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Economics and Organsations

Week 6

Mintzberg’s Contingency Approach – Structural Configurations

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5 Basic ‘Pulls’ within an Organisation

See H6b

Fig IV-1

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5 Basic ‘Pulls’ within an Organisation

Strategic Apex - Centralise

Operating Core - Professionalise

Middle Line - Balkanise (divide and rule)

Technostructure - Standardise

Support Staff - Collaborate

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Structural Configurations

• Combinations of the ‘building blocks’ to form the actual structural forms organisations

• 5 structural forms• Each structural form has:– A dominant part of the organisation– A key coordinating mechanism– One of the 5 basic pulls is dominant

• Each structure is a logical configuration• Not all organisations fit exactly into one of the 5• There is a strong ‘systems’ approach

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The Simple StructureDiagrams on H7

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Simple Structure

• Prime coordinating mechanism

• Key Part• Main Design

Parameters• Contingency factors

• Direct supervision

• Strategic Apex• Centralisation, organic

structure• Young, small, non-

sophisticated technical systemSimple dynamic environmentPossibly extreme hostilityNot fashionable

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Features of simple structure

• Risky - depends on single person• Strong sense of mission/purpose• Can be seen as restrictive, undemocratic

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Machine Bureaucracy

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Machine Bureaucracy

• Prime coordinating mechanism

• Key Part• Main Design

Parameters

• Contingency factors

• Standardisation of processes

• Technostructure• Behaviour formalisation, job

specialisation, functional grouping,large units

• Old, large, regulating non-automated technical system, simple stable environment

external control

not fashionable

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Features of Machine Bureaucracy

• Obsession with control• Highly efficient for repetitive tasks in conditions

of certainty• Serious ‘people problems’ – nature of work –

conflict between engineering efficiency and individual satisfaction

• Does not react well to change – may need to revert to simple structure to accomplish major change

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Professional Bureaucracy

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Professional Bureaucracy

• Prime coordinating mechanism

• Key Part• Main Design

Parameters

• Contingency factors

• Standardisation of skills

• Operating Core• Training, Horizontal job

specialisation, decentralisation

• Complex, stable environment

Non-regulating, non-sophisticated technical system

Fashionable

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Features of Professional Bureaucracy

• Frequently seen as a repertoire of standard programmes, resulting in ‘pigeon-holing’

• High levels of decentralisation, little control of output or processes, SO recruitment is vital

• Large expenditure on training and development• Democratic and gives staff autonomy and

empowerment• Not good at innovation

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Divisionalised Structure

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Divisionalised Structure

• Prime coordinating mechanism

• Key Part• Main Design

Parameters

• Contingency factors

• Standardisation of outputs

• Middle line• Market grouping,

Performance control, limited vert. Decentralisation

• Diversified markets (products), old and large, high power needs of middle-managers, fashionable

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Structure of Divisionalised firm

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Development of divisionalised firm

Integrated form

By-product form

Related product form

Conglomerate form

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Features of Divisionalised Structure

• Divisions as ‘quasi-autonomous units’• Each division can take an appropriate structural

form – most common id machine bureaucracy• Contrast divisionalised with decentralised• Sharp distinction between HQ and divisional

staff – Strategy and Operations• Divisionalised structure solves many of the

problems of the large machine bureaucracy• Divisions can be seen as portfolio of

operations, or an integrated set of units

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The Adhocracy

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• Prime coordinating mechanism

• Key Part

• Main Design Parameters

• Contingency factors

• Mutual adjustment

• Support staff (operating core in Operating adhocracy)

• Liaison devices, organic structure,selective decentralisation, horizontal job specialisation, market and function together

• Complex, dynamic environment, often young, sophisticated operating system - automated

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Two types of Adhocracy

OPERATING ADHOCRACY – Innovates and solves problems directly on behalf

of its clients. Admin work and operating work are blended together

e.g. consultancy firm, advertising agency

ADMINISTRATIVE ADHOCRACYUndertakes projects to serve itself, so it has its

own operating coree.g. Research department, Hi-tech companies

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Features of Adhocracy

• Strategy formation is widespread• Semi-independent and ever-changing work

constellations• Youth is a condition of adhocracy – so is there

a limit to size?• Ad has more democracy and less bureaucracy• There will be ambiguity, interdependence, ever-

changing relations, few procedures, demanding personal relationships

• Poor at routine tasks – inefficient – mutual adj

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Concluding pentagon

• Configurations as a set of pulls on any organisation

• Configurations as ‘pure types’• Configurations as basis for structural hybrids• Configurations as basis for structural transition

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Mintzberg’s Concluding Pentagon

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Some important Hybrids

• Professional Adhocracy – reaction to growth and age in adhocracy – this may undermine its strongest feature, innovation

• Administrative Bureaucracy may even move toward machine bureaucracy to cope with routine – and isolate creative sections from routine – e.g. University Research Centre

• White collar machine bureaucracy – has elements of professional bureaucracy

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Beyond Five!A sixth configuration

Mission Configuration

• Prime coordinating mechanism – Socialisation or Standardisation of Norms

• Key Part – Ideology or organisation culture

• Main Design Parameters - indoctrination

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Strengths of Contingency Approach

• Highlights interrelation of organisation, environment, and technology

• Management can improve organisation effectiveness by understanding these relationships and designing appropriate structure

• Gives a useful typology of specie or types of organisation

• Stresses value of organic forms in innovation

• Modern ecological view stresses inter-organisational relations

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Weaknesses of Contingency Approach

• Unrealistic and oversimplified model of managerial activity

• Causal link between contingency factors and structure not proven – correlation exists but is causal?

• Causality may reverse – large org and environment

• Plays down importance of power and choice – very deterministic

• Simplified versions put too much emphasis on environment

• Weak at dealing with multiple contingency factors

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• Few tests have taken links as far as effectiveness

• Lack of precision in defining variables• The concept of ‘an organisation’ is too concrete

– reflects its functionalist paradigm• High emphasis on functional interdependence –

but organisations demonstrate schism and conflict

• Theory originally intended as positive, but frequently used as normative – ‘one best way’ for a specific organisation?

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Comments on Case Study Approach

• Usually involve insights from more than one theory

• Require thought, insight and lateral thinking• No simple ‘correct’ answer – assumptions• Require more thought and less writing• Theory to be used not repeated• Usually improved answers if discussed with

other(s) before writing

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The Symphony case – real company but disguised

SRI• Develops new seeds and initial basic seed• Largest UK see breeder• 95% of income from royalties from SSS• 10 years to bring new seed to market – • Bio-technology has reduced this

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SSS

• Produces mass quantities of seed – who, how?• Selling company• Three broad ranges of seeds – cereals, forage

crops and potatoes• 30+ full-time salesmen – plus large back-up

staff• Uses agricultural merchants as distributors