Assignment on Culture and Organizational Structure (Chapter # 8) IM 502 (Fundamentals (Fundamentals International Management)
Prepared by: Group: 8 (Eight) Group Members
Roll
Md. Al Amin
222
Sagir Hossain
223
Mahabub Alam
224
Prepared for: Dr. Md. Ataur Rahman
Professor Department of Management Studies, University of Dhaka
Date of Submission 24 January, 2012
Table of Contents Meaning Meanin g of culture: cultur e: ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 4 Meaning Meanin g of Organizat ional structure struct ure ----------------------------------------------------------------------------------------------------------------------------------4 The Importance Importan ce of an Organizat Or ganizational ional Structure Struct ure ---------------------------------------------------------------------------------------------------------5 Benefits of Organizati Or ganizational onal Structure Struct ure ---------------------------------------------------------------------------------------------------------------------------------- 7 Types of Organization Organizat ion Structure Stru cture ------------------------------------------------------------------------------------------------------------------------------------------- 9 Line Organizat ion Structur S tructuree -------------------------------------------------------------------------------------------------------------------------------------------------- 10 Functional Functio nal Organizati Organi zation on Structure----------------------Str ucture-------------------------------------------------------------------------------------------------------------- 10 Line and an d Staff Staf f Organization Or ganization Structure Struct ure -------------------------------------------------------------------------------------------------------------------------- 12 Six Elements E lements of Organizational Organizat ional Structure Struct ure ------------------------------------------------------------------------------------------------------------------- 13 Condition of good structure structur e---------------------------------------------------------------------------------------------------------------------------------------------------- 15 Causes of poor structure: struct ure: --------------------------------------------------------------------------------------------------------------------------------------------------------- 16 Functions Functio ns of Structure Struct ure --------------------------------------------------------------------------------------------------------------------------------------------------------------- 17 Factors Affecting Structure Other Than Culture --------------------------------------------------- 18 Relationship between Culture and Structure-------------------------------------------------------- 19 Bureaucracy Bureaucra cy -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 20 Types of Bureaucracy on the Basis of Cultural Dimensions ------------------------------------ 25 Critical Critica l Evaluat E valuation ion of Bureaucracy Bureaucra cy ---------------------------------------------------------------------------------------------------------------------------------- 26 Positive Positiv e Qualities Qua lities of Burea ucracy ------------------------------------------------------------------------------------------------------------------------------------ 26
2|Page
Table of Contents Meaning Meanin g of culture: cultur e: ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 4 Meaning Meanin g of Organizat ional structure struct ure ----------------------------------------------------------------------------------------------------------------------------------4 The Importance Importan ce of an Organizat Or ganizational ional Structure Struct ure ---------------------------------------------------------------------------------------------------------5 Benefits of Organizati Or ganizational onal Structure Struct ure ---------------------------------------------------------------------------------------------------------------------------------- 7 Types of Organization Organizat ion Structure Stru cture ------------------------------------------------------------------------------------------------------------------------------------------- 9 Line Organizat ion Structur S tructuree -------------------------------------------------------------------------------------------------------------------------------------------------- 10 Functional Functio nal Organizati Organi zation on Structure----------------------Str ucture-------------------------------------------------------------------------------------------------------------- 10 Line and an d Staff Staf f Organization Or ganization Structure Struct ure -------------------------------------------------------------------------------------------------------------------------- 12 Six Elements E lements of Organizational Organizat ional Structure Struct ure ------------------------------------------------------------------------------------------------------------------- 13 Condition of good structure structur e---------------------------------------------------------------------------------------------------------------------------------------------------- 15 Causes of poor structure: struct ure: --------------------------------------------------------------------------------------------------------------------------------------------------------- 16 Functions Functio ns of Structure Struct ure --------------------------------------------------------------------------------------------------------------------------------------------------------------- 17 Factors Affecting Structure Other Than Culture --------------------------------------------------- 18 Relationship between Culture and Structure-------------------------------------------------------- 19 Bureaucracy Bureaucra cy -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 20 Types of Bureaucracy on the Basis of Cultural Dimensions ------------------------------------ 25 Critical Critica l Evaluat E valuation ion of Bureaucracy Bureaucra cy ---------------------------------------------------------------------------------------------------------------------------------- 26 Positive Positiv e Qualities Qua lities of Burea ucracy ------------------------------------------------------------------------------------------------------------------------------------ 26
2|Page
Negative Negati ve Qualit Q ualities ies of Bureaucrac Bur eaucracy y --------------------------------------------------------------------------------------------------------------------------------- 27 Global Structural Struct ural Integration Integrat ion ------------------------------------------------------------------------------------------------------------------------------------------------ 27 Organizing Organizi ng for Globalization: Globali zation: ----------------------------------------------------------------------------------------------------------------------------------------------- 28 Emergent Structural Structur al Forms: -------------------------------------------------------------------------------------------------------------------------------------------------- 29 The Transnational Corporation Network Structure: ----------------------------------------------- 29 Choice of Organizationa Orga nizationall Form: For m: ---------------------------------------------------------------------------------------------------------------------------------------- 30 Control System for Global Operations -------------------------------------------------------------- 30 Possible Possibl e Questions--------------------Questi ons---------------------------------------------------------------------------------------------------------------------------------------------------- 31 References ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 32 Multiple Multipl e Choice Questions-----------Questions ----------------------------------------------------------------------------------------------------------------------------------------- 33
3|Page
Chapter: 8 Culture and Structure Meaning of culture: According to CARLA Culture is defined as the shared patterns of behaviors and interactions, cognitive constructs, and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a culture group while also distinguishing those of another group.
"Culture is learned and shared human patterns or models for living; day- to-day living patterns these patterns and models pervade all aspects of human social interaction. Culture is mankind's primary adaptive mechanism" Damen, L. (1987).
³Culture consists of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values; culture systems may, on the other hand, be considered as products of action, and on the other as conditioning elements of further action.´ Kroeber, A.L., & Kluckhohn, C. (1952)
Meaning of Organizational structure An Organization has been defined by E. F. L. Breach as "a system of structural interpersonal relationships. In it, individuals are differentiated in terms of authority, status and roles with the result that personal interaction is prescribed, and anticipated reactions between individuals tend to occur while ambiguity and spontaneity are decreased". According to Louis A. Allen , Organization is "the process of identification and grouping
the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives".
4|Page
James Mooney defines organization as "the form of every human association for attainment of a common purpose". Structures are applicable to people in how a society is as a system organized by a
characteristic pattern of relationships. Organizational structure refers to the different hierarchies or levels in a company. An
organizational structure appears as a series of boxes, vertical and horizontal lines. The boxes represent various titles within the organization, and the vertical lines represent to whom that position reports. Horizontal lines show which employees are on the same level. The appearance of an organization structure is usually pyramidal because there are fewer executive-level positions at the top of t he company. An organizational structure consists of activities such as task allocation, coordination
and supervision, which are directed towards the achievement of organizational aims. It considers as the viewing glass or perspective through which individuals see their organization and its environment.
The Importance of an Organizational Structure The importance of an organizational structure involves assisting business owners, CEOs, and entrepreneurs to conceptualize, visualize, and construct a hierarchical system to be implemented into their organization. 1. Chain of Command
An organizational structure involves a chain of command which determines and defines: job positions, who makes the decisions, and who's accountable for various duties. 2 .Span of Control
Span of control determines and quantifies the actual amount of employees a manager supervises.
5|Page
3. Departmentalization
Departments within an organization structure are sections of the structure divided into functional divisions relevant to specific tasks. Determining what activities, tasks, and talents are to be grouped to best achieve an organization's objective is called the departmentalization process. 4. Distribution of Authority
Distribution of authority determines if decision-making authority is concentrated among a few high-level figures or is the authority shared and distributed throughout a variety of departments working closet to the their corresponding tasks. 5. Organization Height
Organization height defines how many departments, divisions, and layers there are between the highest levels and the lowest levels of an organization. 6. Change Role Assignments
Another way to change the culture of an organization is to reassign technical specialists in existing departments. For example, you can decentralize the HR department and move an HR professional into each major department. 7. Employee Involvement
Some management teams bring the need for culture change to workers, using a grassroots approach to changing the structure of the company. Managers might present the problem of wanting to make the company more responsive to the market's changing conditions. 8. Strong Culture
A company with a strong organizational culture can effectively change its culture because its employees are responsive to their organizational structure. If employees are highly committed to a work-team structure and their teams desire to shift the culture to focus on new products or services, they might follow the team.
6|Page
9. Function
Organizational structure is particularly important for decision-making. Most companies either have a tall or flat organizational structure. Small companies usually use a flat organizational structure. 10. Communication
The importance of organizational structure is particularly crucial for communication. Organizational structure enables the distribution of authority. When a person starts a job, he knows from day one to which he will report. Most companies funnel their communication through department leaders. 11. Evaluating Employee Performance
Organizational structure is important for evaluating employee performance. The linear structure of functional and product organizational structures allow supervisors to evaluate the work of their subordinates. Supervisors can evaluate the skills employees demonstrate. 12. Achieving Goals
Organizational structure is particularly important in achieving goals and results. Organizational structure allows for the chain of command. Department leaders are in charge of delegating tasks and projects to subordinates so the department can meet project deadlines.
Benefits of Organizational Structure The structure of an organization is meant to complement the company's business goals and objectives. It is also the foundation of the company's culture and as such affects employee behavior, performance, motivation and cooperation. Organizational structures should allow for flexibility, encourage employee creativity and effectively utilize the skills and abilities of the workforce. 1. Functional Structure
Functional organizational structural group employees based on the positions they hold or by the tasks, they perform. The benefits of structuring employees by common job titles an d
7|Page
activities include better communication among specialists, increased teamwork and shared knowledge, and it allows for quicker decision-making. 2. Divisional Structure
A divisional structure can group employees by product divisions, geographic divisions or, geographic divisions. The advantages of divisional structures include higher quality products and customer service because of specialization, facilitated communication and teamwork within divisions and encouragement of hands-on problem solving. 3. Matrix Structure
Matrix structures group employees by a combination of positions held, tasks performed and product divisions. A matrix structure results in employees having multiple bosses, facilitates
product
development
through
innovation
and
creativity,
improves
communication and teamwork between divisions and increases responsibility and freedom of employees. 4. Hierarchical and Horizontal Structures
Communication and decision-making is more efficient and quicker in horizontally structured organizations compared with communicating up each level of the hierarchy. Also, the decentralization of a flatter structure allows for greater job responsibility and motivation. 5. Unified Marketing Message
A company can present a unified front to customers, vendors and investors when a common marketing message is used throughout the organization. A unified marketing message can help the entire company better understand its marketing goals, and then work together to achieve t hem. 6. Succession
A strong organizational structure is better able to prepare qualified employees for management. Departments can work together on a developmental plan to help encourage the training of managerial candidates within any depart ment.
8|Page
7. Focus on Strategy
Using a strong organizational structure allows a company to better focus on a single set of goals instead of each group working towards its own agenda. It helps the company to use resources wisely in the pursuit of company goals as opposed to doubling efforts or experimenting with options perhaps not in the company's best interests. 8. Training
A good organizational structure makes employee training easier to administer, and it also allows it to remain flexible based on the changes within the organization. When organizational structure regulates the flow of information, then changes within that information are easier to monitor and better adaptable for a company-wide training program. 9. Decision Making
An organizational structure can make decision making a more efficient process, according to Lamar University. When a defined hierarchy is in place, the company is better equipped to make important decisions and adjust practices to meet the demands of competition.
Types of Organization Structure Organization structure is defined as "The logical arrangement of task and the network of relationships and roles among the various positions established to carry out the activities necessary to achieve the predetermined objectives of business". Internal Organization structure constitutes the arteries and veins through which the blood of work flows in the body of Organization. Internal Organization structures can be broadly classified into the following forms :
1. Line Organization structure. 2. Functional Organization structure. 3. Line and staff Organization structure. 4. Product Organization structure. 5. Committee and Matrix Organization structure
9|Page
Line Organization Structure Line Organization (also called Military/Scalar Organization) is the oldest and the simplest form of internal Organization structure. It was first developed by the Roman army and later adopted by armies all over the world. Factory owners also used line Organization structure in its purest form in the nineteenth century in England. In the line Organization, the line of authority moves directly from the top level to the lowest level in a step-by-step manner. It is straig ht and vertical. The top-level management takes all major decisions and issues directions for actual execution. Thus authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the upward direction. Line Organization structure is given in the following chart :
Functional Organization Structure F.W.Taylor conceived the functional Organization structure. According to him, it is unscientific to overload a foramen with the entire responsibility of running a department. He introduced a system of functional foremanship in his Organization. In his functional foremanship, there will be eight specialists' foremen who will be required to guide, direct
10 | P a g e
and control the work. Workers at the plant level will have to follow the instructions of all these eight specialists called bosses. In the functional Organization suggested by F. W. Taylor, the job of management is divided according to specialization. As a result, functional departments are created. In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four bosses will be at the planning level and the remaining four will be at the slop floor level. The functional Organization structure is given in the following chart:-
Merits of Functional Organization Structure 1. Facilitates specialization:
Functional Organization structure facilitates division of work a nd specialization. Each boss has specialized knowledge of his functional area. He is in a better position to guide and help the workers.
11 | P a g e
2. Benefits of large-scale operations:
Functional Organization offers the benefit of economy of large-scale operation. In this Organization, one administrative unit manufactures all products. The available machinery, equipment and facilities are used fully for large-scale production. 3. Facilitates effective coordination:
Functional Organization facilitates effective coordination within the function. This is possible as one boss is in-charge of a particular function and he looks after all activities, which come within that function. 4. Operational flexibility:
Functional Organization possesses operational flexibility. Necessary changes can be introduced easily to suit the needs of the situation without any adverse effect on the efficiency. 5. Ensures effective supervision:
Functional Organization facilitates effective supervision by the functional heads and foremen. Due to specialization, they concentrate on the specific functional area and keep effective supervision on t heir subordinates.
Line and Staff Organization Structure In the line and staff Organization, line executives and staff are combined together. The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'. The following chart shows line and staff Organization structure:
12 | P a g e
The line executives are concerned with the execution of plans and Policies. They do their best to achieve the organizational objectives. The staff concentrates their attention on research and planning activities. They are experts and conduct advisory functions. The staff is supportive to line. The staff specialists offer guidance and cooperation to line executives for achieving organizational objectives. This reduces the burden of functions on the line executives and raises overall efficiency of the Organization.
Six Elements of Organizational Structure Organizational structure determines corporate communication and creates a plan for efficient growth for the future. The six elements of organizational structure come together to create the blueprint for your company is operated, and determine how your managerial staff goes about effective change in your organization. 1. Geography
The more spread out an organization is, the more autonomy each location will need to be given in order for the company to run efficiently. Managers need to establish a clear line of communication in order to receive guidance and instruction.
13 | P a g e
2. Number of Employees
A large employee population can necessitate that there be several layers of management for a company to run efficiently. The organizational structure needs to be elastic enough to accommodate more employees and the potential need for a larger management structure. 3. Product Evolution
A company may start with a small line of products that cover a general part of the industry. The need to create specified departments for product development and manufacturing can have an effect on the company's organizational structure. 4. Distribution of Authority
A company's organizational structure is affected by whether the company wants centralize d management or decentralized management. Centralized management keeps all major decisions with one specific executive group, while decentralized management allows company managers to have more said in the decision-making process. 5. Control
A company that requires a higher product quality will have stricter rules and more regimented environment equipment. Companies that engage in the mass production of products may not exert as much control over the quality of their products and may create a different organizational structure. 6. Marketplace
The marketplace has a bearing on how a company is structure. A manufacturer may decide to sell products through wholesalers and directly to end users. In order for this model to be successful, the structure of the company would need to be set up to keep these elements separate, including a separate marketing team and a separate sales force.
14 | P a g e
Condition of good structure 1. Simplicity:
Line Organization structure is easy to understand and follow by superiors and subordinates. It is simple and clear as regards authority and accountability. 2. Prompt decisions:
Line Organization facilitates prompt decision-making at all levels, as the authority given is clear and complete. 3. Discipline:
It brings discipline in the Organization due to unity of command, delegation of authority and direct accountability. 4. Economical:
Line Organization is economical, as experts are not appointed. 5. Quick communication:
High efficiency, flexibility and high employee morale are some more advantages of line Organization structure. 6. Facilitates effective co-operation:
Functional organization makes effective co-operation within organization. This is possible as one basis in-charge of a particular function and he looks after all activities. 7. Operational flexibility:
Functional Organization possesses operational flexibility.
Necessary changes can be
visible easily to suit the needs of the situation without any adverse effect on the efficiency 8. Training opportunities to employees:
Better opportunities of advancement are provided to workers. The scope for learning and training for promotions are available.
15 | P a g e
9. Sound decision-making:
Line and staff Organization facilitates sound management¶s decision because of services of experts and specialists. The decisions are taken in a democratic method in consultation with the experts.
Causes of poor structure: 1. Heavy burden on line executives:
The line executives are given too many duties and responsibilities. Even the quality of the decisions of executives may suffer due to heavy burden of duties and responsibilities. 2. Non-availability of services of experts:
There is absence of skilled experts in line organization. Expert assistance is not available promptly when needed by line executives. 3. Favoritism:
There is wide scope for favoritism and nepotism in the line organization. Leadership of departmental executive is autocratic due to heavy concentration of powers. He may favor some employees at the cost of others. 4. Too much dependence on limited executives:
In the line organization, all powers are concentrated in the hands of a few executives. Naturally, the success and stability of the entire organization depends on their personal skill, initiative and interest. Special difficulties arise when one executive is to be transferred/replaced/promoted. 5. Rigidity:
There is rigidity in the working of line organization. 6. Delays in communication:
Limited freedom to employees and unsuitability to modern large business units are some more demerits of line Organization.
16 | P a g e
7. Costly:
Functional Organization is costly, as more specialists are required to be appointed. 8. Absence of unity of command:
Unity of command is absent in the functional Organization as each worker gets orders and instructions from several bosses. 9. Fixing responsibility is difficult:
In functional Organization, responsibility is difficult to fix on a specific person. This is because the responsibility itself is divided among many.
Functions of Structure Structure is the formal arrangement of roles, responsibilities and relationships within an organization. It is a powerful tool to implement strategy. Its functions are divided into two broad parts- general functions and specific functions. These group-wise functions are stated below. 1. General Functions:
Structure serves general functions of regulating responsibilities and relationships. The services include the followings. It regulates the responsibilities assigned to each member for performing specific tasks. Responsibilities are structured either by common function or by common purpose. It regulates the relationships that each member has with other members within the organization. 2. Specific Functions:
Besides general functions, structure has some specific functions to carry out within an organization. T hose functions are as follows. It channels messages around the organization. It shows the chain of command and determines span of management.
17 | P a g e
It designs and groups jobs as well as coordinates and differentiates among jobs. The structure of an organization generally does the above mentioned functions. But these functions may vary across different organizations and countries.
Factors Affecting Structure Other Than Culture Structure is composed of different elements. Besides these elements, it needs to take into consideration culture and influences other than culture. Because both culture and influences other than culture influence the choice of structure and how that structure is implemented. The influences other than culture are succinctly described below. 1. Personality of the Top Manager:
Top management is the ultimate decision makers in any organization. Their personalities shape their attitudes towards vertical differentiation and horizontal differentiation. And these two issues stand out in influencing structure. 2. Strategic Factors:
Strategic factors are those that help to secure the future of an organization. It is known that future is uncertain. Therefore, an organization that does not adapt its structure to meet environmental change and to achieve new strategic goals certainly grows inefficient. 3. Industry Factors:
Industry is a group of firms offering products or services that are close substitutes for each other. Industry factors include suppliers, customers, competitors, new entrants, and substitute products. These factors also influence structure of an organization. 4. Size of the Firm:
Generally a new company has very few members. Its responsibilities and relationships remain flexible. As members grow, the structure becomes more formalized. If structural adjustments are not made, chaos follows.
18 | P a g e
5. Technology:
Modern age is the age of technology. Technology changes very fast. It substantially a ffects firm¶s operations. An entire industry may be transformed or revitalized due to use of new technology, let alone structure! 6. Complexity of the Task:
A task is a piece of work to be done, especially one done regularly. It may be easy or complex or in between the two. More complex the task requires more need for supervisory control. Hence, a complex task influences how the structure is implemented. Although these factors influence the structure, the influence of culture on structure is the vital one. It is longer lasting too.
Relationship between Culture and Structure Although culture and structure are completely separate, we cannot think of their sole independence. Because member¶s cultural values modify the choice of culture and how it is implemented. To prove that there is relationship between culture and structure, we can take a structure and try to show how it is related to culture. The matrix structure gives a vivid example of how culture affects the design and implementation of a structure. Matrix structure is one that simultaneously attains the benefits of functional and divisional structure. It institutes overlaps among functional and divisional forms. It gives functional, product and geographic groups a common focus. It has dual reporting relationships than a single line of command. It is the chosen structure of many project-based organizations where tasks are non-routine and relationships and responsibilities have to be continually changed to meet the needs of the new project. Members of a matrix structure have to cooperate and share information and other resources in a relationship of trust. This means it works best in cultures with low power distances and low needs to avoid uncertainties. In other cultural conditions, the matrix structure might
19 | P a g e
have different effects. When members have a high need to avoid uncertainty, they are uncomfortable in dual reporting situations. In high power distance cultures, employees prefer hierarchical line of control and communication and are reluctant t o trust peers. Form the above discussion; we can safely say that the relationship between culture and structure is inevitable. We cannot ponder over one singly leaving the other in real life situation.
Bureaucracy Definition
Any goal-oriented organization that consists of thousands of individuals would require the carefully controlled regulation of its activities. To fulfill this requirement, the German sociologist Max Weber (1864-1920) has developed a theory of bureaucratic management, simply called Bureaucracy. Basically, bureaucracy is a system of managing organizations by the officers instead of individual norms and values. It involves an organization with a legalized formal and hierarchical structure. It also involves the structural process within the organizations. Here a strictly defined hierarchy governed by clearly defined regulations and lines of authority is in operations. All activities and objectives are clearly thought out and divisions of labor are explicitly spelled out. Technical competence of members is emphasized and performance evaluations are made entirely one the basis of merit. Features of Bureaucracy
An organization is a group of people organized in a systematic manner to achieve a desired end. It is a role relationship among people with a common goal. There are different types of organizations. Each type is distinguished from the other one because of their features. The features of bureaucracy are described as below.
20 | P a g e
1. Hierarchy of Authority:
Hierarchy of authority refers to the line of authority in an organization. It must be strictly defined in the bureaucratic organization. 2. Division of Work:
Division of work is the breakdown of a complex task into components so that individuals are responsible for a limited set of activities instead of the task as a whole. In bureaucracy, it is explicitly spelled out. 3. Framework of Rules:
Rules are standing plans that detail specific actions in a given situation. In bureaucratic organization, the work and the people are regulated by rules and procedures to achieve uniform behavior, control and disciplinary system. 4. Role Structure:
In this system, every office or position has specific and well defined functions, responsibilities and a uthorities. 5. Impersonality:
This organization is run by codes, not by the personal whims or preferences of the office holders. Features tell about the important part of something. And the bureaucratic features t ell about the important parts of the bureaucracy. Principles of Bureaucracy `Principles are tested guidelines for decision making. They tell about how an organization
works. Since bureaucracy involves an organization, it has got some principles of its own. Those principles are described as below. 1. Professionalism:
Since work is a career, there must be a process of professionalism into the bureaucracy.
21 | P a g e
2. Organization of Work:
The organization of work shall be clearly defined by the hierarchy of offices. 3. Job Specification:
There must be a clearly defined sphere of competence of each office. 4. Technical Competence:
Technical qualification shall be the basis of selecting manpower for every office. 5. Discipline and Control:
Office holders must be subject to strict and systematic discipline and control. 6. Record keeping:
Every action either small or big shall be recorded clearly at concerned offices by concerned officers. 7. Rewards:
Rewards structure must be set on the basis of the hierarchy of positions. It has been seen that all in all forms of bureaucratic organizations have principles. But principles may vary from one bureaucratic organization to another one. Factors Affecting Bureaucracy
The model of bureaucratic rules cannot be applied equally in all companies. Because these rule are set taking into considerations of some essential factors. The followings are the factors influencing bureaucracy. 1. Industry:
An industry involves similar firms but different needs. The needs of firms in an industry differ, so does the bureaucracy. 2. Size:
The size of a particular firm also affects bureaucracy because a small firm may have less need for regulation than a large firm.
22 | P a g e
3. Individual Power:
The power of an individual determines the applicability of rules over him/her. If he/she holds much power, he/she may exploit the rules applicable and thus, affect the bureaucracy. 4. Organizational Culture:
Organization culture may also work as a factor affecting bureaucracy because informal norms may be more powerful than formal rules. 5. Exceptional Events:
Special events such as political turmoil, civil war, national emergency can also affect the bureaucracy. 6. National Culture:
The dimensions of national culture such as power distance, uncertainty avoidance largely affect the bureaucracy of that particular nation. All these factors directly or indirectly influence the forms of bureaucracy an organization may apply or not. Model of Bureaucratic Rules
Model of bureaucratic rules means what rules determine throughout the bureaucracy. It is well accepted that all organizations beyond the very small ones have needs for bureaucratic rules. These rules are needed to determine the followings. 1. Entry:
Rules determine the entry qualifications to the organization. Typical entry qualifications are age, educational achievements a nd professional expertise. 2. Rank:
Rules determine relationships with superiors, subordinates and peers. If rank needs to be changed, proper bureaucratic procedures must be followed.
23 | P a g e
3. Job Specifications:
The member is expected to perform specific duties and not to meddle in the duties of others. If jobs are to be changed, bureaucratic procedures must be followed. 4. Performance Specifications:
There are rules and procedures for doing the jobs. Behavior breaking these rules may be punished. 5. Remuneration:
Pay and allowances are paid for satisfactory service depending on rank, job specification and length of service. Bonus may be given for good performance. 6. Punishment:
Rules make clear what behavior can be punished and what punishments can be imposed. 7. Promotion:
Rules determine the criteria for promotion. Typical promotion criteria include length of service, good performance and qualifications. 8. Timetable:
Rules set the length of the working day and week, opportunities for breaks, flextime, vacations etc. 9. Exit:
Rules determine how staffs are made redundant and how they are compensated. Exit can be forced for certain offences. Model of bureaucratic rules are applicable to all members whatever their identity such as social status, family membership etc. outside the organization.
24 | P a g e
Types of Bureaucracy on th e Basis of Cultural Dimensions The culture is the vital factor that influences how the bureaucracy will be implemented. Based on power distance and uncertainty avoidance dimensions, Hofstede distinguishes four types of bureaucracy. The four bureaucratic types are described precisely below. Marketplace Bureaucracy:
The Marketplace Bureaucracy signifies organization where needs to avoid uncertainty and power distances are low. Members depend more upon personal than bureaucratic relationships to achieve results. They may feel free to bypass the hierarchy and cross departmental boundaries. Job rotation and matrix structure are commonly implemented. United Kingdom, Scandinavian countries and Ireland etc. practices this type of bureaucracy. Full Bureaucracy:
The Full Bureaucracy is just opposite to the Marketplace Bureaucracy. It typifies organizations where needs to avoid uncertainty and power distances are high. Members rely more on bureaucratic than personal relationships to achieve results. They strictly follow the hierarchy and maintain departmental boundaries. Job enlargement and job enrichment as well as functional structure and departmental structure are commonly implemented. France, Belgium and Portugal etc. follow this type of bureaucracy. 1. Personnel Bureaucracy:
The Personnel Bureaucracy thrives where power distances are high and needs to avoid uncertainty are low. All things are built around a strong leader who controls through direct and close supervision and authority. Ranks are tightly differentiated and opportunities for promotion are restricted. This type of bureaucracy is used in Hong Kong, Indonesia and India etc. 2. Workflow Bureaucracy:
The Workflow Bureaucracy flourishes where power distances are low and needs to avoid uncertainty avoidance are high. All things are built around professional bureaucrats who
25 | P a g e
occupy senior posts in the operation core. Emphasis is given upon standardizing operating procedures. This type of bureaucracy is applied in Germany, Israel and Costa Rica etc. It is to be noted that all these four types of bureaucracy can be used in a single country alone. Other possibilities may not also be ignored.
Critical Evaluation of Bureaucracy Bureaucracy is commonly found in any large organization. It is designed to make behavior predictable and to reduce uncertainties and inefficiencies. But unfortunately in the course of time it has got some drawbacks too. Here is given a critical review of bureaucracy.
Positive Qualities of Bureaucracy 1. Reducing Favoritism:
Bureaucracy seeks to bring about objectivity to employee selection by means of qualifications and the use of performance-criteria for promotion. 2. Nurturing Employee Commitment:
Employees working in bureaucracies have high job security. This nurture more loyalty and commitment to the organization. 3. Reducing Ambiguity:
While rules and regulations can be restrictive, they perform the function of clarifying what an employee can or cannot do in any situation. 4. Increasing Uniformity of Action:
Employees in a bureaucratic organization are behaving uniformly in a manner under the control of higher level management.
26 | P a g e
Negative Qualities of Bureaucracy 1. Goal Displacement:
In bureaucracy, goal displacement occurs when the achievement of subunit goals become more important than the organization¶s goals. 2. Inappropriate Application of Rules and Regulations:
This occurs when employees apply formalized rules and procedures blindly in all types of situations without being aware t hat conditions have changed. 3. Employee Alienation:
Members may have the ³cog-in-the-wheel´ feeling. High routine activities breed boredom and high job specialization makes job-holder feel irrelevant. 4. Concentration of Power:
Bureaucracies concentrate power in the hands of a few in the higher hierarchy and this does not appeal to people who perceive that values of democracy should prevail. 5. Non-member Frustration:
Following procedures can be a slow process which will frustrate clients or customers who require prompt and efficient service. It is seen that the most of negative qualities of bureaucracy can be avoided by developing members involved. Because bureaucracy is a system, and it is actually people governed by rules.
Global Structural Integration 1. Global Product Structure:
A global product division is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups. The manager who is in charge of a particular product has authority for that product line on a global basis. This manager also has internal functional support related to that product line. For instance, all marketing, production, and
27 | P a g e
financial activities associated with that product division are under the control of this manager. 2. Global Geographic / Area Structure:
A global area division is a structural arrangement where global operations are organized based on a geographic rather than a product orientation. This approach often requires a major change in company strategy, because now international operations are put on the same level as domestic operations. In other words, European and Asian operations are just as important to the company as North American operations. For example, when British Petroleum purchased Standard Oil of Ohio, the firm revised its overall structure and adopted a global area division structure. Under t his arrangement, Global division managers are responsible for all business operation in their designated business area. 3. Global Functional Structure:
A global functional division organizes worldwide operations based on primarily on function and secondarily on product. This approach is not widely used other than extractive companies, such as oil and mining firms. 4. Mixed Organizational Structure:
Some companies find neither a global product, an area, or a functional arrangement is satisfactory. They opt for a mixed organization structure, which combines all three into an MNC that supplement its primary structure with a secondary one and, perhaps, a tertiary one. For example, uses a global area approach, committee of functional managers may provide assistance and support to the various geographic divisions. Conversely, if the firm uses a global functional approach, product committee may be responsible for coordinating transactions that cut across functional lines. In other cases, the organization will opt for a matrix structure that results in managers¶ having two or more bosses.
Organizing for Globalization: No matter what the stage of internationalization, a firm¶s structural choices always involve two opposing forces: the need for differentiation, focusing on and specializing in specific
28 | P a g e
markets and the need for integration, coordinating those same markets. The way the firm i s organized along a localization differentiation ± integration continuum determines how well strategies ±along a localization- globalization continuum ±are implemented. This is why the structural imperatives of various strategies such as globalization must understood to organize appropriate worldwide systems and connections. Organizing to a globalization strategy typically involves rationalization and the development of strategic alliances. To achieve a rationalization, managers choose the manufacturing location for each product based on where the best combination of cost, quality, and technology can be attained.
Emergent Structural Forms: 1. Interorganizational Networks:
Whether the ever-expanding transnational linkages of an MNC consist of different companies, subsidiaries, suppliers, or individuals, they result in relational networks. These networks may adopt very different structure of their own because they operate indifferent local context within their own national environments. By regarding the MNC¶s overall structure as a network of interconnected relation, we can more realistically consider its organizational design imperatives at both global and local levels. 2. The Global E- Corporation Network Structure:
The organizational structure for global e-business, in particular for physical products, typically involves a network of virtual e-exchanges and µµbricks and mortar¶¶ services, whether those are in house or outsourced. This Structure of functions and alliances makes up a combination of electronic and physical stages of the supply chain network.
The Transnational Corporation Network Structure: A multinational structural is an arrangement that combines elements of function, products, and geographic design, while relying on a network arrangement to link worldwide subsidiaries.
29 | P a g e
Choice of Organizational Form: Two major variables in choosing the structure and design of an organization are the opportunities and need for 1) globalization and 2) localization.
Control System for Global Operations 1. Monitoring Systems:
Monitoring Systems is the design and application of coordinating and reporting systems for foreign subsidiaries and activities can take any form that management wishes. MNCs usually employ a variety of direct and indirect coordinating and control mechanism suitable for their organization structure. 2. Direct Coordinating Mechanisms:
Direct coordination mechanisms are mechanisms that provide the basis for the overall guidance and management of foreign operations including the design of appropriate structures and the use of effective staffing practices. Such decisions proactively set the stage for operations to meet goals, rather than troubleshooting deviations or problems after they have occurred. 3. Indirect Coordinating Mechanisms:
Indirect coordination mechanisms typically include sales quotas, budgets, and other financial tools, as well as feedback reports, which give information about the sales and financial performance of the subsidiary for the last quarter or year. Domestic companies invariably rely on budgets and financial statements analyses, but for subsidiaries, financial statement and financial performance evaluations are complicated by financial variables in MNC reports, such as exchange rates inflation levels, transfer prices, and accounting standard.
30 | P a g e
Possible Questions 1. Define broadly the meaning of structure and culture. 2. What is the importance of organizational structure? 3. What are the conditions of good structure? 4. What are the causes of poor structure? 5. a) Describe the functions of structure. b) Explain the influences affecting structure. 6. a) Define bureaucracy. b) What are the essential features and principles of bureaucracy? c) Do a critical evaluation over bureaucracy. 7. What do mean by global structural integration? Discuss different types of global structures 8. What are the different emergent structural forms? Explain with example. 9. What is a control system for global operations? How many ways it can be done explain?
31 | P a g e
References Damen, L. (1987). Culture Learning: The Fifth Dimension on the Language Classroom. Reading, MA: Addison-Wesley. Daniel, John, D., Radebaugh, Lee, H., & Sullivan, Daniel, P. (Eds). (2010). International Business: Environment and Operations . Pearson Education International Griffin, Ricky, W. (Eds). (2008). Management . Boston New Yoek: Houghton Mifflin Company. Helem Deresky, (2006) International Management Managing Across Borders and Cultures, Pearson. Kroeber, A.L., & Kluckhohn, C. (1952) Culture: A critical review of concepts and definitions. Harvard University Peabody Museum of American Archeology and Ethnology Papers 47 Mead, Richard. (Eds). (1998). International Management: Cross-Cultural Dimensions. Great Britain: Blackwell Business Richard M. Hodgetts, Fred Luthans, and Jonathan P. Doh, (2006), International Management-Culture, Strategy, and Behavior , Tata McGraw Hill Edition. Stoner, James, A.F., Freeman, R., Edward & Gilbert.JR., Daniel, A. (Eds). (2004). Management . Engewood Clifffs: Prentice-Hall Websites: J ob N .
Dig: Organizational Structure Can Be Underlying Cause of Workplace Issues
Dean Meyer and Associates: Organizational Structure: Frequently Asked Questions
Wiriadinata, Michael. (2011). Bureaucracy: Advantages and Disadvantage. Available at http:// mamikikeyu.wordpress.com www.practical-management.com/org
32 | P a g e
Multiple Choice Questions
1. Many departments, divisions and layers are between highest level and lowest level of an organization is called -----------a) Distribution of authority
b) Departmentalization
c) Organization Height
d) Chain of Command 2. What are basis of the divisional structure of organization? a) Product divisions
b) Geographic divisions
c) Market division
d) a+b
3. Who developed the Line Organization Structure at first? a) U. S army
b) Egypt army
c) Roman army
d) Spain army
4. What are the elements of organizational structure? a) Geography
b) Product Evolution c) Number of Employees
d) All of them
5. When bureaucracy is badly used, the result is another system. What is that system? a) Plutocracy
b) Theocracy
c) Autocracy
d) Oligarchy
6. What makes a bureaucratic organization impersonal? a) Rules
b) Social status
c) Family membership
d) Benevolence
7. Which is not the disadvantage of bureaucracy? a) Concentration of Power
b) Goal Displacement
c) Employee Commitment
d) Employee Alienation
8. In which type of bureaucracy vertical communication is not strictly the norm? a) Full Bureaucracy
b) Marketplace Bureaucracy
c) Personnel Bureaucracy
d) Workflow Bureaucracy
33 | P a g e
9. Max Weber is called the father of bureaucracy. Which country he belongs to? a) Germany
b) Belgium
c) Austria
d) France
10. Bureaucracy is needed to get which of the following needs fulfilled? a) Rationalizing roles
b) Rationalizing relationships
c) Achieving efficiency
d) All of these
11. Which organizational structure, simply called structure, allows an employee to report to two superiors? a) Functional structure
b) Divisional structure
c) Matrix structure
d) Mixed structure
12. Which statement of the followings is not relevant? a) Structures are of various forms satisfying different needs. b) Structures may be superficially the same but i mplemented differently. c) Full bureaucracy is built around a strong leader. d) Structures may be formal or informal or both. 13. Divisional structure regulates roles and responsibilities of executives in terms of --a) Inputs
b) Outputs
c) a + b
d) None
14. Matrix structure institutes a dual hierarchy that is a sheer violation of which fundamental management principle? a) Unity of Command
b) Unity of Direction c) Discipline d) Esprit de corps
15. Which of the following is a global structure? a) Global product structure
b) Global functional structure
34 | P a g e
c) Global area structure
d) All of them
16. _ _ _ _ _ _ _ is a global functional division organizes worldwide operations based on primarily on function and secondarily on product. a) Global product structure
b) Global functional structure
c) Global area structure
d) None
17. _ _ _ _ _ _ _ is a global area division is a structural arrangement where global operations are organized based on a geographic rather than a product orientation a) Global product structure
b) Global functional structure
c) Global area structure
d) None
18. _ _ _ _ _ _ is a structure that is a combination of a global product, area, or functional arrangement. a) Vertical structure
b) Transnational network structure
c) Mixed organization structure
d) None
19. _ _ _ _ _ is a multinational structural arrangement that combines elements of function, products, and geographic design, while relying on a network arrangement to link worldwide subsidiaries. a) Interorganizational structure
b) Transnational network structure
c) Interorganizational division
d) None
20. Which of the following is not a control system for global operations? a) Monitoring systems
b) Indirect coordinating mechanism
c) Direct coordinating mechanism
d) None
35 | P a g e
