Summary organization theory Chapter 6
Organizational Structure (EBP670C05)
Rijksuniversiteit Groningen
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Organisational Structure
Chapter 6: Organization size
Defining organization size Organization size is the total number of employees in the organization.
Advocates of the size imperative In different researches it was found that the size of a company, the amount of employees, is the major determinant of structure. Increased size is positively associated with greater specialisation, formalisation and vertical span and negatively associated with centralisation of decision making.
Critics of the size imperative There has been no shortage of critics of the size imperative. Critics include findings on methodological grounds or have argued that size is a consequence rather than a cause of structure
Size and complexity There is evidence indicating that size generates spatial differentiation and that increasing differentiation also generates increasing size. There is a difficulty in separating size, as an independent variable, from other organisational dimensions. Size and formalisation The relationship between organisational size and formalisation is high, positive and statistically significant. Size and centralisation Although common sense suggests that size and centralisation would be inversely related, research reveals mixed findings.
When does an organisation become large? A large organisation is defined as one having approximately 2000 or more employees.
Special issues relating to organisation size
The problems of large size: The growth of bureaucracy (more rules and regulations), turning information it into knowledge, adapting to changing technologies, extended time frames for action, need for accurate costing information, managing over a wide geographic spread and bounded rationality Solutions are applying structure by reducing complexity to manageable parts, locating decisions at the right place in the organisation and ensuring that important tasks have someone responsible for them.
Organisation theory and small businesses: Small businesses do not face the same problems as large- and medium-sized organisations; therefore, we should expect a different priority to be assigned to organisation theory issues by the small-business manager. Managers of small businesses also have a more limited set of structural options. Downsizing Downsizing is the planned elimination of position or jobs.
Reasons for downsizing are: increased competition (need to lower costs), computerisation and automation, technological obsolescence, declining profitability, middle management being replaced by technology, the realisation that size of itself does not bring advantages, changes in strategy, changes in structure and the rise of outsourcing.
Benefits companies seek from downsizing: Lower costs, less bureaucracy, faster decision making, smoother communications, greater entrepreneurship and increased productivity.
The effects of downsizing All downsizing had a negative effect on the employees left in the organisation. Another problem is that managers are often neither well informed nor experienced in implementing it. Many companies are hiring whilst they are downsizing, as a result they are changing their workforce composition.
Summary organization theory Chapter 6
Vak: Organizational Structure (EBP670C05)
Universiteit: Rijksuniversiteit Groningen
