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PowerPoint to accompany

Organisation Theory
CONCEPTS AND CASES

5e
Stephen Robbins Neil Barnwell

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Chapter six

Organisation size

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Aims of this lecture


Define organisation size Summarise the main studies in linking size and structure

Discuss the management challenges presented by large, and small, size


Examine downsizing

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Size
Organisation size is normally measured by the number of employees Other measures may include geographic spread, turnover or market capitalisation For organisation theory purposes, an organisation may be considered large if it has over 2000 members

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Size

continued:
Blau and Shoenherr advocated that as size increases, structural differentiation also increases but at a decreasing rate

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Size

continued:

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Size

continued:
The Aston group found that size was associated with greater specialisation and formalisation Critics claim these studies have:

Poor methodology Sampling difficulties Problems with generalisation

It is also difficult to separate size from the effects of technology and strategy

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Summarising the effects of size


Complexity increases as size increases, but at a decreasing rate Size generates differentiation, and differentiation may also contribute to size As an organisation increases in size, some activities, i.e. day to day decision making, are centralised

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Large size
Large size magnifies management challenges Problems experienced are:

Growth of bureaucracy Turning information into knowledge Adapting to changing technologies Extended timeframes for action Need for accurate costing information Managing over a wide geographic spread Bounded rationality and difficulties in decision making

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

Large size
continued:

The structural contribution to these problems may include:


Divisionalisation Outsourcing Balancing centralisation/decentralisation Structuring to facilitate change Ensuring all tasks have someone responsible for them Physically separating the different types of work

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Small size

Organisation theory has a contribution to make to the structuring of small business


The owner/manager has a major influence upon the way that small business is structured and managed

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Small size
continued:

In a small business, work:


Tends to have a broader scope There are fewer layers of management Decision making is centralised There is less geographic dispersion

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Downsizing
Downsizing is the planned reduction of positions within an organisation The reasons for downsizing include

Increased competition Computerisation and automation Changes in strategy Erosion of economies of scale Rise in outsourcing Declining profitability Structural changes Changing roles of middle management
Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Downsizing
continued:

The claimed benefits of downsizing include

Lower overhead costs Less bureaucracy Faster decision making Smoother communication Greater entrepreneurship Increased productivity

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Downsizing
continued:

Ineffective downsizing practices can have a long lasting negative effect upon the organisation including

Lowered morale Skills shortages Productivity losses Loss of rapport between managers and workers Loss of corporate memory and organisational learning deficits

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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Discussion questions
What structural and management differences would you expect to find in a large organisation, which you would not find in a small one? Compare and contrast working in a large organisation with working in a small one. Discuss the challenges of managing a large organisation, such as Shell, Nestle or Toyota. Identify poor downsizing practices and discuss the effect that these can have upon an organisation.

Robbins, Barnwell: Organisation Theory 5e 2007 Pearson Education Australia

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