Our behavior in any situation involves the interaction of our personal characteristics and the characteristics of the situation. Thus, identifying all of the factors is time-consuming and difficult; frequently it is impossible.

To help us identify the important managerial factors in organizational behavior, however, we use the contingency (or situational) approach.

The basic idea of the contingency approach is that there is no one best way to manage. A method that is very effect in one situation may not even work in others. The contingency approach has grown in popularity in recent years because research has shown that, given certain characteristics of a job and certain characteristics of the people doing the job, some management practices work better than others.

Thus, when facing a problem, a manager using the contingency approach does not assume that a particular approach will work. Instead, he or she diagnoses the characteristics of the individuals and the groups involved, the organizational structure, and his or her own leadership style before deciding on a solution.

With rational-contingency the manager is aiming toward efficiency and effectiveness without actually changing the basic structures of the organization. This approach assumes that managers are always trying to do the best for their organization, although they may not have the correct answer all the time.

The approach does in fact assume that managers behave in a rational manner.

The rationality element of the approach is saying that managers select goals, criteria for effectiveness, and they attempt to adopt strategies which designate as best for the organization.

Also managers attempt to logically design processes and structures to fit the contingencies of technology, environment, and other factors in the organizations situation.

With radical-Marxism it is agreed that managers are rational but with a difference in that, firstly, the managers are making decisions in order to keep themselves in the capitalist class and they are keeping power and organizational resources for themselves.

They are trying to maintain their own position, which could be at the expense of the efficiency and productivity of the organization.

The perspective goes on the say that managers give the workers small jobs in order to de-skill the worker and stop them from having a larger claim on the organization.

Secondly, the perspective claims that the manager has a that he should change the organization what it currently is. Therefore the perspective argues that the theory on organizations should in fact have a political agenda and seek to uncover the power distortions and question the legitimacy of the organization in favor of the worker not being dominated by the hierarchy.

The transaction-cost economics perspective claims that individuals act in their own self interests and that organizations, as we know them, are not needed for the exchange of services and goods.

It says that through contracted transactions an individual would be able to produce or obtain whatever he required and that he would be protected by the contracts.

The problem being that the contracts would be so numerous that it would not be possible to manage them all. So the transactions are brought back with in the hierarchy of the organization which seeks to monitor and supervise them.

There is also the problem that the transactions become very expensive in relation to the complexity of the organizations environment.

The focus of this perspective shifts from production to the exchange of services and goods.

It can be seen from the three theories of organization theory that they are perspectives which move from one end of a scale of managers being selfish and interested in only their own position to the other end which shows managers think of the best interests of the organization as a whole.

There are people in an organization, not always just the managers, who will do all they can to reduce costs, enhance efficiency and productivity and strive for the good of the whole.

In a way of course as each member of the organization tries for the common good they do in fact safe-guard their own position. An organization will last longer if all workers are attempting to reduce costs and increase efficiency, thus the workers will keep their positions for a longer period of time.

So from this claim it seems there is an element of each of the perspectives in modern organizations. The trick of course is to see the amount that each manager, or worker, will take of a perspective and apply to his own situation, how the balance is achieved.

According to the literature the most popular of these perspectives is the rational-contingency approach where all the elements that make up an organization are taken into account. It is clear that the radial-Marxism perspective will not get very far in the west, where organizations of control and efficiency are the bed rock of capitalism itself. Politics in organizations is what leads to union conflicts and, some claim, inefficiency and lack of output. If everyone is playing politics then they certainly are not striving for a more efficient and hence competitive organization.

Strategic management is concerned with the whole organization. It involves internal features such as product/service costs, manufacturing, capability, skills of the workforce, distribution networks, marketing expertise, administrative competence and so on.

Strategic management involves the attitude the organization takes to risk, including the financial risks involved in borrowing to finance activity, and its relative access to capital both from the market and from its own resources. It may also involve the organization’s record of new product development, the cultural norms that determine ‘the way we do things round here’ and other similar, perhaps more ephemeral, features.

In each of these areas, the organization will have particular strengths or weaknesses when compared to competitors offering similar products or services. These special or particular advantages are foundations the organization may be able to build upon to give itself a sustainable edge over its competitors.

There is a need to adopt an integrated approach since it is unlikely that strategic decisions can be managed within any one particular function or area of expertise. This has major implications for those engaged in forming and implementing strategy.

First, strategic decisions and their implementation require managers to cross functional boundaries in the organization. Strategists will have to negotiate and reach agreement with managers in different parts of the organization who may have different priorities, different interests and a different perspective on the issue being confronted.

Second, because strategic issues are likely to require managers to assess the future, the decisions are likely to be subject to a greater degree of uncertainty than the management of day-to-day operations.

Third, the implementation of strategic decisions will tend to involve persuading and influencing people in the organization to change. The expectation may be that we wish them to change to something that may well be poorly defined, uncertain and unfamiliar.

Top management is usually defined as the group of senior managers who surround the Chief Executive Officer (CEO) and are responsible for the strategic direction of the organization through objectives, goals, design of structure and corporate policies. As the manager rises up the organizational hierarchy greater emphasis is placed upon conceptual ability. This ability is required in order to view the complexities of the operations of the organization as a whole, including environmental influences, it also involved decision making skills. The managers personal contribution should be related to the overall objectives of the organization and to its strategic planning.

The decision making skills for the senior manager are particularly important in that he will be expected to make decisions which will affect the organizational design and the best type which will be appropriate under current circumstances. These circumstances he will, along with the rest of senior management, be able to assess in the light of internal and external environmental factors.

The word ‘design’ of course means putting different parts together so that the whole is more valuable than the sum of the parts. This is the great challenge before managers, to construct coherent designs for organizations out of the seeming chaos of thousands of disparate hunches managers may have.

The minimal characteristics of organizations, which explain why they are so productive, are a hierarchy of authority; rules, procedures, techniques, and controls; formal interpersonal communications; specialization of functions and division of labor. While all organizations must have these properties in at least some degree to be called organizations, they vary considerably in the extent to which they possess these as well as other characteristics. This variation could be attributed to the culture of the organization.

Culture sets the bounds on what may or may not be done, on what is desirable and what is not. The members of the organization, bringing into it values of the wider culture, will simply put up with actions that seriously undermine the dominant values of the wider culture.

While an organization has a very wide choice of design, in practice its choice is considerably circumscribed by the environment in which it functions, its technology, size, type, function, the abilities and beliefs of its management, the goals of management, and its cultural values.

The organization is powerfully influenced by the nature of its environment and the events taking place in its environment. Both economic and cultural forces are likely to affect the way the organization functions. The contingency and systems theorists have stressed the dependence of the organization on its environment. The style and philosophy of top management may have far reaching consequences for the organization. When reviewing the human relations orientation the strategic importance of the style of supervision, participative or autocratic, is important.

The organization is a system of interconnected parts, the environment, demographic variables, the style and goals of management, structure, technology, workflow, behavioral variables, and organizational performance are not so isolated but interconnected.

A change in one is likely to have consequences in the rest. Situational variables affect strategic and structural variables. For example, a dynamic environment tends to inculate an ideology of flexibility, looseness, open communications, and situational expertise in the top management. This ideology enables it to cope with the novel and complex problems such an environment generates. Strategic variables affect structural variables. The goals and strategy of management translate into the design of the structure by which they are to be achieved.

While each of situational, strategic, structural, and behavioral variables may affect performance independently, in appropriate combinations they may affect organizational effectiveness to an even greater extent. The combination of a dynamic business environment, a risk taking top management philosophy, a flexible organizational structure with a strong information and control system, and high levels of motivation and readiness to accept innovation on the part of the organizational rank and file may more surely lead to superior organization effectiveness.

Strategic variables and structural variables are amenable to managerial modifications, certainly more so than contextual variables and behavioral variables.

One prevailing criticism of modern contingency theory is its extreme emphasis on the organization’s adaptation and passive responses to the environment. Management’s choice is often restricted to the design of internal structures and controls intended to compensate for conditions in the environment, technological demands, and organizational size. According to this view, an effective organization is one which successfully adapts to its context and continues to adjust to changes in those contextual factors.

Domain accounts for many of the characteristics that distinguish one organization from another. For example, the domain of a large public general hospital is quite different fro that of a private psychiatric hospital. The general hospital serves people with lower incomes, especially if it is located near low-income areas. The suburban psychiatric hospital serves a wealthier clientele.

As part of local government, the general hospital is caught up in the web of public debates about funding, staffing levels, and become a hangout for newspaper reporters covering accidents and violent crime. The private psychiatric hospital has more intense interaction with individual patients, their families, and with private donors. Each organization’s domain implies a particular task environment and a level of uncertainty, which consequently holds implications for organizational design. Domain is therefore a vital and basic consideration for organization design.

Organizations which successfully manage their domains are likely to be more effective than those which do not. But while organizations tend to be more effective if they achieve control over their domains, doing so is not a simple matter. Coalignment implies both adaptation to factors beyond managerial control as well as active selection and management of domain where possible and advantageous. Survival rests on the coalignment of technology and task environment with a viable domain, and of organization design and structure appropriate to that domain.

Coalignment calls for simultaneous use of active and reactive moves, and the skillful manager must understand not only their nature but also their timing.

Since the domain is large and implies many relationships, with both weak and strong elements of the environment, the active and reactive strategies may occur simultaneously in different segments. Weakness and strength in the environment are always shifting, making coalignment an ongoing challenge to management. For this reason it is important to consider carefully and systematically the alternatives available in choosing and managing an organizations domain.

The most fundamental strategic choices of any organization are the selection of products and/or services and targeting them toward specific market segments. These choices are based on forecasts of economic conditions, shifts in consumer tastes and demands, prediction of competitors moves, and financial standing. The basic idea is to find a gap in the complex network of consumer needs and then fill it with a product or service. Therefore an organization can change its domain as a technique for control. Changing its domain can include such strategies as joint ventures, diversification and mergers and acquisitions. Each of these strategies allows the organization to change its place in the market sector it chooses to be in.

If an organization feels vulnerable that it may have too much of its resources concentrated in one market area then it can divest into another.

Another strategic decision can be the location of an organization’s physical facilities, these no longer need to be near the location of natural resources or transportation routes. With modern communication technologies and improved worldwide transportation, other reasons have assumed importance in making location decisions.

Trade associations are often regarded as benign groups that serve social functions as well as professional ones. Yet these groups establish information links in less-concentrated industries and can become highly political action sets. Considerable information is passed through the meetings and publications of a trade association. Where publications like Business week and The Wall Street Journal regularly report on oligopoly behavior, trade publications are needed to disseminate the same type of information within more dispersed industries. Thus trade associations help to manage firms’ legal domain by exerting political pressure on pending legislation. Group action produces better results than isolated pressure by single firms. In addition trade associations may attempt to control prices through publicizing prices or minimum fees for various services.

Some strategies which can be identified when an organization wants to change its domain are illegal activities. This may be the case but many such strategies are pursued and research shows that the commission of illegal acts and their subsequent prosecution is related to domain conditions. We might expect that organizations facing environments where resources are scarce would take action to procure additional resources, and that increased efforts in this direction might result in the commission of various trade violations. For example, price fixing, price discrimination, franchise violations, reciprocity, allocation of markets, and illegal mergers and acquisitions can secure external resources and reduce domain uncertainties.

Another technique an organizations can use is political activity. This is where the organization, alone or with others, can form lobbying groups to attempt to influence those who are responsible for regulation. This is different from those lobbying service firms who will take up the mantle of a cause because the CEO’s themselves can be expected to indulge in this practice as part of their job function. Usually an industry will be keen to promote this type of strategy to alter the domain especially where price regulation or tariff barriers are being considered.

An example is the desire to control the price and quantity of certain commodities to hit the consumer market in order to keep the price higher than it could be in order to protect certain groups, such as farmers.

The transformational approach to organization theory assumes that both technology and structure are caused by the collective paradigm, and, as the paradigm shifts, we can expect new structures and new technologies. This is in fact occurring. The matrix and organic structures, with their dependence on personal maturity, are starting to appear, and the emerging dominant technology of the postindustrial era - electronic information processing and communications - is making an impact on virtually every organization.

The transformational perspective is: technologies are a direct reflection of the consciousness of those who produce them. Because these technologies were all developed under a self-centered, effect-dominated paradigm, they will necessarily be destructive in nature, because they were created with a limited perspective of the whole. As the shift to a whole-centered paradigm begins to gain momentum, technologies will naturally emerge that will be life enhancing and blended with the larger whole.

New technologies are radically transforming organizational structure and strategy. When General Motors environmental advisory staff made a commitment to use information technologies to integrate staff planning and to make the sharing of information more timely and consistent, it found three significant changes occurred, apparently as a result of the new technology:

Firstly the staff member found themselves using a much more elaborate network of communications which included both personal contacts and task-related interactions. More information was being processed than before, and, more significantly, task-related communication became more focused, personal contacts developed between members newly linked with the system, and the new network tied together people with complementary skills and common problems.

Secondly a change occurred in the use and purpose of the organization’s hierarchy. Power based on hierarchical position was replaced by power based on competency as demonstrated throughout the system. Centers of competence became more obvious as the technology allowed performance to become more visible. While these practices did not remove the formal hierarchy, task performance was no longer dependent on hierarchical channels. A less formal, more spontaneous system was used for getting information.

Thirdly, the jobs of the staff became more flexible and the time available for getting work done increased. Routine tasks became eliminated for professionals, taken over by clerks, jobs were enriched.

In other words, the new technology allowed for reciprocal interdependency among the parts of the organization, which in turn flourishes in an organic structure rather than a bureaucratic one.

The relationship between technology and organizations can be further understood with reference to the natural business functions - product development, production, and marketing. The job-order firm produces according to customer specifications: the firm must secure the order, develop the product, and manufacture it. The cycle begins with marketing and ends with production. This sequence requires the firm to be especially adept at sensing market changes and at adjusting to those changes. But more important, the product development function hold’s the key to the firms success. This function must convert customer specifications into products that are acceptable to both the customer and the production personnel.

At the other extreme of the technological continuum are the process manufacturing firms. In these firms, the cycle begins with product development. The key to success is the ability to discover through research a new product that can be produced by already existing facilities or by new facilities once a market has been established.

Operations technology plays several roles in the activities of an organization. It not only transforms inputs into outputs but it automates the process and it helps in the standardization of the organization’s outputs. These roles do very from organization to organization and in service organizations there may be minimal automation of operations as there are few operations anyway. But the clerical and information gathering functions will be enhanced by computers and their speed of processing and manipulation of data bases.

Over the years however, assembly line technology has got a bad name for causing boredom on the job. There is little question that when work is standardized and routinized it can get quite boring. Also in firms employing assembly line technology because their work is machine paced the worker may experience a loss of control over his work and thus slump into passivity. However at lower organizational levels, intellectually unexciting work is the practice in non-mass output organizations as well. The ward boys, the laboratory technicians, the secretaries, the sweepers even when they may be working in custom type organizations do not noticeably wax eloquent about the intellectual challenge of their jobs.

To sum up there are several major reasons why technology is important to the organization. One immediate reason is the increase in productivity it leads to. Technological change has also created an irresistible force toward continued innovations. Technology is often a dominant determinant of job structure, one only needs to review the evolution of technology from the first use of hand tools to the present application of computer-based manufacturing systems to appreciate this.

Technology also has an impact on employee attitudes and behavior, the effect of technology on the nature of work extends beyond the obvious subjugation of man to machine. Technology exerts influence on group composition, group size, patterns of social interaction, and individual control of personal activities.

Perhaps the most common basis for conceiving of the way in which forces in the environment affect an organization in competitive terms is the idea of the lifecycle. The notion here is that conditions in the market place, primarily as between growth stages and maturity of markets, will fundamentally affect market conditions and competitive behavior. As the organization seeks to take advantage, or re-position, in these new market conditions it will have to adapt the way it manages itself. Even if the organization decides to grow it will also go through stages which will allow it to adapt to its new size. These major stages are:

1. Entrepreneurial stage. As creative entrepreneurs invent new products, organizations are started to facilitate the design, elaboration, testing, and eventual commercialization of those products.

Because the entrepreneur makes most of the decisions and supervises the work of everyone else, this stage is marked by centralization , but the structure remains informal and organic, with no middle management. Eventually informal face-to-face communication becomes increasingly inadequate to facilitate integration. The energies of the group members are increasingly being diverted to holding the task together.

2. Bureaucratic stage. Eventually the informal, organic, entrepreneurial organization must begin to formalize its operations and decentralize its authority structure by adding a middle management layer of vertical differentiation.

Although entrepreneurial organizations with mature workers and well-articulated visions can continue for much longer with organic structure, most organizations have to get rid of the entrepreneur in order to make the transition to the bureaucratic stage. The owner founder with strong ego involvement in the success of the firm wants to continue to make all the decisions, creating a bottleneck at just the wrong time in the company’s growth. Job descriptions must be created where none existed, and previously casual reporting relationships must be formalized, especially with old-paradigm workers, who are looking for leaders to lead them (centralization) and directions to follow (formalization).

3. Divisionalized structure. This stage of growth sees the organization begin to expand into different markets, develop different products for regional needs, and the like. In order to coordinate these diverse activities the organization must shift its structural configuration into a form that can control for each site of product line. It becomes imperative that the organization divisionalize. Do all organizations eventually diversify into divisionalization? Clearly not, but there does seem to be an imperative based on market diversification, age, size.

Divisionalization, then, under the industrial paradigm seems to be a logical sequence of aging and growth.

4. Matrix structure. Some companies try to overcome the problem of bureaucracy by creating new structures, characterized by multiple reporting relationships and through collaboration.

They may create worldwide product divisions and area divisions with shared jurisdiction over the subsidiaries. This will combine the stability and predictability of the bureaucracy with the flexibility and speed of the organic structure.

5. Mixed or organic structure. This is the new paradigm organization which has begun with an organic form gone through the cycle and starts again. Some differences exist this time though.

The glue that now holds the organization together is the newness of the organization, the challenge of creating a new company and the transcendent vision of the founders. By this stage the organization has growth to such a large size that the mixed or organic structure is created by splitting up the company into smaller work units. The smaller work units can consist of organic teams or they can have some of the attributes of a bureaucratic form, as required. Flexibility is the major benefit of this stage, those working with nonroutine technologies in a turbulent environment call for organic teams, whereas aspects of the company doing routine tasks may stick to the bureaucratic way of things.

At what point does an organic free-form organization begin to calcify into a bureaucracy? At what point do additional employees have a minimal effect on the organization’s structure? There are no hard and fast answers to these questions.

Once an organization reaches a certain point in size, it tends to be high in complexity, formalization, and decentralization. Each incremental addition of employees makes much less differences to the structural configuration than do additions at the earlier stages of growth.

The organizational chart for this firm is shown on the next page. The design of the organization follows the following logic:

As the firm produces two distinct products, lap top computers and software, there is a distinction between the two. This is because the R&D and the manufacturing of the machines is a different process from the R&D of the software, therefore different skill sets are required, hence the reason for two VP’s, one for each department.

It is necessary for the quality department to be under the engineering manager due to the nature of the quality function which will cover both lap tops and software within a multi faceted department under the one manager.

There are two production departments for the same reasons as above, and due to different manufacturing processes required.

The rest of the organization controls the overall functions which are common to all departments, such as accounting, sales, marketing. There will be internal divisions which will be decided by the relevant departmental managers. This will ensure job enrichment and flexibility through the workforce.

It is necessary to keep the senior management group with the CEO as this is where the major decisions with regard to strategic orientation will be made. However it should be observed that the linkages extend to all the areas of the organization to provide organizational ‘fit’ within the structure.

Under the R&D VP’s it is intended to utilize a matrix type structure so that cross-functionality from hardware (computers) to software will occur. The reason for this is to ensure that each knows what the other is planning and producing so that each will complement the other.

Individual positions are not shown on the chart for clarity but there will be members of the organization under each manager, such as accounting and marketing staff.

The production departments will have their supervisors, workers of various grades, packers, and general staff.

The horizontal linkage lines indicate cross functionality between the areas, such as quality and production.

The purchasing department has several linkages which indicate the departments requirement to know certain information, such as inventory/re-order levels, quality specifications, and the link to the accounting department as purchasing will be issuing purchase orders and receiving invoices for resources ordered to keep the organization working.

The human resources department will keep vertical and horizontal linkages with all departments to deal with all administrative staff matters. Whereas the VP Administration will co-ordinate with the other VP’s on policies affecting staff matters such as remuneration, skill levels of staff, and quantity required to fulfill each departments workload.

Globalization to the consumer means the fact of being able to purchase goods and some services from organizations which are operating in the far reaches of the planet. Competition has become global whereas a few years ago the internal markets were the ones firms would concentrate on. However with the advert of the Japanese showing the American companies that they no longer have a safe haven domestically things have had to change.

Not only are foreign firms competing in the American markets and gaining market share but large blocs of trading partners are springing up as well, where collaborative strategies between countries is becoming normal. The European Union and North American Free Trade Association being just two where tariffs to entry are instigated and rules are legislated.

Not only the consumer is affected but firms are as well. American manufacturing firms are not allowed entry into the huge European market unless the products meet certain quality criteria, designated by the ‘CE’ mark on products. Such regulations prevail in Japan as well where entry is very difficult for all importers.

As far as the quality issue is concerned American firms have had to re-think their philosophy on the subject, although pioneers such as Deming and Juran are Americans who inspired the Japanese.

This has lead to new methods in manufacturing, new technology, adherence to international standards such as the ISO 9000 series of quality assurance.

Workers have begun to realize that competition is also international as well as domestic and they may be displaced if they become uncompetitive with these international rivals. They have to look outside their own environments to see what workers in other countries are up to.

They have been involved in activities such as mergers, collaborations and buyouts as a result of their organizations striving for greater efficiency and to gain competitive advantage.

Their firms are becoming smaller, requiring more efficient ways of managing and working, job security is not guaranteed in these turbulent times.

Organizationally American firms are finding they have to be more flexible t change product lines faster, they have to be innovative to beat the competitors to the markets with new products, and they must be designed to be international and able to cope in different cultures round the world.

Of course if the firms do manage to think internationally then they will have access to a huge world market, much larger than the domestic American one.

They should be striving to become global organizations, such as the multi-nationals have been trying to do for some time now, a good example being the oil companies. They were forced to think globally as the resources they require were running low domestically, but then they realized that being a global organization was good for market share increases.

Organizations, of course, do not have to go it alone when embarking upon a global strategy, they usually form strategic alliances with other companies in targeted countries. There are advantages here with the sharing of risk, advertising, production facilities, and cultural knowledge.

Distribution channels can also be shared with both, or more than two organizations, sharing their already set up channels to help each other to penetrate new markets.

The design of the American organizations has changed in that divisions of a large number of American companies are springing up all over the world. These divisions report to the head office at home from where they follow the generic strategic policy, but are usually independent to pursue strategies which suit the country, or area, they are operating in.

Inflation and currency transactions can have an affect on these divisions for accounting purposes and it is sometimes difficult for the division to consider itself part of the parent company due to its level of independence and these various circumstances.

Americans firms have been prolific in pioneering the idea of the global product. This product, such as certain Ford Motor Co. Vehicles, are standardized round the world. So one can purchase a Ford Sierra in America, South America, or Europe and they will all be made in the same way. Same parts will be used and the firm is able to be competitive through economics of scale. Lower labor costs in various parts of the world add to this competitive ability for many products. Volkswagen manufacture car parts in Germany and ship to Mexico for assembly because assembly costs are a high proportion of putting a car together and labor rates in Mexico are substantially lower than in Germany.

Dividing the world into regions and using a matrix structure has become normal for the very large American firms. It means that the staff at the senior and management levels will have a good chance of being located in more than one country during their working life. This is good for the staff as they gain valuable experience and it is good for the company with the interchange of ideas that will take place as staff move round the globe.

Networking of staff in the different countries has been taking place, again to interchange ideas and innovative thoughts on issues affecting all divisions of the organization.

Of course the total globalization idea is really good for the firms which can have standardized products which can be marketed the world over, such as Pepsi.

When deciding on innovation as a central element for improving effectiveness, there are some key issues which have to be faced when deciding on a strategy for innovation:

Innovation is systematic: all factors involved (social, economic, political, technological, commercial) are inter-related.

Innovation is non-linear: it experiences stops and starts and is often characterized by ‘accidents’ (e.g. penicillin).

Innovation is creative problem solving, requiring imagination and flexibility: managers need to learn how to support people and to facilitate teamwork and problem solving.

Innovation is situational: there is no one best way. Success will be dependent upon such factors as top management support, sensitivity to market needs, effective communication and technological expertise.

Innovation requires appropriate structures: traditional hierarchies are too rigid. Project teams and task cultures are effective structures.

Innovation can be simulated: but this requires major effort and involves significant learning.

Innovation requires various communities of interest: customers and clients can and should play a part.

Innovation is mission-orientated: thus it creates impetus, high viability and ‘success’.

Innovation involves negotiation and participation: it will involve conflict which must be resolved through negotiation or participation.

Innovation is itself innovation: it will never go the way of past innovations.

Innovations and information are closely linked.

Innovation is personal and global: it involves and affects individuals and communities.

Innovative accomplishments stretch beyond the established definition of a ‘job’ to bring new learning or capacity to the organization. They involve change, a disruption of existing structures, a redirection of organizational energies.

Any significant organizational change demands that existing ways of thinking about and talking about what we do can be overturned. Dominant views must be usurped. Experience tells us that the first attempt to articulate an alternative view, a novel concept, will frequently fall on barren ground. It will probably meet opposition or rejection, neither logic, evidence nor the participation of all concerned appear to be enough. New ideas can seem unorthodox and even risky. A manager seeking support for new ideas must be sensitive to political processes.

Change creates anxiety, uncertainty and stress, even for those managing change, and even if they are fully committed to change. Seldom are there any guarantees that the new approach will work, will deliver the goods! Changes which have a significant impact on the work that people do will have a significant impact on their self-esteem.

Individuals have four main categories of need if they are to rebuild their self-esteem amidst a program of organizational change. They need to understand the changes and thus need intelligible information. They will probably need to develop new skills, if only the skills of dealing with new people as colleagues or supervisors. They will need support to help them to deal with the problems. Encouragement to try out new systems is important. Provision of short workshops planned to achieve part or all of the work discussed in the preceding section can help, as can technical support to solve problems, access to people who can help, and allowing people to control their own learning.

First and foremost, empathy, understanding, is a key issue. People need to understand the new system if they are to understand their own part in it. Information must be shared if people are to judge the impact of changes upon themselves and upon ‘their’ jobs.

Does this mean that openness and sharing information is a good thing, and the more the better? Some will say this is so. We can only make mature judgments if we have the relevant information.

Others will point to the uncertainty surrounding many changes. What if the manager you exhort to pass on information does not have it to share? Then the question of confidentiality is raised.

In fact there is a dual problem which must be faced when significant changes are under way. For the individuals concerned, the demands of a change situation can be revealing to themselves and to others. We often respond emotionally because we feel that the new demands , the new situation, strip away barriers and reveal parts of ourselves which we have kept private. One’s skills are examined and explored, work behavior comes under observation and analysis. The individual is asked what he or she thinks about the present system, job, machine or structure? Thus the individual provides information.

People need time to get through a major change, this is especially so if the change required them to solve problems. Spend time with people and it is important to listen to their views. Empathy is important but remember that the concern should be to help them build energy for change. Encourage people to put off those decisions which are not needed immediately. Recognize that everyone needs to feel their way forward for a period of time.

Make improved decisions because people have better detailed knowledge of jobs and systems.

People will better understand the aims of the change, and the working of new systems.

It will create a feeling of ownership.

Involving redirects energy in support of change rather than against change.

Allows senior managers to experiment.

Builds a better understanding of change and how to achieve it.

Therefore, when senior managers are considering innovation and the changes it can lead to, they have to consider the effects this will have not only on the design of the organization but mainly on the people within that organization. If these managers do not have in mind some of the problems which may be caused and how they are to deal with the changes which may come along then they may as well not bother. Not bother because they may be creating problems which lead to organizational ineffectiveness, the opposite of what was intended. Managers at this level are, presumably, versed with change management scenarios and how to solve the problems which will be encountered. If they are not then they can seek outside assistance, but whatever they decide innovative change has to be managed from all angles of the organization and not just one or two sectors in isolation.

Decision makers in all organizations need to have information about their environments and about the state of affairs within the organization so that they can respond more effectively to changes in the environment and exercise control over internal operations. Control and Information system (CIS) is an important element of organizational design. To begin with, organizations with a sophisticated CIS employ many more specialists, relatively, than those with little sophistication in their CIS. In organizations with a simple CIS experience and power of the line manager are ascendant. The organization with a sophisticated CIS is likely to experience more line-staff conflicts than one with a simple CIS.

In order to introduce an information technology system in to the organization there are a number of planned steps which can be followed to make this easier:

1. The organization can conduct a feasibility study with managers and IS staff to look into; economic feasibility which will involve questions such as whether the firm can afford one type of system or another, whether the systems benefits ware likely to exceed its costs, and whether the project has high priority with top management. Technical feasibility involves questions such as whether the organization has enough experience using technology.

Organizational feasibility involves questions such as whether the system has enough support to be implemented effectively.

If the system appears feasible the initiation phase produces functional specification and project plan. The functional specification explains the importance of the business problem: summarizes changes in processes; and estimates the projects benefits, costs and risks. The project plan breaks the project into subprojects with start and completion times.

2. Next the organization goes into the development phase by creating computer programs and installed hardware that accomplish the data processing which has been described in the functional specification. This is done through a process of successive refinement in which the functional requirements are translated into computer programs and hardware requirements. The purpose of the various steps and deliverables in the development phase is to ensure that the system accomplishes the goals explained in the functional specification. These steps being:

Detailed requirements analysis

Internal system design

Hardware acquisition and installation

Programming

Documentation

System testing.

3. It is now possible for the organization to move to the implementation phase. This is where the system is put into operation. Here again there are a series of steps to be taken:

Implementation planning. Creates the plans for training, conversion and acceptance testing.

Training. This is the process of ensuring the system participants know what they need to know about the system. The training format depends on the user backgrounds and the system’s purpose and features.

Conversion, this is where there is a change over from the old business processes to new ones using the new information system. It is possible to simply choose a date, shut off the old system, and turn on the new system. This is risky because it does not verify that the new system will work properly and that the users understand how to use it.

A pilot implementation is normal to check for bugs and problems.

Acceptance testing is testing of the system by the users as it goes into operation, this is important because the new system may not fit regardless of what have gone on before.

4. Operation and maintenance starts after the users have accepted the system and can be divided into two activities;

Ongoing operation and support, the process of ensuring that the technical system components continue to operate correctly and effectively.

Maintenance is the process of modifying the system over time as users gain experience they can discover its shortcomings and suggest improvements.

The four phases above describe how to plan the introduction of a new system for control and information purposes from the perspective of the information technology aspect. Of course managers who intend to introduce such a new radical system will have to go down the path involving getting the organization and its members ready for such a change.

Also the underlying tasks of the organization will determine the amount of information and control each department will require from the computerized system.

Replacing old methods of manufacturing with computer aided engineering techniques will reduce the amount of guesswork and quality rejections of the old systems, this will enhance organizational effectiveness and hence competitive advantage.

Although most people will understand what is meant by organizational culture it is a general concept which is difficult to define or explain precisely. The concept of culture has developed from anthropology. Although people may not be aware consciously of culture it still has a pervasive influence over their behavior and actions. A popular and simple way of defining culture is: ‘how things are done around here’. It can also be said to be the collection of traditions, values, policies, beliefs, and attitudes that constitute a pervasive context for everything we do and think in an organization.

Culture helps to account for variations among managers and organizations both nationally and internationally. It helps to explain why different groups of people perceive things in their own way and perform things differently from other groups. Culture can help to reduce complexity and uncertainty. It provides a consistency in outlook and values, and makes possible the processes of decision making, co-ordination and control.

There is a growing understanding that the strategy of an organization, its structure, the sorts of people who hold power, its control systems and the way it operates, tend to reflect the culture of the organization. It is important when analysing the strategic position of an organization to assess how this culture has influenced the development of the organization and the strategies it has pursued. The successful management of strategic change is most likely to be achieved if the uncertainty and resistance which follow change scenarios can be overcome or avoided. Ideally this requires that the need for change be accepted by those involved in making it work; that they identify with the change or really believe it necessary. This is likely to mean that the existing recipe has to be changed and that its constraining cultural influences minimized.

Culture is clearly an important ingredient of effective organizational performance. In their study of 62 American companies with outstandingly successful performance, Peters and Waterman draw attention to the importance of corporate culture.

"Without exception, the dominance and coherence of culture proved to be an essential quality of the excellent companies. Moreover, the stronger the culture and the more it was directed to the marketplace, the less need was there for policy manuals, organization charts, or detailed procedures and rules. In these companies, people way down the line know what they are supposed to do in most situations because the handful of guiding values is crystal clear"(1).

Drawing on the work of Peters and Waterman a subsequent study of 23 British companies found that these companies stood out from the crowd according to the success criteria of: high growth in assets, turnover and profit over the past ten years; a consistent reputation within the industrial sector as a leader; and a solid public reputation. Organizational culture was clearly identified as a crucial element in the ability to maintain consistently the characteristics of a successful management style.

(1) Peters, T. J. And Waterman, R. H. In Search of Excellence, Harper & Row (1982) pp.75-6.

Part of the organization’s culture may well contain inference to ethical values which are embodied in the employees as well as the organization itself. This is because the culture will shape the framework of the organization itself.

Managers bring to the organization their own values and beliefs which they in turn develop into the organization making these values part of the organization. If the organization is inherently one of high moral and ethical values it is unlikely a manager who does think the same way is going to last long, or be taken any notice of.

So we can see that the behavior of managers determines the organizations ethical reputation. If the managers who shape the organization share the values of fairness and moral behavior this will be apparent in the way they behave toward their subordinates and in the way they treat them. If these values are obviously not being practiced then the respect that the manager needs to function efficiently will be withdrawn and his job will be all the more difficult.

Should the concept of good, honest , moral behavior be lacking by all the top management then this will affect the whole organization including the culture. Efficiency will suffer as the workers will withdraw into the same paradigm, at the extreme lying could become the norm and work levels will suffer.

Of course if the organization does have managers who infuse a sense of high moral and ethical standards this could result in:

Employees trust for the top management being enhanced, helpful during negotiating periods.

Good public relations exercise, the recent trend toward organizations advertising that they are ‘ethical’, such as mutual funds, has lead to the public warming toward these organizations.

Should a problem occur with the organization’s product(s) if it is perceived to be an ethical organization it is in a better position to weather any bad publicity resulting from the problem.

Generally consumers have a sense of fairness within themselves and are not really likely to want to purchase from an organization that is obviously of doubtful values.

On the face of it there does seem to be a good argument for the managers to influence the organization toward having positive ethical values. It does seem to be the element that consumers and the general public like to see in an organization. The trick of course is to ensure that these ethical standards are re-inforced and encouraged. This can be done through codes of ethics, policies that encourage the members of the organization to be ethical and by general example of the senior managers. Ethical values are of course just one of the many factors managers have to keep in mind when considering organizational functioning.

This approach uses a logical stepped approach to decision making. It stresses the requirement for an analysis of the problem which is followed by a sequence of operations which allows the manager to make choices before he decides on implementation of the solution to the problem before him.

This is of course an ‘ideal’ approach for managers to work toward, but there is no guarantee they will ever reach its objectives completely.

1. Monitoring of the environment is the first step where the manager will check out the internal and external environments of the organization. The internal analysis can be far reaching, such as financial analysis, personnel audits, etc. which can take some time.

The same is true for the external environment. Scanning and analysing this can involve taking a look at the whole industry, life cycles, market positioning etc.

So the manager has to decide on the limits of the analysis he/she needs to conduct before getting too carried away. If the problem is one of organizational survival then the in depth analysis may be justified, but for smaller concerns or problems limitations should be placed on the amount of information collected.

2. Define the decision problem. This follows on from deciding the limitations of analysis described in 1. The manager needs to define the essential details of the problem so he will not get carried away with superfluous issues which have nothing to do with the problem. He needs to answer the who, where, when questions of the problem so that he can make a definitive definition.

3. Specify decision objectives. The manager needs to set what his outcomes are so that he will know when the decision has been successful.

4. Diagnose the actual problem. This is where the manager has to analyse further below the surface to discover what the cause of the problem is and here more data may be gathered to assist.

5. Develop alternative solutions. There is always more than one course of action a manager can take to solve a problem. If the manager is part of an organization that encourages participation then he will be seeking ideas from others in the organization. Brain storming may take place within a department where a whole pile of ideas will be put forward. Some will not be feasible, but others will be worth looking at more.

6. Evaluate alternatives. This is where the alternative solutions put forward in step 5 will be looked at more closely. Ideas will be analyzed to see if any of them have a chance of success as measured against the desired objectives previously decided upon.

7. Choose the best alternative. All the knowledge the manager has gathered together from the previous steps is now looked at with a view toward deciding which idea has the best chance of success, maybe more than one will work. The manager will use his own judgment as well as statistical techniques and will now take the best alternative(s) and put them forward.

8. Implement the chosen alternative(s). The manager now has to use his persuasive abilities to actually implement the alternative solution to the problem. He has to persuade his organization that this way id the best one and get it implemented. He will start with step 1, monitoring, once the solution has started to take effect in the organization.

It can be seen from this approach that there are two main sequences; problem identification and problem solution. Although there are eight steps from beginning to end the manager may not use one or more of them as he may utilize his own experience and judgment fairly early on, or he may be highly experienced in problem diagnosing or solving so things could get done much faster.

Once the need for making the decision has been recognized, criteria must be established in terms of the results that are expected from the decision. These criteria should reflect how the decision will be evaluated. The criteria should then be ranked and weighted according to their relative importance. Next factual data should be collected relating to the decision. After the data have been collected, all alternatives that meet the criteria are identified. After all alternatives have been identified, each is then evaluated with respect to all the criteria. The final selection or choice is then made based on the alternative which best meets the criteria.

While the scientific approach to decision making is certainly an improvement over the approach based solely on intuition, it is not without its problems and limitations. The scientific approach is based on the concept of the ‘economic man’. The economic man concept postulates that people behave rationally and that their behavior is based on:

1. People have clearly defined criteria, and the relative weights which they assign to these criteria are stable.

2. People have knowledge of all relevant alternatives.

3. People have the ability to evaluate each alternative with respect to all the criteria and arrive at an overall rating for each alternative.

4. People have the self-discipline to choose the alternative which rates the highest (they will not manipulate the system).

In many instances these assumptions are not very realistic. Difficulties arise in setting decision objectives because the decision maker may not always know the criteria used in evaluating the decision. Factors that are considered to be important by the person making the decision may not be viewed as being important by his or her superiors and subordinates.

An additional problem is that most decisions are based on limited knowledge. Several alternatives could have been omitted due to this lack of knowledge. In many situations the manager has very limited or no control over the information used to make the decision. The information may be generated by an outside source or even a competitor. With new products or innovative ideas, information may be nonexistent. In such instances, the ability to evaluate each alternative and to reach the best possible decision may be hampered by a lack of information.

Because of the inherent limitations with the scientific approach, it should be evident that most decisions, even when the scientific approach is followed, still involve some degree of judgment. Thus in making decisions the manager generally uses a combination approach.

Authority is the right to command and expend resources, lines of authority serve to link the various organizational components together. Unclear delegation of authority is a major source of confusion and conflict within an organization. Many people confuse power with authority. Power is the ability to command or apply force and is not necessarily accompanied by authority, power is derived from the control of resources. This control of resources can be either by a person or by a whole department.

A high degree of power is placed in the hands of top managers in an organization due to the fact that they are expected to have the expertise to drive the organization successfully forward with their strategies for growth and market penetration.

They have the power to decide who works where in the organization and how these people below them will be compensated, and promoted. Top management therefore hold a large amount of resources in the form of the future of the organization and the authority to expend its finances to reach their desired goals.

The problem here for the organization is that the direction and strategies coming from top management will be relied upon for the survival of the organization, and they may get it wrong, they may be incompetent, they may be corrupt and waste the resources.

The solution is that top management need to be accountable to the shareholders, regulatory authorities, who in turn have the power to remove them from their positions should these problems be encountered.

Top managers rely upon middle managers for the smooth functioning of the organization and so invest power to these middle managers. The degree of power to the middle managers has to be such that it will enable them to perform their functions adequately, a lack of power may hinder organizational effectiveness. Too much power and the middle manager may be making decisions for which he has insufficient knowledge. So the solution with the levels of power to invest is one of balance, with accountability systems in place to monitor the managers decisions, such as financial.

Lower level members of the organization may be officially those with less power but they can obtain power which is disproportionate to their positions and are able to exert an upward influence. They may take on specialized functions in the organization, such as a computer programmer, and this is where the manager may lack knowledge to control the power an individual creates from position. Persuasion is a form of power which is widely used, such as a union official negotiating with management in a very forceful manner.

Participative management style can solve the problems which can be exerted at this level. This is where management have made the decision to empower employees with some degree of power sharing. Manufacturing teams which work as a production unit are an example of this, where the team has the power to order more parts, make minor decisions and be part of the team functioning process, rather than just being instructed by the manager.

Horizontally power may be unbalanced, in that one department may influence the functioning of the organization more than another. The power given the departments is not decided by the organizational structure and hence interdepartmental dependencies become a key element underlying relative power. Top management have the power to correct this problem by reducing the power of the department, re-organizing the department, removing those who manipulate the power balance, re-organizing the organizational structure maybe to more of a matrix design when power is spread out more evenly.

Politics is the use of power to influence organizational outcomes in favor of the manager or department. It can involve deception and dishonesty for purposes of self-interest.

Therefore politics can be said to be the tactics and strategies employed by individuals, groups, or organizations in their quest for power.

Political behavior is gaming behavior, it is tricky and manipulative, it is about building coalitions, it is the behavior of the organizational politician. It is a far cry from the almost puritanically rational behavior assigned to the manager by economists of the Good Samaritan behavior hoped for by the behavioral scientist.

Some form of interdependence is a necessary condition for political behavior, but the extent and intensity of political or conflict behavior depends on disagreement as to goals (personal and organizational) and the means by which these ought to be attained. It may also depend on a breakdown in the means by which conflicts can legitimately be resolved.

Where interdependent groups or parties are substantially in agreement about goals as well as means, there is little conflict and little political behavior.

When organizational members are agreed as to goals and means al that remains is the design of a program or plan to attain the goals. But this state of perfect agreement is rare, even in normative organizations.

The most virulent forms of political behavior arise when there is agreement neither as to goals or means nor as to general procedures for resolving disputes. These situations are emotionally charged and are characterized by mutual suspicions and grave distrust. Union-management relations too, sometimes deteriorate to this level. When this happens, character assassination, lists of enemies, public lip service to agreements but private sabotage, spying, strikes, and acts of violence characterize organizational behavior.

Organizational polities can be classified also in terms of the form of the mechanism used to control the behavior of the lower level members. Organizations that greatly emphasize the rewarding of conforming or ‘desirable’ behavior and punishment of deviant or ‘undesirable’ behavior are said to have a utilitarian mode of control. Organizations that seek to control behavior through getting the members to accept certain beliefs and certain norms of behavior are said to have a normative mode of control. Thus the extent to which there is contestation in the conduct of the organization’s major functions, the degree to which the rank and file is permitted to participate in making decisions related to these functions, and the means of control utilized to control the behavior of the rank and file offer ready criteria by which to classify and organization’s polity.

Several factors account for differences in the polities or authority systems of organizations. The norms and values members of an organization import from the wider culture affect the organizations authority system. The ideology of the organization’s elite’s shape it too. Other factors that influence the authority system are the size of the organization, its technology, and its business environment. Indeed not only do authority systems differ in different organizations; they also differ from one part of the organization to another, this variation being accounted for by the kinds of task performed by each part.

Conflict can be regarded as a reality of management and organizational behavior. Conflict is another term which can be defined and interpreted in a number of ways. For our purposes we can see conflict as: behavior intended to obstruct the achievement of some other persons goals. Conflict is based on the incompatibility of goals and arises from opposing behaviors.

1. Differences in perception. We all see things in different ways, we all have our own, unique picture or image of how we see the ‘real’ world. Differences in perception result in different people attaching different meanings to the same stimuli. A perceptions become a person’s reality, value judgments can be a potential major source of conflict.

2. Limited resources. Most organizational resources are limited and individuals and groups have to fight for their share. Resources can be fringe benefits, salaries, working conditions. These are the usual three that lead to union-management conflicts as each side tries to gain a larger share of these resources.

3. The nature of work activities. Where the task of one person is dependent upon the work of others there is potential for conflict. If a worker is expected to complete the assembly of a given number of components but the person forwarding the part-assembled components does not supply a sufficient number of time. If reward and punishment systems are perceived to be based on keeping up with performance levels, then the potential for conflict is great. Unions seem to have a deep suspicion of any system which dictates the amount of work required from any worker and are frequently in disagreement with management on the numbers.

4. Inequitable treatment. A person’s perception of unjust treatment, such as in the operation of personnel policies and practices, or in reward and punishment systems, can lead to tensions and conflict. For example, according to the equity theory of motivation the perception of inequity will motivate a person to take action to restore equity, including changes to inputs or outputs, or through acting on others.

5. Ideology of unions and management. The difference between the values and ideology of the unions and management represents the beliefs each has surrounding the goals and purposes of the unions and the organization. Unions believe in the right to strike and the security of the union whereas management are believers in the free enterprise system and the right to work during a strike.

6. Power and status. This is really about the reason why unions exist, the need for the lower levels of the organization to stay together as a power base against what they perceive are the excesses of the management. They consider that there is strength in numbers and gives them more negotiating power when it comes to dealing with issues which affect each member of the union.

Union-management conflicts are the ones most widely publicized due to the intensity a conflict may have. Any organization which does not take seriously its union views, perceptions, and beliefs will have problems.

The obvious effect at the most extreme for the organization is the union right to strike. This will shut the organization down as long as the strike is in effect, with the resultant effects of, reduced revenue, reduced market share, reduced profitability.

These are not only short term but may extend to the long term for the organization, a reduction in market share is difficult to get back, and may in fact never happen.

The reduction in profitability could result in shareholder confidence deteriorating and a lower share price which in turn could affect the organizations ability to raise capital for modernization or expansion.

Depending upon how the strike was settled will depend how the culture of the organization has been affected. In what may have once been a participative organization managers may use their authority and power base to reduce the level of participation from the workers.

This could result in a different form of conflict arising, or the organization becomes more autocratic in its style and in its dealing with worker situations.

This may lead to affects on the motivation of the workers, skilled personnel, and a reduction in the position of the organization in the market place.

If the organization is part of a group then a serious conflict may result in the parent company loosing its confidence in the division. This can result in a sell-off, a merger, a buyout, or just a reduction in capital from the parent. These results can lead to effects for all the members of the organization, management and workers.

Continued minor conflicts at the departmental and group levels with management can lead to a reduction in the motivation and work performance of such groups. In the competitive market of today minor conflicts rippling through an organization can have serious effects and allow competitors to take advantage.

Continued conflicts can lead to skilled workers, and mangers, seeking to leave the organization for another one. This is especially serious in times of high employment and in a fiercely competitive marketplace where the value of the skilled worker may be the organizations competitive advantage.

The absolute extreme is when the conflicts become so bad that the future of the organization as a functioning entity is put in question. This could result in closure and job losses for all.

Caused by all the symptoms described above from autocratic management style to sabotage by workers it may not be possible for the organization to survive.

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