Professional Documents
Culture Documents
Study Unit 1
The Development of Organisational Theory
Contents Page
A. Nature of Organisations 5
Towards a Definition of Organisation 5
Features Common to All Organisations 5
D. Contingency Theory 13
Joan Woodward 13
Burns and Stalker: the Influence of the Environment 15
Lawrence and Lorsch 15
Aston Group 15
Relevance of Contingency Theory 16
E. Systems Theory 17
The Systems Approach 17
The Organisation as a System 18
Sub-Systems of the Organisation 21
Boundary Management 23
Levels Within the Organisation 23
(Continued over)
A. NATURE OF ORGANISATIONS
It is common now to define business in terms of what it does and why it exists. At its most
general, we can say that business exists to meet the needs of a society; and thus there will
be many different types of business to meet the many different needs of societies.
There are three main types of entity found in the business sector: sole traders, partnerships
and companies. However, business does not satisfy all the needs of society and there are
also a range of 'non-business' entities which exist to meet needs not catered for by profit-
seeking businesses. Thus, we must consider public-sector bodies such as government
agencies, as well as not-for-profit bodies such as charities.
which buy goods from manufacturers and sell to consumers. All organisations have in
some way or another to be connected with the consumers of their goods and services.
We can sum up our first common feature of organisations thus:
All organisations meet some of the needs of members of modern societies.
They all take resources (physical and human) and convert them into utilities
(the goods and services produced). All organisations have to ensure that
these utilities reach consumers as and when required.
(b) Rules and Regulations
The second feature common to all organisations is that they all have rules and
regulations which govern the running of the enterprise. These may be formal and
written; or they may be informal, generally accepted ways of doing things.
Large organisations will have a written statement which outlines the structure and
purpose of the organisation. Small organisations, such as a family shop, have an
informal but generally agreed policy on how the enterprise should be run.
Organisations combine the activities of people and the control of resources in order to
produce goods and services, and these activities have to be directed and coordinated
to achieve the objectives of the organisation. Rules and regulations are essential to
bring about this coordination of effort. Individuals working in organisations need to
know just what their responsibilities and duties are. Just as every sport or game has its
rules, so does every organisation.
(c) Division of Labour
Our third key feature is that all organisations have a structure: a framework of
positions where each person has a set of duties and functions to perform. When
people take up these various positions and perform their allotted duties, sociologists
talk of individuals in their 'work roles'. Every person who works in an organisation has
a role to perform.
In large organisations, roles may be highly specialised: for example, some work roles
may involve aspects of production, others may relate to marketing, etc. In the small
organisation, work roles will be more general: the proprietor of a small shop will
perform a range of buying and selling activities.
Economists term this breaking-up of activities into selected work tasks the division of
labour. In contrast to the system of self-sufficiency where one person performs a
whole range of activities to meet his or her own needs, in organisations labour is
divided between workers. The division of labour can increase the efficiency of an
enterprise, by allowing workers to specialise in certain aspects of work and so become
more expert at what they are doing.
We can thus sum up the third common feature of organisations:
All organisations have a structure, a framework within which individuals can
perform defined work roles. Because there is this division of labour, there
is specialisation of work activities in organisations.
(d) Chain of Authority
The fourth key feature of organisations springs from the fact that they comprise
individuals performing a variety of work roles which combine to achieve the
objectives of the organisation. If organisations are to be effective in the pursuit of
their goals, the work activities have to be controlled and directed, and decisions which
affect the whole organisation have to be taken. This calls for a structure of authority.
A structure of higher and lower organisational roles is called a hierarchy.
The main proponents of classical thinking – principally Taylor, Fayol and Urwick – derived
their theories from their own practical experience in industry (mainly in the engineering field)
and observations. They argued that organisations should be structured in a logical and
scientific manner. They maintained that there were a number of fundamental principles upon
which organisations are built:
There should be a blueprint of organisational structure which could be applied
universally.
The structure of an organisation should be hierarchical, with clear levels of authority.
Each level of authority should have its own functions to perform.
Everyone in the organisation should know their place and what is expected of them.
It was argued that the principles of organisation which derive from this would offer scientific
guidance to managers on how to run an organisation.
Henri Fayol
Fayol was an early 20th-century mining engineer who developed an interest in management
principles. He realised the importance of structure and argued that every organisation needs
to be planned, organised and controlled. Fayol's notion of the ideal structure for all
organisations rested on the following principles.
(a) Division of Labour
Work is divided:
Between the levels of authority in an organisation, with each level having its own
duties and responsibilities from top management down.
Between departments and other groups, with each having its function to perform.
Here Fayol built on the work of earlier authors. As early as 1776, Adam Smith
identified the benefits of specialisation, or division of labour, in the production process.
Fayol extended this to the study of management.
(b) Coordination
The various levels and departments must be coordinated so that all their efforts pull in
the same direction towards achieving the objectives of the organisation.
(c) Span of Control
Fayol stressed the importance of establishing the maximum number of subordinates
which a superior can control. This is called the span of control.
(d) Economies of Scale
Wherever possible similar activities should be grouped together to avoid overlap and to
obtain economies that accrue to larger Units: for example, bulk buying, spreading
overheads, making better use of resources.
(e) Objectives
Every organisation must have clear objectives.
(f) Authority
There must be a clear line of authority.
(g) Responsibility
Where a person is given responsibility, he or she must also be given the authority
necessary to carry out the task. A superior can be held responsible for the actions of
his or her subordinates.
(h) Specialisation
As far as possible people should specialise in order to be proficient.
(i) Definition of Tasks
Employees should know exactly what is expected of them.
(j) Unity of Effort
Everyone in the organisation should be working towards achieving the goals of the
organisation.
(k) Unity of Command
Each member of the organisation should have one clear superior to whom he or she is
responsible. The span of control should not be too wide; ideally no person should
supervise more than five or six subordinates.
Lyndall Urwick
Urwick developed the ideas of Fayol and then put forward his own principles of management:
(a) Objectives
Achieving its objectives is the reason for the existence of any organisation.
Organisations that fail to achieve their objectives should cease to exist.
(b) Specialisation
In an effective organisation there is the principle of 'one group, one function', i.e. every
section or department should do its own job well and not interfere in other activities.
(c) Coordination
Management should so structure the organisation that all the parts fit neatly together
and work as a functional whole.
(d) Authority
There should be clear lines of authority in the organisation.
(e) Responsibility
Superiors are responsible for the actions of their subordinates.
(f) Job Definition
All jobs should be described precisely and duties defined.
(g) Correspondence
Authority and responsibility should go hand in hand.
(h) Span of Control
A superior should be responsible for up to six subordinates.
(i) Balance
The sections and departments of an organisation should be in balance; no one
department should dominate the organisation.
(j) Continuity
The organisation should be set up in such a way that it can continue to perform its
functions.
Having established from this that performance was related to psychological and sociological
factors as well as purely physical ones and the organisational structure, Mayo went on to
investigate the other forces at play in the workplace. These are summarised below:
Workers are strongly motivated by social needs (for social interaction, self-esteem and
recognition, a sense of belonging and security) and seek satisfaction of those needs
over and above any others, including the need for money, once a certain level of
remuneration as been achieved;
Individual workers belonged to groups at the workplace which had their own codes of
behaviour, leaders and means of enforcement of the group norms (which included
notions of what appropriate output standards were), constituting a whole 'informal'
organisation within the formal one.
D. CONTINGENCY THEORY
The key feature of contingency theory is that there is no one best method that applies to all
organisations. There is a wide range of possible structures from which to choose. The
decision as to what structure would be appropriate will be influenced by such factors as the
external environment in which the organisation operates, the motivation of the workforce,
their skills, knowledge, and commitment as well as their experience in the specific working
environment. Technology, the product or service of the organisation are also influencing
factors.
Contingency theory is primarily based (though not exclusively so) on the findings of personal
observations within organisations. We shall now look at important researchers in this field.
Joan Woodward
The purpose of Joan Woodward's study was to assess the degree to which the classical
principles of organisation were being applied in British firms and to analyse the relationship
between organisational structure and success. The basic studies were carried out in the
1950s but they are still relevant today. Woodward looked at 100 firms each employing at
least 100 people. The firms analysed were involved in a wide range of activities including
manufacturing, commerce, medical institutions, building, newspapers, etc.
A definitive pattern did not emerge that could relate either to business success or to the
variety of different organisational structures, in terms of their numbers of levels of authority,
span of control, clarity or otherwise of definitions of duties, the extent of communication
and/or specialisation. What was identified, however, was a correlation between the level of
control over the production process and working patterns, which was directly linked to the
objectives of the organisation.
Woodward identified three broad categories which seemed to favour particular forms of
organisations.
(a) Unit or Small Batch Production
This is where there was least automation of processes, the accent being on 'one off' or
short runs for which it is not appropriate to gear up machines to control production. A
hierarchy of increasing application of technology within the category covered the
production of items to customers' specifications and prototypes, the making of large
equipment in stages, and the production of small batches of items.
In this category, it was found that organisational structure was quite loose. There was
much delegation of authority within a standard pyramidal hierarchy characterised by
relatively small spans of control and quite permissive management attitudes.
(b) Large Batch and Mass Production
Here, the production process is much more automated, the firms being those
concerned with the production of standard items in large quantity, and assembly-line
working. However, the technology is not entirely dominant since variations and
uncertainties occur even in the mass production lines of car manufacturing.
These organisations were characterised by much tighter control procedures and rigid
large-scale hierarchies with the traditional pyramid shape being very elongated at the
base, reflecting the way in which large numbers of workers are required at the lowest
levels, but there are relatively few middle and senior managers. Span of control is very
large (which may account for the management problems experienced by many large
industrial concerns).
(c) Process Production
This is characteristic of the oil refineries and chemical manufacturers studied where the
production process was more or less certain and completed automated.
Such firms tended to be flexible again, but within a different organisation structure, with
diamond-shaped hierarchies which reflected the small number of operatives required to
service and maintain the process machinery, and the larger group of middle managers,
scientists, accountants, etc. In these concerns, problems tended to arise in this 'bulge'
in the middle where opportunities for advancement were limited. The production
process also limited individual initiative.
Woodward's key contribution to organisational theory was the discovery that, far from there
being a set of preferred organisational principles, the main determinant of structure is the
kind of activity and the technology with which organisations are concerned. As she stated:
'The criterion of the appropriateness of an organisational structure must be the
extent to which it furthers the objectives of the firm – not, as management
teaching sometimes suggests, the degree to which it conforms to a prescribed
pattern. There can be no one best way of managing a business.'
Aston Group
This group of researchers, based at the University of Aston, put forward yet another variation
of the contingency theory theme.
They examined the way in which the classical concepts of structure were applied in different
types of organisation. Taking the concepts of specialisation or division of labour,
standardisation of methods, formal rules, tall structures with many layers of authority and
centralised decision-making, they argued that there were many possible permutations where
each of the these elements may be at high or low level. Thus, an organisation may be
centralised or decentralised, formal or informal, etc. They then considered the application of
these possible structural permutations in relation to various other features of the
organisation:
Is it large or small?
What kind of technology does it use?
Who owns it?
What markets does it serve?
They identified the size of the organisation as the most important factor influencing structure.
They concluded that as organisations grow larger they need to be more specialised (greater
division of labour), more formalised (more explicit and stricter rules), more standardised
(similar procedures and methods), but less centralised (greater delegation of decision-
making). This would assist firms to perform well as they grow larger.
Management Style
Management style is generally based on the structure, culture and strategies of an
organisation, but it is important to mention here what Professor Paul Hersey and Ken
Blanchard referred to as 'Situational Leadership' where a good manager/leader will not
practice the same style in every situation. This would not be appropriate, in view of the
plethora of situations that managers face on a day-to-day basis. A single style (say
autocratic) would certainly not be appropriate in a situation where involvement of employees
is vital to getting the job done. Often a manager/leader needs the active commitment of his
or her staff when change is introduced and has to be managed particularly in tight timescales
imposed by the turbulent external market environment.
E. SYSTEMS THEORY
The Systems Approach
As organisations are complex dynamic goal-oriented processes, the systems framework is
fundamental to the understanding of organisational theory. A systematic view on
organisations is transdisciplinary and integrative: it transcends the perspectives of individual
disciplines, integrating them on the basis of a common 'code' or more specifically on the
basis of the formal approach to an organisation. The approach is primarily founded on
interrelationships and is based on a humanistic extension of the natural sciences.
System dynamics was originated in the late 1950s by Forrester of the MIT Sloan School of
management and has since been exemplified by the work of Banathy. Capra, Senge,
Hammond and Swanson who all propound the idea that systems theories are a
transdisciplinary, interdisciplinary and multiperspectival domain, the areas of which have
brought together the principles and concepts from ontology, philosophy, sociology, political
science, computer science, biology and engineering. Also included are geography,
psychotherapy and economics. Therefore, systems theory provides an interdisciplinary
dialogue and link between all areas of the sciences.
This frame of reference is composed of regularly interacting or interrelating groups of
activities, and has evolved from 'an individually oriented industrial psychology to a systems
and developmentally oriented organisational psychology'. This is because it is based on the
premise that organisations are highly complex social systems, as already mentioned.
The same line of thought can be applied to organisations in that they take inputs of varying
kinds, and transform them through a series of processes into outputs. The organisation is
essentially the transformation process, but in viewing it we must be aware of the inputs and
outputs as well.
This basic concept can be illustrated diagrammatically as follows.
Organisation or
Inputs Outputs
transformation system
Feedback
The feedback loop is included to show that outputs commonly have an effect upon the
system, often by returning as an input.
Before considering organisations as systems, a number of points about the nature of
systems need to be explained.
(a) Sub-Systems
Within each system, there are likely to be a number of 'sub-systems', each a separate
entity but each forming an integral part of the whole. Notably, the outputs from one
sub-system are likely to form, at least in part, the inputs for another sub-system. The
whole can, then, be seen as a system of interdependent parts, constantly in action
and reaction both internally in relation to each other and externally in relation to the
environment of the system.
This can be crucial in organisations since any change within a particular sub-system
will inevitably have repercussions throughout the whole system. Management must,
therefore, understand and consider the inter-relationships and inter-dependence of the
various parts which make up the organisation.
(b) Boundaries and the Environment
A boundary is regarded as existing around each system or sub-system, defining it and
separating it from all others.
There are certain types of system which function entirely within their boundaries and
are totally unaffected by anything outside. These are known as 'closed' systems.
However, far more common are 'open' systems, where flows occur across the
boundary and factors outside the system affect it significantly.
Anything outside the boundary of a system with the potential to affect its operation
constitutes the 'environment'.
These are important concepts since managerial problems often arise at the boundaries
of a system or sub-system, and events in the environment are often outside of the
control of those responsible for the system itself. Indeed, environmental monitoring is a
key activity for management as it enables managers to be aware of change which may
affect the functioning of the organisation.
(c) Objectives and Goals
The last introductory concept to consider briefly here is that of what the system exists
to do. All systems must have a purpose, at the very least to survive, but in terms of the
types of organisation we are concerned with, some form of mission expressed as aims,
objectives or goals.
This applies to sub-systems as well as the whole system. Thus, Ford would have as its
objective the production of motor cars, but each of the myriad sub-systems which make
up the organisation would have its own goals: for example, to paint the body parts and,
a sub-system of that, to mix paints into the correct colours.
The outputs of the transformation process are designed to meet these objectives.
Environment
Feedback
Katz and Kahn emphasised the role of feedback in the successful persistence of
organisations. If an organisation is to survive and thrive in its environment, it needs
information about its outputs: for example, how well its products are meeting customer
needs, or whether its by-products or emissions are causing environmental problems?
We can now develop the concept of the system to stress the interdependence of the various
parts in an organisation.
Consider a simple example of an organisation containing just four departments:
Department A Production
Department B Sales
Department C Distribution
Department D Finance
Each of these departments constitutes a sub-system of the organisation as a whole, and we
can show the interconnections between them as follows.
Figure 1.3: The interdependence of systems
Department A Department B
Production system Sales system
Department C Department D
Distribution system Finance system
For the organisation as a whole to function effectively each of the systems must themselves
function effectively, and they must all function effectively together. Department A must
produce goods efficiently, Department B must sell these goods, Department C must see to it
that the goods reach the customers and Department D must pay for the raw materials used
in production, and pay employees' wages, and must collect money as payment from the
customers. Any malfunction in A means that production will be adversely affected and so
disturb the functioning of departments B, C and D. If Department B fails in its functions the
problems of unsold goods will feed back to production and will affect distribution and finance.
If Department C fails to deliver the goods on time this has implications for A, B and D. If
Department D fails to pay or collect money, all the other departments would be in serious
trouble.
In modern, complex organisations there are invariably far more than four systems, hence the
number of interconnections is considerably more than the six shown in Figure 1.1.
Note too that, in the example, we have identified departments with sub-systems. However,
the concept of a system does not necessarily equate with the way in which an organisation
groups its functions. Thus the finance sub-system will extend across the whole organisation,
including the financial activities of the other three departments, and the distribution sub-
system may even include other organisations.
The systems approach also concentrates attention on the dynamics of the organisation. It
allows us to consider not just how the organisation functions in formal or informal terms, but
what it reacts to and how change may affect it.
Obviously, if there is no change in the environment and inputs can remain constant, the
organisation will remain static and we can concentrate on the formal structures of the
transformation system. However, the human relations school taught us that the people who
work in the organisation are themselves a dynamic and there are very likely to be variations
in the attitudes, motivations, etc. of staff as an input. Crucially, though, the environment
within which most organisations operate is constantly changing, in both the nature of the
outputs required and the inputs available.
To view the organisation as a system, or as a complex of interrelated sub-systems, is to
study the extent to which it is able to achieve a balance in its internal and external
relationships, and how far it can develop and progress in relation to the changes in those
relationships.
A particular problem of complex systems is their reliance on the effective meshing together of
the parts or sub-systems. It is not sufficient for each part to perform at optimum (best
possible) level. Rather it is the fit of the parts that is crucial. We can illustrate this with an
example. If the sales department in a commercial firm pushes sales higher and higher, at
first sight this is an optimum performance; but if the production section cannot meet these
orders even when working at maximum capacity, then the firm will lose goodwill and offend
its customers. In the long run the firm may be worse off than if its sales subsection had been
less effective in generating orders. Viewed independently, both sales and production sub-
systems have been maximising their efforts, but viewed as a whole the system of the firm
was not at optimum performance because the fit between the sub-systems was unbalanced.
We term the effects which occur in unbalanced systems 'dysfunctions', meaning that they
do not assist the system as a whole to achieve its objectives.
It is relatively easy to spot dysfunctions arising from the poor performance of a sub-system,
but far more difficult to come to terms with the case where a sub-system gets out of step by
being too successful. Dysfunctions are revealed only when we view the organisation as a
whole system, and take account of the fit and the balance of the various sub-systems. If we
look at each sub-system as a separate entity we may assess them all as being highly
effective individually, yet fail to see that the total system is not performing at optimal level.
Inputs and outputs are invariably from or to the environment of the system and, as that
environment changes, so must the system. All organisations have experienced an enormous
amount of environmental change in the last 20 or 30 years in respect of both inputs
(principally in terms of technology) and outputs, with new products and standards being
demanded. In addition, the expectations of people, both as customers and staff, have
changed considerably. Consider what people now expect in terms of product specification
for a new car or their treatment when reporting problems with that car, compared with 30
years ago, or what staff now expect their working environment to be like. As inputs and
outputs change, the organisation must be capable of changing to accommodate the new
requirements and maintaining equilibrium, that essential balance in a constantly shifting
environment.
Technical
sub-system
Psycho-social
sub-system
Structural
Inputs Outputs
sub-system
Managerial
sub-system
Feedback
Boundary Management
The boundaries of a system separate that system from its environment: they define what is
part of the system and what is not. All systems exist within an environment, but we can
distinguish two types of environment – that which is external to the system (organisation) as
a whole and that which is internal to the system (organisation). In open systems, resources
and information flow across both external and internal boundaries. Boundary management is
concerned with the interface between the system as a whole, or any of its sub-systems, and
the external environment, and between the sub-systems and their internal environment.
The work of writers like Trist and Bamforth points to certain guiding principles for boundary
management:
A flexible approach is needed to managing boundaries. External boundary
management is contingent on the nature of the environment. Internal boundary
management must smooth the interfaces between sub-systems (departments or
divisions).
Boundary management should be based on clearly identified objectives for each and
every sub-system.
The problems between sub-system interfaces may well be social, and this will call for
insights from the human relations approach.
Boundary management must smooth the differential influence of technology across the
system as a whole. A sub-system such as production is shaped by one type of
technology, while another sub-section is shaped by another type of technology.
Managers must deploy skills to reconcile these differences.
Excellence Theory
As already mentioned Peters and Waterman's study sought to identify what companies
needed to do to achieve excellence in terms of profitability and of being the market leader in
their business sector. Since their research there has been a plethora of studies carried out
mostly because of the changing trends in working patterns and employee expectations.
(a) Employee Engagement
Excellence in all of its varying definitions will only be achieved if employees are
engaged in and with the organisation's business objectives. It is difficult to achieve this
employee engagement because it is mostly associated with the level of motivation of
the individual. A contemporary organisation in unlikely to achieve high standards of
performance if this engagement is not present. Purcell's work with Bath University,
published in 2003, is crucial to the understanding of how organisations have moved
away from 'command and control' management styles with exclusive concentration on
Theory Z
Ouchi developed this approach in an attempt to apply the lessons of Japanese organisation
and management styles and practices to the Western (mainly American) cultural experience.
(a) Japanese approach
It is worth reviewing the key points of the Japanese approach as a starting point. Ouchi
identified these as:
secure lifetime employment
consensual, participative decision-making
collective responsibility for decisions, standards and performance
slow personal development, evaluation and promotion
implicit, informal control based on the overriding value system
non-linear and non-specialised career paths
holistic concern for the well-being of the organisation and all its employees
(including their families) in the widest sense.
(b) Application to Western Organisations
In applying these to the context of Western organisations, one must recognise the far
greater emphasis in our culture on individual expression and responsibility, lack of
company loyalty, and the expectation of short-term and more immediate personal
rewards for performance. However, it is considered that some mitigation of these
tendencies, in effect some subjugation of the individual to the greater good of the
company is necessary. The key principle of the approach is, therefore, that the
organisation should develop a philosophy and value system which fosters commitment
to organisational goals through the following practices:
long-term security of employment
consensual, participative decision-making
individual responsibility for decisions, standards and performance
slow personal development, evaluation and promotion
implicit, informal control within a framework of explicit formalised measures
generally linear and moderately specialised career paths
holistic concern for the well-being of the organisation and all its employees
(including their families) in the widest sense.
Note the subtle differences in the development of these principles for application to
western cultural values.
Organisational Culture
Culture is quite difficult to define. When we speak of culture we know what it is and
what/how it is manifested in an organisation but a clear, unambiguous definition eludes us!
This is because culture can mean different things to different people, depending on their life
experiences, their background, religion, beliefs and values. Handy described culture in
organisations as 'the way we do things around here'. These 'things' are the accepted norms
and values of an organisation, developed over time into expected behaviour patterns. They
generally emanate from the top management level of the organisation; but this is not always
the case, and analysing culture can be a complex task.
It is widely recognised that different organisations have distinctive cultures, built up through
tradition, history and structure. Culture gives the organisation a sense of identity. As part of
the induction (introduction) process to the company, a new employee will learn very quickly
what the culture is within the organisation because of the legends surrounding the owners or
founders of the organisation. For example, they might have been autocratic with scarce
interaction with their employees, worked long hours and be critical of formal education and/or
qualifications. Their mindset might be 'work hard, and do as you are told' rather than
welcoming employee participation
There are several influential writers on culture, including Handy's work which is still
recognised in contemporary organisations. Hofstede, Trompenaars, Hampden-Turner,
Schein, Schneider and Barsoux and Deal and Kennedy, are all worth reading.
(a) Cultural Analysis
We can develop an understanding of an organisation's culture by considering the
attributes listed below.
The organisation's goals – particularly its mission statement – and the extent to
which they are clear, communicated to and embraced by all levels of the
organisation.
The dominant behaviour patterns applying to the interaction within the
organisation and between the organisation and its stakeholders (its existing and
potential customers, investors, owners, etc.), in respect to both what is expected
and whether actual behaviour lives up to these expectations.
The distribution of authority and decision-making through the organisation:
basically along a continuum from authority being concentrated at the top or
spread downwards to teams of empowered employees working close to
customers.
The structure of the organisation, which is closely related to the distribution of
authority and may be easier to identify through the use of organisation charts,
etc.
The nature of leadership, which refers to the way in which power and authority is
exercised, again along a continuum from authoritarian to democratic.
The values of the organisation in terms of its responsiveness to the needs and
aspirations of its own staff and to those of its stakeholders.
The entrepreneurial spirit of the organisation, as revealed by the degree of
enterprise, innovation, competitiveness, flexibility and drive for excellence of the
organisation.
Its readiness to embrace change arising from changes in its environment,
particularly whether this is proactive (anticipating and planning for change) or
reactive (coping with change as and when it arises).
Corporate culture is extremely difficult to change. It should be recognised that it takes
a long time for employees to get accustomed to such change, as it can lead to tensions
between the organisation and the individuals within it. Cummings and Worley state
that it is imperative for senior management to be in favour of the culture change, and
their behaviour needs to symbolise the kinds of values that are required for the change
to be effective.
(b) The Learning Organisation
The kind of culture which promotes a learning organisation is one whereby learning is
not perceived exclusively as formal training programmes or what is referred to (as a
generalisation) 'short, sharp bursts of training'. Senge argues that organisations should
constantly seek to improve processes, production outputs (irrespective of whether the
company produces a tangible product, for example a car, or provides a service, for
example banking), and employee skills and knowledge. These elements are crucial to
the organisation's survival and/or growth. Burgoyne and Boyatis have separately
researched the need for organisations to create the kind of environment in which all
employees, irrespective of their occupational position, feel able to put forward
suggestions for improving any area of the business (which does not necessarily have
to be the area in which the employee works).
Since the principle of the learning organisation was first put forward, important work
has been carried out with the emphasis on 'knowledge management' (KM). The
principle of knowledge management is to enable all employees to transfer their
knowledge, either through a formal educational programme and/or from knowledge
gained as a result of their experiences, either in their current or previous jobs.
A learning organisation will not be created unless there is active commitment from
senior management, which is cascaded in practical terms to the lower levels in the
because results are measured in group terms it is in the interests of the group to see to
it that all group members are pulling their weight.
In summary, Japanese corporate culture has been more stable and democratic, has
greater consensus and takes a longer-term view than the American corporate culture.