Management Benchmark Study-Book Summary Chapter 01-Literature, Summaries of Benchmarking

Download Management Benchmark Study-Book Summary Chapter 01-Literature and more Summaries Benchmarking in PDF only on Docsity! Ch 1 Trends 06.19.02.doc 06.19.02 Chapter 1. Concepts Underlying Organizational Effectiveness: Trends in the Organization and Management Science Literature By Kathryn A. Baker and Kristi M. Branch Since organization and management science emerged in the early 1900s in conjunction with the industrial revolution, an evolution has occurred in concepts about the nature and function of organizations and the criteria for organizational effectiveness. These concepts have grown and evolved in dynamic interaction with the organizations and institutions that have become the companies, governmental agencies, and not-for-profit organizations of today’s increasingly global society. From almost nothing at the turn of the twentieth century, organization and management science has become pervasive at the turn of the twenty-first, represented prominently in colleges and universities, libraries and bookstores, and in the training classes of public and private sector organizations alike. Over the course of this 100 year history, core concepts have been developed and disseminated – about individuals and organizations, workers and managers, systems and networks – that have shaped the thinking and behavior of managers, employees, and policy-makers alike. As with all science, present understanding is built upon past thinking and research. Familiarity with the origin and evolution of the concepts, models, and rules-of-thumb upon which contemporary perspectives of effective organizations and management are based can help managers of publicly funded science organizations think more creatively about their own organizations and management strategies. Organizations that fund and direct science as well as the laboratories, universities, and other organizations that conduct scientific research are under growing pressure to demonstrate effective management, provide greater accountability, and accomplish more with fewer resources – to improve their effectiveness. Managers in these organizations, though tending to think of themselves as scientists first and managers second, are nevertheless being called upon to address issues of organizational and system effectiveness and to be innovative not only in the scientific research their organizations sponsor or conduct but also in the design and management of their organizations. This chapter provides a very brief description of the major concepts and trends in the organization and management sciences, highlighting the seminal works and key contributors in these fields of research. The interplay among individuals (and theories about how individuals behave and are influenced), organizations (and theories about how organizations are formed and operate), and more recently, the broader scientific system is central in these sciences; managing that interplay is crucial to organizational and managerial effectiveness in publicly funded science. The key dimensions of organizational design and management are identified, followed by a brief overview of the major concepts and definitions of organizations and their associated management strategies. Next, the chapter addresses fitting organizational designs to the specific circumstances of each entity, resulting in multiple models of both organization and management. The concluding section summarizes the emerging new logic of organization and management and compares it with the prevailing logic of the earlier periods. Ch 1 Trends 06.19.02.doc 2 06.19.02 Key Dimensions Organizations are composed of individuals and operate within systems. Individuals, organizations, and systems constitute the principal units of analysis of the organizational and management sciences, albeit always from an organizational perspective (i.e., the individuals of interest are within an organization or set of organizations). For each unit of analysis, as shown in Figure 1, attention can be focused internally (within the organization) or externally (on the external environment or on interactions with the external environment), though, as discussed below, concepts about both the nature of the organization and its relationship with the external environment have undergone dramatic change over the course of the last 100 years. Unit of Analysis Focus of Attention/ Interaction Individual Organization System Internally -- Within the Organization Externally -- With the External Environment Figure 1. Different Perspectives on Organizations and Management As Morgan (1997) vividly describes, there are numerous ways to conceptualize and model an organization, with profound consequences for criteria of effectiveness. These concepts typically deal with organizational form and structure on the one hand and organizational functions and activities on the other. How the organization is designed and how its functions are defined obviously have important implications for how processes and people are managed. If, for example, managers think of the organization as a machine for the efficient production of products (whether these are widgets, services, or research results), then management controls will seek to maximize production and standardize products for efficiency. If the organization is seen as flux and transformation, then “the fundamental role of managers is to shape and create ‘contexts’ in which appropriate forms of self-organization can occur” (Morgan 1997:267). Dooley (1997:69) has observed that the “prevailing paradigm of a given era’s management theories has historically mimicked the prevailing paradigm of that era’s scientific theories.” During the nineteenth and early twentieth centuries, organization and management theories held reductionism, determinism, and equilibrium as core principles (the organization as a machine metaphor), and accorded management near total authority over the workplace. As science has developed theories of complexity and adaptive self-organizing systems, organization and management science have increased their emphasis on organization-external environment interactions, participation, worker motivation, and the dynamic aspects of change, adaptation, and learning (Morgan 1997; Wheatley 1992), placing a high priority on balancing technical aspects of organizational design with consideration of the needs and interests of the workers and the use of management models that emphasize support and participation (Mayo 1945; Likert 1961; McGregor 1960; and Trist 1981). The organization and management sciences are interrelated disciplines, differing primarily in the extent to which they focus on the individual, the organization, or the system as the principal unit of analysis. Organization science, which typically focuses on the organization, deals primarily with organizational models, organizational design, organizational structure, organizational Ch 1 Trends 06.19.02.doc 5 06.19.02 stability came to be seen as irrational, and the attempt to program in advance the behavior and decisions of organizational participants came to be viewed as misguided, even foolhardy. It was argued that such rigid programming could easily become maladaptive, giving rise to a trained incapacity that, in turn, would contribute to both ineffective and inefficient organizational performance (Veblen 1904; Merton 1957). Perrow (1986) crystallized this position, arguing that the appropriateness of an internal control focus is affected by the degree of organizational complexity and uncertainty: An internal command and control orientation may be effective when task complexity is low, but is less feasible in highly complex organizational systems. Similarly, when the external environment is complex and uncertain (i.e., there is a rapid pace of change and high level of competition) an internal command and control approach may be inappropriate because it restricts the organization’s flexibility and limits its ability to adapt to the changing demands and opportunities. Natural Systems and Management Emphasis on Engaging the Hearts and Minds of Organizational Participants Increasing recognition of the limits of the rational system perspective led to the emergence of the natural system perspective, which became the prevailing model from the 1930s through the 1950s (Scott 1987:115). In contrast to a rational system perspective, the natural system perspective views organizations as first and foremost social collectivities whose primary interest is the survival of the system. A natural system perspective stresses the need for the organization to harness the minds and hearts of its participants and emphasizes the importance of informal social relations over formal structures (Likert 1961; Weick 1999). In tandem, management science was also gradually moving away from an emphasis on command and control to an emphasis on engaging the hearts and minds of the organizational participants. The human relations perspective, initially associated with Mayo, initiated this view. Mayo (1945) is best known for the pivotal studies, triggered by the famous Hawthorne Effect, that demonstrated commitment and loyalty were often more important than self-interest and formal sanctions in determining the behavior of organizational participants. The human relations school gave rise to a large body of work directed at informal, normative structures; organizational cooperation; organizational culture; leadership; motivation; morale; and, later, teamwork (Barnard 1938; Goffman 1961, 1974; and Peters and Waterman 1982). This management perspective has since been expanded to include efforts to engage not only the hearts and minds of organizational participants but also those of the organization’s customers and external stakeholders (Porter 1985; Powell 1990). These efforts contributed to the development of the literature on team work (see Chapter 8), organizational alliances and partnerships (see Chapter 9), participative management (see Chapter 10), and leadership (see Chapter 12). Open Systems and Management’s Function as Leader and Enabler The natural system view, in turn, led to an open system perspective that focused greater attention on the organization’s interaction with its external environment. This perspective became prominent in the early 1960s (Scott 1987:115; Blau and Scott 1962). Basically, an open system self-maintains on the basis of throughputs taken from and given back to the environment. This view stresses that an organization involves inputs – throughputs – outputs. Open systems are also characterized by two basic interlocking sets of system processes: morphostasis and morphogenesis (Buckley 1967). Morphostasis refers to processes that preserve or maintain a system’s given form, structure, or state (in biological systems morphostatic processes would include circulation and respiration; in social systems, socialization and control activities). Ch 1 Trends 06.19.02.doc 6 06.19.02 Morphogenesis refers to processes that elaborate or change the system, for example growth, learning, and differentiation. In adapting to the external environment, organizations typically become more differentiated in form. Also, as the environment confronting organizations becomes more complex, varied, and rapidly changing, organizations need to become increasingly flexible and adaptive. Burns and Stalker (1961) refer to the two fundamental and contrasting organizational forms being discussed during this period as the mechanistic (harking back to the closed, rational organization of Taylor and Simon) and the organic. According to this categorization, mechanistic organizations are characterized by large-scale, low-complexity work activities and are best suited to stable environments that do not require adaptive change and innovation. Organic organizations are characterized by small-scale, high-complexity work and are better suited to changing environments that do require adaptation and innovation. This discussion of alternative organizational forms led to increased consideration of organizational design and the idea that an appropriate organizational design was one that enabled “an organization to execute better, learn faster, and change more easily” (Mohrman et al. 1995:7). An organization’s design comprises multiple, interrelated elements, frequently categorized as structure, people, processes, rewards, and tasks or work systems that together can create unique organizational capabilities that provide competitive advantage (Quinn et al. 1997; Galbraith 1973, 1994, 1995). Although the classic bureaucratic form may be the form of choice in a stable environment with low complexity, research was showing that rapid change and increased complexity required greater lateral mechanisms and a more organic form (Galbraith 1973, 1994; Burns and Stalker 1961; Hall 1962). As attention shifted toward the organic organization, the management science literature gradually moved away from the view that management’s role was to manage critical generic organizational functions toward the idea that managers needed to be leaders whose real added value was the provision of vision and direction that engaged the hearts and minds of employees, and subsequently, customers and external stakeholders (Hesselbein et al. 1996; see also Chapter 3). As this viewpoint matured, the central role of management was increasingly defined as encouraging motivational practices, facilitating creativity and innovation on the part of its employees, customers, and stakeholders, and ensuring the development of leaders throughout the organization. In other words, management’s role was to unleash creativity and passion and harness these forces to promote the success of the organization (Kotter 1996; Deming 1994). This shifted the primary focus of management from the creation and implementation of organization structures to ensuring and leading organizational coordination, flexibility, and agility (Peters and Waterman 1982; Kotter and Heskett 1992). Dealing with Conflicting and Multiple Models: The Emergence of A Contingency Perspective on Organizational Design and Management These discussions raised awareness of a need for a more complex view of organizational design and management, one that reflected the realization that although all organizations have to address common functions, different organizations may have different emphases and approaches. There was growing recognition that focusing on generic functions could mask the fact that there were, indeed, differing views and aspects of organizational effectiveness. Different functions – and different attributes within each of the functions – needed to be emphasized as organizations faced different internal and external challenges. Quinn and Rohrbaugh (1983) noted that different Ch 1 Trends 06.19.02.doc 7 06.19.02 conceptualizations of organizational effectiveness were associated with four common organizational perspectives, which they categorized as: (1) the human relations model; (2) the open systems model; (3) the rational goal model (closed systems perspective); and (4) the internal process model (closed system perspective). Using multivariate analysis, they found three “value dimensions” that underlay these different and seemingly conflicting conceptualizations of organizational effectiveness: ♦ Organization structure, which distinguishes between organizational flexibility/adaptability and control/stability ♦ Organizational focus, which distinguishes between an internal and an external orientation ♦ The means-ends continuum, which distinguishes between an emphasis on outcome objectives or the means by which these objectives are to be achieved, such as processes and/or important causal attributes. Rohrbaugh (1983), Quinn and Rohbaugh (1983), and Quinn (1988) noted that organizations were likely to experience tension among organizational effectiveness attributes – for example, all organizations have a need for some level of stability as well as a need to be flexible and adaptable; a need for control and discipline as well as a need to allow some degree of freedom and autonomy; a need for rational formal structures and non-rational informal relations. They concluded that effectiveness depended upon the ability of an organization, and its managers, to strike the right balance among these critical attributes, as required by the organization’s objectives and situation. This framework is illustrated in Figure 2. Jordan et al. (1999) applied Source: Quinn (1988) and Rohrbaugh (1983). Figure 2. The Competing Values Theory of Organizational Effectiveness Flexibility and Discretion Stability and Control Means: • Discussion, participation, consensus • Teamwork • Employee development Means: • Goal clarification; External positioning • Direction, decisiveness, planning • Achievement of measurable goals Means: • Information management; communication • Standardized decision making • Formalized & structured Means: • Commitment to experimentation, individual initiative • Adaptation • Readiness, insight Clan (Human relations model) Adhocracy (Open systems model) Market (Rational goals model)Hierarchy (Internal process model) In te rn al F oc us a nd In te gr at io n E xternal Focus and D ifferentiation Ends: Creativity, Cutting edge output, Growth & external support Ends: External positioning, Productivity, Goal achievement Ends: Morale & cohesion, Commitment, Human resource development Ends: Timeliness, Stability, Efficiency Ch 1 Trends 06.19.02.doc 10 06.19.02 New Organizational Logic The evolution of the organization and management science literature represents a basic change in organization logic over time. The initial organizational logic was based on the closed, rational perspective; subsequently the logic was based on the natural, open perspective; most recently, a new logic has emerged that assumes an agile, environment-oriented, network system. The differences across these organizational logics are shown in Table 1. Table 1. The Changing Logic of Organizations LOGIC I LOGIC II LOGIC III Bureaucratic Control Engagement Networking and Collaboration Internal Orientation External Awareness and Adaptation External Positioning Orientation Internally Oriented Hierarchical Relationships & Processes Internally Oriented Lateral Relationships and Processes Externally Oriented Relationships, Partnerships, and Alliances Generic Organizational Design Contingent Organizational Design Flexible & Fluid Network Design Organization Designed around Internal Functions Organization Designed around Externally Oriented Products and Customers Organization Designed to Effect Positioning in External Environment Primary Value-Added Is Management Value-Added of All Employees Value-Added of Partnerships & Alliances Management Focus Leadership Focus Facilitation Focus Over time, the organization and management sciences literature has increasingly recognized the shortcomings of generic approaches. Focusing on generic functions can mask the fact that there are, indeed, differing views of organizational effectiveness. Although all organizations have to address some common functions, different organizations will have different emphases and approaches. Different functions and different attributes within each of the functions are likely to be emphasized by different types of organizations facing different internal and external challenges. This recognition has given rise to the identification of new performance functions, such as change management, organizational learning, knowledge management, organizational partnerships and network formation, innovation, and creativity. Organizations have become more differentiated and more and more topics are being addressed in the literature. Although the bulk of the literature continues to focus on private sector business organizations, trends in this literature have made it more relevant to other types of organizations, including public science organizations. This literature is applied to public sector science organizations at two levels: (1) public science management organizations- -- those that set direction and provide funding for basic research (i.e., National Science Foundation, National Institutes of Health, the Department of Energy Office of Science, National Aeronautics and Space Administration, Environmental Protection Agency, National Institute of Standards and Technology, and others), Ch 1 Trends 06.19.02.doc 11 06.19.02 and (2) public science implementing organizations – i.e., the National Laboratories, the universities, and other research organizations that are supported with federal funds. Both types of public science-related organizations can benefit from understanding their own organizational and management structures and processes. Such an understanding can be the basis for changing or redesigning these structures, processes, and management strategies to align with the goals of productivity and innovation. References Ashkenas, R., D. Ulrich, T. Jick, and S. Kerr. 1995. The Boundaryless Organization. San Francisco, CA: Jossey-Bass. Barnard, Chester I. 1938. The Functions of the Executive. Cambridge, MA: Harvard University Press. Blau, Peter M., and W. Richard Scott. 1962. Formal Organizations: A Comparative Approach. San Francisco: Chandler Publishing Company. Buckley, Walter. 1967. Sociology and Modern Systems Theory. Englewood Cliffs, NJ: Prentice-Hall. Burns, Tom, and George M. Stalker. 1961. The Management of Innovation. London: Tavistock. Carroll, Archie B. 1993. Business and Society: Ethics and Stakeholder Management. Cincinnati, OH: South-Western Publishing Co. Christensen, C. M. 1997. The Innovator’s Dilemma. Boston: Harvard Business School Press. Christensen, C. M. and M. Overdorf. 2000. Meeting the Challenge of Disruptive Change. Harvard Business Review 78(2):66-78. Davidow, W.H., and M.S. Malone. 1992. The Virtual Corporation. New York: Harper Collins. Davis, Brian L., Carol J. Skube, Lowell W. Hellervik, Susan H. Gebelein, James L Sheard. 1992. Successful Manager’s Handbook. Personnel Decisions International. Deming, W. Edwards. 1994. The New Economics For Industry, Government, Education. 2nd ed. Cambridge, MA: MIT Center For Advanced Engineering Study. Dessler, Gary. 1982. Management Fundamentals. Reston, VA: Reston Publishing Company. Dooley, Kevin. 1997. A Complex Adaptive Systems Model of Organizational Change. Nonlinear Dynamics, Psychology, and Life Sciences 1(1):69-97. Drucker, Peter. 1985 (copyright 1973). Management: Tasks, Responsibilities, Practices. New York: HarperBusiness. Eisenstadt, S.N. 1968. Max Weber on Charisma and Institution Building: Selected Papers (edited and with an introduction by S. N. Eisenstadt). Chicago: The University of Chicago Press. Galbraith, Jay R. 1995. Designing Organizations: An Executive Briefing on Strategy, Structure and Process. San Francisco: Jossey-Bass Publishers. Galbraith, Jay R. 1994. Competing with Flexible Lateral Organizations. 2nd Edition. Reading, MA: Addison-Wesley Publishing Company, Inc. Ch 1 Trends 06.19.02.doc 12 06.19.02 Gailbraith, J.R. 1973. Designing Complex Organizations. Reading, MA: Addison-Wesley. Goffman, Erving. 1974. Frame Analysis. Cambridge, MA: Harvard University Press. Goffman, Erving. 1961. Asylums. Garden City, NY: Doubleday, Anchor books. Grusky, Oscar, and George A. Miller. 1970. The Sociology of Organizations. New York: The Free Press.Kaplan, R.S., and D.P. Norton. 1996. The Balanced Scorecard. Boston, MA: Harvard Business School Press. Hall, Richard H. 1962. Intraorganizational Structure Variation. Administrative Science Quarterly December:295-308. Hamel, Gary. 2000. Leading the Revolution. Boston: Harvard Business School Press. Hamel, Gary. 1996. Strategy as Revolution. Harvard Business Review (July-August):69-82. Hamel, Gary and C. K. Prahalad. 1994. Competing for the Future. Harvard Business Review (July-August):122-28. Hammer, Michael and James Champy. 1994. Reengineering the Corporation: A Manifesto for Business Revolution. New York: Harperbusiness. Hesselbein, Frances, Marshall Goldsmith, and Richard Beckhard. 1996. The Leader of the Future: New Visions, Strategies, and Practices for the Next Era. San Francisco: Jossey- Bass. Jordan, G.B., L.D. Striet, and J.S. Binkley. 1999. A Framework for Assessing the Effectiveness of Research Organizations. Albuquerque, NM: Sandia National Laboratories. Juran, Joseph M. 1988. Juran on Planning for Quality. New York: Free Press. Kaplan, R.S., and D.P. Norton. 1996. The Balanced Scorecard. Boston, MA: Harvard Business School Press. Kotter, John P. 1996. Leading Change. Boston: Harvard Business School Press. Kotter, John, and James L. Heskett. 1992. Corporate Culture and Performance. New York: The Free Press. Lawler III., E.E., S.A. Mohrman, and G. Benson. 2001. Organizing for High Performance. Employee Involvement, TQM, Reengineering, and Knowledge Management in the Fortune 1000: The CEO Report. San Francisco: Jossey-Bass Publishers. Lawrence, Paul R., and Jay W. Lorsch. 1967. Organization and Environment: Managing Differentiation and Integration. Boston, MA: Harvard University. Likert, Rensis. 1961. New Patterns of Management. San Francisco: Jossey-Bass. Lucas Jr., Henry C. 1996. The T-Form Organization: Using Technology to Design Organizations for the 21st Century. San Francisco: Jossey-Bass. The Malcolm Baldrige National Quality Award. 1999. Managed by National Institute of Standards and Technology, United States Department of Commerce. Administered by American Society of Quality Control. March, James G., and Herbert A. Simon. 1958. Organizations. New York: John Wiley & Sons. Mayo, Elton. 1945 (copyright 1933). The Social Problems of an Industrial Civilization. Boston: Graduate School of Business Administration, Harvard University. McGregor, Douglas. 1960. The Human Side of Enterprise. New York: McGraw-Hill.