Summary Comparison of the High-Performing Organizations

The plastics organization, which functioned in the most dynamic and diverse of the three environments, was consequently most highly differentiated of the three high-performing organizations. Since this condition could create major problems in maintaining the required state of integration, this organization, as we have seen, had developed an elaborate set of formal devices (both an integrating unit and cross-functional teams) to facilitate the resolution of conflict and the achievement of integration. Because market and scientific factors were uncertain and complex, the lower and middle echelons of management had to be involved in reaching joint departmental decisions; these managers were centrally involved in the resolution of conflict. This organization also met all the determinants of effective conflict resolution. The integrators had balanced orientations and felt that they were being rewarded for the total performance of their product group. Relative to the functional managers they had high influence, which was based on their competence and knowledge. In resolving conflict all the managers relied heavily on open confrontation.

In contrast to the plastics organization, the container organization was in a relatively stable and homogeneous environment. Thus its functional units were not highly dif- ferentiated, which meant that the only formal integrating device required was the managerial hierarchy. But in using this device this organization also met the determinants of effective conflict resolution. The sales and production units, which were centrally involved in the crucial decisions related to scheduling and delivery, both felt that they had much influence over decisions. Around these issues influence was concentrated at the top of the organization, where top managers could centrally collect the relevant information to reach decisions. Middle managers, particularly those dealing with technical matters, did have some influence. The great influence of the top managers stemmed not only from their position, but also from their competence and knowledge. Finally, conflicts between departments were resolved and decisions reached through problem-solving behavior.

In these two paragraphs we have described two quite different organizations, each of which is well equipped to deal with its own external environment. Another way to understand the contrasts between them is to examine the major sources of satisfaction and of stress for the executives in each. While we made no systematic effort to collect such data in the plastics organization, the contrast between the two organizations can be clearly seen from interview comments of the managers in each organization. Managers in both organiza-tions were generally quite well satisfied with their situations, but they were finding satisfaction for some quite different reasons. In the plastics organization an important source of satisfaction was the active involvement in decisions. Middle managers often expressed the feeling that they were running their own firms. One product manager in the sales department put it this way:

Our present organization allows us as individuals to more formally play a role in decision making, which we didn’t do before. Now, with the teams, we can make a decision which will affect the profit. We can see the results of our efforts more realistically than we could before. Now that it has management approval, it has a nice flavor. It’s nice to be doing something they approve of. The product manager has no formal authority. But putting him on the team gives him some sort of authority. I’m not sure what kind of authority it is, but it makes my job more meaningful Of course, we all recognize that the other guys on the team are depending upon our effort, so we make an effort to produce.

Managers in the container organization, however, indicated that they liked their jobs for quite a different reason—because they knew where to get a decision made. One manager expressed it in this manner:

He [the chief executive] does all the scheduling himself, and in essence what you have is a large organization run by one man. This is a refreshing switch from the organization where I had previously worked. I find this very beneficial. If I want something decided, I can go right to him and get a direct decision. You tell him what you want to do, and he will tell you right then and there whether he will let you do it or whether he won’t.

The sources of dissatisfaction and stress in the two organi- zations were also different. A manager in the plastics organization described some of the points of concern to him:

I worked for another company which was different, where there were fairly definite lines of authority. This place was quite a revelation to me. In my old company we always knew whose jobs things were. Occasionally here we run into situations where we don’t know whose jobs things are. . . All of these meetings take a lot of time. I used to spend eight hours by myself, and I thought I could get more things done. I feel now that I spend time on committees instead of making autocratic decisions, but this isn’t really a disadvantage, as we do get better solutions. Also, there can be conflict between your position as a functional manager and as a team member. The more empathy with others you have, the worse it gets.

What disturbed this manager and a few others was the ambiguity of responsibility and relationships in this organization. Many managers often had dual loyalties—to their functional superiors and to their team colleagues. They had to decide themselves what needed to be done. The involvement of many managers in interdepartmental decision making made these difficulties unavoidable, and it also meant that managers who had a low tolerance for ambiguity and uncertainty did not always enjoy their work.

In contrast, the few managers in the container organization who expressed dissatisfaction were most concerned because upper managers seemed to be so involved in their activities. As one man said:

Your boss is telling you to check something, and then he jumps down your throat five minutes later. They should know what you are doing and try to give you some answers, or else they should let you do it I know this job involves a lot of pressure, particularly because at first you are just getting ignored around here and then they are jumping on you, and the pressure is really acute. Somebody has to be the whipping boy around here, and that is just part of this job.

These data suggest two things. The first is quite obvious— that these two organizations were quite different places in which to work. The second inference is more speculative. There is some suggestion, from the tone of the interviews, that the managers in the two organizations had somewhat different personality needs. Those in the plastics organization seemed to prefer more independence and had a greater tolerance for ambiguity, while those in the container company were perhaps better satisfied with greater dependence upon authority and were more bothered by ambiguity. While there may have been these differences in personality needs, each organization (as well as the food organization) seemed to provide a setting in which many members could gain a sense of competence in their jobs. As we suggested in Chapter I, this provided them with important sources of satis- faction. The fact that so few managers in either organization did express any dissatisfaction with such different organizational climates would suggest that this is so. While we have no way to confirm this speculation, it does raise again the importance of the point made earlier, that the organization must fit not only the demands of the environment, but also the needs of its members.

In any case, the contrast between the plastics and the container organizations is very sharp. In a sense, they represent opposite ends on a continuum, one dealing with a very dynamic and diverse environment, where innovation is the dominant issue, while the other is dealing with a very stable and homogeneous environment, where regularity and consistency of operations were important. The food organization, as our discussion has suggested, was in many ways like the plastics organization. The differences between them seemed to be more of degree than of kind. While the food environment was not so dynamic and diverse as that of plastics, it seemed to be toward that end of the continuum. The integrating devices, although not so elaborate as those in the plastics organization, were of the same nature, designed to provide linkage at the middle and lower managerial levels. The two organizations met most of the same determinants of effective conflict resolution. The major difference between them was that the plastics organization appeared to be devoting more of its managerial manpower to devices that facilitated the resolution of conflict. The important point, however, is that the food organization, like the other effective organizations, had developed a set of internal states and characteristics consistent with the demands of its particular environment.

We should, however, recognize one limit to this conclusion. Each of these organizations had developed characteristics that were in tune with the demands of its present environment. Whether these same characteristics will provide long- run viability depends, of course, on whether the environmental demands change in the future. Given the widely observed tendency toward greater scientific, technological, and market change, the plastics and food organizations would seem to be in a more favorable position to maintain their high performance. Major technological or market changes in the container industry would almost certainly create serious problems for the high- performing container organization. This suggests that the managements in stable industries must develop within their organizations some capabilities for watching for environmental changes and preparing to adapt to them. It also suggests that in the future more and more organizations may resemble the high- performing plastics and food organizations.

Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.

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