CRICOS Provider 00115M Contact THANK YOU INNOVATIVE RESPONSIBLE ENGAGED MGT1FOM TOPIC 3 Managing Complexity BureaucracyLearning Objectives • At the conclusion of this topic, student should be able to: – Examine the administrative principles which have guided the management of organisations; – Describe the characteristics of Weber’s ‘ideal’ bureaucracy and explain the historical conditions which gave rise to bureaucracy; – Critically analyse the advantages and disadvantages of the bureaucratic form; – Provide relevant illustrations of modern applications of such general administrative theories.Administrative theory • Concerned with the rational allocation of resources to achieve goals (ie: the decision-making). • More specifically: – concerned with how to ensure organisational effectiveness; – focus on organisation as a system for achieving collective goals.Administrative theory • The industrial revolution created challenges for the efficient administration of organisations, in the same way as it created challenges for production efficiency; • Two main contributions to this area: – Henri Fayol’s ‘Principles of Management’; and – Max Weber writings on Bureaucracy.Henri Fayol • Fayol was concerned ‘universal truths’ about management that could be taught to make people ‘better managers’; • The practice of management was distinct from other organisational functions, such as accounting, production etc; • Fayol, writing from his personal experiences, identified 14 principles about the practice of management.The principles of management • Fayol’s principles covered how: – work should be organised; – management can induce certain behaviours in employees; – management should treat workers; – communication should be conducted within the organisation; – The spirit or culture that management should try to foster within the organisation.The principles of management • Division of work • Discipline • Unity of direction • Remuneration • Scalar chain of command • Equity • Initiative • Authority • Unity of command • Subordination of individual interest to the general interest • Centralised decision-making • Order • Stability of tenure of personnel • Esprit de corpsWeber’s theory of bureaucracy WEBER, Max (1864- 1920), German economist and social historian. One of the founders of modern sociology. Best known for his theory of how capitalism originated.Conditions giving rise to bureaucracy • Historical conditions -- the trend for lessbureaucratised organisations to be replaced by more-bureaucratised organisations • Structural conditions -- increasing bureaucratisation within organisationsHistorical conditions • Money economy • Mass education • Scope of tasks and organisational size • Large-scale capitalismStructural conditions • Managerial succession -- the replacement of key personnel (eg as family businesses become public) • Replacement of internal subcontracting with direct control to achieve standardisation • The quest for power in organisations and the need for its legitimisation --> rules and regulationsPreliminary concepts • Weber was concerned with the how these large, administrative organisations should be structured; • Weber suggested that these organisations must be characterised by a ‘legitimate authority’; • Weber, writing in the late 1800’s, wrote about his vision for the ideal form for these organisations (ie: the ‘ideal type’).The ideal type • It is a hypothetical construction; • It emphasises some characteristic features, and disregards others; • It is a basis for assessing how ‘bureaucratic’ an organisation is.Legitimate authority • A form of domination (ie: the probability that commands will be obeyed) • Domination may be: – Sanctioned by law or custom (legitimate) – Based on illegal use of force or coercion (illegitimate) • Legitimate authority: the right to have specific commands obeyedThree forms of authority • Traditional • Charismatic • Rational-legalTraditional authority Traditional authority is based on the belief in the sanctity of tradition. It is not codified in impersonal rules but is hereditary, or invested in a particular office by a higher power. Religions and families often emphasise traditional authority.Charismatic Charismatic authority rests on the appeal of leaders who claim allegiance because of the force of their extraordinary personalitiesRational-legal Authority based on formally defined, accepted systems of rules and procedures. The power of those in authority depends on their acceptance of due legal process and qualificationThe concept of bureaucracy – A bureaucracy is a type of organisation established with a specific purpose, and designed according to rational principles in order to attain the organisational goals efficiently; – It makes possible large-scale planning and coordination. Bureaucracies dominate both the modern State and the modern economy; – The use of the bureaucratic form of organisation to coordinate the work of large numbers of people has become the dominant feature of modern societies.Main characteristics • Specialised division of labour • Hierarchy • Formal rules of conduct • Impersonality • Promotion based on achievement or seniority • EfficiencySpecialised division of labour • Positions are filled by specialists • Employees are responsible for the effective performance of their duties • Optimises the use of expertise, talents and experienceHierarchy • Positions are organised hierarchically -- lower positions are under the control and supervision of a higher one • Employees are responsible to supervisors for the work of their subordinates , as well as their own work • Enhances the coordination and control of workFormal rules of conduct • Methods and rules are devised to support decision-making and operations • Explicit rules and regulations define the responsibilities of employees, and the relationships between them • Does not imply duties are simple or routine • Assures uniformity of task performance regardless of who does it. Members of the organisation behave in predictable ways.Impersonality • Employees carry out their tasks in a spirit of detachment. • They avoid allowing their feelings to influence their work • Impersonality fosters equitable treatment of clients and other employeesPromotion based on achievement or seniority • People are appointed, and promoted, into their roles because they have the ability to do the job (expertise and seniority). • Evidence of this ability provides protection against arbitrary dismissal • Encourages loyalty to the organisation and provides incentives to develop organisation-specific skillsEfficiency • Bureaucratic forms organise work in a way that tends to be: – Precise; – Fast; – Unambiguous; – Based on previous organisational experience; – Controlled and coordinated; – Performed smoothly, without interpersonal friction; and – Without conflicts of interest.Negative consequences • Bureaucracies become mysterious to outsiders because they monopolise information • They are difficult to change, and develop internal processes that make them hard to control. • They tend to become immune to public opinion • Administrative systems may become ends in themselves • They are vulnerable to control by an elite (‘oligopoly’)The multi-divisional form • Was a response to increased organisational complexity due to growth strategies • Growth strategies resulted from changes in external conditions (population growth, economic conditions, technological change) • Changes required a decentralised structureModern applications of bureaucracy • Bureaucracies are a dominant feature of modern society; • As organisations began to ‘grow’, ideas about bureaucracy also grew to encompass new ideas about the best form of organisation; • Enter: the multi-divisional form.What is the multi-divisional form? • “…a general office plans, coordinates, and appraises the work of a number of operating divisions and allocates to them the necessary personnel, facilities, funds, and other resources.” (Chandler 1962: 2)Post WWII • The multi-divisional form was widely accepted and adopted • By 1960 the accepted management solution to complexity • Continues to grow – As populations expand – As technology is more complex – As markets expand – Due to the impact of globalisation • Retains the features of a bureaucracy.Conclusion • ‘Bureaucracy’ refers to a general type -- there are many sub-types and variations • Bureaucracies dominate modern societies • This domination is increasing: – Less-bureaucratised organisations are replaced by more-bureaucratised organisations – Established organisation become more bureaucratic • The principles that produce its strengths also create unintended dysfunctionsCRICOS Provider 00115M Contact THANK YOU THANK YOU INNOVATIVE RESPONSIBLE ENGAGED