FORMAL ASPECTS OF ORGANIZATION STRUCTURE; A CASE STUDY OF A STATE OWNED INSURANCE COMPANY by Cecilio Augusto Farias Berndsen A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (Public Administration) June 1975 UMI Number: DP308/I5 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertalien RùibhsMng UMI DP30845 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 UNIVERSITY OF SOUTHERN CALIFORNIA THE GRADUATE SCHOOL UNIVERSITY PARK LOS ANGELES. CALIFORNIA 90007 PA.D. Pu VS" This dissertation, written by C ecilio Agusto Farias Berndsen ^ 'ASYA'S. i5 under the direction A.!?.....of Dissertation Com­ mittee, and approved by all its members, has been presented to and accepted by The Graduate School, in partial fulfillment of requirements of the degree of DOCTOR OF PHILOSOPHY D ea n DISSERTATION COMMITTEE hatrman TABLE OF CONTENTS LIST OF T A B L E S ................................... iv LIST OF F I G U R E S ................................. vi Œiapter I. INTRODUCTION............................... 1 Purpose and General Background Problem Area Research Question Importance of the Subject Towards a Definition of Formal Organization Structure Organization of the Remainder of the Dissertation II. REVIEW OF THE RELATED LITERATURE.......... 14 Introduction •The Organizations' Environments A Sample of Recent Empirical Research Studies Alternative Structure Models to the Bureaucratic-Classic Model of Formal Organization Summary and Conclusions III. RESEARCH PROCEDURES .................. 120 Introduction The Design of the Research Instrumentation Selection of Respondents Data Collection Procedures Characteristics of the Respondents Data Processing and Analysis Conclusion 11 Chapter IV. THE STRUCTURE OF THE CALIFORNIA STATE COMPENSATION INSURANCE FUND — FINDINGS........................... 138 Introduction The History of the Fund Fund Recent Structure The Environment of the Fund The New Structure of the Fund Integration Among the Groups of Respondents Conclusions V. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS........................... 256 Summary Conclusions Recommendations BIBLIOGRAPHY.................. 264 APPENDICES................................. 294 111 LIST OF TABLES Table \ Page 2- 1 Types of Workers' Participation ............ 43 2- 2 The Mix Model ............................... 63 2- 3 Human Problems Confronting Contemporary Organizations ................. 89 3- 1 Respondents to Questionnaire ................. 130 3- 2 Means of the Age of the Respondents by Groups ..................... 130 3- 3 The Sex of the Respondents ................... 131 3- 4 Time with the Fund ........................... 133 3- 5 Orientation Towards Theories Y or X ........ 135 3- 6 Individual Orientation ....................... 135 4- 1 Q. 45 — The Functioning of the Executive Committee Is Highly Effective . 184 4- 2 Q, 46 — The Concept of the Executive Committee Is Very Adequate to the Fund . 184 4- 3 Q. 47 — The Functioning of the Managers' Council Is Highly Effective ............... 190 4- 4 Q. 48 — The Functioning of the District Managers' Meetings Is Highly Effective . 194 4- 5 Q. 49 — The Functioning of the Standing Committees Is Highly Effective ............ 201 4- 6 Q. 50 — The Functioning of the Program Advisory Council (PAC) Is Highly Effective ................................. 207 4- 7 Q. 51 — The Functioning of Special Task Forces Is Very Effective ............ 210 iv Table Page 4- 8 Q. 56 — There Is a Widespread Acceptance of Fund Policies Throughout the Organization ............................. 21.3 4 - 9 Q. 57 — The Corporate Policy of the Fund Is Easy to Modify #ien Required . 215 4-10 Q. 58 — There Is a Widespread Acceptance of the Corporate Policy at the Levels Below Management........................... 215 4-11 Q. 59 — The Operating Policy in the Fund Is Widely Accepted in the Levels Below Management ................... 216 4-12 Q. 52 — The Concept of Programs Is Highly Applicable to the F u n d ............ 219 4-13 Q. 53 — The Formal Structure of the Fund Is Very Adequate for the Functions It Performs ..................... 219 4-14 Q. 54 — The Formal Structure of the Fund Favors Innovation and Problem S o l v i n g .................................... 220 4-15 Q. 55 — The Formal Structure of the Fund Enhances Employee Satisfaction . 220 4-16 Results of Questions 31 Through 36 .......... 238 4-17 Results of Questions 37 Through 44 .......... 242 4-18 Chi-Square Test Results on the Answers Related to General Features Specific to the Fund Formal Structure............... 247 4-19 Chi-Square Test Results on Answers Related to Argyris Mix M o d e l ............... 252 4-20 Chi-Square Test Results on Answers Related to Burns Organismic Model ........ 253 V LIST OF FIGURES Figure Page 4-1 California State Compensation Insurance Fund Organization Chart, 1 9 5 5 ............ 145 4-2 California State Compensation Insurance Fund Organization Chart, 1956 ............ 146 4-3 State Compensation Insurance Fund Organization Chart, 1967 157 4-4 Organizational Chart, 1969 . ............ 177 4-5 Total Fund R e s p o n d e n t s .................... 227 4-6 Executive Committee......................... 230 4-7 Home Office Managers ....................... 232 4-8 District Office Managers .................. 234 4-9 Program Advisory Council Members .......... 235 4-10 Rank and File Fund E m p l o y e e s .............. 237 VI CHAPTER I INTRODUCTION This dissertation is an effort to add to the pool of knowledge concerning organization structure. It is also our interest to integrate some of the theories which relate to the way in which organizations are ordered. There are almost no aspects of the organization life that the struc­ tural aspects do not touch. Any effort to manage, control, or even interact with an organization probably requires the consideration of the structural aspects. It could be expected that planned change in organizations will be more successful if accompanied by structural change. This view seems to be supported by empirical evidence. The day to day practice is a good indicator of this, and the impor­ tance of the subject of structure goes beyond this aspect to intermediate itself with almost any aspect of organ­ izational life. Purpose and General Background For some time the bureaucratic classic model for the structuring of organizations has been a target of criticism. Recently, we begin to see alternatives to this model proposed. Several organizations broke loose from the mechanistic model and have attempted to structure themselves organically. This study on the formal aspects of organization has two purposes: (1) to survey the related literature to identify alternatives to the bureaucratic-classic model of formal organization structure; and (2) to study in detail The California State Compensation Insurance Fund as the example of organization which differs significantly from the bureaucratic-classic model in its formal structure. A related objective of this study is to determine the attitudes of the Fund's management and employees toward the management style, structure, and the corpora­ tion's operational policies. Implicit is the objective of determining problems and weaknesses inherent in the organization participation format. Problem Area Organizational problems to which this study is directed are those which typically develop from those organization structures that do not allow for the expres­ sion and satisfaction of employee needs in individual and social terms. As a result, the achievement of goals sought by organizations is compromised. Organization goals are often expressed in terms of efficiency, effec­ tiveness, accomplishment, organization survival, or 2 social satisfaction. Organizational goal achievement can result in alienation of the work force, growing lack of motivation, sabotage, high turnover rates, absenteeism, scrap, com­ petition among departments, lack of innovation, resistance to innovation, resistance to change, and others. Research Question What are the main criticisms to the functioning of the bureaucratic model? What are the alternatives to bureaucracy in formal organization structures? VBiat are some of the criticisms to the functioning of an organization adopting a nonbureaucratic structure? Can an organization structure serve as a tool for permanent organization renewal? Importance of the Subject "To obtain lasting change, one does not try to change people, but rather to change the organizational constraints that operate upon them" (Chappie and Sayles, 1961, p. 202). Katz and Kahn (1966) suggest that the most powerful approach to changing human organizations is systemic change by manipulating those structural variables which give the change effort the best chances of success. Drucker (1974) says that, "The wrong structure is indeed a guarantee of nonperformance, it produces friction and frustration, puts the spotlight on the wrong issues mountains