Weitzel and Jonsson's Model of

Organizational Decline:
" William Weitzel and Ellen Jonsson identified five stages
of decline:
" blinded,
" inaction,
faulty action,
crisis, and
dissolution.
" Managers can reverse the decline in all stages except the
dissolution stage.
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eptable organizational
Actual organizational pertomance
Stage 1: Blinded.
" Managers are unaware of problems that threaten long-term survival
in the first stage of decline, the blinded stage.
" Managers are oblivious to large problems because the monitoring
and information systems to evaluate effectiveness are not in place.
Signs of potential problems include too many employees, slow
decision-making, increased conflict among subunits, and reduced
profits.
" An effective top-management team with good information can
thwart decline and return to growth.
" Managers must have information to take timely corrective action.
" An organization may use its resources more efectively and not
pursue continued growth.
Stage 2: Inaction.
An organization that fails to recognize problems will move to
the inaction stage.
Regardless of signs of deterioration, such as decreased sales
and profits, managers take little action.
" They believe the situation will change, or they pursue
personal goals.
" Inertia postpones response, and continued inaction widens
the gap between acceptable and actual performance.
" Quick action by managers, such as downsizing, can reverse
the decline.
" Stage 3: Faulty Action.
" Failure to take action results in the faulty action stage.
" Decline continues because managers made incorrect
decisions due to:
. conflict in the top-management team,
"changing too little too late,
fear of radical change,
" or strong commitment to current strategy and
" structures.
Stage 4: Crisis.
" If change is not implemented, an organization moves to the
crisis stage.
" and
Survival is possible only through radical changes in strategy
structure.
Implementing radical change occurs because stakeholders
withdraw support.
" The best managers have left, and suppliers hesitate to send
inputs out of fear of nonpayment.
Only a new top-management team can turn around a
company in the crisis stage.
New managers have new ideas that can overcome
organizational inertia.
Stage 5: Dissolution.
Once an organizationenters the dissolution stage, decline is
irreversible.
" It has lost stakeholder support, and access to resources shrinks as its
reputation and markets vanish.
New leaders swo
won't have the ressources to turn the company around.
The only choice is to divest resources or liquidate assets and enter
bankruptcy.
" Dissolution Results in Organizational Death
" As organizational death occurs, people understand that further actions
are useless.
The organization cuts ties to stakeholders and
other organirt transfers resources to
ganizations.
ithin the organization, formal closing services occur to help members
focus new roles outside the
organization.
" Organizational Isomorphism:
" As organizations grow and imitate others to
survive, organizational isomorphism--the similarity
among organizations in a population--increases.
" Several reasons explain why organizations become
similar:
Coercive isomorphism
Mimetic isomorphism
Normative isomorphism
" Coercive isomorphism:
"other
Organizations comply with norms due to pressures from
organizations and from society. Adependent
organization, a supplier, imitates a more powerful
organization, buyer, as its dependence increases. Xerox
coerced into adopting TQM.
" Mimetic isomorphism:
" Itoccurs when firms copy eanotherto increase legitimacy.
New organizations copy successful organizations if
environmental uncertainty exists. They may duplicate
structure, strategy, culture, and technology to survive. Some
Late entrantsneed a unique
diminishes.
companies imitate at first, and then imitation
competence because copying
everything makes resource attraction difficult.
"Normative isomorphism:
"It occurs when organizations become similar by
indirectly adopting the norms and values of others. This
occurs as managers and employees change companies
and bring norms and values. Industry, trade, and
professional associations are another indirect way to
acquire norms and values.
" Problemns of isomorphism:
" Organizations may learn outdated behaviors, and
pressures to imitate decrease innovation