Principles of Management: Emergent Processes in Organizations PDF

Principles of Management: Emergent processes in organizations Anselm Schneider Objectives of the lecture: Understand the significance of emergent processes in organizations Break down specific forms of emergent processes in organizations Analyze the potential and limits of managing e...

Principles of Management: Emergent processes in organizations Anselm Schneider Objectives of the lecture: Understand the significance of emergent processes in organizations Break down specific forms of emergent processes in organizations Analyze the potential and limits of managing emergent processes Basic puzzle: What processes shape organisations beyond formal structure? Multiple foci of organizational theories: - Formal organization (lecture 3) - Observable and measurable features (lecture 4 & 5) - Individuals (lecture 6) However: What about processes that unfold beyond formal structures and rules and above the single individual? Roadmap for the lecture: The nature of emergent organizational phenomena Organizational decision processes beyond hierarchical structures Group processes in organizations Organizational culture  The discovery of the informal organization Hawthorne experiments (see lecture 4): Evidence that there are emergent processes beyond formal structures Definition: Emergent organizational phenomena: - cannot be explained by organizational structures and specific intentions - outcomes cannot be predicted Practical questions: Are these processes desirable or problematic? Can they be planned and controlled? Theoretical question: What are these processes and how do they shape organizations?  How does decision making in organizations work? Rational-choice perspective: - Individuals as rational decision makers (à Managers make fully rational decisions on the basis of complete information and thus maximize efficiency - Organizations as rational systems (à Hierarchy as the sole explanation for organizational decisions) Reality: Outcomes of decisions are often unintended/suboptimal Individual level explanation: Individuals are not “maximizers” but “satisficers” à they do not aim to achieve an optimal outcomes, but sub-optimal (satisficing) outcomes (Simon, 1956) Organization-level explanation: Emergent organizational processes shape decisions (see next slides) Emergent decision making in organizations (1): Organizational differentiation Organizations as complex systems à Departments as specialized sub-systems which follow their own formal and informal rules and perceive the organizational environment differently Example: Marketing dept. vs. Finance dept. Focus of perception: style numbers Goal: “catchy” campaign maximal return Division of labour implies (potentially) conflictual priorities Organizational decisions as the result of the interplay of different departments and actors Emergent decision making in organizations (2): Political processes/”Micropolitics” Organizational decisions as the result of dynamics between groups and/or individuals Assumptions: - Different actors have divergent interests (career, power, prestige) - Limited resources in organizations à conflict around resources - Different degrees of power (see lecture 8) Organizational decisions as the result of - Manipulation - Power plays - Compromise  Emergent decision making in organizations(3): Organized anarchy Decision process as a “garbage can” where different problems “meet” Decision process shaped by four independent streams: Problems Participants Hard to Decision predict how the 4 streams Choice opportunities Solutions meet Organizational decisions as the result of - Oversight (formal decision taken, but core problem remains unresolved; more likely) - Flight (formal decision moves to another arena, but core problem remains unresolved; more likely) - Resolution (less likely) Groups in organizations Groups as sub-units of organization What is a group: - 2 or more persons - Interaction over a longer time - common activities and/or goals - feeling of belonging - members recognize each other as members - shared procedures, tools, instruments, Formal vs informal groups - formal: Focused on specific tasks; intentionally planned - informal: based on sympathy & personal goals; unplanned Cohesion of groups - Cohesion (stability) of groups increases with homogeneity of a group - Conformity increases with cohesion - The more attractive a group, the higher the convergence of opinions, goals and norms - a member’s non-conformity results in rejection; the more cohesive a group, the more marked the rejection - the likelihood of rejection of members increases, the more they deviate from central goals, norms or standards - Cohesive groups tend to accept only new members, if these align with goals, norms or standards of the group (Tannenbaum, 1966) Emergent behavioural patterns in groups (1): Risk taking Groups tend to take more risk decisions than individuals Reasons - Diffusion of responsibility: Groups accept a higher risk, because the risk is borne by the whole group - Leadership: Leaders tend to be more risk-affine and influence the group accordingly - Risk as a social value: Presence of others leads to more risky behaviour in order to avoid the impression of timidity (Kogan & Wallach, 1964)  Emergent behavioural patterns in groups (2): Groupthink Cohesive groups strive for unanimity à “esprit de corps” silences autonomous and critical thought Symptoms of groupthink - Illusion of invulnerability - Belief in the morality: Blindness for ethical consequences - Rationalisation: Refusal of facts contrary to the group’s view - Stereotypisation: Perception of outsiders as negative - Self-censorship: Group members suppress their doubts - Group-censorship: Silencing of diverging opinions - “Brain-guards”: Certain group members silence “dissidents” - Illusion of unanimity (Janis, 1982)  Emergent behavioural patterns in groups (3): Groupthink How to avoid groupthink? - Leaders should encourage group members to voice doubt - Leaders should not form premature and definitive opinions - Groups should split up once in a while and discuss different alternatives - Designating a “devil’s advocate” who challenges the ideas of the other group members in order to identify flaws (Moorehead, Ference & Neck, 1991) Wrap up (1) Emergence a central feature of organizations that complements formal explanations of organizations In contrast to the assumption of rationality in organizations, organizational decisions oftentimes emerge through limitedly rational and emergent processes Groups as smaller formal or informal sub-units that shape organizational dynamics through their emergent properties Group processes as a potential source of unintended (and irrational) outcomes of organizational activity Organizational culture Point of departure: Organization as cultural systems (similar to tribes or foreign cultures) This view brings to the fore many aspects that cannot be explained by other perspectives Defining organizational culture: - Historically developed patterns of values and thought - that shape the activities and feelings of organizational members Main features of organizational culture Implicit: Shared and taken-for granted assumptions that shape daily activities and are seldom reflected Collective: Shared patterns of orientation, values and activities that makes organizational activity coherent Conceptual /Cognitive: Culture as a frame that provides meaning and orientation and helps make sense of the world Emotional: Culture as a holistic point of reference beyond cognition (what is loved or hated?) Historic: Culture as a result of organizational history and learning processes that simultaneously shapes organizational development The structure of organizational culture 1) Artifacts and symbols Visible, but in need of (language, rituals, clothes, …) interpretation Espoused values and Partly visible, partly 2) beliefs sub-conscious (rules, guidelines, goals, …) Underlying assumptions Invisible, largely sub- 3) (regarding organizational environment, truth, time, people, conscious human activity, social relations, …) (Schein, 1985) The layers of organizational cultures (1): Artifacts and symbols Stories and legends, e.g. about the early days of an organization, which communicate what matters in an organization Rituals: Admission (e.g. greeting from the CEO), confirmation (e.g. employee of the month), integration (e.g. Christmas party) Visible elements: - Reception of externals - Architecture - Logo - Dresscode - Language/jargon (Schein, 1985) The layers of organizational cultures (2): Espoused values and believes Unwritten moral values and standards of behaviour Shared by all members of an organization to a certain extent, e.g. - Is it OK to criticize colleagues? - Is the discrimination of women acceptable? What about corporate value statements?, e.g. https://hmgroup.com/about-us/our-values/ à Attempts to formalize values in value statements are likely to be limitedly effective because they are most often implemented “top-down” and therefore detached from lived organizational culture (Schein, 1985) The layers of organizational cultures (3): Basic assumptions Assumptions about Environment: invariable threat or manageable challenge? Truth: What is moral or amoral? Whom to trust? Time: When is too early? When is too late? Nature of humans: Are people benevolent or malevolent? What is the ideal superior? Nature of human action: Proactivity vs reactivity? Nature of interpersonal relations: Is the display of emotions desirable? Competition or cooperation? (Schein, 1985)  Typologies of organizational cultures (1) Difficult to characterize organizational cultures Typologies as the (necessarily limited) attempt to identify the “gestalt” of a culture Prominent typology: Deal & Kennedy (1982) Work hard/play Tough guy/ Macho: Typologies condense hard: important features of Speed of feedback E.g.: sales org cultures, but tend E.g.: advertising, entertainment to be too simplistic Process: Bet your company: because they can never cover the high E.g.: banks, E.g.: pharmaceuticals, complexity of governmetal agencies architecture organizations Degree of risk Typologies of organizational culture (2): Dysfunctional cultures Kets de Vries & Miller (1986) as a typology of dysfunctional organizational cultures Idea: Personality of CEO influences the org. culture Culture type Paranoid Depressive Dramatic Compulsive Schizoid Characteristics Hostile Helpless- Grandiosity; Mistrust Detachment relations; ness; hope- need for between of leaders suspicion; lessness attention leaders and from the distrust; sub- organization control ordinates Reaction Inactivity; Concentrati High degree Ineffective instead of coordination on of power of control; communi- anticipation; through at the top; change Implications cation extensive routines, not no effective difficult information managerial flow of collection initiative information  Effects of organizational cultures? Positive effects - Orientation of action - Efficient communication - Fast decision making - Efficient implementation - Low control requirements - Motivation and team spirit - Stability Negative effects - Tendency of closure - Devalorization of new orientations - Barriers to change - Fixation on traditional patterns of success - ”Cultural thinking”: Focus on conformity (see groupthink below)  Changing organizational cultures? (1) 3 distinct approaches towards cultural change 1) “Cultural engineering”: Organizational cultures can be planned, implemented and changed systematically by managers (see Kunda, 1991 for an impressive study of cultural engineering) Open question: What about the deep layers of organizational culture that are not rationally planned, but experienced and therefore hard to access and understand? 2) “Culturalism”: Organizational culture as a lifeworld that cannot and should not be accessed by managerial influence (Smircich, 2017) Open question: What about dysfunctional organizational cultures? Changing organizational cultures? (2) 3) “Course correction”: Both the perspectives of cultural engineering and culturalism are too extreme à Course correction as a middle ground that accepts the complexity of organizational cultures but nevertheless provides leverage points for changing cultures 3 steps: - Diagnosis: Attempt to describe and grasp the existing culture (while accepting the limitations to fully understanding an organizational culture) - Assessing the need for change: What is problematic? - Providing impulses for re-orientation: Destruction and development (e.g. through value statements) Bottom line: There are clear limits to changing organizational cultures Wrap up (2) Organizational culture as a central emergent phenomenon that comprehensively influences organizations Limited possibility to change organizational culture References Deal, T.E. and Kennedy, A.A. (1982) Corporate Cultures: The Rites and Rituals of Corporate Life. Reading: Addison Wesley. De Vries, M. F. K., & Miller, D. (1986). Personality, culture, and organization. Academy of Management Review, 11(2), 266-279. Janis, I.L. (1982). Groupthink. Psychological Studies of Policy Decisions and Fiascoes. Cengage Learning. Kogan, N., & Wallach, M. A. (1964). Risk taking: A study in cognition and personality. Holt, Rinehart & Winston. Moorhead, G., Ference, R., & Neck, C. P. (1991). Group decision fiascoes continue: Space shuttle Challenger and a revised groupthink framework. Human Relations, 44(6), 539-550. Schein, E.H. (1985). Organizational culture and leadership. Jossey Bass. Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological Review, 63(2), 129. Smircich, L. (2017). Concepts of culture and organizational analysis. The Anthropology of Organisations, 255-274. Tannenbaum, A.S. (1966). The social organization of work organization. London: Tavistock.