Transcript Theories, debates and model of Organization Prepared for: Prepared by: HRM 236 Sociology Of Work Syarifah Mastura Syed Abu Bakar.

Theories, debates
and model of
Organization
Prepared for:
Prepared by:
HRM 236 Sociology Of Work
Syarifah Mastura Syed Abu Bakar
Learning Objective
• By the end of this chapter, you should
able to:
 Understand the organizational life cycle
 Understand the Institutional theory and
organizational isomorphism
 Explain Greiner’s life cycle model and
Weizel and Jonnson’s model of decline
 Understand on population ecology and
strategies for entering the population
The Organizational Life
Cycle
•
•
1.
2.
3.
4.
A sequence of stages of growth
and development that
organizations may pass through
The four principal stages:
Birth
Growth
Decline
Death
A model of the Organizational Life
effectiveness
Organizational
Cycle
25
20
15
10
5
0
Organizational
Organizational
Organizational
Organizational
Birth
Growth
Decline
death
Stage of Life cycle
Organizational Birth
• The founding of an organizationa dangerous life cycle stage
associated with the greatest
chance of failure
• Entrepreneur thinking about the
business
• A management group formed
• A business plan written
Organizational Growth
•
•
•
•
To see revenues climb
New services and products developed
More employees hired and so on
The reality is much different since a
company can have both good and bad
years depending on market conditions
• That’s why many companies have
different types of programs relating to
organizational development in place
Organizational Decline
• Corporate insanity is doing the same thing, the
same way but expecting different result.
• Management expect to be better but doesn’t
know or is unwilling to change to get better
results.
• Reasons for decline:
 Too much debt
 Inadequate leadership
 Poor planning
 Failure to change
 Inexperienced management
 Not enough revenue
Organizational death
‘Advice after injury is like medicine after death’
• The life cycle stage that an organization enters
when it fails to anticipate, recognize, avoid,
neutralize, or adapt to external or internal
pressures that threaten its long-term survival
• The liability of newness, for example, threatens
young organizations, and the failure to develop
a stable structure can cause early decline and
failure
• Decline sometimes occurs because
organizations grow too much
Institutional Theory
• Organizations adopt certain traits,
structures and ways of operating in
order to gain legitimacy within their
environment.
• The consequence is that organizations
with similar environmental domains tend
to develop standard structures and
processes
• Not adhering to the institutional
standards causes an organization to
lose credibility with stakeholders
Greiner’s life-cycle model
• Presents a model of the ‘typical’ pattern
of growth of an organization
• Life cycle has 5 stages, and the stage is
related to the size, structure, leadership,
administrative systems and goals that
are appropriate.
• Each life cycle stage is a period of
growth followed by a crisis that must be
successfully managed in order to move
on to the next growth stage
Greiner’s Life-Cycle Model
Size of organization
Large
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
5. Crisis of ?
4. Crisis of
red tape
2. Crisis of
autonomy
3.Crisis of
control
5. Growth through
collaboration
4. Growth through
coordination
3. Growth through
delegation
1. Crisis of
leadership
2. Growth through
direction
1. Growth through
creativity
Small
Young
Mature
Age of organization
11 -
11
Greiner’s 5 Stages/Crises
1. Growth through creativity – entrepreneurial
 Crisis - Leadership
2. Growth through Direction – collectivity
 Crisis – Lack of autonomy
3. Growth through Delegation – differentiation
 Crisis – Lack of control
4. Growth through Coordination – formalization
 Crisis – Too much Red Tape
5. Growth through collaboration
 Crisis - ?
6. Restructuring or decline
Weitzel and Jonnson’s model
of Decline
• Decline occurs over time through 5
stages.
• At each stage, if the organization does
not take the proper corrective action, it
falls deeper into decline
• As decline progresses, it becomes
harder and harder to rectify the
problems and more radical actions are
needed
• Eventually if the organization does not
pull out of decline it falls into a ‘death
spiral’
Weitzel & Jonnson – Org.
Decline
Stage 1:
Blinded
Stage 2:
Inaction
Stage 3:
Faulty action
Stage 4:
Crisis
Stage 5:
Dissolution
Acceptable
performance
Good
information
Performance
Prompt action
Corrective
action
Effective
reorganization
Actual
performance
Decline begins
Time
Acceptable organizational performance
Actual organizational performance
Dissolution and
organizational death
Birth Growth and Death in the
Environment
• We can extend the organism metaphor to
consider the organization as an organism
existing and growing in an ‘open system’
• Consider organizations as a population of
organisms vying for survival in a
competitive environment where resources
are scarce
– Like animals competing for the survival
of their species in an ecosystem
• In an environment with finite resources,
not all organisms can survive, so only
those best adapted to the environment
will thrive
Population Ecology
• We can view the set of organizations
competing for resources (customers,
employees, money…) as a population
• A new environment can sustain a lot of
organisms, but it soon becomes
crowded (population density) and more
competitive for survival (see the s-curve)
– trade-off of capacity (K) vs. market
growth rate (r)
• There are advantages to both early
entry and late entry into the environment
(market), and both have disadvantages
Strategies for Entering the
Population
• Early or late entry
– Early entry (r-strategy) gives first mover
advantage, but is risky (liability of newness)
– Late-entry (K-strategy) allows firm to wait
until risk of market development is lower
and use resources and competencies to
invade the market
• Generalist or Specialist
– Specialists focus their resources on a niche
market
– Generalists focus on a broader target
market
Natural Selection
• Darwin’s theory of evolution applies
to organizational forms
• Those organizations that adopt
forms (structures, processes,
strategies) that are best adapted to
the environment will survive
• Isomorphism allows effective forms
to be ‘selected in’ and retained in
the population, even though
individual firms come and go
Typical Market Evolution
• r-Specialists invest in developing a specialized
market for a narrow segment of consumers
• There is much capacity for numerous r-specialist
and later, r-generalist firms. They grow and seek
new niches that they can serve with their growing
skills and resources
• K-generalists enter the market when it is safe and
viable and use their ‘muscle’ to crowd specialists
out of the market
• K-specialists then move in and try to find niches
not filled by the current firms (ones that were
filled by r-specialists that died out), but face the
challenges of barriers to entry
• Think of story of Netscape vs. Microsoft
Number of organizations
S-Curve Birth Rate
Birthrate
tapers off
Birthrate
is rapidly
increasing
Time