UNDERSTANDING ORGANISATIONS: THE BASIS FOR MANAGING CHANGE Bruce Millett
ABSTRACT The management of organisational change has become a normal part of the manager’s role. Change is regarded as the norm and periods of stability are taken as the exception for many organisations operating in the current era. The author asserts that one of the taken-for-granted assumptions about managing change is that managers have a competent understanding of what organisations are and how they function. This paper challenges that assumption by claiming that most managers don’t have the sort of understanding required to manage change. While they may feel comfortable under conditions of stability, they have not been exposed to a wider range of concepts and models about organisations that provide a more useful framework for dealing with the contemporary challenges they face in terms of change. The answer resides in the development of managers who see themselves as key participants in the context of a learning organisation. KEYWORDS: organisational change, organisation theory, organisational learning INTRODUCTION Two questions that are generally not addressed in the current texts on organisational change management relate to what organisations are and how they really function. There is a general assumption that managers already know the answers. On the one hand, they act on the basis that organisations are rational and orderly systems that can be engineered with some precision. On the other hand, they act as though organisations are the instruments by which entrepreneurs seek their fortunes. In relation to how organisations function, Stacey explains that there are two comprehensive explanations that dominate managerial thinking in the Western world: The rational approach prescribes decision-making and control which is based on clear, well-defined organisational structures, analytical techniques and the orderly motivation of people. The entrepreneurial approach prescribes decision-making and control which is much looser. It is based on far less clear cut organisational structures and job definitions, experimentation, and inspirational motivation (1991, p. 105). While these explanations have been useful, they have also been found to be limited. If managers are to effectively manage the challenges they confront, they need to continually clarify the underlying assumptions they hold about the organisations they manage. This is not only what learning is about, but a basic component of managerial and organisational learning; that is, the way organisations are able to adapt to the challenges and changes in their environments. Intuitively, managers act on sets of assumptions that are deeply woven into Dr Bruce Millett (e-mail:
[email protected]) is a lecturer in the Faculty of Business, University of Southern Queensland. Bruce lectures in organisational change and development, organisational behaviour, and strategic management. Australian Journal of Management & Organisational Behaviour, 2(1), 9-18 © B. Millett
Australian Journal of Management & Organisational Behaviour
Volume 2, No. 1 1999
their personal psych and into the cultures that they influence and are influenced by. Managers behave in terms of their theories-in-use (Argyris & Schon 1978) and, in many cases, without hesitation and without thinking about the underlying reasons for their actions. The need to explore the nature of organisations, as a prerequisite to understanding organisational change, should be obvious and is emphasised by Burke and Litwin 'To build a most likely model describing the causes of organisational performance and change ... we must understand more thoroughly how organisations function' (1992, p. 523). The purpose of this paper is to identify the problems with conventional definitions of organisations and to describe some of the more contemporary theories that are available to change managers as a source of explanation. The basic premise is that managers need to regard themselves as key and competent participants in developing a learning organisation — an organisation that can sustain a journey successfully into the future, rather than achieve one particular destination or milestone. WHAT’S WRONG WITH THE CURRENT DEFINITIONS? In a major research project investigating the transition to university status experienced by four colleges of advanced eduction (Millett 1995) and various management training programmes, the author has used a particular methodology to determine how participants describe the concept of an organisation and how it functions. Participants in the major research study were predominantly managers and administrators. They were, in the first instance, asked to define what an organisation is. Second, they were asked to draw a picture of an organisation on a sheet of paper. Third, they were then asked to describe an organisation in terms of an analogy/metaphor. That is, they were asked to complete the statement an organisation is like a ... because ... An example of the sort of analogies provided by participants included 'an organisation is like a dog because it can be quite vicious and can bite people.' This method produced thirty-eight definitions and graphical representations (which were mainly diagrams), along with various statements that associated the nature of an organisation with animals, machines and other concepts which participants conveniently used to depict particular attributes of organisations. This method utilises the concept of imaginization (Morgan 1993) and is similar to the approaches adopted by other authors. For example, Zbar (1995) used a similar approach to enhance the learning capabilities within management groups by reflecting on different descriptors of organisations espoused by workshop participants. From the analysis of the data concerning the definitions, there were no startling discoveries. The majority of participants provided a very basic definition in the form of organisations as structured groups of people who seek to achieve goals. The definitions provided very limited insights into the nature of organisations and how they function. The very fact that they have goals, people, and structure and that people are involved in achieving those goals, does nothing to indicate the extent and types of processes that give organisations their distinctive and dynamic character. The definitions were similar to the one that Scott uses to define organisations as rational systems, that is, ‘organisations are collectivities oriented to the pursuit of relatively specific goals and exhibiting relatively highly formalised social structures’ (1992, p. 23). This definition of a rational system seems to be ingrained in the responses that the majority of participants gave. If managers and students of management persist with these definitions, then do they really believe organisations to be such rational,
10
Understanding Organisations: The Basis for Managing Change
Millett
goal-directed entities? Alternatively, definitions may be just convenient starting points for discussion. Business schools have certainly done a sound job of instilling a particular and basic definition in students' minds. In terms of the pictorial representations, participants were generally evenly divided as to what they depicted. Approximately half of the participants described organisations in basic systems terminology. They used diagrams which either reflected a flow of inputs to outputs, or they used overlapping circles to identify sub-systems, components and variables and to separate these from each other and their contexts. The remaining fifty percent of participants represented an organisation as an organisational chart. The pictorial representation of an organisation raises some interesting issues. Although the author asked participants to draw a picture, their responses were generally presented as diagrams. It is of some concern that approximately fifty percent of the respondents thought in terms of an organisational chart. This may indicate that participants are strongly influenced by a structural view of organisations, although this is unclear. Waterman, Peters and Phillips (1980) make the point very strongly that organisations are not just structure. They involve much more. This emphasis on organisations as hierarchy indicates a deficiency in the graphical imagery that is used to describe organisations conceptually. The representation of an organisation's structure is acceptable, but to associate such an image with an organisation per se, is not acceptable. The other dominant images which strongly influenced participants were the graphical representations that are associated with general systems theory. The language and symbols of systems theory pervades any discussions on organisations in general. This is understandable given its adoption in most areas of business, the sciences and the technologies. However, the input-process-output-feedback linkage as illustrated in Figure 1, still aligns with Scott's (1992) rational systems thinking.
Figure 1: Basic Systems Model Input
⇒
⇑ Feedback
Process
⇓ ⇐
Output
The outcomes of the pictorial representation, like the definitions, were also very limited in terms of discovering some of the complexities involved in organisational activity. Both the definitions and the diagrams presented a very basic outline of the concept of organisations as used by the participants. This could possibly mean that participants were unable or reluctant to provide any sophisticated or more complex representation of the concept of an organisation under the circumstances, or that the definition or the use of diagrams as tools, did not provide adequate opportunity for them to do so. Some participants complained that they were not artists and that they felt uncomfortable about having to think laterally. Also, definitions and diagrams are generally ingrained from the models that are presented in courses on management.
11
Australian Journal of Management & Organisational Behaviour
Volume 2, No. 1 1999
The use of analogies presents another means of relating to the concept of an organisation. The analysis of the responses produced a whole range of different attributes which provided new insights into what organisations are. Participants immediately changed from providing a rather clinical and straightforward outline of what the major components are, or what the normative management literature prescribed, to a situation where they had to associate another concept or image with the concept of an organisation. They used animals, machines and the like to assist them in identifying the attributes of an organisation. At this point, it was obvious that this technique forced them to identify some of the realities that go on in organisations. Why are organisations like dogs that bite you? Why are organisations like beehives where the queen bee maintains significant control and like mothers who provide support? Why are organisations like lions who are predators and kill in order to preserve their family? The use of analogies and metaphors as a technique for organisational analysis, does not enable the manager to construct a complex and insightful model of organisations either, because they tend to focus on specific features of an organisation. However, as Morgan (1986) suggests, the metaphorical analysis does provide rich insights into the theory of organisations. Analogies and metaphors provide a means of gathering data about organisations. This data thus provides the basis for constructing a more realistic model of what an organisation is. What the analogies do is make the participants think of particular situations, particularly attributes and realities that they are concerned with in terms of this thing called organisation. If managers are to improve their understanding of organisations, they need to rely on multiple perspectives and a whole range of different techniques in order to challenge their perspectives and experiences. Even if managers are unable to develop or articulate sophisticated explanations about the organisations they manage, there is no doubt that they are guided in their actions by some basic and dominant assumptions regarding what happens at work. As stated previously, the rational approach and the entrepreneurial approach strongly influence their decisions. The current definitions and models are not necessarily incorrect. More to the point, managers are generally not exposed to the multiple and diverse range of explanations available to them. Their exposure to concepts, models and the language about organisations is limited. THE USEFULNESS OF ORGANISATION THEORY Organisation theory offers a diverse range of insights that managers need to be exposed to. It is a field of study that involves a … set of related concepts and principles that is used to describe and explain organisational phenomena...organisation theory can help us understand what organisations are, how they behave in a given environment, and how they might behave in a different set of circumstances ... It provides a way of thinking about organisations and a way of managing organisations (Narayanan & Nath 1993, p. 6). Organisation theory is very much concerned with the issues of organisational functioning and organisational performance. In the research and the literature in this area, there is a range of competing theories, assumptions and perspectives about how organisations function. Koontz (1980) refers to this predicament as the management theory jungle. The field of organisation theory has been described in terms of a growing theoretical pluralism (Astley & Van de Ven
12
Understanding Organisations: The Basis for Managing Change
Millett
1983), as anything but monolithic (Ribbins 1985), as in a state of considerable confusion (Griffith 1982), and as a zoo (Perrow 1974) where different theoretical perspectives are on display. Figure 2 illustrates how contemporary perspectives on organisation theory provide a source of relevant, empirical and systematic information to managers about the realities of organisational performance and the dynamics associated with organisational activity. The figure also illustrates how the realities of organisational functioning and change are a key common denominator in developing informative perspectives and theories on organisations and developing a modus operandi for the practice of change management. Both theory and practice have an impact on everyday activity in organisations. Figure 2: Organisation Theory as a Foundation for Effective Change Management Perspectives on Organisation Theory
⇒
to inform managers about
⇒
Organisational performance
impact upon
⇐ effectiveness ⇐ of
The practice of change management
There is a need to integrate what we know about organisation theory and organisational change. But we also need to be aware of the limitations of organisation theory. Organisation theory should not only inform us about organisational dynamics, but it should be the basis for studying the dynamics that occur within and between organisations. However, the field of organisation theory is limited in this regard. There are two reasons for this. First, theories about how organisations function have been constrained by the explicit and implicit attempts to represent complex social phenomena as dichotomies (Renihan 1985). For example, many perspectives on organisations emphasise either a deterministic or voluntaristic perspective (Van de Ven & Astley 1981). They are also drawn into either a structural/functionalist or an action frame of reference (Silverman 1970). Hall's statement also points to the tendency to polarise the debates: 'The distinction between environmentally and goal-based change is at the heart of the major theoretical arguments currently being waged in organisational theory' (1991, p. 183). Such distinctions detract from developing more encompassing perspectives because of the emphasis on an either/or logic. As Hames (1994) suggests, what’s wrong with the power of three as an alternative to the cut and dried acceptance of binary logic? There is also a limitation due to the focus on specific features when organisations are described using various terminology, for example, when they are described as bureaucratic, collegial, pluralist (Baldridge 1971), rational, political and as organised anarchy (Pfeffer 1981). Second, contemporary theories do little to explain the intricacies and details of organisational functioning. Hall identifies five contemporary perspectives which he regards as having ‘... the greatest explanatory power’ (1991, p. 274) in terms of theories at the organisational level of analysis. The first perspective is the population ecology model (Aldrich & Pfeffer 1976; Hannan & Freeman 1977) which has primarily focused on the processes of foundings and failures (Kelly & Amburgey 1991). Although it offers some insights into the phases of change and the influence of environments on the nature of organisational change, the dynamics of 13
Australian Journal of Management & Organisational Behaviour
Volume 2, No. 1 1999
change at the organisational level receive less attention. It is concerned with forms and populations of organisations, rather than individual organisations (Aldrich & Pfeffer 1976). Hall’s (1991) second perspective is the rational-contingency model (Lawrence & Lorsch 1967). This model moves beyond the restrictions of contingency theory ‘... which emphasises the interconnections between a state of the environment and certain requirements for structure, behaviour, or change’ (Pettigrew 1985, p. 25). It needs to address more challenging questions of how and why organisations change in different contexts. Contingency theory is overly concerned with structure as the dependent variable, and size, environment, strategy and technology as the independent variables. As such, contingency generally ignores the internal organisational processes involved in the dynamics of change, particularly the political aspects of these processes (Katz & Kahn 1978). It relies on linear rather than mutual and multiple cause-effect models to determine the appropriateness of particular organisational designs. For example, the Burns and Stalker (1966) model of mechanistic-organic structures is strongly based on a linear and uni-directional cause-effect representation of the environment-design linkage. The third perspective is the institutional model (Meyer & Rowan 1977) which provides a number of explanations regarding innovation and organisational structure but concerns itself with the interaction between prevailing social norms and technical certainty (Pfeffer 1982). Organisations are noted for the way they observe other competitors in their field and mimic their structures and processes. The isomorphic or crystallising nature of organisational fields (DiMaggio & Powell, 1988) in the institutional perspective, directs more attention towards the way organisations conform rather than the way they change. This is reinforced by Clegg's reference to isomorphic pressures which he states: ... are increasingly seen as being regulatorily shaped by organisational bodies of the state and of the professions, as privileged sites of production of what become constituted as rational myths. The iron cage is seen to be composed of rules which enmesh organisations (1990, p. 84). The fourth perspective is the resource-dependence model (Pfeffer & Salancik 1978) which is concerned with adaptation rather than selection as espoused by population ecologists. In line with Child's (1972) strategic contingency perspective, the resource dependence perspective views change as the continuous attempts by decision-makers to adapt the organisation to the demands of the environment and in some cases, to change or enact those environments (Weick 1979). This perspective provides political and economic insights into organisational functioning through the exchange and dependency relationships between various stakeholders. Decision-making is a key process as it is central to the distribution of resources. This approach tends not to account for some of the more fundamental attributes expected to be involved in organisational functioning such as the impact of goals (Hall, 1991), or how resources are socially constructed (Pondy 1977, cited in Pfeffer 1982). However, this perspective provides one of the better explanations of the internal dynamics of organisations by considering the political and technical aspects of making decisions, the autonomy of the decision-maker, the enactment of the environment, and the impact of multiple stakeholders (Hall, 1991). Hall’s (1991) fifth and final perspective is the transaction-cost model (Williamson 1975) which focuses on transaction costs in the marketplace rather than production costs in the firm,
14
Understanding Organisations: The Basis for Managing Change
Millett
to explain the emergence of hierarchies as alternative forms of governance to price mechanisms. Although this perspective is somewhat voluntaristic in nature and deals with the dynamics of some of the individual stakeholders, the internal functioning of the firm is largely ignored. Also, '...the market failures perspective uses primarily equilibrium as contrasted with dynamic analysis and provides arguments for explaining the status quo' (Pfeffer 1982, p. 147). The five contemporary perspectives that were identified by Hall (1991) contribute significantly to organisation theory by improving our understanding about certain aspects of organisational structure and behaviour. However, with the exception of the resourcedependence model, they generally do not provide the depth of insight that is needed to better inform the change management literature on the dynamics of organisations and their environments. One of the major issues with organisation theory is that it is still strongly influenced by the dominant paradigm of organisations as rational and open systems. SUMMARY AND CONCLUSIONS The management of organisational change has become a normal part of a manager’s role. Change is regarded as the norm and periods of stability are taken as the exception for many organisations operating in the current era. One of the taken-for-granted assumptions about managing change is that managers have a competent understanding of what organisations are and how they function. This paper has challenged that assumption by demonstrating that most managers do not have the sort of understanding of organisations required to manage change. This has been evidenced in various research projects — albeit limited in the sample of managers involved. While managers may feel comfortable under conditions of stability, they have not been exposed to a wider range of concepts and models about organisations that provide a more useful framework for dealing with the present and the future. Hall's (1991) five perspectives on organisations indicates the diversity and depth of explanations available on how organisations function. Managers require a greater exposure to these diverse range of perspectives that have evolved under the field of study known as ‘organisation theory’. Although these explanations are partial and have their limitations, they are, nonetheless, essential for building a language for learning about and developing learning communities and learning organisations. The concept of the learning organisation has become a powerful metaphor for contemporary management. Like the other metaphores that Morgan (1986) uses in his ground-breaking book, this metaphor, in particular, emphasises the importance of developing core competencies within the organisation to sustain a successful journey rather than reach a particular destination. Destinations come and go and the challenges remain. Learning, both at the individual, group and organisational levels, is one of the major core competencies we can develop to have a successful journey. The answer resides in the development of managers who see themselves as key participants in the context of a learning organisation. The development of a language about organisations based on novel and diverse theories, models and concepts can only support our learning.
15
Australian Journal of Management & Organisational Behaviour
Volume 2, No. 1 1999
INSTRUCTIONAL COMMENTARY The paper deals with the topic of organisation theory. It makes the point that managers need to develop a greater understanding of organisations if they are to be more effective at managing change in the present and the future. The following questions flow from the paper. 1. Do you agree from your own experiences that managers in general, have a limited understanding of organisations? 2. Is the management of the modern organisation more about the journey rather than the destination? 3. Describe what you believe an organisation is by writing a definition, drawing a picture, and identifying some analogies/metaphors that capture your impressions and ideas. REFERENCES Aldrich, H. & Pfeffer, J. 1976, ‘Environments of organisations’ Annual Review of Sociology, vol. 2, Palo Alto. Argyris, C. & Schon, D. 1978, Organizational Learning: A Theory of Action Perspective, Addison-Wesley, Reading. Astley, W. & Van de Ven, A. 1983, ‘Central perspectives and debates in organisation theory’, Administrative Science Quarterly, vol. 28, pp. 245-273. Baldridge, J.V. 1971, Power and Conflict in the University, John Wiley, New York. Burke, W. & Litwin, G. 1992, ‘A causal model of organizational performance and change’, Journal of Management, vol. 18, no. 3, pp. 523-545. Burns, T. & Stalker, G.M. 1966, The Management of Innovation, Tavistock Publications, London. Child, J. 1972, ‘Organisational structure, environment, and performance: The role of strategic choice’, Sociology, vol. 6, no. 1, January, pp. 1-22. Clegg, S. 1990, Modern Organizations: Organization Studies in the Postmodern World, Sage, London. DiMaggio, P. & Powell, W. 1988, ‘The iron cage revisited: Institutional isomorphism and collective rationality in organization fields’, American Sociological Review, vol. 48, pp. 147-60. Griffith, D. 1982, ‘Theories: Past, present and future’, Paper given at the 5th IIP of the CCEA, Nigeria. Hall, R.H. 1991, Organizations: Structures, Processes, And Outcomes, 5th edn, Prentice Hall, Inglewood Cliffs.
16
Understanding Organisations: The Basis for Managing Change
Millett
Hames, R. 1994, The Management Myth: Exploring the Essence of Future Organisations, Business and Professional Publishing, Sydney. Hannan, M.T., Freeman, J. 1977, ‘The population ecology of organizations’ American Journal of Sociology, vol. 83, pp. 929-964. Katz, D. & Kahn, R. 1978, The Social Psychology of Organisations, rev. edn, John Wiley, New York,. Kelly, D. & Amburgey, T. 1991, ‘Organizational inertia and momentum: A dynamic model of strategic change’, Academy of Management Journal, vol. 34, no. 3, pp. 591-612. Koontz, H. 1980, ‘The management theory jungle revisited’, Academy of Management Review, vol. 5, no. 2, pp. 175-187. Lawrence, P.R. & Lorsch, J.W. 1967, Organization and Environment, Harvard University Press, Cambridge. Meyer, J.W. & Rowan, B. 1977, ‘Institutionalised organisations: Formal structure as myth and ceremony’, American Journal of Sociology, vol. 83, no. 2, pp. 340-363. Millett, B. 1995, Identifying a Model of Institutional Change: The Transition from College of Advanced Education to University, Unpublished PHD Thesis, Griffith University. Morgan, G. 1986, Images of Organisation, Sage Publications, Beverley Hills. Morgan, G. 1993, Imaginization: the Art of Creative Management, Sage Publications, Beverley Hills. Narayanan, V. & Nath, R. 1993, Organisation Theory: a Strategic Approach, Irwin, Homewood. Perrow, C. 1974, ‘Is business really changing?’, Organizational Dynamics, Summer, pp. 3144. Pettigrew, A. 1985, The Awakening Giant: Continuity and Change in ICI, Basil Blackwell, Oxford. Pfeffer, J. & Salancik, G.R. 1978, The External Control of Organisations: A Resource Dependence Perspective, Harper & Row, New York. Pfeffer, J. 1981, Power in Organisations, Pitman, Marshfield. Pfeffer, J. 1982, Organisations and Organisation Theory, Pitman, Boston. Pondy, L. 1977, ‘The other hand clapping: An information-processing approach to organisational power’ in T. Hammer & S. Bacharach (eds.) Reward Systems and Power Distribution, School of Industrial and Labour Relations, Cornell University, Ithaca, pp. 56-91.
17
Australian Journal of Management & Organisational Behaviour
Volume 2, No. 1 1999
Renihan, P. 1985, ‘Organisational theory and the logic of the dichotomy’ Educational Administration Quarterly, vol. 21, no. 4, pp. 121-134. Ribbins, P. 1985, ‘Organisational theory and the study of educational institutions’, in M. Hughes, E. Ribbins & H. Thomas (eds), Managing Education: the System and the Institution, Holt, Reinhart and Winston Ltd, East Sussex. Scott, W.R. 1992, Organisations: Rational, Natural and Open Systems, Prentice Hall, Inglewood Cliffs. Silverman, D. 1970, The Theory of Organisations, Heinemann, London. Stacey, R. 1991, The Chaos Frontier, Butterworth Heinemann, Oxford. Van de Ven, A. & Astley, W. 1981, ‘Mapping the field to create a dynamic perspective on organisational design and behaviour’ in A. Van de Ven & W. Joyce (eds.) Perspectives on Organisational Design and Behaviour Wiley - Interscience, New York, pp. 427-468. Waterman, R.H., Peters, T.J. & Phillips, J.R. 1980, ‘Structure is not organisation’ Business Horizons, June, pp. 14-26. Weick, K. E. 1979, The Social Psychology of Organising, 2nd edn., Addison-Wesley, Reading. Williamson, O. 1975, Markets and Hierarchies: Analysis and Antitrust Implications, Free Press, New York. Zbar V. 1995, ‘Imaginize: A new way of working’, HR Monthly, May, pp. 8-9.
18
