Organization Structure

The objective of this book is to introduce a cybernetic framework for the study of organization using Mathematical General Systems Theory, MGST.

The essential character of an organization as well as its members lies in their goal seeking activities. A goal seeking activity covers a wide range of behaviors, for instance, from a rational activity considered in this chapter to the activity of the garbage can model of Chapter 11. Therefore, it is not easy to describe the activity in simple terms. However, a unified formal model for it is a prerequisite to develop a formal theory of the cybernetic approach to an organization. Using GST concepts presented in Appendix I a formal description of the goal seeking activities in an organization is introduced in this chapter providing a general conceptual model for an organization.

Chapter 2 introduced the notion of a goal seeking system as the basic concept in representation of organizations. The essence of a goal seeking system is that its input-output behavior is explained in terms of the pursuance of a goal. An organization itself is apparently a goal seeking system with a stated organizational goal. The goal-seeking paradigm is used repeatedly to describe the behavior of the organization as such as well as in representation of the components of the organization and its members as well. The ultimate objective of a (rational) management is to generate proper operational goals for its constituents consistent with the organizational goal. This has to be accomplished while adapting to changes in the environment (external inputs) and coordinating operational levels (primary activity of an organization) to secure the proper functioning for achieving respective operational goals.

As the starting point of building our organizational cybernetic theory, this chapter will investigate the skeleton of an organization in the simplest form where only the positions of the organization members in the organizational hierarchy are considered. They are represented simply as points having no structure. Even in this simplest form a hierarchical structure can be found to be fundamental character of an organization. This fact is an illustration to support the thesis that a complex system cannot be managed or controlled without introducing a hierarchical structure. Furthermore, it has been observed that every system has a tendency to increase the height of its hierarchy when it confronts a more complicated situation. This is clear if we notice how a committee produces a subcommittee or a taskforce, and how a newly established organization again establishes sub-organization. Although this tendency may be inevitable, it has been also pointed out that such a tendency decreases efficiency of an organization; for instance, a higher hierarchy leads to slower decision making. On the other hand as the hierarchy of an organization is made flatter, its span of control must become wider or a supervisor may not be able to manage his subordinates effectively due to the increased span of control. A lower hierarchy can be incompatible with realization of an optimum supervising capability. Further studies of the hierarchical structures can be a good research target of the organization theory.

Since hierarchy is one of the most fundamental characteristics of our organization model or, in fact, in general of any real organization, Chapter 4 explored organization properties focusing only on the hierarchical aspect of an organization as a starting point of our organization theory. The result is a construction of a formal theory of an organization chart. The other fundamental character of an organization, its goal seeking activity, will be investigated in this and subsequent chapters. This book assumes that an organization and its components are goal seeking systems except in Chapter 11.

According to the VSM the organizational level management has three functions: To produce a coordination plan, to supervise its execution and to audit the performance of the operational level over an execution period. This chapter and the following two chapters, focus the investigation on the coordination of the operational level units. This is a main function of the organizational level management. In particular, a theoretical study of the planning activity is reported. The ultimate goal of the organizational level management is to secure implementation of a global goal, which is given by the institutional level, by coordination.

In this chapter we will discuss the following design problem for an organizational level management structure: Given the global goal, the overall process and the sub-processes of the operational level, find the coordination variable and the operational level goals so that the generated organization structure satisfies the validity condition for the interaction balance coordination principle IBP.

This chapter is concerned with the following problem: Given the global goal and the operational level goals, find the operational level process or design tasks of the operational level units so that the organizational level management structure based on the IPP satisfies the validity condition.

As a preliminary to Chapter 10 this chapter will examine a management of the operational level in an ideal form. The model of this chapter is not a real one. It provides a normative image of the primary activity of an organization, based on which the institutional level plans its adaptive activity. The image is a process model of the institutional management.

This chapter will discuss an adaptive behavior of an organization performed by the institutional level management. In order to get sharp results, the adaptation of this chapter will be particularized as an activity to adapt to a structural change of the external management information input. The adaptation is performed by adjusting a decision parameter of the institutional level. The ultimate outcome is a global goal which is an operationalization of the organizational goal adapting to the external input change. The goal of the adaptation is to sustain a satisfactory activity state (a set point of the institutional level management) of the organization. It should be noticed then that this adaptation concept presumes that the organization is in an acceptable state in an appropriately defined sense before an adaptation activity is requested.

In previous chapters we have investigated an organization (or an organization model) in qualitative organization theory using non-numerical mathematics. There is another way to study an organization in a formal way. It is called the computational approach. The approach builds a computer model of an organization and explores organizational properties examining the model’s computer behavior. Since a computer model is a formal representation of an object, the approach is conceptually akin to our approach. Both approaches try to develop a solid theory for an organization using operational languages like computer programs or non-numerical mathematics.