
TEAM BUILDING
INTRA-GROUP
TECHNO-STRUCTURAL
SYSTEM BUILDING OR SYSTEM RENEWAL
Exhibit 6: Socio-technical systems approach to organization re-design
Defining the scope of the system to be re-designed
Determining the environmental demands
Creating a vision statement
Educating organizational members
Creating the change structure
Conducting socio-technical analysis
Formulating re-design proposals
Implementing recommended changes
Evaluating changes
Exhibit 7: Techniques of organizational development
TRADITIONAL
GRID TRAINING
Laboratory-seminar training
Team development
Inter-group development
Organization goal setting
Goal attainment
Stabilization
SURVEY METHOD
Leadership
Organizational climate
Satisfaction
MODERN
PROCESS CONSULTATION METHOD
Initiate contact
Define the relationship
Select a setting and a method
Gather data and make a diagnosis
Intervene
Reduce involvement and terminate
THIRD PARTY
TEAM BUILDING
TRANSACTIONAL ANALYSIS
Reading note: Organizational design and change

Organizational effectiveness and efficiency
Organizational development
The OD process
Socio-technical systems approach for organization re-design
OD techniques

A research organization, like any other organization, has to function in consonance with its
external environment, which includes other organizations, ecology, government policies,
trade systems, technological environment, cultural beliefs and other factors. The
effectiveness of the organization depends greatly on how well the social and technical
systems are designed with respect to each other and also with respect to the demands of
the external environment (Pasmore, 1988). There should be a 'fit' between various design
elements and the external environment. If there is a change in the external environment,
resources or technology, the organization has to respond through appropriate structural
changes.
Organizational effectiveness and efficiency
The organization has to be both effective and efficient to be successful. Organizational
effectiveness is a measure of the extent to which an organization realizes its goals.
Organizational efficiency refers to the amount of resources an organization uses in order to
produce a unit of output. Efficiency and effectiveness are highly dependent on the ability of
the organization to adjust itself to rapid changes in its environment, resources or
technology.
Processes
According to Albrecht (1983), there are four processes which may lead to organizational
effectiveness:
evaluation, referring to a periodical and methodical process of scrutinizing the complete
functioning of the organization;
adaptation, referring to a formal and disciplined planning process which facilitates policy
decisions about OD;
graduation, which refers to the systematic process by which the organization identifies
and develops its future leaders and latent management talents; and
innovation, referring to a policy which encourages the people in the organization to find
better ways for accomplishing the goals assigned to them.
Considering the degree and type of differentiation and the integration mechanisms for
coordination within and amongst departments, Lawrence and Lorsch (1967) observe that
organizational efficiency is increased when the complexity of the environment is matched by
the complexity of structures.
Attributes
Significant attributes (Mohrman, 1989) which characterize an effective organization in
today's environment include:
Change is a continuing organizational process and not something that is intermittent.
Designs are temporary.
Learning is built into the organization.
Lateral relationships become increasingly important, particularly in decision making,
diluting the traditional focus on hierarchy. Decision making also depends on mutually
satisfactory arrangements.
Organizations create many linkages and close relationships with customers, users,
suppliers, community groups and competitors.
The function of management alters from one of control to that of leadership.
Management practices for people in the organization are oriented towards involvement
rather than control.
Organizational development
Burke (1982) defined organizational development (OD) as "a planned process of change in
an organization's culture through the utilization of behaviourial science, technology,
research and theory." It refers to the management of change and the development of
human resources. It is a response to change (Bennis, 1969). OD is a complex educational
strategy intended to change the beliefs, attitudes, values and structure of the organization
so that the organization can better adapt to new technologies, markets and challenges.
A variety of forces cause changes in the modern organization (Hellriegel, Slocum and
Woodman, 1983). Some of these are:
technological change;
the knowledge explosion;
product and service obsolescence; and
social change.
Environment, resources and technology perform a decisive role in determining
organizational policies. If any one of these determinants changes, the policies need to be
re-examined to determine if a different organizational design would be better suited.
Approaches to OD
The major schools of thought in OD are considered in the following paragraphs.
Group Dynamics
This is a historical and traditional method of OD based on the assumption that OD activities
are process consultation (Albrecht, 1983). In this approach, an expert works at a small-
group level, using group methods, sensitivity training and other related approaches.
The Behaviour Modification School
The 'be-mod' school of OD (based on the various works of Skinner) attempts to rearrange
the reward system in the organization so as to strengthen selected 'target' behaviour on the
part of employees.
The Systems Approach
This approach aims at enhancing the overall effectiveness of the organization. The system
can be defined as having:
some components that comprise it;
functions and processes performed by various components;
relationship among the components that make them a system; and
an organizational principle, which gives the system a purpose.
This approach is based on the assumption that an organization is composed of four
interlocking systems (Albrecht, 1983), namely:
a technical system, referring to the elements, activities and relationships that make up the
primary productive axis of the organization. It includes physical facilities, machinery, special
equipment, work processes, work methods, work procedures, work-oriented information and
various means of handling;
a social system, referring to the people in the organization and the activities in which they
are engaged. It includes the intra-group roles and relationships, the form of power
hierarchy, values and norms for behaviour in the organization, and the reward and
punishment processes;
an administrative system, which refers to the policies, procedures, instructions, reports,
etc., which are required to operate the organization. It also includes those who operate the
technical and administrative systems; and
a strategic system, which is the steering function of the organization. Its components
include the management team from the chief executive down to the lowest supervisor, the
chain of command, reporting relationships, and the power values of the leaders of the
organization. It also includes plans, the planning process and the procedures used in
governing the organization and adapting it to changing needs.
The systems approach has four sequential stages: assessment, problem solving,
implementation and evaluation.
The Socio-Technical Approach
The socio-technical approach views an organization (Pasmore, 1988) as made up of people
(a social system and a technical system) producing goods or services valued by customers
(who are part of the external environment).
The social system uses tools, techniques, and knowledge. The technical system produces
goods and services which are valued by customers in the external environment.
The Environment Approach
The environment is an agent of change. Environmental changes are the primary incitement
and stimulus for organizational betterment. The socio-technical arrangements in the
organization must change according to changes in the environment. The environment can
change in both predictable and unpredictable ways. The external environment can be
relatively stable or rapidly changing.
Thus, the environment, the technical system and the social system are three basic elements
which play a crucial role in any organization's design, re-design or development. The
efficiency and effectiveness of the organization depend upon the equilibrium between the
needs of these determinant elements.
The OD process
The OD process entails various activities at different levels in the organization. Through
these activities, interventions are made in the ongoing organization to change the structure,
processes, behaviour or values of individuals and groups. Golembiewski, Prochl and Sink
(1981) categorized these interventions under eight headings:
Process Analysis Activities, referring to applications of behaviourial science perspectives
to fathom complete and dynamic situations;
Skill-building Activities, involving various designs for eliciting behaviours in congruence
with OD values. This includes giving and receiving feedback, listening, and settling conflicts;
Diagnostic Activities, including process analysis to generate data through interviews,
psychological instruments or opinion surveys;
Coaching or Counselling Activities to help in resolving conflicts through third-party
consultation;
Team Building Activities, enhancing the efficiency and effectiveness of task groups;
Inter-group Activities, attempting to create effective and satisfying linkages between two or
more task groups or departments in the organization;
Techno-Structural Activities, aiming at building need-fulfilling roles, jobs and structures;
and
System-Building or System-Renewal Activities, seeking exhaustive changes in a large
organization's climate and values using combinations of the various OD interventions listed
above.
Socio-technical systems approach for organization re-design
Socio-technical systems design is better suited to meet the requirements of a changing
external environment in comparison with traditional designs. It endeavours to re-design the
organization's structure, processes and functions to create a balance between the
organization and its changing external environment. It could involve the following steps
(Foster, 1967; Cummings, 1976; Pasmore, 1988):
defining the scope of the system to be re-designed;
defining the environmental demands;
evolving a vision statement;
enlightening organizational members;
developing the change structure;
conducting socio-technical analysis;
preparing re-design proposals;
implementing recommended changes; and
evaluating the changes or re-design.
OD techniques
Techniques used for OD are considered below.
Sensitivity training
This has many applications and is still used widely, even though new techniques have
emerged (Lewin, 1981). Sensitivity training (Benny, Bradford and Lippitt, 1964) basically
aims at:
growth in effective membership;
developing ability to learn;
stimulating to give help; and
developing insights to be sensitive to group processes.
These process variables - in a systems sense - interact and are interdependent.
Grid Training
Grid training is an outgrowth of the managerial grid approach to leadership (Blacke and
Mouton, 1978). It is an instrumental approach to laboratory training. Sensitivity training is
supplemented with self-administered instruments (Benny, Bradford and Lippitt, 1964). The
analysis of these instruments helps in group development and in the learning of group
members. This technique is widely used and has proved effective.
Grid training for OD is completed in six phases. They are:
laboratory-seminar training, which aims at acquainting participants with concepts and
material used in grid training;
a team development phase, involving the coming together of members from the same
department to chart out as to how they will attain a 9 x 9 position on the grid;
inter-group development aims at overall OD. During this phase, conflict situations between
groups are identified and analysed;
organization goal setting is based on participative management, where participants
contribute to and agree upon important goals for the organization;
goal attainment aims at achieving goals which were set during the phase of organizational
goal setting; and
stabilization involves the evaluation of the overall programme and making suggestions for
changes if appropriate.
Survey Feedback
Survey feedback is based on the study (survey) of the unit of analysis (such as work group,
a department or a whole organization) by using questionnaires (Taylor and Bowers, 1972).
The resulting data are then used to identify and analyse problems and propose a suitable
action plan to overcome them. A typical survey questionnaire would generate information on
leadership, organizational climate and satisfaction (Table 1).
Table 1. Typical factors covered in a survey research questionnaire
Leadership






Managerial support
Managerial goal emphasis
Managerial work facilitation
Peer support
Peer goal emphasis
Peer work facilitation
Peer interaction facilitation
Organizational climate




Communication within the organization
Motivation
Decision making
Control within the organization
Coordination between departments
General management

Satisfaction




Satisfaction with the organization
Satisfaction with the supervisor
Satisfaction with the job
Satisfaction with pay
Satisfaction with the work group
Modern OD techniques
In addition to the traditional OD techniques like sensitivity training, grid training and survey
feedback, there are four modern techniques which can be used at inter-personal and inter-
group levels.
Process consultation approach
This attempts to efficiently help diagnose and solve important problems of organizations. It
refers to the processes which take place within a group or between groups and the
consultant. The consultant aims at helping the client to perceive, understand and act upon
process events which occur in the client's environment. Schein (1969) has proposed six
major steps to be followed by the consultant. They are:
Initiating contact The consultant is approached by the client to solve an organizational
problem which could not be solved by normal procedures.
Defining the relationship This refers to clarifying the expectations of both client and
consultant through a contract between them about services, time and fees.
Selecting a setting and a method This refers to the place and method of doing the
exercise.
Gathering data and making a diagnosis This is implemented through using
questionnaires, interviews, observations, etc.
Intervention This involves agenda setting, feedback, coaching and structural interventions,
individually or in combination.
Reducing involvement and terminating This is the mutual agreement to cease the
consultation.
Third Party
The third-party peace-making technique attempts to settle inter-personal and inter-group
conflicts using modern concepts and methods of conflict management. This technique
analyses the processes involved, discerns the problem on the basis of the analysis, and
suitably manages the conflict situation.
Team building
Team building has been considered the most popular OD technique in recent years, so
much so that it has replaced sensitivity training. It aims at improving overall performance,
tends to be more task-oriented, and can be used with family groups (members from the
same unit) as well as special groups (such as task forces, committees and inter-
departmental groups).
There are five major elements involved in team building (French and Bell, 1978):
problem solving, decision making, role clarification and goal setting for accomplishing the
assigned tasks;
building and maintaining effective inter-personal relationships;
understanding and managing group processes and culture;
role analysis techniques for role clarification and definition; and
role negotiation techniques.
Transactional Analysis
Transactional analysis is widely used by management practitioners to analyse group
dynamics and inter-personal communications. It deals with aspects of identity, maturation,
insight and awareness (Berne, 1964). As a tool for OD, it attempts to help people
understand their egos - both their own and those of others - to allow them to interact in a
more meaningful manner with one another (Huse, 1975). It attempts to identify peoples'
dominant ego states and help people understand and analyse their transactions with others.
It is quite effective if applied in the early stage of the diagnostic phase.
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