pt.1 Contingency Theory

book: Contingency Theory: different management systems for different problems

Burns and Stalker Stinchcombe

"The Management of Innovation" by Tom Burns and G. M. Stalker an example of

Contingency Theory

Contingency Theory: theoretical perspective that "emphasizes that design decisions depend-- are contingent-- on _______ ______" (Scott and Davis 2007: 103) Contingency theory falls under the _____ systems perspective, because "it explains organizational structure and practice on the basis of an organization's _____ adaptation to its circumstance" (Handel 2003: 39).

Contingency Theory: theoretical perspective that "emphasizes that design decisions depend-- are contingent-- on environmental conditions" (Scott and Davis 2007: 103) Contingency theory falls under the rational systems perspective, because "it explains organizational structure and practice on the basis of an organization's efficient adaptation to its circumstance" (Handel 2003: 39).

The Management of Innovation The book opens with the assertion that ___ ____ systems are appropriate for ____ market situations than for stable commercial and technical environments. • This implies that there is "__ ___ set of principles for 'good organization'" •And it is the job of ___ to select the __ systems for the market and technological situations.

The book opens with the assertion that different management systems are appropriate for unfamiliar market situations than for stable commercial and technical environments. • This implies that there is "no single set of principles for 'good organization'" (Burners and Stalker 45). • And it is the job of management to select the best systems for the market and technological situations.

Contingency Theory defined

A contingency theory is an organizational theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. A contingent leader effectively applies their own style of leadership to the right situation. Contingency (philosophy): In philosophy and logic, contingency is the status of propositions that are neither true under every possible valuation (i.e. tautologies) nor false under every possible valuation (i.e. contradictions).

Bureaucratic and Craft Administration: Bureaucratic Administration • _____planning of work by people other than the work crew (Administrators) • An established system for the delivery and processing of information and communications up and down the ______ ladder

Bureaucratic and Craft Administration: Bureaucratic Administration • Centralized planning of work by people other than the work crew (Administrators) • An established system for the delivery and processing of information and communications up and down the hierarchical ladder

Bureaucratic and Craft Administration: Craft Administration • _____planning of work, where competent workers make decisions about work tasks • A relative _____of entrenched communication systems designed to push information up and down an established ____structure

Bureaucratic and Craft Administration: Craft Administration • decentralized planning of work, where competent workers make decisions about work tasks • A relative absence of entrenched communication systems designed to push information up and down an established hierarchical structure

Bureaucratic and Craft Administration: ___ argued that bureaucratic administration was the most _____way to organize. _____questions this, arguing that while bureaucratic administration might be ___in some situations, it is not necessarily always the most ____way to organize. • Both bureaucratic and craft administration are _____forms of organization. Economic instability makes _______administration a poor organizational choice.

Bureaucratic and Craft Administration: Weber argued that bureaucratic administration was the most rational way to organize. Stinchcombe questions this, arguing that while bureaucratic administration might be rational in some situations, it is not necessarily always the most rational way to organize. • Both bureaucratic and craft administration are rational forms of organization. Economic instability makes bureaucratic administration a poor organizational choice.

Conclusion: "We have endeavoured to stress the ____of each system to its own ____ set of ____. Equally, we desire to ____ the suggestion that either system is ____under all circumstances to the other." (51) •There is __ one best way.

Conclusion: "We have endeavoured to stress the appropriateness of each system to its own specific set of conditions. Equally, we desire to avoid the suggestion that either system is superior under all circumstances to the other." (51) •There is no one best way.

Conclusion: Stinchcombe revises Weber's conception of the ideal bureaucracy. • Stinchcombe argues that Weber regarded "rational administration as identical with bureaucratic administration" (183). • In contrast, Stinchcombe defines bureaucracy as a subtype of rational administration, and proposes that professionalization (i.e., craft production) is another type of rational production since it is sometimes a more economical type of administration (183). Stinchcombe argues that rational administration requires • Differentiation of the work role from home life • Organization of work statuses into some sort of career, in which future rights depend on current performance • Stable allocation of work to those identified as able and willing • Stable way of communicating the goals to be reached by subordinates and of seeing that these goals are accomplished Both the bureaucratic and craft forms of administration meet these requirements. Stinchcombe claims that we should reconsider the defining characteristics of bureaucracy and construct the ideal type bureaucracy as: • "The defining criterion would be stable, rule- ordered communications channels from and to continuously occupied statuses. This criterion implies: (1) development of files and employment of clerks, (2) hierarchical command-advice authority structures, and (3) career commitment to an organizational rather than a labor market or occupational status system" (185-186)

Conclusion: Stinchcombe revises Weber's conception of the ideal bureaucracy. • Stinchcombe argues that Weber regarded "rational administration as identical with bureaucratic administration" (183). • In contrast, Stinchcombe defines bureaucracy as a subtype of rational administration, and proposes that professionalization (i.e., craft production) is another type of rational production since it is sometimes a more economical type of administration (183). Stinchcombe argues that rational administration requires • Differentiation of the work role from home life • Organization of work statuses into some sort of career, in which future rights depend on current performance • Stable allocation of work to those identified as able and willing • Stable way of communicating the goals to be reached by subordinates and of seeing that these goals are accomplished Both the bureaucratic and craft forms of administration meet these requirements. Stinchcombe claims that we should reconsider the defining characteristics of bureaucracy and construct the ideal type bureaucracy as: • "The defining criterion would be stable, rule- ordered communications channels from and to continuously occupied statuses. This criterion implies: (1) development of files and employment of clerks, (2) hierarchical command-advice authority structures, and (3) career commitment to an organizational rather than a labor market or occupational status system" (185-186)

Contingency Theory: A Quick Summary • There is no one best way to ____ an ________. • ______ may not be the best way. ◦ H______, c_____ c_____, f______ • Everything is contingent on something ◦ ____ ◦ ______ ◦ _____

Contingency Theory: A Quick Summary • There is no one best way to structure an organization. • Bureaucracy may not be the best way. ◦ Hierarchical, centrally controlled, formalized • Everything is contingent on something ◦ Size ◦ Environment ◦ Technology

Contingency Theory: Early organizational scholars emphasized the _______ of _______ organizations (Weber) and the _____ ______ _____ that could increase efficiency (Taylor) Later scholars recognized that _____ ____ __ ________ appeared to be similarly successful, leading them to ask why? Contingency theory

Early organizational scholars emphasized the efficiency of bureaucratic organizations (Weber) and the different administrative styles that could increase efficiency (Taylor) Later scholars recognized that other forms of organization appeared to be similarly successful, leading them to ask why? Contingency theory is that branch of organizational theory interested in understanding the conditions that account for this variation in organizational structure.

Management Structure and Systems: Organization within a Stable Program • ????? Organization for a Constant or Predictable Rate of Novelty • ????? Organization and Innovations • ??????

Management Structure and Systems: Organization within a Stable Program • Organization had a clear hierarchy with each position having a fixed and clear description. Organization for a Constant or Predictable Rate of Novelty • The need for change brought with it a flattening of the organizational hierarchy. Organization and Innovations • Managers had to constantly navigate their social situation making it difficult for them to make claims to authority, information, and technical expertise.

Systems of Management: ___ and ___- identify two opposing management systems that are adapted to different technical and commercial markets. These two management systems are: • _______: appropriate for stable conditions • _____: appropriate for changing conditions

Systems of Management: Burns and Stalker identify two opposing management systems that are adapted to different technical and commercial markets. These two management systems are: • Mechanistic: appropriate for stable conditions • Organic: appropriate for changing conditions

Systems of Management: Mechanistic Management 1• ???? 2• ???? 3• ???? 4• ??? 5• ??? 6• ??? 7• ??? 8• ??? 9• ??? 10 11

Systems of Management: Mechanistic Management 1• Specialized differentiation of functional tasks; 2• Specialized techniques are used to realize abstract tasks; 3• The existence of a clear hierarchy whereby superiors oversee the execution of specific tasks; 4• The precise definition of rights and obligations and technical methods attached to each functional role 5• The creation of functional positions with clear rights and responsibilities; 6• A hierarchical structure of control, authority, and communication; 7• A reinforcement of the hierarchic structure by a centralization of key knowledge at the top of the hierarchy; 8• A propensity for vertical interactions 9• A tendency for workplace behaviors to be governed by supervisors 10• The requirement of loyalty and obedience to superiors 11• The privileging of specialized as opposed to general knowledge, experience, and skill

Systems of Management: Mechanistic and Organic Systems • "while ____ systems are not hierarchic in the same sense as are ____, they remain ___" (2003: 49) • Commitment to the task is much higher in ___ systems than ____ systems. ◦ It is more difficult to distinguish ____ vs. ____ organization under organic systems. • In __ systems, cooperation is ensured by shared beliefs about the value of the goal. ◦ In _____ systems it comes from command and control systems associated with hierarchy. • Two systems exist along a ____.

Systems of Management: Mechanistic and Organic Systems • "while organic systems are not hierarchic in the same sense as are mechanistic, they remain stratified" (2003: 49) • Commitment to the task is much higher in organic systems than mechanistic systems. ◦ It is more difficult to distinguish formal vs. informal organization under organic systems. • In organic systems, cooperation is ensured by shared beliefs about the value of the goal. ◦ In mechanistic systems it comes from command and control systems associated with hierarchy. • Two systems exist along a continuum.

When is Craft Administration Rational?: Stinchcombe claims that ___administration is the ____choice in situations characterized by unstable work flows and income. (176) • "Routine processing of administrative communications and information [bureaucratic administration] is economical only when the overhead cost of specialized information-processing structures is highly productive; this productivity will be high only if rules concerning the route of communication can be taught to clerks. Otherwise, if it necessary to use discretion in the choice of the receiver of a communication, it is cheaper to rely on visual supervision and executive or professional discretion [craft administration]" (176)

When is Craft Administration Rational?: Stinchcombe claims that craft administration is the rational choice in situations characterized by unstable work flows and income. (176) • "Routine processing of administrative communications and information [bureaucratic administration] is economical only when the overhead cost of specialized information-processing structures is highly productive; this productivity will be high only if rules concerning the route of communication can be taught to clerks. Otherwise, if it necessary to use discretion in the choice of the receiver of a communication, it is cheaper to rely on visual supervision and executive or professional discretion [craft administration]" (176) EXAMPLE Stinchcombe claims that instability is common in the construction industry as a result of variation in business cycles. • Sources of Variability ◦ Seasonal Variations in the volume of work and in product mix in the course of the business cycle. ◦ Limitations of construction companies to small geographical units. ◦ The organization of work into stages. This instability means that the overhead costs associated with bureaucratic administration are uneconomical. Craft administration is cheaper in this situation.

Systems of Management: Organic Management 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

• Individuals contributing their specialized knowledge and experience to a common task; • The adjustment and constant re-definition of tasks through interaction; • The diffusion of responsibility such that it is not limited to a specific person or persons; • Spread of commitment to the concern; • A network structure of control, authority, and communication; • Knowledge is no longer concentrated at the top of the hierarchy; • A lateral rather than a vertical direction of communication; • Communication consists of information and advice more so than directions and orders; • Commitment to the task and the technological ethos is more important than loyalty and obedience; • Prestige flows to those who have affiliations and expertise valid in contexts external to the firm.