Page 155 - Managing Change in Organizations

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Chapter 8 ■ Sustaining organizational effectiveness
of employees and/or customers or clients, and the size of the organization.
Lawrence and Lorsch (1970) were the first to use the term ‘contingency theory’
as a convenient way of describing this empirical view of organizational structures
and processes; however, the earlier work of Burns and Stalker (1961) and
Woodward (1965) are important applications of the approach.
Exponents of contingency theories have advocated a shift in the approach of
organization designers from prescription to the creation of the organizational
choice. Rather than propose one strategy as being of universal application
within organizations, contingency theorists have suggested that design, man-
agement and control strategies should be developed to meet the situation
within which they are to be applied. The theory suggests that organizational
performance depends on the extent to which the organization secures a good
match between situation and structure. Child (1984) summarizes it as follows:
Contingency theory regards the design of an effective organization as neces-
sarily having to be adapted to cope with the ‘contingencies’ which derive from
the circumstances of environment, technology, scale, resources and other fac-
tors in the situation in which the organization is operating.
The components of organizational structure (e.g. the degree of formalization of
procedures, centralization of decision making, number of levels in hierarchies
and the spans of control of managers) can take different forms. Lorsch (1970)
suggests that the ‘structure of an organization is not an immutable given, but
rather a set of complex variables about which managers can exercise consider-
able choice’.
The contingency theory approach to organization design attempts to take
account of all four factors, uses the organization as the unit of analysis and tends
to accept a managerial framework, particularly in respect of organizational pur-
poses. By stating that the components of an organization can be changed they
introduce the idea of choice, called ‘strategic choice’ by Galbraith (1977). For
Galbraith, organization design involves attempts to make the goals of organiza-
tion, the means applied and the people ‘coherent’. The phrase ‘strategic choice’
is used to emphasize the available choice of goals, means and processes for inte-
grating individuals into the organization and also the choice as to whether some

or all of these goals, means and processes should be changed to meet changes in
the environment.

Organization design, resources and complexity
From what we have said so far it is plain that organization design is not a precise
science. Yet there does seem to be evidence to suggest that issues such as control,
resources and the complexity of the environment are important issues in organ-
ization design. Lawrence and Dyer (1983) have examined these points in an
interesting way. Their argument is that appropriate organization designs are
related to the complexity of the environment and the scarcity of resources for the
organization. Figure 8.3 summarizes this idea.
In effect Lawrence and Dyer (1983) identify what they feel are the most
appropriate organizational forms for each combination of information complexity

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