SUMMARY – ORGANIZATIONAL DESIGN
Organizations in action part one
There are personal and impersonal forces which generate and guide behavior of organizations
Organizations do some of basic things they do because they must. They are expected to produce results, their
actions are expected to be reasonable or rational.
Rationality brings limits within which organizational action must take place
Uncertainties pose major challenges to rationality
Technologies and environments are basic sources of uncertainty
CHAPTER 1: STRATEGIES FOR STUDYING ORGANIZATIONS
Individual understanding of organization does not generate public body of knowledge
Rational models: closed-system strategy planning or controlling
Natural-system models: open-system strategy
Closed system strategy
- Search for certainty
System should be closed and outside forces should be predictable
Strong human tendencies to reduce various forms of knowledge to closed-system variety, to rid them of
all ultimate uncertainty
Three schools in caricature:
- Scientific management
- Administrative management
- Bureaucracy
Rational-model approach uses closed-system strategy
Schools are primarily students of performance or efficiency
Rational model results in everything being functional – making a positive, indeed optimum, contribution to
overall result.
All resources are appropriate resources and their allocation fits a master plan.
All action is appropriate action, and its outcomes are predictable
Literature focuses on concepts of planning or controlling
Open system strategy
- Expectation of uncertainty
System contains more variables than we can comprehend at one time or some variables are subject to
influences we cannot control or predict
System is determinate by nature but its our incomplete understanding which forces us to expect
surprise or intrusion of uncertainty.
Organization is set of interdependent parts which together make up a whole because each contributes
something and receives something from the whole, which in turn is interdependent with some larger
environment.
Survival of system is taken to be the goal, and parts and their relationships presumably are determined through
evolutionary processes.
Dysfunction is there, but assumed that offending part will adjust to produce net positive contribution
Self-stabilization: spontaneously or naturally governs necessary relationships among parts and activities and
thereby keeps system viable in face of disturbances from environment.
Choice or compromise?
Literature falls in one and ignores the other or denies relevance of the other
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,Logics associate with each appear to be incompatible: one avoids uncertainty to achieve determinateness, while
other assumes uncertainty and indeterminateness
Yet phenomena treated by each approach, as distinct form explanations of each, cannot be denied
Planned action, not random behavior, supports our daily lives
Rational model of organizations directs our attention to important phenomena – to important ‘truth’ in sense
that complex organizations viewed in large exhibit some patterns and results to which rational model attends,
but which natural-system model tends to ignore.
Equally evident that phenomena of natural-system approach exist in complex organizations
A newer tradition
Organizations must develop processes for searching, learning and deciding as well. It must make decisions in
bounded rationality and this requires replacement of maximizing by satisficing of decision making.
The cutting edge of uncertainty: supporters of each extreme have different purposes in mind, with open-system
strategists attempting to understand organizations per se, and closed-system strategists interested in
organizations mainly as vehicles for rational achievements. Simultaneously thinking about rationality and
indeterminateness is hard. The concepts are incompatible so combining is difficult. One alternative is the
closed-system approach of ignoring uncertainty to see rationality; another is to ignore rational action in order
to see the spontaneous processes.
The location of the problems
Phenomena associated with open and closed system strategies are not randomly distributed but tend to be
specialized by location. Parson suggests three levels of responsibility and control: technical (effective
performance of the technical function), managerial (control the technical suborganization) and institutional (if
you have a technical and managerial part, you are also part of a wider social system).
We suggest that the logical model for achieving complete technical rationality uses a closed system of logic.
Uncertainty will be the greatest on the institutional level. At this extreme the closed system approach is clearly
inappropriate. So, at the technical level the closed system approach, and at the institutional level the open
system approach. The function of the managerial level is to mediate.
CHAPTER 2: RATIONALITY IN ORGANIZATIONS
Instrumental action is rooted on the one hand in desired outcomes and on the other hand in beliefs about
cause/effect relationships. To the extent that the activities dictated by man’s beliefs are judged to produce
desired outcomes, we can speak of technology, or technical rationality. Technical rationality can be evaluated
by two criteria: instrumental and economic. Economic is whether the results are obtained with the least
necessary expenditure of resources. For example, compare in costs.
In literature most attention to the economic dimension of technology but hides the instrumental question (do
you produce the desired outcome).
Variations in technologies
Technology is important in understanding actions of complex organisations. The variety of desired outcomes
for which specific technologies are available seems infinite. We identify three typologies which are widespread
in modern society and sufficiently different to illustrate the propositions we wish to develop.
The long-linked technology
It involves serial interdependence in the sense that act Z can be performed only after successful completion of
act Y, which in turn rests on act X and so on. For example the mass production line. Instrumental perfection
when it produces a single kind of standard product, repetitively and at a constant rate. Experience can lead to
modification and elimination of imperfections.
The mediating technology
The primary function is to link clients or customers who are or wish to be interdependent; for example the
commercial bank link depositors and borrowers. It is complex because it requires operating in standardized
ways and extensively. Some parts are variable, and some parts need to be standardized.
The intensive technology
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,A variety of techniques is drawn upon in order to achieve a change in some specific object; but the selection,
combination and order of application are determined by feedback from the object itself. For example a hospital;
you need feedback from your patient. This technology is a custom technology. If it is successful rests in part on
the availability of all capacities potentially needed, but equally on the appropriate custom combination of
selected capacities as required by the individual case or project.
Boundaries of technical rationality
It is an abstraction. It is instrumentally perfect when it becomes a closed-system of logic and contains all
relevant variables. All other influences, or exogenous variables, are excluded.
Proposition 2.1: Under norms of rationality, organizations seek to seal off their core technologies from
environmental influences.
Organizational rationality
The technical core is always an incomplete representation of what the organization must do to accomplish
desired results. So technical rationality is necessary but never alone sufficient to provide organizational
rationality. Organizational rationality involves three major components:
1. Input activities
2. Technological activities
3. Output activities
These activities are interdependent but also have environmental elements so never conforms closed-system
logic. Since technological activities are interdependent and embedded in activities which are open to
environment, a closed-system approach can never be attained for the technological component.
Proposition 2.2: Under norms of rationality, organizations seek to buffer environmental influences by
surrounding their technical cores with input and output components.
Buffering on the input side: stockpiling of materials or preventive maintenance.
Buffering on the output: warehouse inventories.
Buffering brings advantages but also costs. Thus a fully buffered technological core would enjoy the conditions
for maximum technical rationality, but organizational rationality may call for compromises between conditions
for maximum technical efficiency and the energy required for buffering operations.
Proposition 2.3: Under norms of rationality, organizations seek to smooth out input and output transactions.
It involves attempts to reduce fluctuations in the environment, for example charge premiums to those who
contribute to ‘’peaking’’. Action by organization may reduce fluctuations in demand, but complete smoothing of
demand is seldom possible.
Proposition 2.4: Under norms of rationality, organizations seek to anticipate and adapt to environmental
changes which cannot be buffered or levelled.
Environmental fluctuations are exogenous variables within the logic of technical rationality. They can be
treated as constraints on the technical core within which a closed-system of logic can be employed. For
example forecasting; environmental fluctuations are often patterned.
Buffering, levelling and adaptation to anticipated fluctuations are devices for reducing the influence of the
environment on the technical cores of organizations. Often they are effective, but not in all occasions.
Proposition 2.5: When buffering, levelling and forecasting do no protect their technical cores from
environmental fluctuations, organizations under norms of rationality resort to rationing.
Rationing is most seen in organizations pointed toward emergencies such as hospitals. Rationing is an unhappy
solution, for its use signifies that the technology is not operating at its maximum.
The logic of organizational rationality
Core technologies rest on closed-system logic and links it with the larger environment through input and
output activities. Organizational rationality calls for open-system logic for when organizations are opened to
environmental influences. Some of the factors become contingencies, which may or may not vary, but are no
subject to control by the organization. So, organizational rationality is a result of 1) constraints which the
organization must face, 2) contingencies which the organization must meet and 3) variables which the
organization can control.
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, CHAPTER 3: DOMAINS OF ORGANIZED ACTION
Organizations vary in the extent to which they include or exclude certain essential activities. All organizations
must establish what their ‘’domain’’ is.
Domain, dependence and environment
The organization’s domain identifies the points at which the organization is dependent on inputs from the
environment. If the organization’s need is unique or nearly so, we can say that demand for input is
concentrated; if many others have similar needs, we can say that the demand is dispersed. Similar distinctions
can be made on the output side of the organization.
Task environments
To simplify our analysis of the environment we denote those parts of the environment which are ‘’relevant or
potentially relevant to goal setting and goal attainment: task environment.
It can be composed in four sectors: 1) customers 2) suppliers of materials, labor, capital, equipment and work
space 3) competitors for both markets and resources and 4) regulatory groups, including governmental
agencies, unions and interfirm associations.
Task environments and domain consensus
The relationship between organizations and its task environment is essentially one of exchange. The elements
exchanged fall into three main categories: 1) referral of cases, clients or patients 2) giving or receiving of labor
services encompassing the use of volunteers, lent personnel and offering of instruction to personnel and other
organizations and 3) sending or receiving of resources other than labor services, including funds, equipment,
case and technical information. Exchange agreements rest upon prior consensus regarding domain. Domain
consensus defines a set of expectations both for members of organization and for other with whom they
interact. It provides a guide for the ordering of action in certain directions.
Management of interdependence
Task environments of complex organizations turn out to be multifaceted or pluralistic. This pluralism is
significant because it means that an organization must exchange with not one but several elements, each of
which is itself involved in a network of interdependence, with its own domain and task environment. Task
environments pose contingencies for organizations but also impose constraints. Since the dependence of an
organization on its task environment introduces not only constraints but also contingencies, we would expect
organizations subject to norms of rationality to attempt to manage dependency.
Power and dependence
An organization is dependent on some element of its task environment 1) in proportion to the organization’s
need for resources or performances which that element can provide and 2) in inverse proportion to the ability
of other elements to provide the same resource or performance.
Dependence can be seen as observe of power. An organization has power, relative to an element of its task
environment, to the extent that the organization has capacity to satisfy needs of that element and to the extent
that the organization monopolizes that capacity. This approach frees us from the necessity of viewing power as
some generalized attribute and leads us to consider power as resulting from a set of relationships. The power-
dependence concepts also provides escape from the ‘’zero-sum’’ concept of power, which assumes that in a
system composed of A and B, the power of A is power at the expense of B. Both can become powerful. It is this
possibility on which coalitions rest.
The competitive strategy
Since dependence introduces constraints or contingencies, the problem for the organization is to avoid
becoming subservient to elements on the task environment.
Proposition 3.1: Under norms of rationality, organizations seek to minimize the power of task environment
elements over them by maintaining alternatives.
Under favourable conditions the organization would practice exchanging with each of its several possible
sources, thus establishing with each a precedent for support if conditions become less favourable. In reality,
however, conditions for perfect competition are infrequent and highly unstable over time. Competition in an
imperfect market introduces considerable contingency and thereby raise the possibility of losing out on any
particular negotiation to such ‘’third parties’’. Each time the organization needs a kind of support, it offers
something in exchange.
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