BBE 504 – ORGANIZATION THEORY

LECTURE ONE
INTRODUCTION

1.1 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.

1.2 What is Organization Theory?

Organization theory is the discipline that studies the structure and the design of
organizations. Organization theory refers to both the descriptive and prescriptive
aspects of the discipline. It describes how organizations are actually structured and
offers suggestions on how they can be structured to improve their effectiveness. It is a
body of knowledge about organizations which has been developed through the
scientific method.

1.2.1 Sources of Knowledge

(a) Common sense: When people share a common belief then. it must be true e.g.
opposites attract, “birds of a feather flock together.” Although common sense may at
times be correct or true, it may sometimes present different versions of the truth.
(b) Appeal to Authority. The second source of knowledge is appeal to authority.
This means that what experts say is correct (is the truth) and it is to be accepted.
c) Deductive Reasoning. This method of building knowledge follows the
following format:
all short men are clever
and Kariuki is a short man
therefore, Kariuki is a clever person
(d) Unsystematic Research. This form of creating knowledge entails the
carrying out of research and making conclusions without following a systematic
(scientific) method for example, one i4ay want to find the proportion of cars in
and Nairobi which are Toyotas. He or She stops at a main road e.g. Uhuru Highway,
counts all the cars that pass there, in terms of makes and at the end of his research,

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finds that Toyotas were 10% of the cars passing through. He/She therefore
concludes that 10% of cars in Kenya/Nairobi are Toyotas.
(e) Scientific/Systematic Research. In this method of building knowledge, the
researcher follows a systematic (scientific) method which can be tested and followed
by other researchers in order to confirm the findings. In the systematic
of method the following steps are necessary:
Step 1 State study objectives
Step 2 State in detail proposed data collection sources e.g. primary data or of
secondary data
Step 3 State data analysis methods
Step 4 State data presentation

1.2.2 What is a Theory?

A theory is a body of knowledge used to describe and predict. It is an integrated set of
statements that summarize and explain research findings. It is an explanation of some
phenomenon and it consists of principles that describe relationships observed in some
situation. In other words a theory tries to explain some practice observed in nature. In
organization theory the primary focus is the study of organizations at the macro level.
In other words we are trying to learn the whole organization or departments: the way
it is structured: the ways the various variables relate to each other and the way groups
behave in an organization set up.

1.2.3 Purpose of Organization Theory

The purpose of organization theory is to explain the component parts of an
organization and their relationships so that some prediction can be made about how
they are likely to behave under certain conditions. It is a way that scholars try to see
and think about organizations based upon patterns and regula1ities in organization
design. It is a theory that studies organizations, their structure and the relationships
between its various parts. It focuses on organizations as entities in themselves i.e. the
whole organization.

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1.3 Management Theory, Organizational Behaviour and Organization

Psychology

1.3.1. What is Organizational Behaviour?

Organizational behavior refers to the behavior of people in organizations. It tries to
understand the behavior, attitudes and performance of people in organizations. In
addition it discusses human psychological processes that can affect behavior in
organizations for example it tells us how a system of rewards affects a person’s
behavior and performance in organizations. Organizational behavior derives its
concepts from political science, psychology, anthropology and social psychology.

Organizational behavior as a theory seeks increased understanding of human

behaviour in organizational settings. It seeks to find out how individuals behave the
way they do and how one can change their behaviour and guide them to behave in a
certain way. Thus Organizational Behaviour (O.B) is about individuals (their
attitudes, perceptions, motives).O. B is defined as a field that seeks enhanced
knowledge of behavior in organizational settings, through the scientific study of
individuals and individual processes. The goal of such knowledge is to enhance both
organizational effectiveness and individual well being.

1.3.2. What is Organizational Theory?

Organizational theory focuses on the design and structure if organizations. It also
looks at organizations as social systems. The discipline of organization theory derives
its concepts from sociology, and anthropology. Organizational theory therefore
studies organizations from their macro aspects

1.3.3. How does Organizational Theory Differ from Organizational Behavior?

Organizational theory looks at an organization as a whole - its objectives, goals,
structure and context. On the other hand organizational behavior looks at the micro
elements of the organization, the individual worker

1.3.4. What is Management Theory?

Management theory on the other hand is the study of a particular group (managers) in
the organization. How this group behaves, what makes them do what they do and how
they can be made to behave in a way that benefits the organization is in the field of
management theory.

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1.3.5. What is Organizational Psychology?

Organizational psychology is a science of behaviour and mental processes.
Psychology is a study of mind or the soul. Thus in psychology, we study both the
mental experiences such as hunger and thirst or anger and their outward
manifestations such as drinking or aggression.

1.4 Importance of Organization Theory

For people who are or will be managers, organization theory provides significant
insight and understanding to help them be better managers in a rapidly changing
world. For example, one of the greatest threats to organization today is the inability of
management to adapt to the speed and chaos of technological change. Although
companies have made massive investments in technology, they are only beginning to
implement the organizational and management changes needed to make technology
and the internet competitive weapons.

Understanding organization theory can help managers make these necessary changes
by helping them see and understand how technology interacts with other elements of
organization and its environment. In a very real sense organization theory can make
managers more competent and more influential by giving them an understanding of
how organizations work. Organization theory provides ideas, concepts and ways of
thinking and interpreting that help the managers effectively guide their organizations.
When the old approaches are no longer working, organization theory helps managers
understand why and develop new approaches to meet changing conditions. The
concepts provided by organization theory helps managers describe organizations more
accurately, concisely and specifically. The relationships of variables presented by
organizations theory help managers predict outcome of actions taken and propose
solutions to organizational problems.

1.4.1 Level of Analysis

In systems theory, each system is composed of subsystems. Systems are nested within
systems and one level of analysis has to be chosen as the primary focus. Four levels of
analysis normally characterize organizations. The individual human being is the basic
building block of organizations. The human being is to the organization what a cell is
to a biological system. The next higher system level is the group or department. These
are collections of individuals who work together to perform group tasks. The next

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level of analysis is the organization itself. An organization is a collection of groups or

departments that combine into a total organization. Organizations themselves can be
grouped, together into the next higher level of analysis, which is the inter-
organizational set and community. The inter-organizational set is the group of
organizations with which a single organization interacts. Other organizations in the
community also make up an important part of an organization’s environment.

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.

Organization theory is directly relevant to top and middle-management concerns and

partly relevant to lower management. Top managers are responsible for the entire
organization and must set goals, develop strategy, interpret the external environment
and decide organization structure and design. Middle management is concerned with
major e departments such as marketing or research and must decide how the
departments relate to the rest of the organization. Middle managers must design their

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departments to fit work unit technology and deal with issues of power and politics;
inter group conflicts and information and control systems each of which is part of
organization theory. Organization theory is only partly concerned with lower
management because this level of supervision is concerned with employees who
operate machines, type letters, teach class and sell goods. Organization theory is
concerned with the big picture of the organization and its major departments.

1.5 The Meaning of an Organization

An organisation is a consciously coordinated social entity with a relatively verifiable
boundary that functions on a relatively continuous basis to achieve a common goal/ or
goals. This definition brings out certain facts about an organization. These facts are
that organizations are:
 Consciously coordinated This implies that management deliberately allocate
tasks and responsibilities.
 Social entity This implies that the unit is composed of people or groups of
people who interact with each other while performing their various tasks. The
interaction pattern that people follow in an organisation does not just emerge
rather it is meditated
 An organisation has a relatively identifiable boundary. This boundary exists
to identify members from non- members. Members enter into explicit and
implicit contracts with the organisation.
 People in an organisation have some continuity or bond.
 Organisations exist to achieve certain goals.

1.5.1 Characteristics of Organizations

All organizations exhibit the following characteristics:
(a) Composed of people who interact with each other
(b) Have identifiable boundaries.
(c) Are consciously coordinated and structured.
(d) Are relatively continuous. I.e. are established to last.
(e) Have goals, which they strive to achieve.
(f) It is a system: i.e. it is composed of subsystems of parts which constitute a
unitary whole.

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1.5.2 Benefits of Organisations

In this section we wish to find the answer to the question” why do we study
organizations?” Organisations pervade all aspects of contemporary human life -
society as a whole, the economy and even our personal lives. You may be interested,
in pursuing a career in management. As a manager you may want to know how
organisations operate and how to structure them so that they become effective. You
may also want to pass a required course in a university or college - thus you may have
to study organisation theory. Organisations also satisfy us with our needs which
include:
(i) Basic needs (biological needs)
These are the needs necessary to maintain life. They include the need for food, water
and shelter. Many organisations are formed to satisfy the biological needs.
(ii) Social needs.
These are needs that satisfy man’s desire for love, affection, social acceptance,
recognition and self-fulfillment.
(iii) Economic utilities: - these are the goods and services that provide man with
material well-being. The food he eats, the car he drives, e.g. are examples. Other
economic utilities include roads, education and medical services.
(iv) Political utilities: - these refer to the benefits man receives associated with
political stability, national defense, security and internal stability.
(v) Social utilities: - these are benefits attained through association with other
people e.g. sense of belonging, talking with other people and social contacts, provides
man with some of his most gratifying experiences.
(vi) Religious utilities: - helps man to find answers to questions on death, life,
morality and the universe.
(vii) Aesthetic utilities: - these help a man achieve his desires in art and music.
(viii) Time utilities: - compared with an individual effort, an organisation can make
available a good for use by an individual within a short time what would take years
for an individual to manufacture. For example one individual would take years if not
decades to make an aeroplane but through the use of an organisation, the same can be
made within a year or less.
(ix) Place utilities: - these are benefits enjoyed by people who live in different
climates of goods produced in another climate for example an individual living in a
cold climate e.g. Greenland is able to enjoy a cup of coffee grown in a hot climate.

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(x) Form utilities: - a manufacturer who sells a pick-up vehicle to a farmer

exemplifies this. The manufacturer converts raw materials into the form of the truck
for the farmer who needs to know nothing about the manufacturing process.
These utilities overlap. To some extent there can be a trade-off of utilities. In other
words, more or less of some utilities can be traded for more or less of other utilities.
For example economic utilities might be used with political utilities. In similar
version, a political utility can be used as a way of making an economic utility.
(xi) Organisations also store utilities: Organisations permit society to create and
store advances in knowledge and technology and to pass them along to succeeding
generations; thus with organisations, it is not necessary to re- invent the wheel or
other technological, social and cultural advances. This permits rapid and higher level
of technological advancement as succeeding generations start from a higher level.
(xii) Organisations enable human beings to enjoy consumer surplus. Consumer
surplus is the difference between the total utility the consumer receives from a
quantity of a good and the total rice he pays for that quantity. Let us explain this
further. The law of diminishing marginal utility postulates that the first unit of a good
has more utility than the second unit of a good For example suppose the utility of the
first glass of milk to a hungry customer is kshs 30 while the utility of the second glass
is Kshs 28 and so on as depicted in the table below. Customer surplus is the difference
between the price he/she pays for the glass of milk and the utility of that glass of milk
to the consumer.
Table l: Calculation of the Consumer Surplus
Unit numbers Utilities (utils) Price Paid Consumer surplus
(Kshs.) ( Kshs.)
1 30 15 15
2 28 15 13
3 26 15 11
4 24 15 9
5 22 15 7
6 20 15 5
7 18 15 3
8 15 15 0
Total 55

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(a) Other benefits of organisations

In addition to the benefits cited above organizations do provide the following other
benefits
 They bring together resources to achieve desired goals and outcomes.
 They are able to produce goods and services efficiently.
 They facilitate innovation and creativity.
 They enable the use of modern technology.
 Are able to adapt to and influence a changing environment.
 They create value for owners, customers and employees.
 They accommodate on-going challenges and diversifying ethics and the
motivation and coordination of employees.
 They are able to accommodate and utilize ethnic and other diversities among
organizational participants

1.6 Relationships in Organisations

In almost all organizations the following relationships are likely to exist:
 Accident Relationships
 Parasitic Relationships
 Mutual Relationships
 Transcendental Relationships
 Let us now briefly explain each of these;

1.6.1. Accidental Relationship.

This is an association in which no participant deliberately associates with another, yet
from such an association benefits often accrue to at least one participant. For example
a man who happens (without planning the association) to walk down the street of a
crime ridden neighbourhood at the same time with a policeman is less likely to be hurt
or robbed by his assailants because of his association with the policeman which
occurred merely by accident. In a business scenario, this can occur when an executive
of a clothing store gets an idea for a new type of garment from two charting ladies in
the street.

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1.6.2 Parasitic Relationship

This type of relationship exists when one gains from an association at the expense of
another. For example a flea gets its nourishment from its host- a dog, a cat or a human
being. In a business organisation, a parasitic relationship exists when one organisation
as a matter of policy receives support, advantage or service from another without
payment or proper return.
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.

1.6.3 One-Way Relationship

In this relationship, one party benefits without harming or helping the other. The one
providing the benefit indifferently tolerates the one benefited. Here the relationship is
deliberate at least on the part of the benefited one. An example is a business
organisation that goes about its normal business while permitting itself to be observed
by a student. However, for this relationship to be one- way, the organisation being
researched must not expect any form of benefit- including a copy of research project.

1.6.4 Mutual Relationship

This relationship is both deliberate and mutual for both parties. Both parties expect to
benefit from this association. Most relationships in nature are mutual or mutually
beneficial. In most business organisations relationships are mutual. Both expect to
make profit. In addition, the relationship between the organization and its employees
is mutual.

1.6.5 Transcendental Relationship.

This type of relationship calls for much more than mutual. It requires the participants
in the relationship to aspire for more than their individual benefit or profit. The
participants in a transcendental relationship aspire for benefits to accrue not only to
him and his partner but also to other individuals, organisations and society not directly
associated with the relationship. In a transcendental relationship, a person acts in such
a way that his advantage will also be the other’s advantage rather than his advantage
being other’s disadvantage. Achieving transcendental relationships in organisations
offers a great challenge in the human society. Nevertheless the advantages are great.
In nature, transcendental relationships can be seen in animals when it leaves its meat

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(after being satisfied) to others. In the human society it requires an exceedingly high
degree of personal honesty and responsibility which for some reason, God has not
bestowed upon many humans.

1.7. Complexity of Organizations

Organizations are complex structures. This is because they are composed of complex
beings in the form of human beings. Human beings bring their diversity, their
temperament, and their attitudes in to the organization making quite a complex whole.
Human beings are basic building blocks of organisations. Human beings are
biological rather than machine systems. Consequently, organisations are extremely
complex systems far more complex than other systems. The human organisation has
many characteristics of simpler systems but it also incorporates new forms of
complexity. The sources of these complexities are characteristics formed in human
groups which include:
o Norms and values which are intangible and hard to detect.
o Cultural dimensions such as music and art.
o System elements (human beings) display awareness.
o The structure of elements and roles continuously changes.
o Information is processed through abstract forms of language, symbols and
meaning systems.

Organization managers must be sensitive to social system complexity if they are to

understand and cope with organizational systems. In the human organisation, a large
number of dimensions interact so that it is impossible to completely understand and
predict future behaviour. These dimensions are interconnected so that changing one
element affects the whole system.

1.8 Informal and Formal Organisations

Informal organizations that are also referred to as work groups are:
o Formed in every formal organisation by its members.
o Parallel to the formal organisation.
o Are a shadows of the formal organization

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1.8.1 Why do Informal Organisations Arise?

In almost all organizations informal organizations exist to serve the following
purposes:
o To satisfy social needs.
o To provide a sense of belonging.
o To provide information on approved behaviour.
o To provide a sympathetic ear.
o Assist individuals in meeting objectives.
o To provide opportunity for influence and creativity.
o To enable members to perpetuate cultural values.
o Provides the members with an additional channel of communication.
o Provides satisfaction and stability to members.
o Compensates for managerial limitations.

1.8.2 Comparison of Informal and the Formal Organisation.

o Goals. The informal organisation also has goals that could either be congruent to
those of the formal organisation or not.
o Norms. A norm is a standard of behaviour expected from group members. Formal
groups have norms and so do informal groups. However, the pressure to conform
to the informal group member’s norms is greater.
o Role. A role consists of the total pattern of expected behaviour. In the formal are
to organisation, it includes but goes beyond the official content of the job a large
description. Informal group members are also expected to have a role. Whether or
not the informal group supports the role of group members, has a major impact on
the role of members in the formal group.
o Leadership. In the formal organisation leaders (or managers) are appointed. The
informal group leaders emerge from the group; there is no formal title attached to
the individual.
o Structure. A formal organisation has a structure- an organisational chart,
hierarchical and horizontal differentiation and formal coordinating mechanisms.
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.

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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, etc.
In the informal group, cohesiveness is usually stronger.
o Size. The size of the formal work group is determined by the need of the
organization. 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.

1.8.3 Benefits of the Informal Organisation

 Assists in accomplishing work in organizations.
 Helps to remove weaknesses in the formal structure e.g. where a manager has
given orders which may be inconsistent with organizational needs e.g. 8.00 to
5.00 pm.
 Lengthens the effective span of control by exchanging knowledge and
experience within the group, workers are able to learn what is expected of them
without needing supervision.
 Compensates for violations of formal organisation principles for example a
manager may need the help of an employee to achieve efficiency or
effectiveness.
 Provides additional channels of communication to some extent, which is faster
and accurate.
 Provides emotional support to employees which is necessary for efficient
performance for employees but which the formal organization does not provide.
 Encourages better management. The acceptance by managers of the fact that
formal structures alone may not lead to efficiency in their organization.

1.8.4 Dysfunctions of Informal Organisations

 May work counter to the purposes of the formal organizations especially when
the formal group goals are counter to the organization’s goals.

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 Reduces the degree of productivity and control by managers .Due to the

influence of the informal group on members behaviour, the manager is unable
to control the members, nor predict outcomes
 Reduces the number of practical alternatives. The solidarity developed in the
informal groups strengthens their cohesiveness and thus reduces manager’s
ability to change the groups of workers.
 Increases the time required to complete activities. Informal workgroup
behaviour such as gossiping, consultations, long coffee breaks, etc. are time
consuming and can lead to delay in task completion.
 Resistance to change. To the extent that change can affect informal groups they
will resist change. Therefore assuming change is functional, then any resistance
to the change is dysfunctional.
o Source of rumors.
o Group conformity to unacceptable standards.

1.8.5 Managing Informal Organizations.

When Managing Organizations Managers should be guided by the Following
Principles;
o Compatibility Try to set organizational goals that are compatible with those of
the members of the informal group
o Influence. Try to influence the informal group members rather than forcing
o Togetherness. Try to work together with the informal group members for the s
not interests of both the formal and the informal organizations.

1.8.6 Characteristics of Informal Organizations.

Standards of behaviour. Just as formal groups develop laws, taboos and beliefs
about what is right and wrong so does the informal group.
Pressure to conform. Informal groups apply pressure to members to conform to
group norms.
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

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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.

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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

2.2 Pre-classical Period

The evolution of organization can be traced from the following periods:

The Pyramids of Egypt

The pyramids of Egypt could not have been completed without sophisticated
organization practices and structures of the modern period.

The Chinese Empire

The construction of the Great Wall of China could not have been accomplished
without the sophisticated administrative and bureaucratic structures we know today.

The Catholic Church

The Catholic Church has also practiced many elements of classical theories for over
two thousand years.

The Roman Empire

The extensive bureaucracy of the Roman Empire could not have been maintained in
such a form and for such a long time without the application of a management theory
that we know today.

2.3 The Classical Theories

The classical theories were developed in three streams/approaches namely:
a) The Administrative theory
b) The theory of Bureaucracy
c) The Scientific Management Theory

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2.3.1. Administrative Theory:

This theory was largely developed by Henri Fayol (1841- 1925) who was a French
industrialist. He described a number of management principles that go towards
capturing
the entire flavor of the administrative theory of management. Some of those principles
are:
 Division of work (or specialization): One should work at activities in which
he/she has comparatively higher skills. This should lead to higher productivity.
 Authority and responsibility: Authority is the right to give orders. Each
person should have an appropriate authority to go with the given
responsibility. Responsibility is the task to be accomplished.
 Discipline There must be respect and obedience to the rules and objectives of
the 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
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.

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 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.

2.3.2 The Theory of Bureaucracy

The theory of bureaucracy was developed by sociologists who took a relatively
scholarly descriptive point of view. The most famous of those sociologists was Max
Weber (1864 -1920) who was a German Sociologist. He published most of his works
towards the end of the 19th Century. Max Weber identified the following as the, main
characteristics of bureaucracy:
 Labor is divided so that the authority and responsibility of each member is clearly
defined.
 Offices or positions are organized in a hierarchy of authority resulting in a chain
of command.
 All organization’s members are to be selected on the basis of technical
qualifications through formal examinations or by virtue of training or education.
 Officials are appointed not elected.
 Administrative officials work for salaries and are career people.
 The officials are separate from owners how
 The officials are subject to strict rules and controls regarding the conduct of their
official duties. Those rules are impersonal and uniformly applied to all people and
cases.

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.

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Employees in effect owned the organization and used resources for their own rather
than to serve customers and organizations.
Max Weber envisaged organizations that would be managed on an impersonal basis.
He called this form of an organization bureaucracy. Max believed that organizations
that exhibited the characteristics that he described would be more efficient and
adaptable to change.

2.3.3 Scientific Management Theory

First developed by Fredrick W. Taylor (1856 -1915), a mechanical engineer in the
United States, the Scientific Management can be defined as:

 The application of scientific method of study, analysis and problem solving to

organizational problems.
Or
 A set of mechanisms or techniques for improving organizational problems.

Scientific Management focuses its unit of analysis on the physical activities of work.
Scientific management deals with the relationship of a worker and his or her work.
Thus,
this lays emphasis on man-machine relationships with the objective of improving
performance of routine, repetitive production tasks.
Scientific management advocates for an empirical detailed study of each job to
determine how it could be done most efficiently.

The basic assumptions of scientific management theory are:

 Improved results in organizations will come from the application of the
scientific methods of analysis to organizational problems. In other words, the
scientific management approach holds that scientific solutions to problems of
management of organizations are superior to those of other approaches.
 Scientific management focuses primarily on work itself and not on the
particular person doing the work.
 Each worker is assumed to be a classical economic man-interested in
maximizing his monetary income. The complications of emotional and social
actions and reactions of persons in organizations are not emphasized.

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The basic principles of scientific management as expounded by Fredrick W. Taylor

are as follows:
 Develop a science for each element of man’s work in order to maximize the
organizations output.
 Scientifically select and then train, teach and develop the worker.
 Management should heartily cooperate with the workers so as to ensure all the
work is being done in accordance with the principles of science.
 There is almost equal division of the work and responsibility between
management and the workers. The management should take over all work for
which they are better fitted than the workers, and the workers should do the work
for which they are better fitted.
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.
2.3.4. Comparison of the Classical Theories
i. The theories were mainly developed during the early part of the 20Th century.
ii. The three streams were formed on similar assumptions about organizations -
organizations as a structure of relationships of human beings with goals,
objectives, roles, activities, power etc that exist when persons work together.
iii. Their main goal was to find out what needs to be made to organization
structures and relationships to improve efficiency in the organizations.
iv. They considered the environment to be either static or to have an insignificant
role in organizational efficiency

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However the three approaches had the following dissimilarities:

i. They were developed by separate groups of writers working totally
independently of each other:
ii. Bureaucracy developed mainly by sociologists who generally took a
scholarly point of view.
iii. Administrative theory and scientific management developed by writers who
were practicing managers; they were not merely content at describing
organizations; they prescribed practical purposes for better organizational
performances.
iv. Administrative theories focused on overall relatively macro aspects of levels
organizations. The scientific management theory looked at the micro aspects
— the worker, and the foreman. Bureaucracy also looked at the macro aspects
of the organization.

2.3.5 Evaluation of the Classical Theories

The Administrative theory
1. The principles of administration as postulated by Henri Fayol fail to be
universal truths.
2. The principles lack scientific derivation and verification.
3. The administrative theory is power centered. It is thus in philosophical conflict
with those who desire limited individualism.
4. Administrative theory suffers from the dysfunctions of bureaucracy such as
lion rigidity, impersonality, and excessive categorization.
5. Administrative theory suffers from superficiality, oversimplification and lack
of realism. It is satisfied with theoretical rather than actual.

However, as a theory of organization, the Administrative theory is critical

because:
(i) It recognizes the need for:
 Specialization
 Unity of command
 Discipline
 Separation of individual and organization interest.

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(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.

The Scientific Management Theory

The basic problem with the scientific management theory is that it assumed man to be
purely an economic man interested only in the satisfaction of his basic needs. His
rationality and motivation were purely financial/materialistic. These assumptions
were not realistic and man was motivated by more than his basic needs as later proved
by the neo classists.

2.3.6 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

The theory of Bureaucracy

Contribution to organization theory
 well defined hierarchy of authority
 A clear division of
 A system of rules covering rights and duties of each position
 A system of procedures dealing with work situation
 Recommended impersonality of inter personal relationship
 Selection /promotion based on technical competence.
Criticisms

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i. Lack of empirical evidences

ii. Assumed people are machines
iii. Ignored practical situations
2.3.7. 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?

Scientific Management Theory

 Standards
 Procedures
 Incentives
Administrative theory
 Discipline
 Unity of command
Bureaucracy
 Rules and procedures
 Hierarchy of authority

2.3.8 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

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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.

2.4. The Neo Classical Theories

The neo classical theories are based on the classical theories. They seek to address the
shortcomings of the classical theories. A4 few of the neo classical theories are
discussed here below.

2.4.1. The Hawthorne Experiments

The experiments were carried out between 1927 and 1933 at the Chicago Hawthorne
plant of the Western Electric Company: Four studies were carried out namely:

a) The illumination studies

These studies were expected to determine the relationship between the level of
illumination and worker’s productivity. It was expected that worker’s productivity
would increase with increasing levels of illumination. The studies failed to prove any
relationship between worker’s productivity and level of illumination

b) The Relay Assembly Test Room Studies

These studies were carried out to determine the relationship between worker’s
productivity and improved benefits and working conditions. The studies found out
that there was no cause - and - effect relationship between working conditions and
output. Rather, there were other factors that affected worker’s output such as his/her
attitudes and supervisor behavior.

c) The Interviewing Program

A group of employees were interviewed to learn more about their opinions with
respect to their work, working conditions and supervision. The workers suggested
that:
 Psychological factors help determine whether a worker is satisfied or
dissatisfied in any particular work situation
 The person’s need for self-actualization determines his/her satisfaction in the
work.

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 A person’s work group and his relationship to it, also determines his/her
productivity

d) The Bank Wiring Room Studies

This study was expected to study the effect of group influence on workers
productivity. The researchers found out that an informal grouping and relationship
was a critical factor in the workers’ productivity. The informal group determined the
group’s productivity, and functioned as a protective mechanism (served both for
internal and external purposes).

The Hawthorne Experiments concluded that:

i. An industrial organization is a socio technical system. The socio part is the
human aspects that need to be taken care of in order to increase workers’
productivity and the technical system are the physical aspects that also need to
be improved.
ii. Employee attitudes and morale are also important as determinants of
productivity.
iii. Other factors include worker’s personality and supervisor’s behavior. These
two also affect worker’s altitude and morale.
iv. A worker’s social group has a prevailing effect on his or her altitude and
productivity.

Criticisms of the Hawthorne studies

1. The philosophical basis
By emphasizing the social needs of human being rather than the economic needs
and self-interest, these studies conflict the philosophical basis of economic theory.
2. Methodology
The study methodology lacks the basis for generalizations.
3. Findings
The cause - and - effect relationship conclusions lack general support and
scientific verifiability.

Contribution
The Hawthorne Studies have however made the following contribution to
Organization theory

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 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.
2.4.2 Mary Parker Follet
She was a philosopher and political scientist. She was also a social worker among the
poor in Boston. She proposed the following principles:
 Emphasized the importance of subordinating individual freedom to that of the
group
 Stressed the importance of democracy in decision making -by involving all in
order to find a solution. Recommended the use of power with rather than
power over. Observed that Power cannot be delegated but authority can.
Power is the capacity to get things done. Authority is the right to give orders.
Power should be exercised with rather than over. Power over is dominance or
control, based on force. Power with is a jointly developed power. She
emphasized that power is a basic to management especially when used with.
 Defined conflict as the difference in opinion or interests. She emphasized that
conflict cannot be avoided, and therefore must be used to manage
organizations. Noted that there are three ways of managing conflict:
 Dominance - one side wins over the other
 Compromise - each side gains something to settle the conflict; also
each side loses something. In both dominance and compromise, the
basic causes of conflict are not settled. Follet recommends a third way.
 Integration of desires. In this way a solution that fully meets the goals
of each party in a dispute is found. Both parties get what they want.
Neither party gives up anything. Integration lets the parties creatively
discover alternatives that satisfy both parties in conflict. In integration,
conflict is used to creatively discover alternatives that satisfy both
parties.

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

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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.

2.4.3 Chester Barnard

 Barnard was writing in the 1 930s
 Was the President of New Jersey Bill Telephone Company
 Contributed to organization theory in three areas:
i. the importance of individual behavior
ii. theory of compliance
iii. theory of organization structure
1. The importance of the individual
- Bernard was the first person after the Hawthorne studies to emphasize the
importance and variability of the individual in the work setting.
- He emphasized that an essential element in organizations is the willingness of
persons to contribute their individual effort to the organization.
- The individual is always the basic strategic factor in organizations.
- Consequently the individual regardless of his history or his obligations must
be induced to cooperate or there cannot be cooperation.
2. Barnard’s Theory of Compliance
Barnard’s theory of compliance consisted of four basic elements.
i. the willingness to cooperate is a basic element of the individual in the
organization
ii. in complying, the individual surrenders his personal preferences i.e. surrender
or foregoes other preferences in order to comply in an organization.
iii. An individual is only willing to comply if he is sufficiently induced.
iv. The level/quantity of inducements determines his degree of compliance.

Barnard noted that material incentives by themselves are not enough. Other incentives
include:
 Opportunities for distinction
 Prestige
 Personal power

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 Coercion (i.e. sometimes force is necessary to obtain compliance).

3. Barnard’s theory of organization structure

- Emphasized that the organization was a structure of decision makers
- Stressed the importance of communication in organizations
- Stressed the role and importance of informal organizations in communication
and cohesiveness
- He was also one of the first organization theorists to take a system’s view of
organizations.

2.4.4 The basic Elements of the Neo-Classical Theories were:

i. Individual needs. Recognizes the existence of, and the variability of individual
needs, and characteristics e.g. feeling, emotions, and perceptions.
ii. Work Groups- recognizes the existence and the importance of informal groups
in organizations.
iii. Participatory Management - emphasizes the need of involving employees in
decision making especially on things that affect them.

2.5. The Information Processing Theory

i. The Information Processing theory views organizations as open systems which
face two basic situations
a) Environmental threats and uncertainties
b) Task uncertainty- this is the difference between the amount of
information already possessed by the organization and the amount of
information required to perform the task.

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

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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

2.6 The Contingency Theories

The contingency theories relate to how the organization structure adjusts to fit with
both the internal environment such as work technology and the external environment
such as given economic or political legal.
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.

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2.7 The Population Ecology Theory

The Population- Ecology theory can be explained by the following characteristics:

The carrying capacity of the environment is limited. An excess population of

organizations leads to congestion and subsequently to the survival of only those
organizations successful in creating a niche in the market place.Like biological
elements organizations are doomed to die unless they meet the environmental test of
fitness. Environmental forces select out the most appropriate structural forms for
survival from among populations of creased organizations on the basis of fit between
structural attributes and environmental characteristics.

The population- ecology theory shifts away from preoccupation with organization at
the individual level towards population level. It is not the fitness of any single
organization that is of interest. It is the group or groups of organizations and they may
be influenced by actions and events with which they have no obvious or direct links
Management has no effect in deciding whether or not the organization will survive or
die. Environmental factors solely determine the survival of any organization.

Criticism of the Population Ecology Theory

The Population- Ecology theory is not without problems. The following has been
cited as the major weaknesses of the theory:

The claim that the organizations’ existence and survival is determined by the
environments’ carrying capacity means that the theory cannot be used to predict about
the future. This is because the concept of environmental carrying capacity is
immeasurable and cannot be estimated. It can only be measured on ex post or
retrospective basis. Thus the theory cannot be used to make organizations adapt to
their environment and therefore ensure survival. Thus as an organization theory it is
therefore inappropriate.

The concept of fitness is not clearly defined by the theory. In other words it is
insufficient to state that only those organizations that environment determines as fit
survive. To do so would be tautological. A more meaningful and causal pattern must
be presented for a theory to be acceptable.

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To claim that organizations are like biological organisms also ignores the fact that
organizations are created by men- a biological organism- to meet its objective. To
claim that a biological organisms, man, can create a biological organism, an
organization, endows man with supernatural powers.

The population ecology theory also ignores the role of managerial decision makers.
To assume or argue that managers should be passive, helpless elements completely
dependent on environmental forces is to denigrate the important role managers can
play in determining the success or failure of an organization.

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LECTURE THREE
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:
Future desired end results to which Present efforts arte directed
Both the terms “goals” and “objectives” are considered to have the same meaning in
this context. Other aspects of goals are the following;

3.1 Goals are Ideal States

Goals represent targets established at certain points in time therefore it is inevitable
that actual performance of organization tends to be less consistent and less perfect
than anticipated.
Sometimes the goals may be too low, harmful or otherwise misplaced.

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Thus it would be meaningless to evaluate organisations in terms of effectiveness using

such types of goals.
Most organizations are multifunctional and they generally seek to accomplish
several different goals at the same time.
The realization of one goal may inhibit the attainment of another. For instance, a high
rate pr of return may be well achieved at the expense of long-term organizational
growth. Thus, effectiveness in the attainment of one goal may be inversely related to
effectiveness in b) attainment of another.

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.

Interpretation of some goals is also subject to wide differences of interpretation

Despite such problems however, the goal attainment remain an important measure of
(organizational effectiveness.

3.2. Official and Operative Goals

a) Official goals refer to:
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 emphasized in public pronouncements by the top officials of the
organizations.
Goals that describe a value system.
Goals that serve the purpose of legitimizing the organisation to the various parties
such as customers, taxpayers, suppliers and employees.

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BBE 504 – ORGANIZATION THEORY

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
organization.
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

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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.

3.3 Types of Goals

There are many ways of classifying goals, one way, discussed by Perrow, classifies
goals into five categories’ according to “whose point of view is being recognized”,
that of society, the customer, the investor, the top executive or others. Thus
organizations may be said to have:
Societal goals: The point of view recognized here is that of society in general.
Societal ‘goals relate to the goods produced and services provided by an
organization to enhance general welfare, maintain order, and generate and
maintain cultural values
Output goals: The point of view being recognized here is that of the public for which
goods are produced or services provided. Examples would be the creation of
consumer products, business services health care, and education programs.
System goals: The point of view being recognized here is that of the organization
itself and the manner in which it functions, independent of the goods it produces
or services it renders. Examples would be the goals of growth, stability, and profit
and market share.
Product Goals: The point of view being recognized here is that of the actual good or
service which is produced or provided. Product goals relate to the characteristics
(quality, styling, uniqueness, variety) of the goods and services in question.
Derived Goals: The point of view being recognized here is that of the top
management of an organization, and what it chooses to do with the power and
resources it accumulates while pursuing other goals. For example top management
may use its power and wealth to further certain political aims, or to support the
arts or higher education, or to contribute to the personal development of its
employees.

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

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proposed by R.C. Davis in his classic. The Fundamentals of Top Management. A

summary is may presented in Table 2.1 below.
Table 2.1 Classification of Objectives
Type of Focus Serves Example
Objective
Primary Production and Primary To increase sales of widgets
distribution of goods and beneficiary by 10% by end of fiscal year
services, groups. 1990.

Secondary Support functions to Secondary To meet all major occupational

achieve production and beneficiary safety and health standards
distribution of goods and groups. (OSHA) by 1990.
services.
Short Term One year or less Primary and To reduce the number of quality
accounting cycle, secondary control rejects by 20% within the
groups. next 12 months.
Long Term Two to twenty years or Primary and To increase market share to 31%
more. secondary by January 1995.
groups.
Equilibrium Maintain status quo with Primary and To maintain market share at 10%
environment, secondary through 1995.
groups.
Improvement Increase operating Primary and To reduce electrical
efficiency and secondary consumption (Kshs.) by 15%
effectiveness, beneficiaries, by January 1.
Explicit Publicly stated. External groups
To increase hiring of minorities
(formal and top
by 10% by January 1, 1991.
Official) management.
Operational
Implicit What people actually To fill six positions as soon
managers.
(operational, work toward. as possible.
unofficial)

Source B.J. Hodge and William P. Anthony 1988 page 276

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BBE 504 – ORGANIZATION THEORY

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.

This primary objective is of paramount importance to the organization because it by

establishes the base for defining other supporting objectives by setting the basic
purpose of the organization. Also it can be a determining influence on the structure
and process used in the organization. It sets the stage for an organization’s operations
because the process, technology, and even personnel are selected on the basis of what
is required to produce and distribute products and services that will satisfy primary
client needs and desires.

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 on providing utility that the group desires.

Short -term and long-term objectives

This classification is not a new category per se, but a different way of looking at
primary and secondary objectives from the view point of establishing some sort of
time boundary as soon for them.

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

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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.

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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.

3.6 Functions of Organizational Goals

Viewed in broad perspective organizational goals perform several important functions
which vary according to time and circumstances among other things. Organizational
goals perform the following functions:
a) Guidelines for action. By describing future desired results, goals serve as
guidelines for action, directing and channeling efforts and activities of
organizational participants. In this regard, goals provide focus, and direction for
organizational activity by prescribing what should be done.
b) “Constraints” To the extent that goals prescribe what “should be” done, they also
serve to prescribe what should not be done. An Organization that commits itself to
certain goals reduces the amount of discretion it has, to pursue other outcomes.
For example, an organization that commits itself to maximizing immediate stock
holders’ dividends in effect reduces, the amount of financial resources available
for expanding production capacity or investing in research and development of
future products, Thus, by their nature, goals function to constrain the activities of
organizational participants.
c) Source of legitimacy Goals also provide a source of legitimacy for an
organization by justifying its activities and indeed its existence to such groups as
customers, politicians, employees, stockholders and society at large. Prominent
examples of organizations and their stated official goals that provide legitimacy
include:

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Hospitals- provision of medical services aimed at cure, and prevention of

diseases.
Prisons and mental hospitals therapy and rehabilitation
Churches- divine worship and spiritual salvation
Universities - teaching, research and public service

Recognition of legitimacy greatly enhances an organization’s ability to deflect critics

and obtain resources and support from its surrounding environment. This largely
explains the fundraising success of such organizations as the Girl Guides, Boy Scouts,
The Salvation Army, and the Red Cross.
d) Standards of performance: To the extent that goals are clearly stated and
understood they offer direct standards for evaluating an organization’s
performance. Once organization establishes goals in such quantifiable areas as
sales, market size, or profit, the degree to which they have been obtained should
be easily verifiable.
e) Source of motivation: The goals of an organization can serve as an important
source of employee’s motivation and identification. In fact organizational goals
give incentives to members. This phenomenon is clearest in organizations that
offer their members bonuses for achieving specified levels of sales, or whose pay
schemes are tried directly to annual profit.
f) Rationale for organizing Organizational goals provide a basis for organizations
design; organizational goals and organizational structure interact in
that the actions necessary for goal accomplishment may impose unavoidable
restrictions on employees activities and resource initialization patterns,
necessitating implementation of a variety of organizations design elements;
communication patterns, control mechanisms departmental structures etc. for
instance, the more the goals of a functionally structured organization call for
diversification, the greater will be the need to evaluate alternative structural
arrangement such as product or customer departmentalization.

3.4 Goal Formulation

3.4.1 Responsibility for Goal Setting
The process of setting organizational goals should ideally begin at the top levels of the
organization in order to set the basic direction for an entire organization. However,

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even though the ultimate responsibility for goal setting rests with the top management
group, it
is important that they gather sufficient input from within and without the organization
to
make intelligent decisions about the goals that the organization on will seek. First-line
managers and production workers can add valuable input to production oriented goals,
and the same can be said for sales managers and the sales force about establishing
sales
goals. These members are most familiar with the conditions surrounding the process
of
goal achievement.
The management group at every level should set goals for their respective
departments
and divisions. Goal setting should be shared, involving all members of management
and
often non-managers as well, depending on management philosophy, technology and
so on. Often objectives are set by a dominant coalition of managers, experts, or those
with
special interests and influence in the organization. These individuals might not, in
fact,
be charged with the formal responsibility for goal setting, nevertheless they can be
very
influential when it comes to establishing those goals toward which the organization
works, both formally and informally. Because of the impact, actual as well as
potential,
that it can have on goal setting, the dominant coalition must be considered when goals
are being set.

3.4.2 Determinants of Organization Goals

The following are some of the major factors that organizations must consider when
setting goals:
a) Consumer needs:
All organization exist to serve some consumer groups (primary beneficiaries) so they
must carefully identify those people they will attempt to serve. A clear understanding

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of these consumer needs is necessary for a management group to establish primary

organization goals. In addition, the organization should examine the needs of
secondary beneficiary groups. In this way there can be an integrated set of goals
aimed at satisfying primary consumer groups that also takes into account the needs of
the secondary groups such as government, distributors, and so on.

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.

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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.

3.4.3 Goal Setting Techniques

Officially, organizations often have a formal and explicit means for establishing
goals, whether by a vote of the shareholders or the board of directors or by some other
means. In actuality, the setting of goals or objectives is often quite different from the
formal means that the organization espouses. In reality there are many factors that
come into play in establishing goals; internal policies frequently exert a great
influence on the process. A strong group or an individual in a key place can exert an
inordinate amount of influence on setting goals and also on determining their priority
once they have been it is selected. The following sections briefly discuss the main
techniques that can be used to establish organizational goals and the priority placed on
them.

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.

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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.

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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;

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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.

Under favorable conditions, organizations often accumulate resources in excess of

those necessary to meet their required side payments (that is inducements). The
resulting difference between the total resources thus available to an organization and
the total payments necessary to maintain the contributions of coalition members
comprises what has been termed organization slack. Slack may take many forms. In
general it is that cushion of unused or convertible resources which enables an
organization to successfully adjust to various internal and external pressures as well as
to initiate required changes in strategic posture. Liquid financial assets such as cash,
marketable securities, and current account receivables are perhaps the most utilitarian
form of slack. Other forms of slack include dividends in excess of those required to
ensure continued stockholder investment, wages paid at a level above that necessary
to attract an acceptable labor force and so on. The capacity to absorb and release slack
allows an organization to successfully respond to variations in its workflow with
minimal trauma.

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

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BBE 504 – ORGANIZATION THEORY

its very survival, hard bargaining takes place with the result that the desires of weaker
groups are sacrificed.

3.4.4 Organizational Decision Making

Bounded Rationality
The classical economic theory portrays organizational decision makers as maximizing
intended outcomes based on complete information. This representation flows from
two fundamental assumptions upon which classical economic analysis rests. The first
assumption is that organizations seek to maximize expected utility or profits above all
else. The second assumption is that human beings are substantively rational. The
realism and applicability of these assumptions has been challenged by organizational
theorists. One of them is the Nobel Laureate, Herbert A. Simon who advances the
view that the actual choice or decision to follow a course of action, far from being
substantively rational, is limited by the finite cognitive capacity and affective
attributes of the individuals involved as well as by environmental constraints over
which there is virtually
no control. Thus, individuals make decisions under conditions of bounded (or
limited) rationality. Such circumstances are seen as not only reflecting the limited
computational capabilities of the human mind to process information, but also
reflecting the uncertainty of future organization events and an inability to order
preferences for all consequences in a single utility scale. Given that organizations
exist in environments that do not fully disclose the alternative courses of action
available, or the consequences of those alternatives, all intended rational behavior, is
by definition, behavior that is inherently bounded.

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

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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.

Garbage Can Model

March and Olsen (1972) challenge both the preexistence of goals to direct
organizational choices and the orderliness of choice processes. They claim decisions
are an outcome of four partially independent streams; a stream of problems, a stream
of potential solutions, a stream of participants, and a stream of choice opportunities.
Likening organizations to irrational garbage cans into which. various participants
have poured miscellaneous problems and solutions, they view organizations as
“organized anarchies” the no clear or consistent idea of what they are trying to do,
how they are supposed to do it or who is to decide. Decisions are only made if a
problem (for example declining sales), a solution decision (for example a new
product), the relevant participants (for example annual sales convention)
simultaneously intersect.

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

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BBE 504 – ORGANIZATION THEORY

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

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BBE 504 – ORGANIZATION THEORY

3.5. Measuring Goal Efficiency and Effectiveness

3.5.1. Organizational Efficiency is generally defined as the ratio of an organisation’s
output (products or services) to its inputs (labour, capital, raw materials.)

In economic terms, the concept of efficiency can be formulated as an optimisation

problem i.e. what is the least cost combination of inputs that will produce a given
level of outputs.
In normative terms, an organization is judged efficient if when compared to similar
organisations its outputs (benefit received) are relatively high in comparison to its
inputs (cost). Thus if two companies making the same product finish the fiscal year
with equal production levels but one attained the same level with fewer invested
resources than the other, that company is said to be more efficient. This is so because
it attained the same level of outputs with fewer inputs

3.5.2 Organisational Effectiveness- This is a measure of how well an organisation

has achieved its goal. The greater the extent to which an organisation’s goals are met
or surpassed, the greater its effectiveness.

3.5.3. Models of Measuring Organizational Efficiency and Effectiveness

There are four models or approaches used to measure an organization’s efficiency and
effectiveness. These models are as explained below:

Systems Resource Model of Measuring Organizational Effectiveness

In the systems resource model organisations are viewed as being involved in a
bargaining relationship with their surrounding, importing various scarce resources (for
example physical facilities, ideas, raw materials, personnel, funds, e.t.c) to be returned
to the same environment in the form of products and services (outputs).

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.

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BBE 504 – ORGANIZATION THEORY

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.

Shortcomings of the systems resource model for evaluating organisational

effectiveness and efficiency
While the systems resource model takes into account that organisations are dependent
on their environment for their sustainability, it provides little or no guidance as to
what constitutes the optimum exploitation of resources. Thus, without some
optimisation criterion, the model is difficult to operationalize i.e. with this approach,
we are left with unanswered questions “how does one know when a system has
reached a point of optimal input exploitation.”
The systems resource model also fails to provide guidance in determining which
scarce and valued resources are relevant as the basis of determining the organisational
effectiveness. Without reference to specific output goals, the definition of resource
becomes ambiguous.

The model also fails to elaborate on the internal allocation of resources.

A further drawback of the systems resource model is that once essential resources
have been identified, something must be said about their desired state. E.g., if certain
raw materials are viewed as an essential resource, the nature and extent of raw

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materials necessary must be determined. However this cannot be done unless some
ultimate goal is established, in other words, the desired state of essential resources
must be defined in relation to some objective. It is unrealistic to assume that
organizations can be determined to the necessary nature and extent of essential
resources without doing so on the basis of established goals.
Organisational effectiveness is based solely on resource acquisition rather than
resources. That is the model ignores whether or not resources are being used
effectively.

Internal Process Approach

In this approach, effectiveness is measured as internal organizational health and
efficiency. An effective organization has a smooth well - oiled internal process.
Employees are happy and satisfied. Departmental activities mesh with one another to
ensure high productivity. The following are the indicators of an effective organization
as seen from an internal process approach:
 Strong corporate culture and positive work climate
 Team spirit, group loyalty and teamwork
 Confidence, trust, and communication between workers and management
 Decision making near sources of information regardless of where those
sources are on the organization chart
 Undistorted horizontal and vertical communication; sharing of relevant facts
and feelings
 Rewards to managers for performance, growth, and development of
subordinates and for creating an effective working group
 Interaction between the organization and its parts with conflicts that occurs
over projects resolved in the interests of the organization

Shortcomings of this Approach

Does not consider the external environment and it ignores the shareholders and other
external stakeholders. Further the internal process approach has been faulted for being
subjective because many of its aspects are not quantifiable.

Usefulness of the Approach

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BBE 504 – ORGANIZATION THEORY

 Happy committed actively involved and satisfied employees are appropriate

measures of efficiency and effectiveness as it would be difficult to achieve
efficiency without satisfied staff
 Keeping staff happy is the key to long term success of a company
 The idea of a positive corporate culture is also part of this approach and this
also leads to corporate efficiency

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;
Table 2: Stakeholder and its criterion
Stakeholder Effectiveness Criteria

1. Owners Financial return

2. Employees Work satisfaction, pay
3. Customers Quality goods and services
4. Creditors Creditworthiness
5. Community Contribution to community
affairs
6. Suppliers Satisfactory transactions
7. Government Obedience to laws tax payment

Shortcomings of using the stakeholder approach

i) This approach is complicated as it seeks to satisfy many stakeholders at
once
ii) It also ignores the major stakeholders
iii) It is also a subjective
iv) Business organizations would also find it difficult to simultaneously fulfill
the demands of all groups

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BBE 504 – ORGANIZATION THEORY

Usefulness of the stakeholder approach

i) It takes a broad view of effectiveness and examines factors in the
environment as well as within the organization
ii) It includes the social aspects which are ignored by the other approaches.
iii) The approach further handles several criteria simultaneously and on that
acknowledges that there is no single measure of effectiveness.
iv) The approach is also gaining popularity based on the view that
effectiveness is a complex, multidimensional concept that has no single
measure
v) Recent research has also shown that the assessment of multiple
stakeholder
groups is an accurate reflection of effectiveness.
vi) Moreover research shows that firms really do care about their reputation
status
and actually do attempt to shape stakeholders’ assessment of their
performance.

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

The main disadvantages are

i. Multiplicity of goals
ii. Subjectivity of goal measurement criteria

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BBE 504 – ORGANIZATION THEORY

LECTURE FOUR
ORGANIZATION AS A SYSTEM

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.

4.2 Definition of a System

A system is an organised or complex whole, an assemblage or combination of things or
parts performing as a complex or unitary whole.

This definition conveys three very important ideas:

The first concept is that of interdependence. That is to say the parts that make up a
system are interdependent i.e. if change occurs in one part or set of parts, it affects all
other parts. This effect on each part or set of parts in a system may be direct or indirect.
The second concept is that of holism. That is to say, the system should be considered as
a functioning whole. Changes in parts of the system and in the functioning of the
elements of the system should be considered from the standpoint of the systems overall
performance.

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.

The system is capable of growth.

It is also capable of receiving inputs
It is also capable of producing outputs.
It is a goal searching system. (In fact also multi goal seeking).
It consists of both abstract and concrete subsystems.
It also a dynamic system.

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BBE 504 – ORGANIZATION THEORY

The general subsystems of an organisation system are:

Production subsystems
Boundary spanning subsystem
Maintenance subsystem.
Management subsystem.
Adaptation subsystem

These subsystems are explained in detail in paragraph 4.3 below

4.3. What are Subsystems?

Subsystems are a group of functioning elements within a larger system. They are in fact
systems within a larger system. The determination of subsystems depends on the
desired level of abstraction at a given time for a desired type of analysis. If we are
concerned with analysing the University Of Nairobi as a system, we can break it into
colleges as subsystems. If we want to analyse the College of Humanities as a system,
we can break it into faculties and consider them as subsystems and so on. Thus, all
systems can be considered as subsystems and every sub system can be considered as a
system depending on the level of analysis desired. In the case of organisations, we are
interested in looking at an organisation as a system composed of subsystems
(departments).

subsystem subsystem
System

College of Humanities and Social Sciences Faculty of Commerce

University of Nairobi College of Physical and Biological Sciences Faculty of law
College of Architecture and Engineering Faculty of Arts

Figure 4.1 an example of systems and subsystems of the University of Nairobi

4.3.1 Organisation Subsystems.

The sub-systems perform the specific functions required for organisational survival.
Each sub-system is a system on its own because it has a boundary and absorbs inputs
from other sub-systems and transforms them into outputs for use by the remainder of

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the organisation. The organisational sub-systems can be divided into the following
functional sub-systems:
i. Production sub-system: this subsystem is responsible for producing the
product and service output of the organisation. This is where the primary
transformation takes place. In a manufacturing firm, the production subsystem
is the production department. In a university, it is a teaching department. In a
brewing company it’s the department that actually produces beer.
ii. Boundary spanning: the boundary spanning subsystems handle transactions
at organisational boundaries. They are responsible for exchange with the
environment on both the input and the output sides. The boundary spanning
subsystems acquire the needed supplies and materials. On the output side,
they create demands and deliver outputs. On the input side they provide inputs
to the organization Boundary spanning subsystems work directly with the
external environment. In a beer manufacturing company, the boundary
subsystem includes the marketing department on the output side and the
purchasing department on the input side.
iii. Maintenance subsystem: this is a subsystem responsible for the smooth
operation and upkeep of the organisation. The maintenance subsystem includes
cleaning and painting of buildings and maintenance of machines. Maintenance
subsystem also includes departments, which take care of human needs such as
morale, compensation and physical comfort. Such departments include
personnel, salaries, and cafeteria e.t.c.
iv. The adaptation subsystem: This is the subsystem responsible for the
organisational change. It scans the organization’s environment for problems,
opportunities, threats and technological developments and provides
appropriate recommendations to the organisation. It is also responsible for
providing information and helping the organisation to change and adapt. In a
manufacturing organisation, the adaptation subsystem includes such
departments as marketing research, Research and Development and corporate
planning.
v. The management subsystem: this subsystem is responsible for directing the
other subsystems of the organisation. It provides direction, establishes
strategy, goals and policies for the whole organisation. The subsystem also
coordinates the performance and activities for the other subsystems and

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resolves conflicts between them. It is also responsible for developing

organisation structure and directing tasks within each subsystem. This
subsystem consists of the top management team in an organisation.

4.3.2 Advantages of the Systems Approach.

i. Its holism approach enables one to consider the organisation as a whole.
This clearly emphasises the interdependence of the parts of the system.
ii. The approach allows the student or manager to clearly comprehend the
various concepts, ideas, or elements and their relationships.
iii. The approach also allows for model building, which makes presentations
of ideas easier. The diagrammatic presentation makes the understanding of
the relationship easier not only to understand but also to build up models
to help in empirical research and hypothesis generation and testing.
iv. The approach also allows for quantifications of relationships between
elements in the system.
v. It enables managers to view their jobs as parts of a system, not as static
isolated elements

4.3.3. Disadvantages of the Systems Approach.

There is a tendency for some students and practitioners who apply the system approach
to
advocate for a more centralised administrative structure in organisation. That is looking
at the organisation as a whole may tempt one to concentrate decision-making power at
the top of the organisation with little delegation if any.

The systems approach tends to oversimplify organizational relationships. Relying

exclusively on these models at the expense of managerial judgment and experience can
lead to dysfunctional consequences.

4.4. Closed and Open Systems

4.4.1. Closed System
 A closed system would not depend on its environment
 A closed system would be autonomous, enclosed or sealed off from the
outside world.

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 Although a closed system would not exist since it would die due to entropy, the
classical theorists looked at organizations as closed systems because they
focused on internal systems. This is because they took the environment for
granted and assumed that the organizations could be made more effective only
through internal design. They assumed that the environment was stable and
predictable and did not affect the organization.
 Does not depend on its environment
 Does not interact with its environment
 It is enclosed and sealed off from its environment
 It has all the energy it needs.
 Assumes the environment is static and has no effect on the organisation.
 Assumes that the only thing that matters is internal structure and design, which
can be effectively structured by management.

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

4.4.2 Open System

An open system:
 Interacts with its environment to survive.

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 To survive, it must continuously change and adapt to the environmental

changes.
 It must correctly interpret and act on the changes happening to its environment.
 It must also control and coordinate its internal activities in the face of
environmental disturbances and uncertainty.
 The need for input from the environment and the need to export its output into
the environment denote an interdependence relationship between an
organisation and its environment.
 It both consumes resources from and exports resources to the environment. for
 It cannot seal itself off from its environment. It must deal continuously with
its environment. At the same time, it must also deal with internal efficiency as
well as interact and act on the environmental changes.
 It must sell its output in the environment, coordinate its internal activities, and
deal with environmental changes and uncertainties.
 All systems that must deal with their external environments to survive are
open systems. Human beings are open systems. The University of Nairobi is
an open system.
 It must correctly interpret and act on the changes happening in its environment
 At the same time it must control, structure and coordinate its internal
environment to take account of changes in the external environment.

a) Advantages of looking at organizations as open system:

 Enables us to see the dependence of the organisation on the environment
 Enables us to understand the inter-relationship between the organisation and the
environment.
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.

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4.5. Input — Output Analysis of a System

 An input- output analysis depicts the system as taking or receiving resources
from the environme1at, processing them into outputs and giving them to the
environment.
 Input — output analysis involves examining a flow of materials, ideas,
concepts, money, people, e.t.c. from the environment.
 The input- output analysis consists of 5 parts namely:
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.

The organization Environment

Environment

Inputs Transformation process Outputs

Feedback

Figure 4.2 an input- output diagram of an open system

4.6 Other Kinds of Systems

There are many kinds of systems with their own subsystems. The human being is one
of them, but it is the most complex because it:
i. Is alive- it has life.
ii. It can think, plan and remember.

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iii. Is aware of its surroundings.

iv. Is also aware of itself.
v. Have attitudes, moods, feelings and norms.

You can also proceed to a higher and more complex system,

vi. The organization as a system. It is composed of human beings and consequently

transforms the complexity of the human system many times over. The complexities of
social system arise from:
 Complexities of the human system.
 The norms and values of human beings, which are intangible and hard to detect.
 Cultural dimensions of human beings, which are even harder to identify.
 The fact that these norms, values and cultures are constantly changing.

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).
1. Atom, map or bridge.
Simplest because it’s static.
2. Clocks and watches.
A higher complexity because it is dynamic.
3. Thermostat.
Higher complexity because it is self regulating within prescribed limits.
4. Cell.
This is the beginning of a system that is not only Self-regulating but it is a living
thing.
5. Plant.
Complexity increases due to ability to reproduce and grow. (Several cells).
6. Animal system.
Dynamic and living.
7. Human beings.
Living, dynamic and has awareness of its surrounding. Self- regulating
8. Social organisation.
A social system is composed of complex systems namely human beings that
transfer their complexities to the social organisation.

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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.

Organisation theory focuses on the organisation level of analysis. Organisation theory

is a macro examination of the organisation because it analyses the whole organisation
as a unit. Organisation behaviour on the other hand focuses on the individuals within
the organisation as the relevant unit of analysis. Organisation behaviour examines
concepts such as motivation, leadership style and personnel and is concerned with
cognitive and emotional differences among people within the organisation.

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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.

5.2 Meaning of Organization Structure and Design

An organisation design is defined as a structure and a process through which
individuals allocate tasks among members, identify relationships and integrate their
activities towards common objectives. It includes
 Allocation of tasks and responsibilities between the different members of the
organization
 Differentiating these tasks and activities into groups and departments
 Differentiating the tasks and responsibilities into hierarchies and locations
 Establishing coordination mechanisms to integrate the different groups, and
hierarchies into a unitary whole.
Organisation structure may also mean the following:
 The way the organisation is differentiated into various tasks and responsibilities.
 The way the tasks and responsibilities are allocated to the various members of
the organisation.
 The way the organisation is differentiated into hierarchies.
 The way the organisation is differentiated into different locations.
 The way the different responsibilities, tasks and locations are coordinated or
integrated into a unitary whole

Organization 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)

5.3. Dimensions of Organization Structure

There are several ways in which the organization structure is measured or
differentiated.
The measures used are:

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a) Span of control. This refers to the number of employee directly controlled by a

single supervisor. The size of the span of control is a function of:
i. The degree of complexity of the work- simple tasks are easily
supervised and are therefore associated with long spans while mo
complex or advanced tasks are associated with shorter span of control
ii. The level of staff skill and ability. Well-framed and able employ can
be supervised more efficiently in larger groups (wider spans) while
untrained staff require narrow or smaller span of control.
iii. The supervisors’ training and ability level. Too wide span of con is
associated with lack of control and the likelihood of costly mistake
being made by subordinates. Too narrow a span of control leads
employee being over supervised and denied the opportunity to creative.
This may lead to decline in organisation growth as a result inability to be
adaptive to environmental change and dynamics.

(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.

(c) Ceitra1isation/decentralization. This refers to the level in the organizational

hierarchy in which decisions are made. In a centralized hierarchy, the decisions are
made at higher level.

(d) Formalization- the amount of written documentation in the organisation that

describes the procedures, job descriptions, regulations policies of these organisations.

(e) Specialization- the degree to which organizational tasks is subdivided.

(This is also referred to as the division of labour.) If specialization is extensive, each
employee performs only a narrow range of activities.

f) Standardization- is the extent to which similar work activities are performed in a

unified manner. In a highly standardized organisation, work content is described in
detail, so similar work is performed the same way across departments or locations.

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(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.

(i) Structural Complexity-refers to the number of activities or subsystems within the

organisation (horizontal complexity) the number of levels in the hierarchy (vertical
complexity) and the number of localities that is geographical (spatial complexity).

j) Professionalism- is the level of formal education and training of employees.

Professionalism is considered high when employees require long periods of training to
be jobholders in the organisation. Professionalism is measured in terms of the average
number of years of education of employees.

(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.

5.4 Contextual Dimensions

They characterize the whole organisation including its environment. Contextual
dimensions are important, because they influence the structure. The key contextual
dimensions are as follows:
i. Size- this is the number of people in the organisation. Since organisations are social
systems, the number of employees measures size. Other measures such as total
sales or amount of assets are related but do not indicate the size of the human part
of the social system.
ii. Organizational technology- the nature of the task to the production subsystem and
includes the actions, the knowledge and the technologies used to change inputs to
outputs. An assembly is one type of technology. E.g. college classroom or an oil
refinery.
iii. Organizational environment- this refers to all the elements outside the
organisation’ boundary but can affect or have the potential to affect the
organization. The key elements include: the industry, government, customers,
suppliers and the financial sectors. Most elements that affect the organisation are

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composed of other organisations. Both contextual and structural dimensions

represent variables that can be measured and analyzed for any organisation. They
provide a basis for measurement and analysis.
iv. Organizational culture This refers to the beliefs, values and customs shared
by members of an organization or group. The shared beliefs, values and customs
are strongly held and shared by the group and they help guide the group in the
pursuit of the group’s goals
v. Organizational strategy This refers to the formulation of the organizations goals
and objectives and the way to achieve those goals

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LECTURE SIX
ORGANISATION ENVIRONMENT

6.1 Introduction
In this lecture we shall define organizational 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.

6.2 Definition of Organization’s External Environment

Organizational environment refers to all the elements existing outside the boundary of
the organization that have the potential to affect all or part of the organization. In a
broad sense, the environment is infinite and includes everything outside the
organization. It consists of sectors such as
 Raw material - these are individuals and other firms which supply the
organization with raw materials
 Human resources - these are organizations which supply the organization with
human resources
 Financial Resources - these are conditions, competitiveness, institutions and
instruments which supply the organization with financial resources
 Customer or Market - this sector includes the customers who purchase the
organization’s goods and services
 Economic - this includes the state of the economy, inflation, depression, or
unemployment rates, economic policies etc. of the country or region where the
organization sells its goods and service
 Political/legal - this includes the stability Or instability, rules and regulations,
and the justice systems of the country
 Socio-cultural - consists of values, beliefs, standards of the society in which the
organization is situated
 Demographic - consists of all the demographic dimensions of the society of the
organization
 Natural Environment - consists of the climate, weather and other natural
conditions of the country or region of the organization

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 International environment - consists of the elements, factors and other

organizations existing outside the country of the organization which have
the potential to affect the organization.

6.3 Dimensions of Organizational Environment

The external environment of an organization can be differentiated, measured or
categorized in many ways. The main ways in which this differentiation can be done
include the following studies:

6.3.1 By Aldrich - Aldrich Categorizes

External Environments in Terms of:
i. Environmental Capacity: This measures the environment in terms of
resources availability
ii. Homogeneity/Heterogeneity: This categorizes the environment in terms of the
degree of similarity among the environments elements
iii. Stability/Instability: This categorizes environment in terms of the degree of
turnover of the elements
iv. Consensus/Dissensus: This categorizes the environment in terms of the degree
to which an organization’s claim to a specific domain is disputed or recognized
by other organizations
v. Concentration/Dispersion: This measures the degree to which resources and
the elements are evenly distributed over the range of the organization’s domain.
vi. Environmental Turbulence: This measures the extent to which the task
environment of an organization is disturbed by an increasing rate of
interconnection between elements and trends.

6.3.2 Emory and Trist

Emory and Trist categorized external environments into the following categories:
 Placid Randomized. This is a simple environment. It is placid in the natural sense
that elements change slowly. The environment is random because when a change
does occur, it is not predicted, and is not coordinated with other environmental
elements.
 Placid Clustered. This environment is stable. Elements are linked together so that
any slight change in one causes simultaneous change in other elements. When

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threats or opportunities occur they occur in clusters which are more dangerous for
the organization.
 Disturbed reactive. In this environment changes are no longer random. Actions by
one organization can disturb the environment and provoke a reaction. This
environment is made up of large organizations. A decision by any one organization
in this type of environment is significant enough to cause a disturbance, and calls
for a reaction from other organizations. In a disturbed reactive environment,
management’s task is to carefully plan decisions and strategic moves to allow for
counter moves.
 Turbulent Field. This is an environment characterized by both complexity and
rapid changes. Multiple sectors experience dramatic changes and the changes are
connected. The turbulent field usually has overwhelming negative consequences for
the organization. The distinguishing feature of the turbulent field is the inter-
dependence and the inter-connectedness of the elements.

6.3.3. Lawrence and Lorsch Studies

Lawrence and Lorsch of Harvard University examined three departments
(Manufacturing, Research & Development and Sales) in ten companies in the United
States of America. Their aim was to find out how organizational structure relates to
environmental complexity. Their findings were that;
 The plastics industry with high environmental complexity tended to have higher
departmental differentiation than either the food industry, (facing moderate
complexity), and the container industry, (facing low environmental complexity).
They defined differentiation as the differences in cognitive and emotional
orientation among managers in different functional departments.
The plastics industry also had a higher degree of integration than either the foods
industry or the container industry. Their findings are as summarized in table 6.1.
Table 6.1 Environmental Uncertainty and Organizational Structures
Plastics Food Container
Environmental uncertainty High Moderate Low
Departmental differentiation High Moderate Low
Percentage in integrating roles (integration) 22% 17% 0%
Source: Draft, R.I

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6.3.4 Burns and Stalker Studies

Burns and Stalker observed 20 industrial firms in England and discovered that when
external environment was stable, the internal structure was characterized by rules,
procedures and a clear hierarchy of authority (i.e. high formalization). They were also
highly centralized.

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.

6.4. The Impact of Environment on the Organization

The organization’s external environment has the following effects on the organization:
Resource Dependence: The organization depends on its external environment for its
resources. It also depends on its external environment for marketing its goods and
services. These dependencies give environmental elements power over the
organization. When these dependencies are small and isolated as in the case of placid
randomized environment, significant coping is not required. When the dependencies are
large and are changing rapidly, the organization must take steps to cope with these
dependencies and reduce them. Organizations have two coping techniques:
 The first one is internal change. This involves altering its structure, internal work
patterns, or policies, or planning and forecasting.
 The second technique is to reach out and change the external environment. The
organization can try to reduce environmental change, or to change external
conditions in a direction suitable to its own needs. These internal and external
strategies are described below

6.4.1. Internal Change Categories: These are as follows;

 Structural complexity. As the complexity in the external environment increases,
so does complexity in the organization structure. This is based on the law of
requisite variety that says that complexity in one system is required to control
complexity in another system.

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 Buffering. Buffers absorb uncertainty from the environment. The goal of buffer
departments is to protect the organization’s technical core from external
disturbances so that it can operate as efficiently as possible. Buffers are specific
departments established to deal with specific domains and absorb the uncertainty
originating from each domain. Advertising, sales and marketing departments
attempt to buffer the technical core (the production department) from environmental
uncertainty.
 Boundary .spanning roles. These are departments that link and coordinate the
organization with key elements in the external environment The boundary role
establishes a relationship with individuals and organizations in the external
environment. The boundary spanning role serves two purposes:
 To detect and process information about changes in the external environment.
 To represent the organization to the external environment

Examples of departments which perform boundary spanning role include strategic

planning, public relations.
 Differentiation. This is the difference in cognitive and emotional orientation
among managers in different functional departments and the difference in formal
structure among these departments. When the external environment is complex and
rapidly changing organizational departments become highly specialized to handle
the uncertainty in their external domain. For example, when the University of
Nairobi faces a highly hostile political environment, it establishes specific
departments to deal with the complex political environment
 Integration. Integration is the quality of collaboration between departments. When
environments are highly uncertain, organizations form integrators to increase co-
ordination among departments. These integrators include liaison officers,
management committees, task forces, or integrators.
 Planning and Forecasting. When the environment is stable, the organization can
concentrate on current operational problems and day- to-day efficiency. Long-range
planning and forecasting are easy to do because environmental demands in the
future will be the same as they are today. But when environments are hostile,
rapidly changing and complex, specific departments for planning and forecasting
are essential since p1annng required is extensive.

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6.4.2 External Strategies

The relationship between organization and its external environment is not simply one
of organizational adaptation. Organizations can also reach out and change the external
environment. Two strategies can be adopted to manage the external environment viz;

i. Establishing favorable linkages with the key elements in the environment and
ii. Shaping the environment domain

Establishing favorable linkages. This may include:

Mergers. In a merger, the organization acquires an organization in the domain that is
creating uncertainty
Contracts. The organization enters into contractual arrangements with suppliers or
purchasers.
Joint Ventures. Organizations form companies with key stakeholders in the external
environment to reduce uncertainty
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
Advertising. Organizations also advertise their products to customers
Public Relations. This is aimed the at public merely to cast the organization in a
favorable light
 Controlling Environmental Domains of the External Environment.
This entails three techniques:
i. Change domains. An organization may decide to produce other products.
ii. Political activity. This involves influencing government officers or
politicians to make or repeal laws and regulations in the organizations favor.
iii. Trade Associations. The organization may form forces with other
organizations in the industry that have similar interests, by pooling
resources together to take care of their interests, These organizations can
afford to pay people full- time to carry out activities such as lobbying

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legislators, influencing regulations, developing new relations, campaigns

and blocking competition .

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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.

7.2 What is Technology?

Technology refers to the process of transforming inputs into outputs. It includes the
knowledge, tools, the equipment and the processes used in producing goods and
services in an organization. All organizations have technology

7.3. Importance of Technology

Technology is important because:
i. It determines the efficiency of the organization
ii. It is the principal determinant of increase in production of limited and
exhaustive resources
iii. It affects the attitudes, feelings and the temperament of the worker, and
therefore affects his or her productivity
iv. It affects organization’s structure

7.4. Technology Typology and its Categories

Technology typology refers to the ways technology is measured, differentiated or
categorized.

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

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analyzability and variability and task variety the complexity of technology takes on
four dimensions. These dimensions of technology typologies are explained here below.

7.4.1 Joan Woodward’s Technical Complexity

Joan Woodward was a British Industrial Sociologist. Her studies covered 100
manufacturing firms in South Essex, England. Her study was conducted between
September 1954 and September 1955. The study was designed to test whether
management principles as applied on organization structure, span of control, chain of
command etc led to successful organizations.

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.

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Group 1: Small Batch and Unit Production

These firms tended to be job shop operations that manufacture and assemble small
orders to meet specific needs of customers. Customs work is the norm. This technology
relies heavily on the human operator. It is thus not highly mechanized and predictability
of outcome is low. Examples included many types of made to order manufactured
products, such as specialized construction equipment or custom made electronic
equipment.

Group 11: Large Batch and Mass Production

This manufacturing process is characterized by long production of standardized parts.
Output often goes into inventory from which orders are filled because customers do not
have special needs. Examples would include most assembly lines, such as automobiles
or trailers homes. The integrated cotton mill is also a mass production technology.

Group III: Continuous Process Production

In this technology, the entire process is mechanized. There is no starting and stopping.
This represents mechanization and standardization one step beyond an assembly line.
The organization has high control over the process and outcomes are highly
predictable. Examples would include chemical plants, oil refining, and liquor
production.
Her findings were as follows;
 Ratio of management staff to total personnel shows an increase from unit
production, to mass production and to continuous process production.
 Supervisor span of control is highest in mass production and lowest in process
production.
 Direct labor to indirect labor ratio decreases with technical complexity.
 Other characteristics such as span of control, formalized procedures, and
centralization are high for mass production and low for other technologies i.e. unit
production and process production.
 The number of skilled workers and the use of verbal versus written communication
also depend upon manufacturing technology. It is high in unit and process
production and low in mass production.

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 Overall, the management system in both unit and process technology is

characterized by organic while mass production is characterized by, mechanistic
system.
 With respect to technology and performance, Woodward studies found that
successful firms tended to be those that had complementary structures and
technologies i.e. firms that most nearly approximated the typical structure for their
technology were most effective. Firms that deviated in either direction from their
ideal structure were less successful.
 Woodward was able to explain the disparity between her findings and the classical
prescriptions of management theorists’ these principles must have been based on
these theorists’ experiences with organizations that used mass production
technologies. The mass production firms had clear lines of authority, high
formalization, a low proportion of skilled workers achieved through a high division
of labor, wide span of control at the supervisory level and centralized decision
making.
Evaluation of Woodward studies
Woodward’s findings were widely supported by a number of other researchers for
example: -
 Edward Harvey studied 43 different industrial organizations and rated them in
similar technologies. He found, consistent with Woodward’s findings that, a
relationship between technical specific technologies had more - specialized sub-
units, more authority levels and higher ratio of managers to total personnel than did
those with diffuse technologies.
 Another study confirmed that there was no evidence that there was such a thing as a
universally optimum structural form. Each type of structure depends on many
things.

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Table 7. 1: Woodward’s classification of 100 British firms according to their

system of production
Group 1: Small Batch and Unit Production Technology
 Production of simple units to customer’s orders
 Production of technologically complex units
 Fabrication of large equipment in stages 7.
 Production of small batches
Group 2: Large Batch and Mass Production Technology
 Production of components in large batches. Subsequently assembled directly
 Production of large batches assembly line type
 Mass production
Group 3: Process Production Technology
 Process production combined with the preparation of product for sale by large
batch or mass production methods
 Continuous flow of chemicals of liquids, gases, and solid shapes.

Table 7.2: Relationship between technical complexity and structural

characteristics according to Woodward’s findings.
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

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7.4.2 James Thompson’s Task Interdependence

Another pioneer in the technology- typology arena was James Thompson. Unlike
Woodward’s, Thompson’s work was not based on field research. His contribution was
theoretical he drew from a variety of sources and proposed new ideas and frameworks
about organizations. In Thompson’s view, organizations are open systems and
technology reflects the environment outside the organization as well as internal task
activities. He proposed three categories of technology that reflect relationships with
clients as well as internal transformation process. These categories are:
Mediating or pooled technology: Mediating technology involves the mediation or
linking of clients with the external environment. Typically these clients cannot deal
with each other directly because of costs or complexities involved in face to face
transactions. A stockbroker for example mediates between sellers and buyers. So does a
real estate firm. Employment agencies bring together clients who are jobless with
clients who have job openings. Banks and retail stores also mediate between clients in
the environment.
Long Linked or sequential Technology: the concept of long-linked technology refers
to the combination in one organization of successive stages of production, each stage of
production uses as its inputs the production of the preceding stage and produces inputs
for the following stage. Organizational activities occur in sequence in long linked
technologies: the output of operation 1 becomes the input of operation 2, the output of
operation 2 becomes the input of operation 3 and the finished product is then available
to customers. Large-scale organizations that use assembly-line production to produce
goods or services through a sequence of activities as in the automobile industry are
examples of long linked technologies.

Intensive or reciprocal Technology: intensive technologies are characterized by the

collection of specialized services for clients. A variety of activities can be brought to
bear on the client and have substantial impact on the client. Intensive technologies
generally go beyond providing a simple service and are designed to bring about change
in the client. Hospitals are an excellent example because they represent a collection of
specialized skills to bring about therapeutic change in patients. A university is another
example — a wide variety of disciplines and support services are available to facilitate
educational development of students. Figure 7.1 illustrates the three types of
technology typologies by Thompson.

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Mediating
Clients

Customers

Long –linked Clients

Intensive

Client

Fig 7.3: Thompson’s Technology Classification

Evaluation of Thompson’s work

Thompson’s study fails to explain the departmental technologies — for example what
classification would one use for G.M which uses an intensive technology in its R&D
department, a long linked one in its assembly line, and a mediating technology in its
financing department.

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

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different automobile models with color and other options) while others are less
complex.

7.4.3 Charles Perrow’s Knowledge Technology

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

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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.

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Task variability

Few Exceptions Many Exceptions

Craft C
III defined
4
Non-route
3

Routine 1 2
Well
defined Routine Engineering

Figure 7.4. Perrow’s Technology Classification

Technology and Structure

Perrow argued that control and co-ordination methods should vary with technology
type. The more routine the technology, the more highly structured the organization
should be. Conversely, non-routine technology requires greater structural flexibility.
Perrow then identified the following as the key aspects of structure that could be
modified to the technology.
 The amount of discretion that can be exercised for completing tasks
 The power of groups to control the units goals and basic strategies.
 The extent of inter-dependence between these groups.
 The extent to which these groups engage in co-ordination of their work using
either feedback work or the planning of others.

The above means that:

 The most routine technology (cell 1) can be accomplished best through
standardized co-ordination and control. These technologies should be aligned with
structures that are high in both formalization and centralization.
 Non-routine technologies (cell 4) demand flexibility. Basically they would be
decentralized have high interaction among all members, and be characterized as
having minimum degree of formalization.
 Craft technology (cell 3) requires that problem solving be done by those with the
greatest knowledge.

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 Engineering technology because it has many exceptions but analyzable search

process, should have decisions centralized but should maintain flexibility through
low formalization.
Table 7.5 Perrows: Technology — Structure Predictions
Span of Co-ordination and
Cell Technology Formalization Centralization
control control
1 Routine High High Wide Planning and rigid rules
2 Engineering Low High Moderate Reports and meetings
Moderate-
3 Craft Moderate Low Training and meetings
wide
Moderate - Group norms and
4 Non-routine Low Low
narrow meetings

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.

Evaluation of Perrow’s Typology

At the general level, i.e. where technologies can be differentiated on the basis of routine
ness and where more routine technologies are associated with higher degrees of
formalization and centralization — there is evidence to support Perrows theories.

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LECTURE 8
ORGINIZATIONAL CHANGE

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.

8.2. What is Organizational Change?

According to Daft (1986), organizational change is the “adoption of a new idea or
behaviour by an organization”. Similarly, Hodge and Anthony (1988) define
organizational change as an alteration in the status quo. Change occurs mainly because
organisations as open systems, must frequently cope with shifts in key environmental
domains. If they do not change to cope with shifts in important environmental domains,
they may face serious problems and they may even die. By adapting to new conditions,
they can continue to grow and prosper. Thus organisations must change to cope with
changes generated by changes in their external environment, which are continuously
changing. Changes may also be generated by the internal environment (from within the
organisation). Change generated from within the organization is endogenous, while that
generated from without is known as exogenous.

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

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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.

According to Hodge and Anthony (1988) although organizational ecology’s main

contribution is its dynamic environmental conceptualisation, this does not “displace all
other explanatory variables”. In much of research, ecological variables are combined
with institutional and structural variables to explain organisational adaptation. This
paper takes the position that organisational change can be planned and managed to a
certain extent by the management. To the extent that change can be planned then the
uncertainty and instability associated with change can be reduced. Organizational
change is therefore;
- alteration of the status quo
- varying or modifying the current state of the organization aspect
- reactive change- change in response to external circumstances
- Proactive change: change primarily caused by desire by management to change.
- Organizational change can influence and be influenced by several features of
the organizational life.
- Change in one part of an organization affects people and processes in another
- Change can be triggered by a number of external and internal factors.

8.3. Sources of Organizational Change

Organizational change can be caused by either external or external forces or both.
External triggers include: change in demand for an organization’s products or services
(as change a result of changing consumer preferences, action by competitors,
government etc), threatening tactics of competitors, arrival of a new corner in the
market, or take over of the business. ‘Internal Triggers include: need to change strategy
as a result of external forces, need to introduce a new culture in the organization, need
to improve productive efficiency, need to improve the quality of product or services, or
the need to improve standards. Change can have an impact on various aspects of an
organization. It can impact on task, technology, structure or people. Organizational

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growth or retrenchment as well as new government action often changes structure.

Changes in technology can also affect people’s attitudes, emotions, skills, abilities,
expectations and interest. Seldom is the impact of change neatly compartmentalized as
affecting just one or two parts of an organization. The arrows in the diagram below
indicate that change usually has an interactive, dynamic effect on the other parts of the
organization.

Structure

Task
Change Technology

People

Fig.8. 1: The Impact of Change on Aspects of the Organization.

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.

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8.4 Need for Organizational Change

Organizations face a continuously changing environment for example competitors

introduce new products, new production technologies are developed, political
environments change, economic environment changes e.g. economic growth, economic
depression, increase or decrease in interest rates etc.

The organization’s internal environment also changes eg employees retire or resign, or

inter group conflicts arise
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.

8.5 Organization Change Processes

There are THREE processes of organizational change frequently encountered in
vices, management. These are:
1. The three phase process by Kurt Lewis
2. The four phases process by Mint berg
3. The six phase process by Greiner
8.5.1 Kurt Lewis’s Three Phase Process
Proposes that every human grouping has some forces within it which help keep it in
balance and provide it with stability. On the one hand there are forces that force it to
e may maintain stability and others which provide it with a reason to change (the force -
field theory)
Forces resisting change — maintaining stability

Equilibrium

Process for change

Field force theory

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- all behavior is the result of an equilibrium between the two sets of opposing
forces (driving forces and restraining forces)

Driving forces: push one way to attempt to bring about change

Restraining forces: push the other way in order to maintain the status quo
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

Step 3: Refreezing - reinforcing continuously convincing the organizational members

that change is not only necessary and desirable, but inevitable. This can be consolidated
by various support mechanisms such as encouragement, participative management
styles etc.

8.5.2. Mint Berg’s Four Phase Change Process

Mint berg identifies a four-phase process of change as follows;
Stage 1: Identification of the need for change
During the first phase of the change process management identifies the need for change
Stage 2: Identification of the alternatives
In the second phase management identifies the various alternatives of implementing the
change
Stage 3: Evaluation of the various alternatives
In this phase the various alternatives are evaluated using a given criteria and the most
efficient alternative is selected for implementation
Stage 4: Implementation
During this phase change is implemented

8.5.3 Greiner’s Six Phase Change Process

Greiner identified six phases common to successful change efforts each involving a
stimulus to the power structure and a reaction from the power structure of an
organization. A general overview of this process is discussed here below.

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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

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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.

8.6 Additional Aspects of Successful Change

Another way of looking at the change process and the elements necessary for change to
occur is by referring to the views of Daft (1986), Daft concedes that in order for a new
idea or behavior to be adopted, a series of activities has to be completed. If any one of
these elements is missing the change process will fail. These elements are:

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.

8.7. Principles of Successful Organizational Change

Margulies and Wallace drawing on an in-depth analysis of techniques and applications

of organizational change offer several guiding propositions on successful
organizational change

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Proposition 1: planned change efforts are much more likely to be successful if initiated
and supported by the top management of an organization.

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.

8.8 Resistance to Change and Dealing with Resistance to Change

8.8.1 Resistance to Change
Although change is a universal and an inevitable phenomenon, it rarely occurs in a
smooth, balanced fashion. Resistance to change is a frequent and natural occurrence.
The paragraphs that follow discuss four of the most common reasons for resisting
change.
(a) Parochial self-interest: Virtually all organizational members can be expected
to behave in ways that will maximize those goals that they personally consider
most important. Consequently, to the extent that all proposals for change
order represent a threat to the status quo, individuals and groups are likely to resist if
they believe they stand to lose something of value as a result. In such circumstances,
the parties involved will for the most part focus on their own self interest, and only
incidentally on the overall good of the organization. The following are some of the
personal goals, that when threatened, will almost inevitably provoke resistance; power,
money, prestige, convenience, security etc.
(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.

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(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.

8.8.2 Dealing with Resistance to Change

There are six methods suggested by Bedeian (1983) to influence participants to accept
changes. These methods are briefly discussed below.
i) Education and Communication Education is the sharing of knowledge or
perception that a change initiator has acquired through means not typically
available to other members of his or her general organization. This approach
involves securing relevant facts, eliminating misunderstanding due to incorrect or
incomplete information and resolving difficult viewpoints through discussion.
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.

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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.

8.9. Creating a Climate of Total Organizational Change

In order for a meaningful and total organizational change to occur it is important not
only to adhere to above methods of managing change, it is also important to ensure that
a new climate and culture of people in the organization is created. Climate refers to the
way people behave and think and culture refers to the values of people in the
organization. For an effective change to occur, both the ways people behave and think,
and their values, must change. The more these values and beliefs of people can be
changed, the more organizational change can be achieved.

8.10 Organizational Development

Organizational development is a technique of changing the people’s culture,
knowledge, behavior, values and attitudes so that the people adopt new values that
espouse (enhance) trust and openness, and open and democratic leadership styles. It
also changes management styles from dictatorial to democratic styles. According to
Bennin, organizational development is “a response to change using a complex
educational strategy intended to change the beliefs, attitudes, values and structures of
organizations so that they can better adapt to new technologies, markets, and challenges
and the dizzying rate of change itself.

8.10.1 Organizational Development Techniques

This mainly refers to changing the people. There are many techniques in use depending
on the organization and the consultant. The four most widely used include.
i) Survey feedback
ii) Confrontation meetings
iii) Sensitivity training

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iv) The managerial grid

i) The Survey Feedback4Technique

In this technique a questionnaire is used to measure altitudes of employees. The
questionnaire is administered by outside consultants and the results are sent to top
management. The main aim is to find out the views of employees on certain issues.
This information can be used to identify the existence of some problem for
example low morale and seek employees’ proposals of the solutions to the problems.
They can also be used to follow up on the success or not of the proposed solutions.
Some examples of attitude survey questions include:
- the hours of work here are okay( select one)
 Very low
 Low
 Average
 Very high
 High
- I am paid fairy compared with other similar companies(select one)
 Very low
 Low
- formalization is a problem in my department

ii) The Confrontation Meetings

Confrontation meeting is a type of focused exercise in which the management group
meets with employees to discuss and come to grips with problems that have arisen in
the organization. A consultant is included in the meeting to help slash the issues that
face the organization at any particular moment. A confrontation meeting usually begins
with the consultant introducing the subject matter in general terms, emphasizing the
need for communication, mutual trust and understanding and the need for members and
management to share responsibility for accomplishing organization goals. In such
meetings, discussions on organization’s operating problems are held, and solutions
proposed.
(iii) Sensitivity Training (or T-Group Training)
This method or technique is a group experience designed to provide maximum possible
opportunity for the individuals to expose their behavior, give and receive The feedback,

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experiment with new behavior, and develop awareness and acceptance top of self and
others. It provides managers with sensitivity for themselves and others tam and with
skills necessary to more effectively guide and direct changes in social for arrangements
and relationships. It develops in managers the sensitivity the understanding and skills to
participate effectively both as group leaders and the members. It also enables managers
discover and develop tested principles and improved methods of human relations
training.

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

(iv) The Managerial Grid

This method is used to bring about change in employees’ attitudes and values. The
technique was developed by two gentlemen Blake and Moulton. The basic objective of
the program is to develop managers with a high concern for people and high concern
for production. The program is carried out in six phases:
Phase 1: Consists of seminal training in a one-week conference where managers
study the theory of managerial effectiveness.
Phase II: The manager implements a climate of openness developed in phase I
Phase III: The experiences of phase II are extended to include the interrelationship
of related organizational units
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.

Therefore O.D is a strategy of improving organizational effectiveness by means of

behavioural science approaches involving the application of diagnostic and problem
solving skills by an external consultant in collaboration with the organizations
management. It is an organization wide process that utilizes the techniques and

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approaches of the behavioural sciences i.e. psychology, social psychology and

sociology in so far as they relate to the study at work in organizations. It involves the
intervention of an external third party in the shape of a change agent trained and
experienced in behavioural science applications in the work situation. It is aimed at
organizational effectiveness, not just changing people or structures for the sake of
change. The change agent and the organization must adopt a collaborative relationship
— which means being open with one another, having a high degree of trust, and being
prepared to work through conflict in a constructive way.
Role of the Change Agent
The success of any O.D program depends largely on the part played by the third party.
The role ranges from the highly directive leader type of role to non-directive counseling
role. In the first mentioned role, the third party will tend to prescribe what is best for his
client, at the other extreme, he will tend to reflect on issues and problems back to his
clients without offering any judgment himself. He will let the client make / suggest
proposals. In between these extremes are several other possible roles, as indicated
below:
Role of third party

Plans/prescribes recommends/proposes clarifies/reflects/

listens
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.

8.10.2 Benefits of an O.D Program

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- It enables an organization to adopt to change in a way that obtains the full

commitment of the employees concerned.
- It can lead to organizational structures that facilitate employee co-operation and
the achievements of task.
- It releases latent energy and credibility in the organization.
- It can improve understanding of organizational objectives by employees
- It can improve decision making processes and skills.
- It provides opportunities for management development in the context of real
organizational problems
- It may stimulate more creative approaches to problem solving throughout the
organization.
- It usually increases the ability to management groups to work as teams.

8.10.3 Principles of Implementing an O.D Program Successfully.

- create and sustain a sense of urgency about the future
- create and empower a leadership team (a guiding coalition)
- develop a vision and a strategy for achieving it
- constantly communicate the new vision.
- Empower employees to help the change happen by removing obstacles such 8
12 as restrictive structure, lack of necessary skills, inflexible managers, and
unimaginative reward systems.
- Generating some benefits in the short term so that people can see some
tangible improvements on the way to achieving the end goal
- Consolidating short gains
- Embedding the new approaches in the organizations culture.

8.11. Business Process Re-engineering (bpr)

8.11.1. What does BPR Involve?
BPR is a strategic approach to organizational change where the entire business
architecture of the, enterprise is restructured. It is a fundamental rethinking and a
radical redesign of business processes to achieve dramatic improvements in critical
contemporary measures of performance, such as quality, cost, service and speed. BPR
is vital, under modem conditions of customer expectations, intense competition and the
pervasive nature of change. BPR processes include all the collection of activities that

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take one or more kinds of inputs and creates an output that is of value to the customer.
Typical processes include ordering, buying, manufacturing, product development,
delivery, invoicing. The reengineering process tends to lead to the following changes in
the way work is undertaken:
- Several jobs or tasks becoming combined with related tasks.
- Workers become more involved in decision making (empowerment increase)
- The various steps in a process being performed in accordance with the needs of
the next process rather than in some pre-determined linear form.
- Processes having several versions to deal with differing customer requirements
- Work is performed where it makes most sense.
- A reduction in the number of checks and controls insisted on during the process.
- The minimization of reconciliations (e.g. of orders) between customers and
suppliers.
- A single point of contact with the customer
- Hybrid centralized / decentralized operations prevail.

8.11.2. The Structural Changes Likely in a BPR

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.

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- 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.
8.11.3. The Shortcomings of the BPR

BPR has been challenged on the following grounds:

i) Much of what passes as BPR is not so much of process engineering, but
process simplification, is process led rather than vision led, is not
revolutionary just an improvement of existing systems, and works with
existing systems rather than challenging them.
ii) BPR as practiced makes people work harder, than smarter
iii) It is used as a tool of downsizing
iv) Hence people become victims rather than beneficiaries
v) The drive to please the customer rather than the boss can lead to dysfunctional
consequences to the organization.

8.12. Ambidextrous Approach to Organizational Change

8.12.1 Meaning
In an ambidextrous approach to change, the change agent incorporates structures and
management processes that are appropriate to both the creation and the use of the idea
of change. For example the organization can behave in an organic way (or create
organic structures) during the innovation and creation of new ideas, and then adopt
mechanistic structures when the change is being implemented.
8.12.2 Justification
Organic structures such as decentralization and low formalization encourage creativity
and innovation. On the other hand, mechanistic structures such as high centralization
and high formalization stifle creativity, with emphasis on rules, procedures and
regulation but results in efficiency and effectiveness.

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8.12.3 Techniques for Encouraging Ambidextrous Change in Technology Change

i) Switching structures: This means that an organization creates an organic in
structure when such structure is intended for the innovation of new ideas, and
reverts to mechanistic structures during the implementation of the changes.
ii) Creative departments: In some organizations, the creation of new ideas is
assigned to separate departments for adoption by other departments.
Departments that initiate change are organically structured to facilitate
generation of new ideas and techniques. Departments that are supposed to
implement those changes tend to have mechanistic structures so as to achieve
efficiency in the implementation.

General manager

Creative department Using department

Organic structure

Diagram 8.1: Creative Departments

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.

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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.

9.2 Meaning of Culture

Organization culture is a pattern of values, beliefs and customs shared by members of
an organization or group. It is often unspoken, but is clearly understood by members of
the organization. It dictates how members are to behave. It is also unwritten. All
organizations have culture, which has emerged over time. Culture generally evolves
over time and begins with a founder or early leader who articulates and implements
particular ideas and values as a vision, philosophy or business strategy. When these
ideas and values lead to success they become institutionalized and an organization
culture emerges that reflects the vision and strategy of the founder or leader. Over time,
culture becomes artifacts, stories, symbols and language of the organization.

9.2.1 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.

9.2.2 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.

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9.2.3 Symbols
A symbol is something that represents other things. Rites and ceremonies are symbols
but symbols generally refer to physical aspects of culture.
9.2.4 Language
Language refers to sayings, metaphors and other forms of language used to convey of
the special meaning to employees.

9.3. Importance of Culture

Culture provides members with a sense of organizational identity and generates and
commitments to beliefs and values. Culture integrates members so that they know how
to relate to one another. Culture also helps the organization to adapt to the external
comes environment.

9.4 Organizational Design and Culture

The culture of an organizational should reinforce the strategy and structural design that
a new the organization needs to be effective within its environment. That is to say if the
external Rites environment requires flexibility and responsiveness the culture should
encourage are adaptability.

9.5 Dimensions I Categories I Types of Culture

The organization culture can be differentiated into four categories based on the extent
to which the competitive environment requires flexibility or stability and the extent to
which the strategic focus and strength is internal or external. These categories are:
(i) Adaptability / entrepreneurial culture
This type of culture is categorized by strategic focus on the external environment,
through flexibility and change to meet customer needs. This type of culture encourages
norms and beliefs that support the capacity of the organization to detect, interpret and
translate signals from the external environment into new behavior responses.
Innovation, creativity and risk- taking are valued and rewarded.
(ii) The Mission Culture
This type of culture is characterized by emphasis on a clear vision of the organization
purpose and on the achievement of goals, such as growth, profitability or market share,
to help achieve the purpose. A mission culture reflects a high level of competitiveness
and profit making orientation. Its environmental characteristic is stability.

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(iii) The Clan Culture

Has a primary focus on the involvement and participation of the organization’s
members. Emphasis is on the needs of employees as a route to high performance.
Involvement and participation are assumed to create a sense of responsibility and
ownership, which would lead to greater commitment to the organization. Its external
environment is stable and therefore requires less flexibility.
(iv) The bureaucratic culture
In this type of culture, symbols, heroes and ceremonies support cooperation, tradition
and following established policies, and practices as a way to achieve goals. The
organization succeeds by being highly integrated and efficient. There is a high level of
consistency, conformity and collaboration among members.
Strategic focus is internal rather than external and the external environment requires
stability rather than flexibility.
Table 9.1. Relationship between Environment, Strategy and Corporate Culture

Environmental need
Flexibility Stability
Internal Entrepreneur Mission
External clan Bureaucratic

9.8 Changing Organization Culture

Cultures do change. As the external and internal factors that affect or influence culture
change, so culture will change. However, because culture is locked up in people’s
beliefs, values and norms, cultural change will be slow and may not change in the same
fashion
or speed required to keep up with changes in the environmental factors. Since a
successful culture is one based on values and assumptions appropriate to the
environment to keep up with rapidly changing external environment, the culture must
therefore change of the or be changed appropriately. Cummings and Worley (2001)
propose six practical steps a route for achieving cultural change as follows.
i) Formulate a clear strategic vision. Effective cultural change should start
greater form a clear vision of the firm’s view strategy and of the shared values
and le and behavior needed to make it work.

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ii) Display top management commitment — Cultural changes must be

managed from the top of the organization; senior managers need to be
committed to the new values.
iii) Model culture change at the highest level — Senior management must
communicate the new culture through their own actions.
iv) Modify the organization to support the culture changes — Cultural change
must be accompanied by applying modifications in organizational structure,
human resource systems, information and control systems, and management
styles.
v) Select and socialize newcomers and terminate deviants — One of the most
effective methods for changing culture is to change organizational
membership. People can be selected in terms of their fit with the new culture.
vi) Develop ethical and legal sensitivity - Most cultural change programs
attempt to change people’s integrity and values. When implementing cultural
change programs, organizations need to be aware of ethical and legal pitfalls.
In other words, care should be taken to follow equity, ethical, and legal
methods.

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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.
10.2 What is Organization Size?
Organizational size can be measured in many ways including:
i. Market share — organizations that dominate the market place are considered
large.
ii. Number of branches: organizations with many branches in several towns are
considered to be larger than single branch organizations.
iii. Number of products: organizations with varied products are considered larger
than those with few products.
iv. Asset size is also considered as a measure of size.
v. Number of full —time employees can also be used as a measure of size.
Use of full-time employees as a measure of size
Using the number of employees as a measure of size because it is simple to understand,
is the most commonly used. All organizations have employees or people and it is a less
subjective measure than many of the other measures.
10.3. Organizational Size and Complexity
When organizations grow in size the organization complexity as measured by the
following measures also increases
a) Formalization
Formal communication in terms of rules, written procedures etc increases
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

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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.

10.4. Organizational Growth

10.4.1 What is growth?

Growth is the increase in size for an organization. The motives for growth (why do
firms grow) include: adventure and risk, prestige power and job security, increases
compensation, organizational self-realization, to achieve a stable environment,
organizational survival, increased profits, increased revenue, decreased costs via
economies of scale, and to achieve monopolistic power.

10.4.2 Growth Models

1 Lippitt — Schmidt model

This model suggests that organizations normally experience three stages in their
development i.e. birth, youth, and maturity. As an organization enters each of these
stages it encounters a predictive series of critical crises accompanied by recognizable
key issues and results. A true measure of an organization’s stage of development is best
gained through analysis of how it handles predictable organizational crises, rather than
through simply making judgments based on its age or economic size. Consequently, a
relatively small or newly founded organization may rapidly achieve developmental
maturity, and a relatively large (or comparatively older) organization remain youthful.

2. Larry Grainer Growth Model

Greiner observed that organizations often go into trouble when the specific structure
was not appropriate to the organizations stage of growth and development; He
identified five phases through which organization pass through in their growth. For
each phase there was dominant issues and crises that faced a growing organization.

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.

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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

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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.

10.6 Organizational Growth and other Organization Characteristics

Greater organization size is associated with
(i) Increased number of management levels (vertical complexity)
(ii) Greater number of jobs and departments (horizontal complexity)
(iii) Increased specialization of skills and functions
(iv) Greater formalization
(v) Greater decentralization
(vi) Smaller percentage of top administrators
(vii) Greater percentage of technical and professional support staff.

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LECTURE ELEVEN
POWER

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.

11.2 Definition of Power

Power is defined as the possession of the potential for influencing others or the ability
to act or produce some effect. Power is the probability that one actor within a social
relationship will be in a position to carry out, his own will despite resistance,
regardless of the basis on which this probability rests. Similarly, power is also defined
as an actor’s ability to induce or influence another actor to carry out his directions or
any other norms he supports.

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.

Organizational power is often the results of structural characteristics.

Organizations are large complex systems that contain hundreds even thousands of
people. These systems have a formal hierarchy in which some tasks are more
important regardless of who performs them. In addition some positions have access to
greater resources or their contribution to the organization is more critical. Thus
organizational power is vested in the position not in the person.

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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.

Horizontal Sources of Power

Horizontal power pertains to relationships across departments. Horizontal power is
not defined by the formal hierarchy or the organization chart. Each department makes
a unique contribution to organizational success. Some departments will have greater
say and will achieve their desired outcomes faster than others. The theoretical concept
that explains relative power is called strategic contingences.

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.

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Other sources of organizational power include;

a) Dependency-Interdepartmental dependency is a key element underlying relative
power. When eight departments must come for help to the engineering
department, engineering is in a strong power position. In contrast, a department
that depends on many other departments is in a low power position.
b) Financial resources-control over various kinds of resources and particularly
financial resources is an important source of power in organizations. Money can
be converted into other kinds of resources that are needed by other departments.
c) Centrality-centrality reflects a department’s role in the primary activity of an
organization. One measure of centrality is the extent to which the work of the
department affects the final output of an organization. Centrality is associated with
power because it reflects the contribution made to the organization.
d) Non substitutability-this means that a department’s function cannot be
performed by other readily available resources. If an employee cannot be easily
replaced, his or her power is greater.

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.

Obtaining prior information means a department can reduce an organizations

uncertainty by forecasting an event.
Departments increase their power through prevention by predicting and forecasting
negative events.

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Absorption occurs when a department takes action after an event to reduce its
negative consequences.

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.

Power is an important concept in organizations as individuals exert power to get

things done. Power, once gained usually confers major benefits on those who hold it.
Such persons can change the actions of many other people. In addition they often
acquire high degree of status, with all respects, prestige and perks this implies. Given
such outcomes, many people in an organization invest considerable time and energy
to power.

11.3. Effects of Power on its Holders

Power exerts strong effects upon those who hold it and those over whom it is
exercised

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In addition power affects a wide range of key organizational processes. An example

of such processes is negotiation. The most obvious way in which power can affect
negotiations is through differential possession of this capacity in opposing sides. To
the extent one party to negotiations has an advantage in this respect it can shape the
course of the exchange, and obtain an agreement favorable to itself. Another way in
which power can affect negotiations concerns the relationship between negotiators
and their constituents — the people they represent. If the persons representing an
organization in a beginning situation are low in power, they will have to answer for
their actions during negotiations. As a result they may feel constrained, and adopt
cautious or defensive strategy. In contrast, if negotiators are high in power, they will
be protected from such censure and may feel free to choose a more flexible and open
approach. The result is that negotiations involving high power representatives from
both sides may be more successful and more efficient than negotiations between
persons of lower power.

11.4. Organizational Politics

Organizational politics can be defined as any actions taken by individuals or groups to
gain power and so secure goals and outcomes that they personally desire. In other
words politics is selfish in its orientation. Indeed this element of using or gaining
power to further one’s own or groups’ self-interest is one of the major factors
distinguishing politics from other more legitimate uses of power. Politics is one way
of using power- for personal or group gain.

In most organizations, politics is common. In fact, organizations appear to be highly

political environments in which various persons, groups and units are constantly
jockeying for position and power.. As a result promotions, salary raises and other
rewards are not always distributed solely on the basis of merit. Major decisions are
not always made on the basis of careful study of all available data. And the principles
of fair play and rationality do not always serve as the guiding precepts. Instead,
“politics rules and rules with a vengeance” (Baron 1980).

Approaches to Organizational Politics

There are two approaches to defining politics. One is the negative approach. In this
approach, politics is seen as self-serving, and involves activities that are not

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sanctioned by, nor in the interest of the organization. In this view politics involves
deception and dishonesty for purposes of individual self-interest and or for group
interest without regard to organizational interest. In this view politics leads to conflict
and disharmony within the work environment. This view of politics is widely held by
lay people. Studies have shown that workers who perceive this kind of political
activity at work within their companies often have related feelings of anxiety and job
dissatisfaction. Studies also support the belief that inappropriate use of politics is
related to low employee morale, inferior organizational performance and poor
decision making.

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.

11.5 Techniques Used in Organizational Politics

People gain and exercise power in organizations in many ways. Among them
includes:

(i) Coalitions — forming the right alliances

This involves joining forces with persons or groups who have something to contribute
and who can be relied upon. To get such a group or persons requires search.

(ii) Choosing a powerful mentor

Having an experienced and powerful mentor is beneficial to the group or individual
seeking this relationship and can be an effective tactic for acquiring power and
reaching important goals. Since there are many more would be protégés than there are

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openings for them, competition in this regard can be intense:. However, given the
substantial benefits yielded by the protection and guidance of a powerful mentor,
efforts to establish such a relationship are well worthwhile.

(ii) Projecting the right image

This includes demonstrating a high level of competence, adopting a co-operative
attitude and displaying good behavior. For this reason, polishing one’s image often
yields valuable dividends where organizational politics is concerned. In fact, the old
adage “nothing succeeds like success” is very applicable to organizational politics.

(iv) Establishing control over access to information

This is another highly effective tactic for gaining power that can be used both by
individuals and by groups. This involves gaining control over vital information. Since
information is the life blood of organizations, any one who can control its flow or
access to it, acquires considerable power.

(v) Co-optation — neutralizing opponents

This tactic involves bringing people whose support is desired and who currently stand
in the group’s way into the fold. Once they are made part of the group they become
part of it, subject to its norms, and often adopt its values and goals.

(vi) The use reciprocity

A guiding principle of all human relations- whether between individuals or groups
— seems to be reciprocity. In general people treat others as they have been treated
previously. By doing favors to others, or supporting them against opponents, it is
possible to place them in one’s debt, then at appropriate times (when their assistance
is needed most) reciprocity can be invoked and requests for repayment made.
(vii) The use of ‘dirty tricks’
This refers to strategies that most people view as deceitful, underhanded and
dishonest — ones that violate the ethical principles of human beings. Included among
dirty tricks are such steps as:
a) Falsely attributing blame for negative outcomes to others (holding them
responsible for events they did not produce).

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b) Announcing one agenda for meetings, but then following a totally different
hidden one thus preventing opponents from being adequately prepared.
c) Restricting the flow of information to others or providing them with
“misleading facts”.
d) Spreading false rumors about their personal lives, lack of commitment to the
organization etc.

Although the above tactics are highly objectionable they are quite effective and are
commonly used by unscrupulous pe4rsons in their perpetual quest for power.

11.6 Some General Guidelines on the Ethics of Organizational Politics

As noted above some of the tactics in acquiring power in organizations can be quite
ethical while others are quite unethical.
Some tactics are manipulative, dishonest and in some cases even illegal. Others are
quite reasonable and even desirable such as coalitions and co-optation. Such situations
leave us with one issue: when are efforts to acquire and use power through
organizational politics justified, and when are they inappropriate? The following
principles suggested by Cavanaugh, Mob erg and Velasquez (1980) offer some
general guidelines in this regard.
i) Whenever the use of politics is contemplated, the following questions about
their ultimate purpose should be addressed: are they designed to further purely
selfish ends or will they help to promote organizational goals and values as
well? To the ‘extent the former applies, the use of such tactics is unethical.
ii) The impact of political behaviors upon the rights of individuals should be
addressed. To the extent such tactics violate basic human rights, they are
unacceptable.
iii) The relationship of political behaviors to principles of equity and fair play
should be considered. Almost everyone likes to feel that they will be judged by
their merit. Further most persons like to behave that although all individuals
would not finish together they can at least begin from the same point and run the
same course. By their very nature political actions run counter to such views.
Indeed in an important sense, their ultimate aim is that of establishing two sets
of rules one for those in power and another one for those without it. To the

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extent that political tactics operate in this manner, and directly conflict with
the principles of fairness and justice, they are unacceptable.

Thus political behavior in organizations is ethical only when it furthers organizational

as well as individual goals; when it does not violate individual rights and when it is
consistent with the principles of equity, fair play and justice.

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CHAPTER TWELVE
CONFLICT
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.

12.2. Definition of 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

12.3 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.

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What is intra-individual conflict

- Opposing behavior between different sub-systems of an individual
- Can be caused by stress
- Can also be caused by the following
 Conflict due to frustration. Frustration occurs when a motivated drive is blocked
before a person reaches a desired goal. The barrier may be either overt (outward,
or physical) or covert (inward or mental)

Example
Need drive Goal
 Goal Conflict: Three separate types of goal conflicts can be identified.
- Approach - approach conflict - where the individual is motivated to
approach two or more positive but mutually exclusive goals.
- Approach - avoidance conflict - where the individual is motivated to
approach a goal and at the same time is motivated to avoid two or
more negative but mutually exclusive goals
- Avoidance - avoidance conflict - where the individual is not clear about what
role he is supposed to play in his different capacities in an organization.
 Interpersonal Conflict: There are four major sources of interpersonal conflict.
i) Personal differences: This refers to differences in upbringing, cultural and
family traditions, and socialization processes, education, values etc. These
differences cause conflict among organizational participants.
ii) Information deficiency: This may be a result of misinformation or
communication breakdown.
iii) Role incompatibility: This may arise when the organizational participants are
expected to perform incompatible roles in an organization. For example, a
sales manager may be required to increase sales which means increasing
output and stock levels. The production manager may be required to reduce
stock levels to reduce costs. This may be a cause of interpersonal conflict.
iv) Environmental stress: In an environment characterized by scarce or
shrinking resources, downsizing, competitive pressures, high degrees of
uncertainty, etc, interpersonal conflict could be amplified.

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Inter group conflict

Inter group conflict arises when individuals belonging to one group interact,
collectively or individually, with another group or its members in terms of their
reference group identification.
Causes of Inter group Conflict
i) Competition for resources
ii) Task interdependence
iii) Jurisdictional ambiguity
iv) Status struggles — this conflict occurs when one group attempts to improve
its status, and another group views this as a threat to its place in its status
hierarchy.

In an inter group conflict the following conditions prevail:

 There is a clear distinction between “we” and “they”
 A group that feels that it is in conflict with another group becomes more
cohesive and pulls together to present a solid front to defeat the other group
 The positive feelings and cohesion within the in-group do not transfer to the
members of the out-group. The members of the out-group are viewed as the
enemy rather than as neutrals
 Threatened group members feel superior - they over-estimate their own
strengths, and underestimate that of members of other groups
 The amount of communication between conflicting groups decrease. When
there is communication, it is characterized by negative comments and
hostility.
 If a group is loosing in a conflict, the member’s cohesion decreases and they
experience increased tension in themselves. They look for a scapegoat to
blame their failure on.
12.4 Competition
Competition refers to rivalry between two or more organizations which is mediated
by a thrilled party. In business, the third party4 may be a customer, a supplier of raw
materials, or distributor, or potential employee. In a free market system, competing
organizations attempt to influence third party decision through various appeals and
offerings. A third party choice may be viewed as a vote of success for one of the
competing organizations.

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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.

12.6 What Happens During Competition /Conflict?

In general the following development can be expected in groups competing for goals
that only one group can attain, such as writing a contest or attaining a particularly
attractive reward of some trend.
1) A WE —VERSUS — THEY constellation of attitudes and feelings forms
Both groups take pride in the group’s accomplishments and make favorable
evaluation of “our” group in contrast to favorable or less negative evaluations
of characteristics of other groups.
2) Each group has distorted perceptions and judgments about the other group
Favorable information about the other group is either ignored or interpreted in
favor of one’s own group
3) The performance of one’s own group is over estimated, and the performance
of the other group is underestimated

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4) Each group sees the other as the enemy. In addition to making disparaging
remarks within ones own group about the other groups, contact with the other
group is frowned upon and generally avoided. A great deal of energy is used
to outwit the enemy
5) Group solidarity, cooperation and morale increases If the odds are not over
whelming i.e. - groups in conflict or competition become more
cohesive and mutual help increases
6) Negative perceptions and feelings carry over into noncompetitive situations
7) Information is used to erode the position of the other group. When
negotiations or intermediaries are used to negotiate between two groups in
conflict information supplied by group members to their and representations is
aimed at improving the relative position of ones group are rather than at
clarifying matters or enhancing communication
8) Representatives may become either ‘heroes’ or traitors.’ A representative who
is negotiating with the other group and who gives in too readily to the position
of the other group is branded a traitor

12.7 What Happens after the Competition /Conflict?

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.

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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.

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5. . Conflict can also lead to group solidarity and cooperation against the other group
6. Conflict can lead to morale and increased productivity

12.9.2 Dysfunctions of Conflict

1. Can lead to physical harm or even killings
2. Can lead to destruction of property
3. In a work environment conflict can make people too upset to work
4. Can lead to break down or distortion of communication
5. Conflict can also lead to stress (both emotional or physical)
6. Can produce excessive levels of tension anxiety and stress
7. Can drive out people who cannot tolerate high levels of conflict
8. Can reduce trust, leading to antagonistic interactions. This can lead to
withholding /distorting of information by one party.
9. Low conflict fails to encourage new ideas or tolerate different points of view.
This leads to poor decisions made with poor information

12.10 Functional and Dysfunctional Consequences of Competition

12.10.1 Functional Consequences of Competition
Competition encourages creativity, lowering of prices, and quality production. Within
groups, it encourages effectiveness and efficiency. Within larger social systems, it
encourages creativity, innovation and effectiveness. Competition therefore:
- promotes and encourages creativity and innovation
- clarifies differences between people or groups
- motivates
- increases group solidarity
- after the win, may result in group friendship and cooperation

12.10.2 Dysfunctional Consequences of competition may lead to the:

- development of a we versus they attitudes
- distorted perceptions and judgment about the other groups
- each group sees the other as an enemy
- misinformation about the other group
- the wining group might become complacent
- the loosing group might become gloomy leading to loss of morale and drive

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12.11 Functional and Dysfunctional Consequences of Cooperation

12.11.1 Functions of Cooperation
 Shared benefits
 Increased outcomes (synergy)
 Peace and stability within or between group

12.11.2 Dysfunctional Consequences of Cooperation

 Complacency
 Lack of creativity and innovation
 Failure to adopt change

12.12 Differences between Conflict and Competition

1. Incompatibility of goals
In conflict, there is incompatibility of goals between parties while in competition
there compatibility of goals between parties
2. Opposing behavior
In conflict, behavior is entirely (or mostly), opposing while in competition, there is
some opposing behaviors and some cooperative behavior
3. Rules
In conflict there are few or no rules of behavior while in competition rules exist

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

12.13 If cooperation is so beneficial, why don’t people, groups or units

cooperate?
 The main reason is that the goals sought by the groups or individuals cannot
be shared for example if two people are seeking the same promotion, they
cannot cooperate to attain it. In many cases therefore, competition or conflict
is the result.
• 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
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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 Comparison between Conflict and Cooperation

12.14.1 Differences.
a) Cooperation has largely positive consequences at least for the parties involved
while conflict has both positive and negative consequences
b) Cooperation consists of mutually reinforcing or supportive behaviors between
two or more people, groups or larger systems while conflict consists of opposing
behavior.
c) Cooperative behavior stems from a perception that collaboration will help obtain
mutual goals, while conflict sterns from a perception of conflicting goals.
d) Cooperation may stem from a predisposition to behave this while conflict is
largely caused by perceived or actual goal incompatibility.
e) In cooperation, since each of the parties involved is obtaining something
desirable, or expects to, there is little reason for the behaviors or be sub rosa.

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Therefore cooperative behavior is open and disclosed to all parties who may
wish to hear or know about the cooperation; conflict is usually sub-rosa.

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

High conflict Low conflict Low cooperation High cooperation

12.15 Conflict Management Model

12.15.1 The management of conflict requires that when conflict is dysfunction ally
high, the manager tries to reduce it and if the conflict is dysfunction ally low, he tries
to increase it. In the same way a thermostat maintains a desired room temperature,
conflict management maintains a desired conflict level.
Signs of a dysfunction ally high conflict are:
 Low trust in a work unit
 Deliberate distortion of information

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 High levels of tension during interpersonal interactions

 Antagonism between parties
 Sabotage
 Violence between the parties

Symptoms of dysfunction ally low conflict are:

 Suppression — includes denial of differences, a desire to perceive similarities
between parties that do not exist, repressing controversial information, and
prohibiting disagreements about legitimate issues.
 Withdrawal — reduced communication avoidance of interactions, the belief
in” peace at any price” and walking away from a disagreeable interaction.

12.15.2 Reducing Conflict

When conflict increases to dysfunction ally high levels, managers must develop
techniques for reducing it to acceptable levels. There are three approaches to reducing
conflict in organizations. These are: win-lose, lose-lose, and win-win
Lose-lose methods
- None of the parties to the conflict episode get what they want.
- Typical lose - lose methods are
(i) Avoidance- parties to the conflict avoid confrontation. However although
manifest conflict may be reduced through avoidance, latent conflict can
arise.
(ii) Compromise -in compromise parties in conflict use bargaining and
negotiation to reduce conflict. Each party to the conflict gives up values. In
compromise however, manifest conflict may reduce, but latent conflict
persists.
(iii) Smoothing: in smoothing parties to the conflict emphasis similarities not
differences. Thus , because differences are not discussed, latent conflict
exists.
Win -lose methods
In win-lose method, one party to the conflict becomes a clear winner, and the other
party a clear loser. Consequently win-lose methods clearly leave latent conflict.

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Nevertheless, they reduce conflict. Main methods of win- lose are: dominance;
authoritative command; and majority rule.
(i) Dominance: dominance happens when one party to a conflict overwhelms
the other either because the overwhelming party has a higher authority
status, or is physically over powering. It can also happen when one party to
the conflict has a low tolerance for conflict. Although dominance reduces
conflict, if leaves latent conflict.
(ii) Authoritative command: this occurs when the parties in conflict refer their
conflict to a common superior who decides the solution to the conflict
manifest conflict stops, but conflict episode ends with a conflict after ***
(iii) Majority rule: in this method, the issue in conflict is put to a vote. Some
members (majority) win, and the minority loses. If this is acceptable to all
concerned, this method can reduce conflict.

The win - win methods of conflict reduction

In these methods, each party to the conflict episode gets what he/she wants. These
methods include: problem solving, integration, and establishing super ordinate goals.
(i) Problem solving: this method tries to find the basis of conflict and ensures that
all differences among the parties are fully exposed. The parties regard
differences as important sources of information which lead to creative solutions
to the conflict. Properly done, problem solving is an effective way of reducing
conflict.
(ii) Integration: this method seeks solutions that are in the best interests of all
parties. It assumes that peoples’ deeply held interests and desires are the bases
of conflict. Thus, the method tries to find a solution that meets the goals of every
party in the conflict.
(iii)Super ordinate goal: a super ordinate goal is a goal desired by all parties in the
conflict but is unattainable by any party alone. Super ordinate goals compel
cooperation even if the parties otherwise do not wish to cooperate.

12.15.3 Increasing Conflict

Conflict management includes increasing conflict when the conflict becomes
dysfunction ally low. The goal of increasing conflict is to get the functional qualities
of conflict so as to increase efficiency and effectiveness increasing information and

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proposing creative solutions to problems. Managers must ensure that conflict in

increased to levels that are not dysfunction ally high. The following are the major
methods of increasing conflict:
(a) Deliberately forming heterogeneous groups to find solutions to problems
(b) By developing an organizational culture that supports openness about debate
and opinions.

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