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1 Introduction
This lecture introduces you to the important concepts met in organization theory. We
shall learn what a theory is, what an organization is, and its importance in society We
shall further differentiate between organization theory and other theories we learn in
business such as Organization Behaviour (O.B.) Organizational Psychology and
Management theory. It is assumed you have already covered Introduction to Business
Course (DBA1O1).
Organization theory focuses on the organizational level of analysis but with concern for
groups and environment. To explain the organization, one should look not only at its
characteristics but also at the characteristics of the environment and the departments and
groups that make up the organization.
Organization theory does consider the behavior of individuals, but in the aggregate.
People are important but they are not the primary focus of analysis. Organization theory
is a macro examination of organizations because it analyzes the whole organization as a
unit. Organization theory is concerned with people aggregated into departments and pts
organizations and with the differences in structure and behavior at the organizational
level of analysis.
A new approach to organization studies is called meso theory. Meso theory [meso means
re in between] concerns the integration of both micro and macro levels of analysis.
Individuals and groups affect organizations and the organizations in focus influence
se individuals and groups. To thrive in organizations, managers and employees need to
understand multiple levels simultaneously. For example research may show that
employee diversity enhances innovation. To facilitate innovation, managers need to
understand how structure and context [organization theory] are related to interaction
among diverse employees [organizational behavior] to foster innovation, because both
macro and micro variables account for innovation.
• Accident Relationships
• Parasitic Relationships
• Mutual Relationships
• Transcendental Relationships
• Let us now briefly explain each of these;
At another level, a relationship where work is extracted for less than appropriate pay is
parasitic. Another parasitic relationship can be demonstrated by firms which conspire to
form a monopoly and charge unreasonable prices to customers.
In the informal organisation there is also a structure, with hierarchical levels and
horizontal differentiations. However, there are no formal structures or coordinating
mechanisms Differentiation is informal.
o Cohesiveness. This refers to the degree of attraction that the group has for each of
its members. This is important in both the formal and informal organisation.
Cohesiveness is measured by such things as loyalty to the group, feeling of
responsibility for a group effort, defending against outside attach, friendliness,
e.t.c. In the informal group, cohesiveness is usually stronger.
o Size. The size of the formal work group is determined by the need of the
organisation. The size of the informal group is determined by the size of the
formal group. The size of the informal group is usually smaller.
o Synergism. In the formal group, the concept of synergism achieves greater
importance.
Informal leadership. Informal groups have leaders who guide and direct the members
through persuasion and influence.
Status systems. Informal groups also display status differences. Status is a differentiation
of social position from associates. It is the amount of prestige a person has and defines
the person’s position in terms of importance in the group. Status depends upon the
following factors:
a) External factors- these are factors that the individual brings to the organisation. Such
as sex, education, age ethnicity and personality.
b) Internal factors- These are determined by the job one has e.g. job title, pay, and work
schedule.
LECTURE TWO
EVOLUTION OF ORGANIZATION THEORY
2.1 Introduction
In this lecture we shall trace the development of organization theory from the pre
classical period to the present. We shall discuss the classical theories then the neo
classical theories after which we shall briefly touch on some modern theories and
principles of managing organizations
organization.
• Unity of Command To reduce confusion and conflicts each member should
receive orders from and be responsible to only one superior.
• Unity of direction An organization is effective when members work together b
towards the same objective.
• Subordination of individual interest to general interest The interests of one
employee or group of employees should not prevail over that of the organization.
Rather, the general interest must be maintained as paramount.
• Remuneration of personnel should be fair -not exploitative, and should reward
good performance.
• Centralization - A good balance should be found between centralization and
decentralization.
• Scalar Chain-There is a scalar chain or hierarchy dictated by the unity of
command linking members of the organization from the top to the bottom.
• Equity Kindliness and justice, largely based on predetermined conventions,
should prevail in the organization.
• Stability of tenure of personnel Job security should reward good performance.
• Initiative A manager who has initiative, and can get others junior to him to do it,
is far superior to the one who does not have this ability.
• Esprit de corps “Unity is Strength” Superior performance comes from working
together; thus, everyone in the organization should be encouraged to work
together and have a sense of belonging.
• Technical ability Technical ability predominates lower down the ladder and
management ability higher up.
• Fayol emphasized the importance of planning, organizing commanding,
coordination and controlling in organizations.
• Fayol recommend rational selection of and training of workers together with
professional training for managers.
The above specifications by Max Weber were necessary because during this period and
before, most organizations were managed on a “personal” family like basis. Employees
were loyal to an individual rather than to the organization or its mission. The
dysfunctional consequences of the practice were that resources were used to realize
individual desires and goals rather than organizational goals and needs. Employees in
effect owned the organization and used resources for their own rather than to serve
customers and organizations.
Application of the piece rate principle: This is the principle by which workers are paid
by piece rates on the basis of standards set by motion and time studies rather than on
other basis. Piece rates are effective in motivating workers.
Tailor’s piece rate system was called the differential piece rate system. Under this
system, workers were paid a low piece rate up to a standard (a standard was based on a
first class man performing under average conditions). At higher levels of output the
worker was paid a higher rate.
Tailor’s recommendations were designed to reduce the inefficiencies and the
wastefulness of the past through practicing scientific rather than rule of thumb
methods.
(ii) It also introduces essential principles that even today lead to organization
efficiency.
The theory of bureaucracy
1. Most of the characteristics described by Max Weber truly describe an ideal
organization. They described what should be rather than what is. However, to the
extent that organizations aspire to achieve the characteristics described by Max
Weber, their efficiency and effectiveness can be maintained.
2. Some of the aspects envisaged by Weber, however, have sometimes taken on a
negative meaning .e.g. being associated with endless rules and red tape.
2.4.6 What Prescription did Each Theory have on how to Best Structure
Organizations?
The Scientific Management Theory
Scientific way to do work
Scientific selection of personnel
Financial incentives
Separation of management and workers
Criticisms
i. Lack of empirical evidences
ii. Assumed people are machines
iii. Ignored practical situations
2.4.7. What Prescriptions did each Theorist ‘have for, how to Best Ensure
Compliance — to ensure in other words that each worker carried out the task to
which he or she is assigned?
Administrative theory
Discipline
Unity of command
Bureaucracy
Rules and procedures
Hierarchy of authority
2.4.8 What was the Environment of the Organizations that Theorist Focused on.?
i.e. what influenced the theorists to make the type of recommendations that they made.
The tasks facing workers then were relatively routine and repetitive
Efficiency rather than creativity was the rule consequently, the theorists were
justified in making the type of recommendations that they made about how to
perform those tasks.
What was it about the environment of the organizations each theorist focused on that
influenced the prescriptions for how to structure organizations and gain compliance?
• During the time, the organizations environments were relatively simple and
unchanging.
• Technology was generally static over long periods
• Political environment was also stable
• Equality and democratic ideas were developing
This type of environment motivated organization theorists to come up with the type of
proposals they came up with on how to structure organizations and to motivate workers.
Contribution
The Hawthorne Studies have however made the following contribution to Organization
theory
As a basis for organization theory Research, the Experiments were important.
They were some of the earliest scientific studies in human behavior.
Their finding on the importance of informal groups is also a key to organization
theory.
Their emphasis on employee altitude towards work as an additional to other factors was a
breakthrough in organization theory.
Follet also brought a new way of looking at leadership. She defined a leader as one with
a vision of the future and can articulate the common purposes towards which the
organization is striving. The leader focuses the energies of people towards that purpose.
A leader not only knows the technical aspects of his job, but also understands the total
situation and the relationship among its many parties. Leaders also train and develop their
followers.
i.e. Task uncertainty Information required to perform the task MINUS the information
already possessed by the organization.
ii. The organization must have the mechanism and be structured in such a way
that it can diagnose the information it has, and the information required. In
particular the organization must be able to gather, interpret, and use the
appropriate information in order to reduce this task uncertainty
iii. The second assumption of the information processing theory is that given
the various sources of uncertainty a basic function of organization structure
is to create the most appropriate configuration of work units (as well as the
linkages between them) to facilitate the effective collection, processing and
set distribution of information.
iv. The third assumption of the theory deals with the sub systems or the various ma
departments of an organization. Because the sub systems have different degrees of
differentiation (that is to say they have different time perspectives, goals,
technology etc) the important question is not what the over all organization should
be but rather what are the optimal structures for the different sub units within the
organization.
v. The information processing theory views the organization as having
the tasks of the organization vary in their degrees of their uncertainty
as work related uncertainty increases, so does the need for increased amount of
information and thus the need for increased information processing capacity
an organization will be more effective when there is a match
between the information processing requirements facing the organization and
the information processing capacity of the organization
if an organization ( or sub units) face different conditions over time
more effective units will adapt their structures to meet the changed
a way information requirements
Contingency means that one thing depends upon another thing or that one characteristic
depends upon another characteristic. What works in one setting may not work in another
setting. There are no universal principles that apply to every organization. There is no one
best way. Contingency theory means it depends. The most efficient organization structure
various may be contingent upon the size, technology, strategy and since organizations are
open different systems, its environment. These contingency factors are discussed in
chapters 6 and 7.
Definition of Goals
An organizational goal is a desired state of affairs which the organization attempts to
realize. It is that future state of affairs which the organization as a collectivity is trying to
bring about. It can also be defined as a state of affairs or situations which does not exist at
present but is intended to be brought into existence in the future by the activities of the
organization. A goal or purpose is an unrealized state or condition that the members deem
desirable.
All organizations are established for a purpose. This purpose may be referred to as a goal
or mission. Different parts of the organization establish their own goals and objectives to
help them meet the overall goal, mission or purpose of the organization.
The overall goal for an organization is often called the mission the organization’s reason
for existence. The mission describes the organization’s vision, its shared values and
beliefs, and its reason for being.
The mission is sometimes called the official goals, which are the formally stated
definition of business scope and outcomes, the organization is trying to achieve. Official
goal statements typically define business operations and they may focus on values,
markets, and customers that distinguish the organization. Whether called a mission
statement or official goals, the organization’s general statement of its purpose philosophy
is written down in a policy manual or the annual report.
In each of the above definitions, it is important to note that there are two elements that
goals describe. These elements are:
Both the terms “goals” and “objectives” are considered to have the same meaning in this
context. Other aspects of goals are the following;
Assessment of effectiveness on the basis of goal attainment depends upon the extent
to which goals are measurable.
While some goals are easily measurable e.g. sales, number of production units,
profitability, many organisations do not have such identifiable objectives. Service
organisations such as social welfare agencies and voluntary associations are examples of
organisations with non-measurable goals.
The formally stated outcomes that the organisation states it is trying to achieve.
What the organization should be doing, the reason it exists and the values that
underlie its existence
Aims normally written down in a policy manual in a charter or in the annual
report.
Goals emphasised in public pronouncements by the top officials of the organizations.
Goals that describe a value system.
Goals that serve the purpose of legitimising the organisation to the various
parties such as customers, taxpayers, suppliers and employees.
Official goals are therefore the general purposes of the organization as put forth in the
charter, annual reports, public statements by key executives, and other authoritative
pronouncements.
b) Operative goals on the other hand represent the real aims of the organisation. They:
Designate the end results sought through the actual operating policies of
the organisation.
Tell what the organisation is actually trying to do regardless of what the
official goals say are the aims.
Describe desired operational activities and are often concerned with the short run
Operative goals designate the end results sought through the actual operating procedures
of the organization and explain what the organization is actually trying to do. Operative
goals describe specific measurable outcomes and are often concerned with the short run.
Operative goals represent actual goals, while official goals represent stated goals.
Operative goals pertain to the primary tasks an organization must perform. These goals
concern overall performance, boundary spanning, and maintenance, adaptation, and
production activities
Operative goals are therefore the ends bought through the actual operating policies of
the organization; they tell us what the organization is actually trying to do regardless of
what the official goals say are the aims.
An example of an official goal is the one often stated regarding prisons. The prisons in
most countries are said to have the official goal of rehabilitating the prisoner. However in
actual practice the operative goal is to provide custodial care and to punish the offender.
Official goals perform an important role in organizations. They give the organization a
favorable image and thus provide a source of legitimacy and hence justify its activities.
However, most organizations end up practicing operative goals rather than official goals
because:
Organizational members lack knowledge of what the organization’s official goals are.
Perceptions about how best to accomplish official goals differ between the different
organizational participants.
Stated official goals cannot be achieved for financial and other reasons.
The operative goals of an organization are the outcome of complex exchanges
between individuals and groups pursuing a diversity of aims.
While the official goals of an organization may remain unchanged over time, the
operative goals of an organization at different points in time may well vary
substantially as a sequence of the exchanges between the individuals.
Some organizations also puipose1y avoid articulating specific goals so as not to
attract potential competition or become a focus of opposition groups.
You could also classify goals to help you catalogue what you know about goals and the
goals role they play in organizational life. One scheme of classifying goals was proposed
by R.C. Davis in his classic. The Fundamentals of Top Management. A summary is may
presented in Table 2.1 below.
Primary Objectives
These are objectives that are tied directly to satisfying the needs and desires of the
organization’s primary client group (primary beneficiaries). Whatever type of
organization is considered, it is basically established to provide goods and services to
some special group that may be called the primary client group.
Secondary Objectives
All organizations must satisfy the needs and desires of a variety of secondary client
groups, and these needs and desires become the basis for determining the organization’s
secondary objectives. For example the organization’s employees expect certain utility
from the organization in return for their contribution to it. This utility can take many
forms, wages and salaries, pleasant working conditions, and a host of fringe benefits, are
but a few examples. Whatever form they take, however, secondary goals are the personal
goals of secondary client groups that can be satisfied only if the organization concentrates
Short-term goals Are those that the organization hopes to accomplish within a year.
Accounting cycles are often used as the time frames for these short term goals. The
organization then strives to attain this type of goal within the bounds of its accounting
cycle.
Long-term goals Are those that cannot be accomplished within the time frame of year or
so. A few years ago, long-term ranged from five to ten years. Now that period has been
prolonged to range up to twenty years. The reason for this is that technology has greatly
increased management’s ability to forecast. Whatever its definition, the long-term
objective of an organization will provide the overall direction for it for a considerable
number of years. It is important to keep the long-term objective in mind when setting
short term objectives so that their accomplishment can directly contribute to the
attainment of long term goals. At the same time, it is important for management to review
the long term goals each year in order to reaffirm or alter them as the base for the future
direction of the organization, whether the organization deserves to be in a state of
equilibrium or improvement.
Equilibrium Objectives
Those organizations that wish to remain in or achieve a steady state will develop what
might be termed equilibrium objectives. These objectives are such that their attainment
would allow the organization to preserve its relative share of the market and its relative
share of resources over time. Basically, an organization that adopts equilibrium
objectives makes a conscious decision also to adopt the adaptation strategy for staying in
tune with its macro environment. This means that it will monitor this environment with a
view to making internal changes that will allow it to remain in consonance with outside
pressures. This means that the organization is in a reactionary mode in that it is reluctant
to adopt objectives that would require shaping or molding the macro environment.
Improvement Objectives
The desire to improve operations and to accomplish projects more efficiently is one of the
universal goals of most organizations. So for reasons of efficiency, conservation and
tradition, today’s organization counts the improvement objective among its goals.
Explicit Objectives
Organizations frequently set formal, official objectives that are printed and circulated
primarily to those outside the organization (e.g. owners, government, or the media).
These might appear in the annual reports, in press releases, or in other organization
pronouncements. These objectives may not even be the actual objectives of the
organization. They may be formally stated only for public - relations purposes.
Implicit Objectives
The actual or unofficial objectives that the organization works toward in reality might be
to the different from the formally stated. This might occur for several reasons.
• Lower - level managers may not be aware of explicit objectives and may for
the therefore formulate their own objectives.
• Explicit objectives may be deemed unrealistic or unattainable, and less
ambitious ones may be implicitly set.
• Personal objectives of managers may cloud or even negate formal objectives.
For whatever reasons, it is important to note that formally stated objectives may not be
the actual objectives that guide behavior in organizations.
b Technology:
Organizations tend to change their goals to accommodate technological advances. The
classic example is this; once it became generally available, organizations began to change
goals in accordance with the computer. Production and sales quotas were revised upward
as technology made more rapid and efficient production and distribution possible. Such
actions were tied to goals affected by the availability of the computer and its capability of
increasing organizational efficiency.
c. Resources:
Having the most critical aspects of goal setting is recognizing the role of resources. It is
not practical for instance to set objectives that require more resources than the
organization can reasonably expect to acquire.
d. Management philosophy:
Because top management is ultimately respnsib1e for establishing the organization’s
goals, the values that this group holds will exert a major influence on the statement of
goals. This set of values guides all management’s decision making, and it is recognized
here that goal setting is a major choice area. The goals of an organization can even be
taken as a reflection of the values that the management group seeks for the organization
since goals represent a desired end-state of the organization.
e. Practices of others:
Often an organization sets its goals in response to what others in its industry are
doing. For example, when a competitor brings out a new product, others in the industry
must take this into account when setting sales and production goals for the
coming period. For example, in order to attract students as well as faculty universities try
to bring out new courses and majors in response to the practices of other colleges and
universities. In fact, the goals of others can actually determine the goals of an
organization.
f. Mandates
Occasionally, organizations are mandated, in effect, to set a particular goal. This can be
demonstrated in the case of the Environmental Protection Agency (EPA) of the U.S.
Government. When setting goals that can affect the environment, organizations
must abide by the rules and regulations of the EPA. Environmental impact studies
must be conducted to measure the projected effect of certain construction projects. For
example in cases such as housing developments, the developer must establish a and goal
to protect the surrounding environment. Manufacturers are required to observe certain
protection standards. Mandates then can have a significant impact on the
entire process of goal setting and measurement.
Conflict Setting goals by conflict can create the type of discussions that result in the
development of an effective base for conflict resolution. This means that conflict can
provide the impetus for the type of interaction that brings out the factors affecting the
goals of all parties. Without the conflict one of the parties might set a good goal that
would require the other(s) to set either sub-optimal or unreasonable goals. Conflict,
because it does focus attention on its own resolutions, points out the way to effective goal
setting. Unchecked, conflict can be potentially disastrous to an organization, and yet a
healthy level of conflict can bring pressure on the setting of realistic goals. A
management group can use it as a process to bring about the establishment of a sound
goal program for the organization.
Compromises: It is not unusual for managers to set goals that are quite ambitious in their
initial form in order to establish a base for compromise as well as for an increased share
of resources. Every organization has its own set of rules for such practices, and these
rules of the game play an important role in setting courses of action for the organization.
Managers who expect to use compromise set a given level of goal in the hope of
bargaining away some of the advantages that might be associated with this level for other
benefits. For example, a college administrator might set the goal for his or her unit’s
share of capital funds at an optimistic level in the hope of bargaining with superiors for a
larger share of current expense money. In other words, there is a deliberate attempt to
establish a base from which to retreat in an effort to gain an overall advantage through
compromise.
Cooptation: When an organization or a group of people absorb another, the act is termed
cooptation. As mentioned earlier, this can be seen when a company becomes a member of
a larger organization. It is customary for its goals to be set in accordance with guidelines
furnished by the parent organization. This means that the goals of the parent will
determine to a large extent which goals of the members will fit into the overall, goal
structure of the conglomerate. The goals of an organization itself can be affected by the
practices of its members. The management of the conglomerate must take the conditions
and objectives of all its members into account when setting the goals of the entire
organizations. Therefore cooptation can be viewed as a two-edged effect, with influence
flowing from the top and the bottom of the organization.
Coalitions
While discussing the concept of organizational goals, it must be made clear that
organizations as such cannot have goals except in a purely metaphorical or figurative
sense. Attributing such things as goals and needs to organizations place us in a position
of treating organizations as having anthropomorphic (human) characteristics it does not
possess. In reality, organizations are mental abstractions, incapable of having an
existence and behavior independent of the behavior of their members. In other words,
people have goals, organizations do not. At the same time, the opposite extreme of
equating the goals of an organization with the sum total of the purposes and needs of its
individual members is also unacceptable. The personal goals and motives of an
organization’s members may or may not be the goals of the formal organization. If
organizations per se cannot be said to set and pursue goals, and if the goals of an
organization are more than the simple sum of the personal goals in the organization, how
then are the goals of an organization formulated? In an effort to explicitly deal with this
apparent goal setting dilemma, Cyert and March (196) propose an alternative
conceptualization of organizations and organizational goal setting. Rather than viewing
organizations as integrated entities, they are seen as being comprised of interacting
interest groups or coalitions that make competing claims on an organization’s resources.
According to this model, organizational goals are determined by continued bargaining
among various groups attempting to ensure that their differing interests are represented.
For example stock holders bargain with employees over the relative division of profits,
and departmental units bargain with one another for increased prestige and status. As a
consequence of such exchanges, organizational goals represent compromises reflecting
the relative power of various organizational, coalitions. Power and thus influence is
achieved through control over critical events and essential resources. This approach
emphasizes that the impact of organizational goals or organizational action is mediated
by a continual process of bargaining in which various coalitions attempt to protect and
advance their special interests. This suggests that organizations do not necessarily
formulate goals and subsequently allocate resources based on rational criteria, but rather
on political influence. The impact of coalitions is not equal. A coalition or sub-group’s
political position and power in the bargaining process largely depends on the non-
substitutability of its activities and the centrality of its work. Substitutability is a
function of the replace ability of a group’s activities. Centrality refers to a group’s
importance and degree of connectivity of its assigned tasks. For instance an accounting
department (sub group) typically performs a set of activities that are essential to the
normal operations of a firm, exemplifying low substitutability. Likewise, the tasks it
performs generally have substantive ramifications for such other departments as credit,
sales, production, and shipping illustrating high centrality. In most instances, the
greater a group’s non substitutability and centrality the more secure its political
position and power.
Throughout the bargaining process, side payments are employed by coalitions to induce
other individuals or groups in an organization to join with them in the pursuit of certain
goals. These inducements to participate can take any of numerous forms; money,
perquisites, privileged personal treatment, grants of authority, position etc. Side
payments are the price in return for which participants will accede to the demands of
other participants or group of participants. Thus in exchange for decent wages and
acceptable working conditions, employees agree to produce. Similarly in exchange for
dividends, shareholders agree to invest. Note that what is a goal for one participant is
simultaneously a side payment for another participant and vice versa.
it should be noted that an organization will continue to be viable as long as the payments
made to its various interest groups (coalitions) are sufficient to induce them to remain in
the organization, or stated differently, if the utility the coalitions derive from the net
balance of inducements over contributions is greater than what they could obtain
elsewhere.
Slack is of direct significance to the coalition process of goal formation. The structuring
of conditions and the intensity of their bargaining are directly related to the availability of
resources. The fierceness with which coalitions bargain is clearly affected by the state of
the organization as whole. If times are good and the organization is rich in resources, the
several groups can afford to be generous in the bargains they strike; competing and even
conflicting goals may be simultaneously pursued. However, in those lean times when the
organization is forced to struggle for its very survival, hard bargaining takes place with
the result that the desires of weaker groups are sacrificed.
Satisficing:
This word is a Scottish word meaning satisfying. Simon argues that once decision makers
have isolated a limited set of variables, they again deviate from the demands of
rationality by generally selecting the first course of action that is deemed “satisfactory” or
good enough rather than searching further for the optimum source. That is rather than
examine all possible alternatives and attempt to order them according to a well organized
and stable hierarchy or preferences, they generally settle for the first satisfactory
alternative that presents itself. Examples of statisficing criteria include “reasonable share
of market” “adequate profit” “fair price” and “acceptable rate of return”.
Incrementalism:
Charles E. Lindblom (1959) contends that in many organizations, goals are not
necessarily either stabilized or agreed upon prior to the consideration of alternatives.
Rather, there is an ever ending series of attacks on the issues at hand through repeated
sequential or incremental analysis. Lindblom depicts managers as risk avoiders who
prefer to wrestle with problems and seize opportunities as they emerge, rather than
formulate goals at the outset of a comprehensive search process. Thus managers bumble
along, or “muddle through” without even attempting to survey all possible alternatives
for achieving superior performance.
A course of action is selected and the consequences are evaluated as they develop,
becoming the focus of subsequent incremental analysis.
The Garbage Can Model emphasizes the impact of chance and timing in determining
organizational choices, and thus reflects reality.
Means-Ends Chain
Once specific courses of action are chosen for attaining agreed upon goals, subsequent
decisions must be made to complete what is called the means-ends chain or hierarchy.
That is, given the limited or bounded rationality of individual decision markets, and the
fact that both goals and means at the highest level of an organization are often both
complex and abstract, it becomes necessary to divide ultimate goals into sub goals for
participants at lower organizational levels. In other words, what are means intended to
contribute to the accomplishment of ends articulated at the highest level become ends in
themselves for individuals at the second level of organizations. These ends in turn are
translated into specific means and are parceled out to people at the third level who treat
what are means for the second level as ends of themselves. Though the elaboration of
chains, non-operational organizational chains, non-operational organizational goals are
eventually transformed into very specific routines of behavior for people at the lowest
level. An example of such a means-ends chain is illustrated as Figure 2.1
Fig. 2.1 Means-ends Hierarchy
An organisation’s long- run success and sustainability depends upon its ability to
establish and maintain a favourable input- output ratio. The procurement and the
transformation of inputs to outputs and their subsequent distribution to the external
environment is therefore the frame of reference of measuring organisational
effectiveness. Accordingly, the systems resource model proposes that an organisation is
most effective when it maximises its bargaining position and optimises its resource
procurement.
The systems resource model emphasises the interdependence of an organisation and its
environment. The approach emphasises that the organisation is dependent upon its
environment and its effectiveness is measured in terms of how it is able to sustain its
environment. Thus, by drawing too heavily upon its supporting environment the
organisation endangers its effectiveness not only by potentially depleting its resource
base, but also by running the risk of stimulating countervailing forces (legislation) within
its environment.
A systems resource model defines organizational effectiveness as the extent to which an
organization as a social system given certain resources and means fulfils its objectives
without incapacitating its means and resources and without placing undue strain upon its
members. The effectiveness of an organisation must therefore be measured in terms of:
- Productivity
- Absence of ultra organisational strain or conflicts.
- Organisational flexibility conceptualised as the ability to adapt to internal and
external change.
c) Stakeholder approach
In this approach efficiency is measured from the perspective of the organizational
stakeholders. A stakeholder is any group within or outside an organization that has a
stake in the -organization’s performance. Creditors, suppliers, employees, and owners are
all stakeholders. Each stakeholder will have a different criterion of effectiveness because
it has a different interest in the organization. Each stakeholder group has to be surveyed
to learn whether or not the organization performs well from its viewpoint. The following
table shows each stakeholder and its criterion;
d) Goal approach
This approach consists of identifying an organization’s output goals and assessing how
well the organization has attained those goals. The main advantages of this method are
the following;
i) Organizations are established to achieve goals
ii) All organizations have goals
4.1 Introduction
In this lecture we shall define a system and discuss the importance of looking at
organizations as open or closed systems. We shall also discuss the disadvantages of
looking at organization as closed or open systems.
Finally is the concept of synergism. This refers to the fact that the interactive effects of the
parts of the system working together create an effect greater than the effect of the parts
acting separately. This means that, as each part performs its role within the system it
enhances the performance of other parts and hence the total performance of the system.
subsystem subsystem
System
It has all the energy it needs. It can function without the consumption of external resources.
An approach that considers an organisation as a closed system takes the environment for
granted and assumes that the organisation can be made more efficient through internal
design.
This approach further considers the environment as stable, predictable and would not cause
problems.
According to this approach the main issue for management is internal efficiency.
a) Advantages of looking at organizations as closed systems:
• Some managers treat their organisations as closed systems.
• The classical theorists treated organisations as closed systems.
• As a basis of theory building, one can conceptualise the organisation as a closed
system to enable more understanding.
b) Disadvantages:
• No organisation is a closed system.
• This approach ignores the importance of the external environment in
affecting the organization
b) Disadvantages
• Tends to ignore the role of management behaviour and decision- making, capacity to
make the organisation efficient.
• It ignores the importance of the internal environment to the organisation’s efficiency
and effectiveness.
a) Inputs: the resources, ideas, concepts and people coming from the environment.
b) The transformation process: the process that works on the inputs and changes
them usually by adding value.
c) The feedback: the process or flow of information regarding the quality or price
e.t.c. of inputs and outputs.
d) The outputs: the end results of the transformation process that is taken to the
environment.
e) The environment: the element, which constitutes these sources of inputs or the
users of the outputs.
Inputs Outputs
Transformation process
Feedback
Thus the social system (the organisation) requires extra training to be understood, manage
and change. Other systems include :( from the simplest to the most complex).
Levels of analysis- in systems theory, each system is composed of subsystems. Four levels
of analysis usually characterise organisation.
• The individual human being is the basic building block of the organisation.
• The next higher level of analysis is the group or department. These are collections of
individuals who work together and interact to perform subsystem tasks.
• The next level of analysis is the organisation itself. An organisation is a collection of
individuals who work together and interact top perform subsystem tasks.
• The next level is the community of organisations, which are grouped together. They
form an important part of the environment.
LECTURE FIVE
ORGANIZATION STRUCTURE AND DESIGN
5.1 Introduction
In this lecture we shall define organization structure and design and discuss the structural
and contextual dimensions of organizations.
Organisation structure is therefore the differentiation i.e. the way the organisation is
differentiated into tasks, responsibilities, departments and hierarchies and the integration
(the way the organisation is coordinated to form a unitary whole)
(b) Chain of command: This identifies how power and control is passed down through
the organisation. A tall structure is a long chain of command and a flat structure is a short
chain of command. Chain of command is also described in terms of vertical complexity.
(d) Formalization- the amount of written documentation in the organisation that describes
the procedures, job descriptions, regulations policies of these organisations.
(g) Hierarchy of authority- describes who reports to whom and the span
of control for each manager. Span of control refers to the number of employees reporting
to a supervisor. Hierarchy of authority is the number of hierarchal levels.
(k) Personnel configuration is another structural dimension of organisation and this refers
to the deployment of people to various functions and departments. Personnel configuration
is measured by ratios such as administrative ratios, the ratio of direct/ indirect labour
employees. It’s measured by dividing the number of employees in a function by the total
number of employees in the organisation.
LECTURE SIX
ORGANISATION ENVIRONMENT
6.1 Introduction
In this lecture we shall define organisational environment as the elements outside the
boundary of the organization which affect or have the potential to affect the organisation.
We will also discuss the various environmental sector facing organizations such as
political/ legal, economic, industry and others.
However, the studies found out that in rapidly changing environments, the internal
organization was much looser, free flowing and adaptive. Rules and regulations often were
not written down, or if written down were ignored. The hierarchy of authority was not
clear. Decision making was decentralized. Burns and Stalker used the term “organic” to
describe the decentralized, low formalized, flexible- structures, and “mechanistic” to
describe centralized, highly formalized and inflexible structures.
i. Establishing favorable linkages with the key elements in the environment and
ii. Shaping the environment domain
Co-optation. This occurs when leaders from important domains in the environment are
brought into the organization e.g. influential customers or suppliers are appointed to the
board of directors of the organization
Interlocking Directorates. The individuals appointed to the board of the organization are
also members of other key stakeholders in the external environment.
External Recruitment. Hiring, for example retired generals from the air force to connect
organization manufacturing air force equipment to the air force
LECTURE SEVEN
ORGANIZATION TECHNOLOGY
7.1. Introduction
In this Lecture we shall define organizational technology and technology typology and
discuss its importance to the efficiency and effectiveness of organizations. We shall also
discuss the various technology typologies such as technical complexity, task
interdependence and knowledge analyzability and analyzability.
Technology can be classified or differentiated in many ways. Some of the ways are
technical complexity of operations, ii4iterdependence of operations and knowledge
analyzability and variety. Technical complexity refers to the differentiation in terms of
the use of human labor versus the use of machinery and equipment in the transformation
process. The more the proportion of the human input the less complex the technology and
the more the proportion of the machine input the more complex the technology. In the case
of interdependence of operations, the greater the interdependence the higher the technical
complexity. In the case of knowledge analyzability and variability and task variety the
complexity of technology takes on four dimensions. These dimensions of technology
typologies are explained here below.
Method of study
Woodward and her research team visited each of the firms studied, interviewed managers,
examined company records and observed its manufacturing operations. Her data included a
wide range of structural characteristics of these organizations such as span of control,
levels of management, management and clerical ratios, work skill level, dimensions of
management, (i.e. written versus verbal communications, use of sanctions) type of
manufacturing processes, data on commercial success of the company (such as
profitability, prices of shares in stock exchange) the history and rate of development,
reputation of the firm as an employer, level of salaries paid to senior staff, rate of staff
wastage and the relationship between the firm and outside organizations.
Data Analysis
The initial study of data found that firms varied widely in such things as span of control,
number of hierarchical levels, administrative ratio and amount of verbal communications.
Thus her data did not show any proof to the “one best way” principle of management.
However a further look and analysis of the data and information showed a relationship
between organization structure and technology. Woodward developed a scale and
organized the firms according to technical complexity of the manufacturing processes.
Technical complexity represented the mechanization and predictability of the
manufacturing process. Her scale had ten categories that were grouped into three
production types as summarized in Annex 1 attached and discussed below.
TECHNOLOGY
Unit Mass process
Structural characteristics
Number of managerial levels 3 4 6
Supervision span of control 23 48 15
Direct labor/indirect labor ratio 9.1 4.1 1.1
Management staff/total personnel ratio Low Medium High
Number of skilled workers High Low Low
Formalized procedures Low High Low
Centralization Low High Low
Amount of verbal communication High Low Low
Amount of written communication Low High Low
Overall structure organic Mechanic Organic
Customers
Intensive
Client
Thompson also does not deal explicitly with the issue of complexity or variability of
technology in a given case (Robbins — 2000). For example some long linked technologies
are quite complex and allow variability and exceptions (e.g. assembling different
automobile models with color and other options) while others are less complex.
Charles Perrow tried to look at the limitations of Woodward namely the fact that
Woodward studied only manufacturing firms. Since manufacturing firms represent less
than half of all organizations, technology needs to be operationalised in a more general
way if the concept is to have meaning across all organizations.
Per row looked at knowledge technology rather than production knowledge. He defined
technology as “the action that an individual performs upon an object, with or without the
aid of tools or mechanical devices, in order to make some change in that object”. He
identified two dimensions of4echnology viz:
• Task variability — this considers the number of exceptions encountered in one’s
work. These exceptions will be few in number if the job is high in routine ness. Jobs that
normally have few exceptions in their day-to-day practice include those on an automobile
assembly line or as a fry cook at McDonald’s. At the other end of the spectrum if a job has
a great deal of variety, a large number of exceptions can be expected. Typically this
characterizes top management positions, consulting jobs or the work of those who make a
living by putting out fires on off shore oil platforms. So, task variability appraises work by
evaluating it along a variety routine ness continuum.
• Task/Problem Analyzability — the second dimension assesses the type of
procedures followed to find successful methods of responding adequately to task
exceptions. The search can at one extreme, be described as well defined. An individual can
use logical and analytical reasoning in search for a solution. If you are basically a high B-
student and you suddenly fail an exam given in a course, you logically analyze the problem
and find a solution. In contrast, the other extreme would be ill-defined problems. If you are
an architect assigned
to design a building to conform to standards and constraints that you never
heard about or encountered before, you will not have any formal search
technique to use. You will have to rely on your prior experience, judgment and intuition to
find a solution. Through guesswork and trial and error, you
that might find an acceptable choice. Perrow called this second dimension problem
analyzability ranging from well defined to ill define.
These two dimensions — task variability and problem analyzability — can be used to
contrast a two by two matrix- shown in fig 7.2 below. The four cells in this matrix
defined represent four types of technology, routine, engineering, craft and easy to analyze
Lout the problems.
Routine technologies are characterized by little task variety and the use of objective,
computational procedures the mass — production processes used to make steel or auto
mobiles or refine petroleum belongs in routine category. A bank’s teller’s job is also an
example of activities subsumed under routine technology.
Engineering technologies have a large number of exceptions, but they can be handled in
took at a rational and systematic manner. The construction of office buildings would fall in
this cell, as would be the activities performed by tax accountants.
Craft technologies (Cell 3): deal with relatively difficult problems with a limited set of
exceptions. This would include shoe making, furniture restoring, or the work of
performing artists.
Non-routine technologies: are characterized by many exceptions and difficult to analyze
problems. Examples of non-routine technologies would be strategic planning basic
research activities. In summary, Perrow argued that if a problem can be studied
systematically using logical and rational analysis cells 1 or 2 would be appropriate.
Problems that can be handled only by intuition, guesswork or unanalyzed experience
requires the technology of cell 3 or 4. Similarly if new, unusual, or unfamiliar problems n
in a appear regularly, they would be in either cell 2 or cell 4. If problem are familiar, then
cell 1 or 3 are appropriate.
Perrow also proposed that task variability and problem analyzability were positively
correlated. By that he meant that it would be unusual to find instances where tasks had a
very few exceptions and search was clearly unanalyzable or where tasks had a great many
exceptions and search was well defined and easily analyzable. This means that the four
technologies can be combined into a single routine, non-routine dimension. This is shown
in the figure 2 as a diagonal line.
Task variability
Craft C
III defined
4
Non-route
3
Well Routine 1 2
defined Routine Engineering
NB: Perrow did not test his work but others did for example
• One study of 14 medium sized manufacturing firms supported Perrow’s prediction.
• Another covering 16 health and welfare agencies confirmed that organizations do
have diverse technologies.
• That the more routine the work, the more likely decision making will be
centralized.
• Another study covered state employment service agencies. In this study technology
was operationalized at the unit rather than the organizational level, in the belief that if
routine ness of technology actually affects structure, this effect would be greatest at the
unit level. The results of this study also proved consistent with Perrows predictions; work
that was high in routines was associated with high formalization.
8.1 Introduction
In this lecture we shall define organizational change and explain the various processes of
implementing change. We shall also discuss the main causes of change and give an insight
into the causes of resistance to change. Lastly we shall also discuss in detail the meaning of
organizational development and the main techniques of achieving organizational
development.
Organizations face a dilemma with respect to change. On the one hand, organizations
desire change in order to remain competitive, adopt more effective and efficient
technology and methods; on the other hand, organisations resist change because they desire
stability and predictability. Organisations desire stable output, predicable costs, and
financial stability. The key question for the organization thus becomes how can we achieve
desired change without disrupting current stability?
A question that arises is whether organisations bring about change deliberately or change is
brought about by the environment. In other words, do organisations actually determine
their own fate with regard to change? Can organisations actually adapt to environmental
change or does environmental change occur in such a manner that many organizations
cannot adopt, and therefore they die. The central issue here is between environmental
determinism and freedom of organisational choice and adaptation. This idea builds on
Darwin’s theory of natural selection, which holds that only those species that can adjust to
environmental change survive; they are selected for survival by the environment. Those
that are not selected die. This theory argues that there is little, if any, adaptation (i.e.
planned change by the organization). The environment weeds out those organisations that
do not fit.
Structure
Task
Change Technology
People
Technology changes pertain to the organization’s production processes. These changes are
designed to make the transformation process more efficient or to produce greater volume.
Changes in technology involve new techniques for making products or services. Product
(task) changes pertain to the product or service outputs of the organization. New products
include small adaptations of existing products or entirely new product lines. Structure
changes pertain to the changes in the organization structure, goals, policies, reward
systems, labor relations, linkage devices etc. They also pertain to the changes in
the supervision and management of the organization. People changes refer to the changes
the attitudes, skills, expectations and behavior of employees.
It is important to note that each type of change often influences the others. A new product
may require changes in the production technology. A change in the structure may
influence the attitude and skills of employees.
Although changes affect each other, most changes can be classified as technology,
structure, people or task depending upon the primary target.
These changes and others give managers daily challenges. The managers must constantly
respond to those challenges. They meet these challenges by implementing one or more of
the organizational change and development techniques namely the three phase the four
phase or the six phase processes. Each of three processes is discussed below.
Equilibrium
Lewis suggests that the best way to implement change is to use a three —step approach to
change the behavior of those opposing the change as follows.
Step 1: Unfreezing existing behavior by persuading and convincing those with restraining
force
Step 2: - Changing Behavior by Adopting new Attitudes
- implementing the changes
- use of a change agent
Stage 4: Implementation
During this phase change is implemented
Phase 1: Pressure and Arousal: The process begins as a result of pressure on top
management. These pressures may arise either externally or internally. In successful
changes, the result is the same — arousal to take action.
Phase 2: Intervention and Reorientation: Arousal in itself does not automatically ensure
proper response. It is quite likely that top managers will be tempted to see
problems as temporary or to blame them on other things. As a consequence, successful
change typically involves intervention by an outsider. It is important that this individual
be known for his improvements and that he or she enters an organisation at the top or as a
consultant who reports directly to the highest level of management.
Phase 3: Diagnosis and Recognition: This phase is characterized by a shared approach to
power as the newcomer, with top management support and active personal involvement,
engages members at several lower levels in collaborative, fact finding,
for problem solving discussion in order to recognize and diagnose current and potential
organizational problems, as well as to reduce any anticipated opposition.
Phase 4: Invention and Commitment: During this phase, attention switches to the
invention of new solutions capable of generating sustained commitment to new courses
of action. As in previous phase, the newcomer plays an active role, involving all
management levels in developing new ideas and methods for solving problems and taking
action. Solutions are based on shared power, emphasizing participation in the invention
the of group solutions to the problems identified in phase 3. Such collaboration has been
shown to be particularly effective in developing quality solutions and sustained
commitment to action.
Phase 5: Experimentation and Search: In this phase solutions identified in phase 4 are
tested for credibility on a small scale before they are introduced on a companywide basis.
In addition, the method previously used to generate solutions (interaction and shared
power) is carefully evaluated. Further, rather than implementing major changes at the top,
numerous small changes are introduced at all organizational levels on an experimental
basis.
Phase 6: Reinforcement and Acceptance: This last phase is an outgrowth of the
acceptance and internalization of change as previously experienced. As change is found
to be successful, and as participants support grows, it is introduced on a much larger scale,
ultimately being absorbed into all parts of an organization. Accordingly, this phase
involves reinforcement from positive results, leading in due course to an acceptance of
new practices. Greiner suggests that apart from the change itself, the most significant
outcome of this phase is greater acceptance at all organizational levels of the use of shared
power as an approach for introducing change.
i) Need: A need for change occurs when managers are dissatisfied with current
performance.
ii) Idea: An idea is a new way of doing things. The idea may be a model, concept or
plan that can be implemented by the organization. The idea may be a new product, a new
machine, or a new technique for managing employees.
iii) Proposal: A proposal occurs when someone within the organization requests the
adoption of a new behavior, idea, or technique. The proposal gives the organization the
opportunity to decide if it wants to try the change.
iv) Decision to Adopt: A decision occurs when the organization makes a choice to
adopt the proposed change.
v) Resources: Human force and activity are required to bring about change. Change
requires resources. Change does not happen on its own. In order for a change to be
successfully proposed and implemented, resources must be allocated to it.
Proposition 2: Changes will flow most smoothly when those who will be affected are all
brought into the process at the earliest possible stage.
Proposition 3: Successful changes require time and repeated effort. That is, before new
becoming successfully incorporated as an ongoing part of organizational life, a change
effort will typically require reinforcement over some period of time.
Proposition 4: A successful change requires careful monitoring to secure accurate with
feedback concerning intended outcomes. No matter how good a job one does of initially
selecting a change strategy and facts, something-unexpected will eventually occur during
implementation. Only by carefully monitoring the process can one identify the
unexpected in a timely fashion and react to it intelligently.
(b) Lack of understanding and trust: People also tend to resist when they do not
understand the intended purpose, mechanics, or consequences of a planned change.
(c) Different assessments: Resistance to change frequently occurs when organizational
participants differ in their evaluation of associated costs and benefits resulting from a
proposed change.
(d) Low tolerance for change: Opposition may stem from a low tolerance for change.
Different people have varying abilities to absorb change. Unknown consequences of
change may present a psychological threat to many individuals challenging their sense of
adequacy as well as threatening their self-esteem.
ii) Participation and Involvement This involves the participation of potential resisters
in the planning and implementation of a proposed change. This method is based on
the notion that the most effective way to reduce opposition and to engender
commitment to a proposed change is to work collaboratively with the members of the
targeted system.
iii) Facilitation and Support: This involves the use of facilitative and supportive skills.
Particularly appropriate when resistance develops as a result of fear and anxiety, this
method may be traced to the interest stirrings of human relation’s movement.
iv) Negotiation and Agreement: This involves the use of covert attempts to side
step potential resistance to change. Manipulation is not simply a matter of
persuasion but more a devious tactic for persuading different minded groups
when that a proposed change should be adopted. As such, manipulation involves
and supporting a position through slanted appeals to the particular interests of a
target system. Selective distortion of information by both omission and
commission may be involved. In addition facts and emotional appeals most
likely to be convincing to the principal parties may be consciously misrepresented.
Co-operation may be classified as a form of manipulation.
Absorption of various key resisters into an organization’s selection making
structure has long been a popular method to avert opposition.
v) Explicit and implicit Coercion: This method assumes that there is a basic
disagreement and that the principal parties involved are operating from
relatively fixed positions. Typified by at least temporary abandonment of efforts at
consensus, coercion involves the use of force or threats or both to compel acceptance
of an enacted change. Tactics involved may include roach violent disagreements as
well as threatened firings, transfers and loss of e to promotion possibilities. Coercion
is generally used sparingly in practice.
Sensitivity training is arranged usually away from the job, no activities or discussion topics
are planned and the focus is on the here and now issues. The participants are encouraged to
portray themselves in the group rather than in terms of past experiences or future problems.
The consultant or trainer sees to it that an environment of mutual trust, understanding and
frankness is created
Phase IV: Top management works with other groups to develop an ideal model of
employee management relationship.
Phase V: During this phase tactics are developed of moving the company to the ideal
organizational model development in phase IV.
Phase VI: The achievement of phases I-V is evaluated with the objective of identifying
weaknesses and taking corrective actions as necessary.
The following are the qualities of a good third party in an O.D process
- Intellect and personality, in particular the ability to listen diagnostically, and to
apply rational approaches to problems and situations.
- Mature outlook in terms of awareness, and acceptance of personal strengths and
weakness.
- A preference for interpersonal relations based on mutual trust and liking, for
teamwork rather than competitiveness and for conflict to be handled openly and
constructively.
- Must have basic understanding of behavioral science knowledge and more
generally, intervening skills, presentation skills and ability to establish and
ion maintain comfortable relationships with a wide cross-section of people.
These are
- Work structures move away from functional departments towards process
some teams.
- Employees are empowered to act in ways that were previously controlled by rules
- Empowerment implies a willingness and an ability to accept greater responsibility
for work outcomes
- Preparation for work implies a greater emphasis on education (i.e to understand the
why) rather than on training (understanding the how)
- The focus for performance and payment shifts from activities to results
radical (expressed in terms of value created for the customers).
- Advancement within the organization is more likely to be based on the
ability to undertake the work rather than on performance in the current job.
- A culture change will occur in which the typical employee will see the
hat take customer as more important than the boss.
- Organizational structures are likely to become flatter and bureaucracies less
critical.
- Senior executives assume the role of culture leaders than financial score
cards
- The role of IT (Information Technology) will be vital in facilitating the
reengineering process. The personal computer, the photocopies, the fax machine,
e -mail, and the mobile phones, all show the importance of IT in facilitating the
BPR processes.
General manager
Creative department
Using department
Organic structure
iii) Venture teams: These teams encourage creativity. The teams are often given a
separate location and facilities so that they are not constrained by organizational
procedures. The teams may be given total license to establish new venture projects for any
department.
iv) New venture fund: A fund is created to provide financial resources for
employees who can develop new ideas, products or business. Employees are given leave
and resources to go out of the organization and create new business opportunities for the
organization. Employees can also use company labs and equipment to develop a business
idea. If the idea is successful, the company can provide the necessary financial resources to
start -up the business.
v) Corporate entrepreneurship: Here the company attempts to develop internal
entrepreneurial spirit, philosophy, and structures that will produce a higher than average
number of innovations.
LECTURE NINE
ORGANIZATION CULTURE
9.1 Introduction
In this lecture we shall explain the meaning of culture, its importance and its dimensions.
We shall also discuss the relationship between culture and also propose methodologies of
increasing culture in an organization.
9.3.1 Artifacts
These are the obvious features of an organization that are immediately visible to a new
employee. They include sounds, behavior, language, products, rites and ceremonies. Rites
and ceremonies are the elaborate, planned activities that make up a special event, and are
often conducted for the benefits of an audience.
9.3.2 Stories
These are narratives based on time events that are frequently shared among organizational
employees and told to new employees to inform them about an organization. Many stories
are about company heroes who serve as models or ideals for serving cultural norms and
values. Some stories are considered legends because the events are historic, and may have
been embellished with fictional details. The stories are myths, which are consistent with
the values and beliefs of the organization but are not supported by facts.
9.3.3 Symbols
A symbol is something that represents other things. Rites and ceremonies are symbols but
symbols generally refer to physical aspects of culture.
9.3.4 Language
Language refers to sayings, metaphors and other forms of language used to convey
of the special meaning to employees.
Environmental need
Flexibility Stability
Internal Entrepreneur Mission
External clan Bureaucratic
LECTURE TEN
ORGANIZATIONAL GROWTH AND DECLINE
10.1. Introduction
In this chapter, we are going to define size, growth and decline. We also discuss two
models of organizational growth and propose strategies for dealing with decline.
b) Differentiation — this is the process of dividing the work of the organization into
manageable units. This may include
• Vertical differentiation — differentiation on hierarchal levels
• Horizontal differentiation — differentiation on functional departments
c) Specialization- concentration of tasks into specialist areas
d) Routinization — development of a set of routines for the performance of work
e) More impersonal work environment
• More impersonal atmosphere in the work place
• Friendship groups tend to be limited to a few co-workers
f) Less direct involvement by the chief executive: In small organizations the
entrepreneur is involved or takes part in all operations. As the organization grows, this is
no longer feasible and delegation becomes absolutely necessary.
Phase 1 Creativity
The organization is born. Emphasis is on creating a product and surviving in the market
place. The founders are entrepreneurs and they devote full energies to the technical
activities of production and marketing. The organization is informal and non-
bureaucratic. Control is based on the owners’ personal supervision.
Leadership crisis: when the organization starts to grow, it faces a leadership crisis
because founders are not skilled or interested in management activities. They may restrict
growth. A strong manager, who can introduce good management techniques is needed. If
the leadership crisis is resolved, the organization grows into the next phase.
Phase 2 Direction
New management systems and clear organizational structures are introduced to guide the
organization into more growth. Departments are established along with a hierarchy of
authority, job assignments, and 4livision of labor. Communication may become more
formal. Elements of bureaucracy become apparent.
The Autonomy crisis If the new management structures and techniques are successful
lower level employees find themselves restricted by the strong leadership and increasing
bureaucracy. Lower level managers begin to acquire confidence in their own functional
areas and want more discretion. The autonomy crisis occurs when top managers do not
want to give up responsibility
Phase 3 Delegation
For the organization to grow into this phase, it must overcome the autonomy crisis. Top
management must delegate responsibility and decentralize decision making. Top
management becomes concerned with top management issues such as strategy and
planning and leaves the operations of the firm to lower level management. Internal
control and information systems are installed and used. Communication is less -“““ and
more formal. New products and new employee’s specialists may be added.
The control crisis: as middle and lower — level managers become more autonomous,
top executives feel that they are losing control of the organization. In order to overcome
the crisis, new techniques to coordinate the increased number of departments and
activities must be found.
Phase 4 Coordination
The response to the control crisis is sophisticated techniques of coordination. Staff
personnel and specialists are required to review company wide programs. Product groups
or other decentralized units may be formed to improve coordination. Incentive systems
based on profits may be implemented to ensure that managers work towards what is best
for the overall company. If the new systems are successful, and effective, the
organization will grow to the next phase
The red — tape crisis: the proliferation of systems and programs may begin to frustrate
middle level executives. The organization may become over-bureaucratized. The
organization may seem too large to manage through formal program.
Phase 5 Cooperation
The solution to the red tape crisis is a new sense of collaboration and cooperation.
Managers develop skills for confronting problems and resolving interpersonal differences
and conflicts. Formal systems may be simplified and partially replaced by manager
conferences and task forces.
11.1 Introduction
In this lecture we are going to define power and politics in organizations and explain how
power is used to achieve organization, group and individual interests.
Hodge and Anthony (1985) also define power as the ability (potential or actual) to
impose one’s will on others. It is the ability of one person to affect the behavior of
someone else. The author identifies five bases of power. These are reward power,
coercive power, legitimate power, referent power and expert power. These bases are
explained below.
All organizations are a complex mix of individuals and groups pursuing various goals
and interests. Conflict is a natural and inevitable outcome of the close interaction of
people who may have diverse opinions and values, pursue different objectives and have
differential access to information and resources within the organization. Individuals and
groups will use power and political activity to handle their differences and manage
conflict.
Authority is a form of power which is prescribed by the formal hierarchy and reporting
relationships. Authority has three properties viz;
It is vested in organizational positions
It is accepted by subordinates
It flows down the vertical hierarchy.
Vertical Sources of Power
All employees along the vertical hierarchy have access to some sources of power. There
are three sources of vertical power;
Formal position-Certain rights, responsibilities and prerogatives accrue to the
positions one holds in the organization. The amount of power provided to each
position is prescribed into the organization’s structural design. Allowing
people to make their own decisions increases their power. Access to powerful people
in the organization also increases ones power.
Resources-Access to resources and having resources is power. Resources can be used
as rewards and punishments. Resource allocation also creates a dependency
relationship.
Network centrality-Network centrality means being centrally located in the
organization and having access to information and people that are critical to the
company’s success.
Strategic Contingences are events and activities both inside and outside an organization
that are essential for attaining organizational goals. Departments involved with strategic
contingences for the organization tend to have greater power. Departmental activities are
important when they provide strategic value by solving problems or crises for the
organization. For example, if an organization faces an intense threat from law suits and
regulations, the legal department will gain power and influence over organizational
decisions because it copes with such a threat.
Coping with Uncertainty. Uncertainty means that decision makers do not have
sufficient information about environmental factors and they have a difficult time
predicting external changes. Uncertainty increases the risk of failure for the
organizational response and makes it difficult to compute costs and probabilities
associated with decision alternatives. In the face of uncertainty, little information is
available to managers on appropriate courses of action. Departments that cope with this
uncertainty will increase their power. Just the presence of uncertainty does not provide
power; reducing the uncertainty on behalf of other departments will. Forecasting is one
technique for coping with uncertainty. Sometimes uncertainty can be reduced by taking
quick and appropriate action after an unpredictable event occurs. Other techniques
departments can use to cope with uncertainties include; obtaining prior information,
Prevention and Absorption.
Reward power is defined as power whose basis is the ability to reward. The strength of
the reward power one person holds over another increase with the magnitude of the
rewards the latter perceives the former can mediate for him.
Coercive power involves one person’s ability to manipulate the attainment by another of
positive (or negative) rewards. The coercive power of one person over another stems
from real or imagined expectation on the part of the latter that he will be punished if he
fails to conform to the influence.
Legitimate power stems from internalized values in a person that dictate that another
person has a legitimate right to influence. The actual source of this legitimate power and
the reasons subordinates feel they ought to obey might be tradition or may derive from
the office the supervisor holds.
The referent power is based on the fact that one person identifies with and is highly
attracted to another.
Finally expert power derives from the fact that one person is viewed as an expert in
some area and others MUST therefore depend on him for advice and counsel. Expert
power in an organization often stems from a person’s position in the communication
network and from that person’s ability to control access to coveted information.
The second view of politics sees it as natural organizational process for resolving
differences among organizations’ interest groups. They view politics as a process of
bargaining and negotiation that is used to overcome conflicts and differences of opinion.
In this view politics is very similar to coalition building decision processes. The
organization theory perspective views politics in this positive way-as a normal decision
making process. This approach views polities as simply the activity through which power
is exercised in the resolution of conflicts and uncertainty. Politics is neutral and not
necessarily harmful to the organization. Thus, from this perspective, organizational
politics involves the activities to acquire, develop and use power and other resources to
obtain the preferred outcome when there is uncertainty or disagreement about choices.
People gain and exercise power in organizations in many ways. Among them includes:
Although the above tactics are highly objectionable they are quite effective and are
commonly used by unscrupulous pe4rsons in their perpetual quest for power.
CHAPTER TWELVE
12.1 Introduction
In this chapter we shall define conflict, competition and cooperation. We shall also
discuss the functions and the dysfunctions of the three behaviors and attempt to compare
and contrast cooperation and competition with conflict. We shall discuss the sources /
causes of conflict and propose some principles of managing conflict.
Conflict refers to the interactive, opposing behaviors between two or more people,
groups or larger social systems having incompatible goals. Conflict is usually
experienced as troublesome if not disruptive. Conflict ranges form disagreements,
debates, to physical confrontation, murder, and or annihilations (elimination) i.e. can be
presented in the form of a continuum) Conflict may be overt or covert, perceived or
actual, non-verbal or verbal, active or passive, manifest or latent.
There are five levels of conflict:
Level I Intra-individual conflict
Level II Inter personal conflict
Level III Inter group conflict
Level IV Organizational conflict
Level V Conflict between larger social systems
12.2 Objectives
At the end of this lecture, the student will be able to:-
1. Define conflict, competition and cooperation
2. Explain the functions and dysfunctions of conflict cooperation and competition
3. Discuss the basic ways of managing conflict in organization.
The main causes of inter group, organizational, and larger social systems conflicts are
i) Intra-Individual conflict
ii) Inter personal conflict
The main cause of interpersonal and intrapersonal conflict is stress. Thus in order to
understand conflict one must understand stress.
12.5 Cooperation
12.5.1 Management of Conflict
Cooperation consists of mutually reinforcing or supportive behaviors between two or
more people, groups or larger social systems. The behaviors may steal from a perception
that collaboration will help obtain mutual goals, or just from predisposition to behave this
way. Cooperative behavior may be verbal, or non-verbal or both. Cooperative behavior is
usually active, although there may be degrees of competition. The groups, individuals or
larger systems work together in order to enhance, the outcomes received by each.
Assistance is two way or reciprocal in nature.
Example
i. workers work together to lift a heavy load
ii. managers use their expertise to reach an important decision
The persons, groups or units involved coordinate their actions in order to reach goals and
levels of performance they could not attain alone. Once the mutually desired goals are
reached the benefits are shared among the parties in some agreed manner. Cooperation
often pays, for all concerned. Cooperation results in synergistic benefits to all.
The following things happen to the winning group after the context is order
1. The winning group tends to be joyful, self-congratulatory, and reveal in the glow
of victory.
2. The role of the leader(s) is enhanced. Leaders are congratulated, their status is
enhanced, and group members are even more willing to follow
their leaders in the future.
3. The wining group becomes complacent. Characteristically the winners bask in
their success and do not critique their performance. They do not examine in what
respects their performance might improve for future situations. They become fat
and happy.
4. The winning group has little empathy for the losers. The winners typically cannot
understand why the defeated group is so defensive and sullen. Further they cannot
understand why the other group takes the matter so seriously.
12.8 What Happens to the Losing Group?
The following things happen to the loosing. group.
1. Gloom settles over the loosing group — the members of the losing group tend to be
gloomy more so and subdued.
2. The judges are seen as unfair. The judges who hard done the decision are frequently
perceived by the losing groups as biased, unfair, and incompetent, and having no
grasp of the problem. They are wrong, not group.
3. The leader(s) lose in status and influence and status of the leader(s) decline
dramatically. Feelings may sometimes run so high that the leader or negotiator is
deposed or resigns.
4. Some critique of what happened readily occurs. There is some attempt to assess the
reason for defeat, but considerable blaming of the circumstances or
the judges or of each other can occur.
5. Recriminations may occur within the losing group. In the losing group, mutual
blaming for the defeat frequently occurs. The persons blame one another, and other
group members support the criticism or defend the person attacked. Recriminations
may proliferate for a while, with some disorganizing and splintering occurring.
Sometimes the splintering leads to group dissolution.
6. The losing group has little empathy for the winning group. They see the celebration
of the other group as excessive and they resent their self congratulatory behavior.
12.9 Functions and Dysfunctions of Conflict
12.9.1 Functions of Conflict
1. Conflict and competition are the vehicles for surfacing and resolving disagreements
and different points of view
2. Conflict can help redefine a group’s or organization’s mission and can also help
review group norms
3. Some levels of conflict can also provide an energizing and vitalizing dimensions to
organizational life
4. Conflicts can also
- Lead to production of better ideas
- Lead to search for new products
- Lead to better clarification of news.
5. . Conflict can also lead to group solidarity and cooperation against the other group
6. Conflict can lead to morale and increased productivity
4. Willingness to enter
In conflict one or both parties may be drawn or forced into the conflict while in
competition usually both parties enter willingly
• The other reason is that many valued goals in organizations (e.g. status, power
promotions etc,) are in short supply and are sought by many more persons or units
than can hope to attain them: cooperation is scarce, whereas competition and
conflict are the norm.
• The other reason is that in many instances the individuals or groups may find that
they have an alternative to cooperation. They can either choose to cooperate to
achieve mutually desired goals, or they can work on their own to achieve the
desired goals.
• Reciprocity: people treat others the way they are treated rather than treating
others the way they would have others do to them.
• Communication: in many situations where cooperation could develop, but it
does not, its absence is blamed on failure to communicate.
• Group size: as the number of individuals rises, the level of cooperation drops.
Several factors contribute to this outcome.
The greater the number of persons, the greater the possibility that one will be
totally selfish, exploitative or simply uncooperative.
As groups increase in size communication among their members, becomes
more difficult.
As the number of individuals increases, diffusion of responsibility develops
such as pass - the back
12.14.2 Similarities
(i) Cooperative behavior, like conflict behavior may be verbal or nonverbal or
both.
(ii) Both conflict and cooperation can be functional or dysfunctional
(iii) In both conflict and cooperation, there are at least three parties to the situation.
(iv) In both conflict and cooperation, behaviors are interactive in the sense that it is
between at least two people and there is usually more than one cycle of behavior
and counter behavior.
(v) Both conflict and cooperation can be considered as parts of a continuum
Low High
Conflict conflict
Low High
Cooperation Cooperation