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Robbins, Barnwell: Organisation Theory 5e © 2007 Pearson Education Australia

PowerPoint to accom pany 

Stephen Robbins

Neil Barnwell

Organisation TheoryCONCEPTS AND CASES

5e

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Robbins, Barnwell: Organisation Theory 5e © 2007 Pearson Education Australia

Chapter six

Organisation size

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 Aims of this lecture

Define organisation size

Summarise the main studies in linking size and

structure

Discuss the management challenges presented by

large, and small, size

Examine downsizing

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Size

Organisation size is normally measured by the

number of employees

Other measures may include geographic spread,turnover or market capitalisation

For organisation theory purposes, an organisation

may be considered large if it has over 2000

members

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Sizecontinued:

Blau and Shoenherr advocated that as size

increases, structural differentiation also increases

but at a decreasing rate

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Sizecontinued:

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Sizecontinued:

The Aston group found that size was associated

with greater specialisation and formalisation

Critics claim these studies have:• Poor methodology

• Sampling difficulties

• Problems with generalisation

It is also difficult to separate size from the effects of 

technology and strategy

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Summarising the effects of size

Complexity increases as size increases, but at a

decreasing rate

Size generates differentiation, and differentiationmay also contribute to size

As an organisation increases in size, some

activities, i.e. day to day decision making, are

centralised

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Large size

Large size magnifies management challenges

Problems experienced are:

• Growth of bureaucracy• Turning information into knowledge

• Adapting to changing technologies

• Extended timeframes for action

•

Need for accurate costing information• Managing over a wide geographic spread

• Bounded rationality and difficulties

in decision making

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Large sizecontinued:

The structural contribution to these problems may

include:

• Divisionalisation

•

Outsourcing• Balancing centralisation/decentralisation

• Structuring to facilitate change

• Ensuring all tasks have someone responsible for them

• Physically separating the different types of work

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Small size

Organisation theory has a contribution to make to

the structuring of small business

The owner/manager has a major influence upon the

way that small business is structured and managed

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Small sizecontinued:

In a small business, work:

• Tends to have a broader scope

• There are fewer layers of management• Decision making is centralised

• There is less geographic dispersion

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Downsizing

Downsizing is the planned reduction of positionswithin an organisation

The reasons for downsizing include• Increased competition

• Computerisation and automation

• Changes in strategy

• Erosion of economies of scale

• Rise in outsourcing• Declining profitability

• Structural changes

• Changing roles of middlemanagement

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Downsizingcontinued:

The claimed benefits of downsizing include

• Lower overhead costs

• Less bureaucracy

• Faster decision making• Smoother communication

• Greater entrepreneurship

• Increased productivity

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Downsizingcontinued:

Ineffective downsizing practices can have a long

lasting negative effect upon the organisation

including

•

Lowered morale• Skills shortages

• Productivity losses

• Loss of rapport between managers and workers

• Loss of corporate memory and organisational learning

deficits

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Discussion questions

What structural and management differences would

you expect to find in a large organisation, which

you would not find in a small one?

Compare and contrast working in a largeorganisation with working in a small one.

Discuss the challenges of managing a large

organisation, such as Shell, Nestle or Toyota.

Identify poor downsizing practices and discuss the

effect that these can have upon

an organisation.