Four Perspectives on Organizations

Four Perspectives on Organizations

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Four Perspectives on Organizations

This note describes four images or metaphors on organizations that furnish distinctive lens or paradigms for thinking about behavior in organizations, understandings its causes, and developing programs for change. Note that each image or metaphor draws attention to a limited set of organizational properties and characteristics as critical for understanding, but pays scant attention to a host of other aspects that fall outside its purview. Thus, they concentrate attention and interest, but in a highly simplistic ways that obscures the richness of organizational phenomena. Presumably, managers equipped with the ability to view organizations through diverse lens will achieve greater understanding.

A. Organizations as Machines

This was the first image to dominate management thought about the nature of organizations. The Industrial Revolution brought with it the growth of large-scale organizations and the need to develop ways of managing them. Prior to this time, organizations were smaller, their owners typically managed them, and the relatively few employees could be supervised directly by the owner. The evolution of factory technologies coupled with the growth of efficient capital markets enabled small organizations to grow in the latter part of the 1800s. In the process, the number of owners often increased and most were passive shareholders with no active management role. At the same time, extensive immigration in the latter part of the 19th century provided firms with large pools of cheap labor to run the new machinery and the number of employees often grew rapidly. These changes led to increasing demand for "professional" managers capable of organizing and controlling the workforce for the mass production of rather simple goods to serve the interests of the absentee owners.
Armies, churches, and governments furnished early management theorists in the U.S. with their only models of what efficient large-scale organizations might look like. In each case, the highly bureaucratic structures suggested that factories engaged in mass production should be designed as a highly specialized machine that could maximize efficiency. Efforts to design organizations as machines proved extremely successful and clearly play a role in the emerging dominance of the U.S. economy in the 20th century.
This design model focuses on several organizational properties:

1. Mission, goals, strategies, planning, and control. If we take seriously the notion that it helps to think of organizations as machines, the first question that comes up has to do with the purpose of the machine since different machines are needed for different purposes.

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While private sector firms in capitalist economies need to make profits, we need to flesh things out much more if managers and workers are to understand clearly what they need to do. Let's begin with mission, which is usually defined as the distinctive contribution of the firm. What is it trying to do that is both worthwhile and somewhat different from its competitors? At the next level, it is helpful to think about business goals that often involve attention to two issues: a) profits and b) market share. Strategies are planned courses of action for accomplishing the mission and reaching the business goals. Firms have many strategies for competing, but three are especially important. Some seek profits or market share by producing efficiently and thus selling at a lower price than competitors. Others emphasize product differentiation or the development innovative products that command a premium in the market (think of how expensive a successful anti-AIDs vaccine might be when it first came out). A third strategy has to do with a focus on customers via quality products, and exceptional service. In practice, most firms are concerned to some extent with all three: efficiency, innovation, and customer focus. In the machine model, these issues are the responsibility of managers subject to approval by the owners represented by the board of directors. Conversely, the strategic direction of the firm is explicitly not part of the responsibilities of workers. Managers are the planners since they have both expertise and the interests of the owners at heart. Workers are only doers because they have no skill for this and can't be trusted to look after the owners' interests.

2. Specialization of tasks: Efficiency in machine design comes about in part through the use of highly specialized parts. The need for specialization in tasks and skills to perform them has long been recognized in management thought as well (see, e.g. Smith's Wealth of Nations). The first form of specialization was suggested above: managers as planners and decision-makers, workers and doers and order-takers. However, within management, there are different tasks to be undertaken and considerable specialization often needs to occur. Managers with different backgrounds typically head up specialized subunits in firms organized by function: e.g. production, marketing, engineering, human resources, finance, legal, public affairs, etc. Additionally, there are often a variety of staff experts whose role it is to advise line managers or those with direct responsibility for operating units in their specialty. So when the Marketing VP wants to hire more salespeople, he or she often has to consult with a HR professional to ensure that recruitment and selection are handled effectively, efficiently and legally. Among workers, one also observes a variety of specialized work roles and titles that begin with the distinction between white collar, clerical positions and blue collar labor ones and extend to encompass a host of finer gradations within each of these categories. Note that firm's incentives to specialize their decision-making and work processes increase with the probability that they will continue to produce the same articles in the same ways using the same skills. That is, when you believe that nothing will change in the future you can afford to divide up tasks quite finely and let the individuals become experts in their performance via repetition.

3. Standardization: Machine efficiency also depends on standardized parts that are interchangeable. The main implication for the machine model of the firm has been the effort to simplify as many work processes and jobs as possible through time and motion studies and more recently total quality management and other forms of "reengineering." Specialized, but simple parts often result in very efficient workflows. Moreover, those performing these jobs are often easily replaced by those seeking jobs in the labor market. As a result, work discipline is easier to maintain and productivity losses as a result of turnover are minimized.

4. Coordination: When firms break up the workflow into highly specialized jobs and sub-units, they need to coordinate the different workers and units to produce the products. For example, in a manufacturing firm organized into operations, marketing, and engineering functions, the heads of these functions need to coordinate their actions so that, e.g., marketing doesn't promise delivery before operations can produce the good or engineering design it. Similarly, workers in specialized positions in a sequential workflow need to adapt their actions to the individual to whom they are passing their work.

5. Control: Efficient machines have mechanisms for detecting deviations from plan and initiating actions to return to the predetermined course of action. American management has been notable for its ability to develop a variety of systems for management control over operations including PPBS (planning, programming, budgeting systems), MBO (management by objectives), zero-based budgeting, etc. At the human resource level, control has been sought through formalized job descriptions explaining in detail the tasks and goals for each job, extensive testing devices to ensure that those new to jobs have the requisite skills, highly developed systems of performance appraisal, and performance-based rewards. The intent of all these control measures is to ensure that workers do what management wants them to do and in a reliable and dependable manner.
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