H.2 Organizational structure, design, and bureaucracy
Describe the main features of bureaucratic organization
Explain how bureaucracy is a form of rational organizational design that helps
managers to control organizations as they grow in size
Analyse the negative effects of bureaucracy that weber described as an ‘iron cage’
Describe dysfunctions of bureaucracy, such as red tape and the bureaucratic
personality
Explain how bureaucracy has developed through the use of digital technology,
including the management and control of workers in the gig economy
Key terms
Bureaucracy: Official aspects of an organization, such as the hierarchical structure, rules,
procedures, and paperwork which allow control to be exerted over the whole organization.
Rational organizational design: As championed by Fayol, the design of bureaucratic
features in the most technically efficient way so as to achieve the organization’s goals
Iron cage of bureaucracy: A phrase which summarizes Weber’s critique of bureaucracy and
rationality, suggesting that it is inescapable and leads to monotonous, dull routines
Informating: Where a large amount of an organization’s activity and knowledge is stored as
computer code in a database.
Network: Where organizations are linked by sharing data through computer networks or
through the internet
Gig economy—a modern day form of organization typical of the Fourth Industrial Revolution
(examples; Uber and Deliveroo)
Direct control by one individual owner/manager at the top of the organization is no longer
possible in large companies (manage and organize in a personal, informal style).
Impersonal control: More indirect
Three aspects of bureaucratic control:
- Hierarchy/organizational structure
- Rules, procedures, and policies
- Paperwork and records
A double-edged sword?
- Fayol: bureaucracy as technical, efficient design
- Weber: negative effects and the ‘iron cage’
,Fayol’s five functions of management (1949)
Planning/forecasting: Looking to the future, trying to calculate and predict future
circumstances (such as demand, competitors, etc.), and acting so as to be prepared to
respond to these.
o Standard rules and procedures make behaviour and actions more predictable
across the organization and thus easier to plan for. Paperwork and computer
records give data which can be used for forecasting, e.g. planning staffing
requirements.
Organizing: Building up the necessary structures, resources, and people to best meet
the needs and goals of the organization.
o A structure is created to encompass the vertical and horizontal levels of
hierarchy needed to achieve the organization’s aims. Tightly defined job roles
and recruitment procedures allow the development of an appropriately
qualified workforce.
Coordinating: Bringing together the structural, human, and resource elements of the
organization to act in harmony in working towards the goals of the organization.
o Standard procedures (e.g. for pay) make it easier to coordinate activities across
the organization (e.g. through a payroll department). The bureaucratic structure
and rules make clear what each person does and how they relate and report to
each other across the organization.
Commanding: Giving orders and directions to people within the organization to
maintain activity aimed at achieving the organization’s goals.
o Command is delegated through the hierarchical levels of bureaucratic
structure. Rules and procedures tell people what to do without a human
presence being necessary.
Controlling: Checking and inspecting work—monitoring and surveillance of work
done, rather than direct command.
o Paper records and computer data can be used to monitor work performance and
associated issues, such as absence. Computers can increase the processing
power of bureaucracy.
Vertical differentiation: The process whereby a hierarchy creates a number of different
layers of management within an organization.
Horizontal differentiation (functional differentiation): The process whereby different parts
of the hierarchy are grouped according to criteria, such as the function performed, the
geographical area served, or the product or service provided.
Examples of rules, policies, and procedures in organizations:
- Grievance: Policies which outline how workers themselves may pursue grievances if
they are unhappy with how they are being managed
- Equal opportunities: Policies that ensure equality of treatment and prohibit
discrimination on grounds such as gender, race, age, sexual orientation, and disability
- Appraisal and promotion: Procedures for monitoring the standard of work that
employees do, often done in a standardized appraisal procedure which feeds into
decisions on promotion or pay increases
, Pro-forma: A type of paperwork, sometimes called a form. It is a blank template with
standard fields for different types of relevant information, which is filled in as a means of
capturing information for the records of an organization.
Max Weber was wary about its increasing dominance within society and its negative effects
upon society and people. He described this movement as:
Rational–legal authority: where authority comes neither from tradition nor from the
charisma of an individual, but from the office they hold and the bureaucratic rules and
procedures associated with that position.
Disenchantment: For Max Weber this was a loss of ‘magical elements’ in society, and
suggests some of the dehumanizing elements of bureaucracy.
Dysfunctions of bureaucracy: Unintended consequences of bureaucracy which lead to it not
functioning in the efficient manner for which it is designed. (Red tape, Bending the rules,
Exercising discretion, Mock-bureaucracy, Inflexibility)
‘Red tape’ describes situations where rules and regulations get in the way of an organization
achieving its goals.
Bureaucratic personality: A tendency to follow rules to the letter rather than seeing the
wider picture and making more common-sense judgements.
Trained incapacity: Where people are so used to their behaviour being controlled by
bureaucratic rules and procedures that they become inflexible and unable to think for
themselves and show initiative.
Mock bureaucracy: The rules exist on paper but are ignored in practice.
Post-bureaucracy/post-bureaucratic organization (structureless organization): A trend
away from rigid, bureaucratic rules and structures in organizations towards more flexible and
less hierarchical, rule-driven structures. This structure goes further than matrix organizations
in minimizing bureaucratic structures and rules and regulations.
The PEST model splits this environment into four sectors:
- Political—government policies and laws
- Economic—e.g. the state of the economy, demand, exchange rates, etc.
- Social—consumer tastes, fashions, and opinions
- Technological—current technology and innovation
Contingency theory: Suggests that the best structure for an organization is determined by
factors such as environmental uncertainty, the organization’s size, and the technology that the
organization uses.
Liquid modernity: Bauman’s characterization of modern-day society as dynamic,
changeable, and flexible. Where organizations, workers, and consumers experience a more
uncertain and precarious side to life.
Describe the main features of bureaucratic organization
Explain how bureaucracy is a form of rational organizational design that helps
managers to control organizations as they grow in size
Analyse the negative effects of bureaucracy that weber described as an ‘iron cage’
Describe dysfunctions of bureaucracy, such as red tape and the bureaucratic
personality
Explain how bureaucracy has developed through the use of digital technology,
including the management and control of workers in the gig economy
Key terms
Bureaucracy: Official aspects of an organization, such as the hierarchical structure, rules,
procedures, and paperwork which allow control to be exerted over the whole organization.
Rational organizational design: As championed by Fayol, the design of bureaucratic
features in the most technically efficient way so as to achieve the organization’s goals
Iron cage of bureaucracy: A phrase which summarizes Weber’s critique of bureaucracy and
rationality, suggesting that it is inescapable and leads to monotonous, dull routines
Informating: Where a large amount of an organization’s activity and knowledge is stored as
computer code in a database.
Network: Where organizations are linked by sharing data through computer networks or
through the internet
Gig economy—a modern day form of organization typical of the Fourth Industrial Revolution
(examples; Uber and Deliveroo)
Direct control by one individual owner/manager at the top of the organization is no longer
possible in large companies (manage and organize in a personal, informal style).
Impersonal control: More indirect
Three aspects of bureaucratic control:
- Hierarchy/organizational structure
- Rules, procedures, and policies
- Paperwork and records
A double-edged sword?
- Fayol: bureaucracy as technical, efficient design
- Weber: negative effects and the ‘iron cage’
,Fayol’s five functions of management (1949)
Planning/forecasting: Looking to the future, trying to calculate and predict future
circumstances (such as demand, competitors, etc.), and acting so as to be prepared to
respond to these.
o Standard rules and procedures make behaviour and actions more predictable
across the organization and thus easier to plan for. Paperwork and computer
records give data which can be used for forecasting, e.g. planning staffing
requirements.
Organizing: Building up the necessary structures, resources, and people to best meet
the needs and goals of the organization.
o A structure is created to encompass the vertical and horizontal levels of
hierarchy needed to achieve the organization’s aims. Tightly defined job roles
and recruitment procedures allow the development of an appropriately
qualified workforce.
Coordinating: Bringing together the structural, human, and resource elements of the
organization to act in harmony in working towards the goals of the organization.
o Standard procedures (e.g. for pay) make it easier to coordinate activities across
the organization (e.g. through a payroll department). The bureaucratic structure
and rules make clear what each person does and how they relate and report to
each other across the organization.
Commanding: Giving orders and directions to people within the organization to
maintain activity aimed at achieving the organization’s goals.
o Command is delegated through the hierarchical levels of bureaucratic
structure. Rules and procedures tell people what to do without a human
presence being necessary.
Controlling: Checking and inspecting work—monitoring and surveillance of work
done, rather than direct command.
o Paper records and computer data can be used to monitor work performance and
associated issues, such as absence. Computers can increase the processing
power of bureaucracy.
Vertical differentiation: The process whereby a hierarchy creates a number of different
layers of management within an organization.
Horizontal differentiation (functional differentiation): The process whereby different parts
of the hierarchy are grouped according to criteria, such as the function performed, the
geographical area served, or the product or service provided.
Examples of rules, policies, and procedures in organizations:
- Grievance: Policies which outline how workers themselves may pursue grievances if
they are unhappy with how they are being managed
- Equal opportunities: Policies that ensure equality of treatment and prohibit
discrimination on grounds such as gender, race, age, sexual orientation, and disability
- Appraisal and promotion: Procedures for monitoring the standard of work that
employees do, often done in a standardized appraisal procedure which feeds into
decisions on promotion or pay increases
, Pro-forma: A type of paperwork, sometimes called a form. It is a blank template with
standard fields for different types of relevant information, which is filled in as a means of
capturing information for the records of an organization.
Max Weber was wary about its increasing dominance within society and its negative effects
upon society and people. He described this movement as:
Rational–legal authority: where authority comes neither from tradition nor from the
charisma of an individual, but from the office they hold and the bureaucratic rules and
procedures associated with that position.
Disenchantment: For Max Weber this was a loss of ‘magical elements’ in society, and
suggests some of the dehumanizing elements of bureaucracy.
Dysfunctions of bureaucracy: Unintended consequences of bureaucracy which lead to it not
functioning in the efficient manner for which it is designed. (Red tape, Bending the rules,
Exercising discretion, Mock-bureaucracy, Inflexibility)
‘Red tape’ describes situations where rules and regulations get in the way of an organization
achieving its goals.
Bureaucratic personality: A tendency to follow rules to the letter rather than seeing the
wider picture and making more common-sense judgements.
Trained incapacity: Where people are so used to their behaviour being controlled by
bureaucratic rules and procedures that they become inflexible and unable to think for
themselves and show initiative.
Mock bureaucracy: The rules exist on paper but are ignored in practice.
Post-bureaucracy/post-bureaucratic organization (structureless organization): A trend
away from rigid, bureaucratic rules and structures in organizations towards more flexible and
less hierarchical, rule-driven structures. This structure goes further than matrix organizations
in minimizing bureaucratic structures and rules and regulations.
The PEST model splits this environment into four sectors:
- Political—government policies and laws
- Economic—e.g. the state of the economy, demand, exchange rates, etc.
- Social—consumer tastes, fashions, and opinions
- Technological—current technology and innovation
Contingency theory: Suggests that the best structure for an organization is determined by
factors such as environmental uncertainty, the organization’s size, and the technology that the
organization uses.
Liquid modernity: Bauman’s characterization of modern-day society as dynamic,
changeable, and flexible. Where organizations, workers, and consumers experience a more
uncertain and precarious side to life.
