E-Book Overview
Book is a synthesis of the empirical literature currently available on organizational structuring. A framework is developed enabling students to handle organizational problems. For use as a supplement in upper level Organizational Design courses in Management.
E-Book Content
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tem. Below we look at each of these aspects in turn. Commands and instructions are fed down the chain of authority, emanating from the strategic apex or a middle-line position, and elaborated as they flow downward. In the formal planning process, for example, gen eral "strategic" plans are established at the strategic apex; successively,
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The Organization as a System of flows
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these are elaborated into programs, capital and operating budgets, and operating plans (e.g., marketing and manpower plans), finally reaching the operating core as sets of detailed work instructions. In effect, in the regu lated system the decisions made at the strategic apex set off ever-widening waves of implementational decisions as they flow down the hierarchy. The upward control system exists as a "management information system," or MIS, that collects and codes data on performance, starting in the operating core. As this information passes each level in the hierarchy, it is aggregated until, finally, it reaches the strategic apex as a broad summary of overall organizational performance. Figure 3-6 shows some aspects of the regulated control flows in a manufacturing firm-the downward ampli fied planning system and the upward aggregated MIS in finance and pro duction. The regulated control system of the organization also includes a speci fication of the kinds of decisions that can be made at each level of the hier archy. This represents, in effect, the vertical division of decision-making labor. For example, the spending authority of managers may be specified as $1000 for first-line supervisors, $10,000 for district managers, and so on up to the chief executive officer, who may be able to authorize expenditures of up to $100,000 without having to seek the approval of the board of direc tors. Figure 3-7 shows a more elaborate example of a regulated decision system. When we combine this notion of vertical division of decision-making labor with those of the regulated flows of information aggregated up and commands elaborated down the hierarchy, we find that managers at dif ferent levels can interrupt these flows to make decisions appropriate to their own level. This is what the circular arrows in the middle line of Figure 3-2 are meant to describe. Commands coming down the hierarchy may be stopped at a given management level and handled there, as, for example, when a president receives a complaint by a customer and sends it down to the regional sales manager for action. And information on "exceptions" decision situations that cannot be handled at a given level-are passed up the hierarchy until they reach a manager with the necessary formal author ity to handle them. T. T. Paterson (1969) provides us with a number of interesting illustrations of this regulated decision system, the most graphic being in the British income tax office. Paterson speaks from experience: Faced by an income tax problem because I have an income from writing and broadcasting and the like in addition to a salary, I decide to take my problem to the local income tax office. A young clerk sees me come in and ... comes towards the desk to receive me. I tell her I have problems and I bring out my income tax return form. She immediately answers by saying "Well, you fill this one in here, and flll that one in there" ... This cannot solve my problem and she does not know how to solve it either, whereupon she lifts up the flap
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