Characteristics and phases of organisational life cycle

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Last Updated: 15 Jun 2020
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Greiner (1972) has gone further to identify five phases that summarise the life cycle of organisations. These phases include: the first phase of growth marked by creativity; the second phase of growth marked by direction, the third phase of growth marked by delegation, the fourth phase of growth marked by coordination and the fifth phase of growth marked by collaboration. The five phases are very significant in determining planning and decision making in organisations as particular point in time (Greiner 1972). First phase of organisational life cycle

In the first phase of creativity growth, the creation of products and subsequent market base form the main emphasis. In this stage, the founders of an organisation tend to employ technical or entrepreneurial orientations with partial to total disdain for management as an operational strategy. The first phase is also characterised by less formality in communication channels with modest rewards for performance being capped with possible shareholding at a future date. Control measures are usually based on feedback and reactions from customers.

However, as time passes and the organisation experiences growth in demand for goods or services, new demands set in as the need for expanded structures become more and more obvious. Informal communications become inadequate and management structures to respond to market reactions become necessary. With these new structural demands, a manifestation of management crisis becomes evident, leading to the recruitment of a structured management team. Second phase of organisational life cycle The second phase of growth is direction which in more ways than one marks the culmination of the first phase.

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The direction phase involves the identification of effective and able managers to run an organisation’s activities in formal and structured manner. It is at this level that departmental functionalities are identified and separated, with job specialisation becoming the norm (Greiner, 1972). Accountability systems are adopted and incentive structures, budgetary frameworks and working standards are set. The informal style of communication is reversed to formal communication procedures across the emerging hierarchical structures.

Moreover, decision making structures are transformed from the autonomous levels of supervisors down the hierarchy to the top hierarchy of the management structures. The transfer of management decisions from the autonomous levels of supervisors to the top centralised management presents much challenges and resistance because the autonomous managers are usually in possession of the technical know how and day to day operations of their respective functionalities than the top centralised management.

For example, Microsoft’s founder, Bill Gates decision to exercise centralised authority and oversight over the management of the company amid fast pace of expansion in the 1980’s inevitably gave rise to autonomy crisis with unit managers demanding more executive powers owing to the technical nature of their responsibilities (Heller, 2005). Effectively, this makes autonomy crises inevitable at the second phase of growth, a situation that can be overcome through adequate delegation of responsibilities in the decision making processes. Third phase of organisational life cycle

The third phase of delegation is designed to avert autonomy crises emerging from the second phase. Decentralisation of activities and responsibilities become the norm in organisations in this stage. Territorial managers gain more powers to run the day to day activities with the top management executives limiting their activities to oversight, expansion and new acquisition endeavours. For example, BT allows the managers of its nationwide branches to exercise delegated authority in running the day-to-day activities of the company while the headquarter offices concentrate on market expansion and new acquisitions (Heller, 2005).

Notably, vertical communications are replaced by more frequent horizontal communications. According to Greiner (1972) employee motivation becomes a key feature in the third phase as a way of encouraging better performance. The delegation phase has been cited to be the most important stage in the growth and development of organisations because the decentralisation of decision making authority coupled with greater incentives provides the necessary force and initiative for market penetration, innovation and improved customer relations management.

However, the delegated nature of authority eventually develops into a control crisis, leading to power struggles between the top company executives and territorial managers. For example, the semi-autonomous nature of Vodafone’s subsidiaries around the world manifested into a control crisis as the company’s headquarters sought to wrestle control of the subsidiaries market penetration and overall management decisions and strategies (Heller, 2005). The attempts by the top management to wrestle back and monopolise the decision making process is what gives rise to the fourth stage, the coordination phase (Greiner, 1972).

Fourth phase of organisational life cycle The fourth phase is marked by increased coordination whereby, concerted efforts between the top management and independent units to set systems for achieving cooperative approach to decision making processes. Review of planning processes and hiring of new staff to oversee the cooperative structures take precedence (Weiss, 1996). This leads to the emergence of bureaucratic red tape culminating to rigidity in decision making processes.

If unchecked, this could lead to a bureaucratic crisis eventually widening the gap between the organisation’s operations and the prevailing environmental realities. To avert the possibilities of such crisis, the fifth and final stage, the collaboration phase becomes inevitable. The collaboration phase averts a bureaucratic crisis by introducing new practical cooperative dimensions in the form of interpersonal communication channels among individuals and across organisational teams (Greiner, 1972).

This phase calls for lots of skills in confronting problems associated with interpersonal attitudes and differences. It must be noted that the main challenge in the final phase is the difficulty of transitions from the old ways of doing things as the experts who crafted the old systems may be inclined towards the old stagnant systems than the newly introduced progressive systems (Weis, 1996). It is this resistance to change that the organisation must eek to overcome by all means.

The collaborative phase is designed to instil more flexibility and behavioural characteristic to managerial approaches. Consultation becomes the norm and teams become the main focus for developing and implementing strategies and solving inherent problems. For example, Vodafone’s management board headquartered in Britain today serves as an oversight body of all its worldwide subsidiaries and operational strategies for the subsidiaries are developed through collaborative efforts between the headquarters and the semi0autonomous subsidiaries (Vodafone Website, 2009).

The McKinsey 7S model and organisational change Any management approach must place formal considerations of how particular actions can lead to particular outcomes and thus, analytical framework for improving decision-making processes must be observed. The McKinsey 7S model presents the most vivid perception of organisations as the sum total of different resource endowments consisting of strategic positioning, systematic processes, structural models, human resources, knowledge, skills and organizational culture (Peters & Waterman, 1982).

The 7S in the McKinsey model are strategy, structure, systems, staff, skill, shared values and style. Peters & Waterman (1982) acknowledge that organisational changes associated with systems, strategy and structure are easy to overcome owing to their easily identifiable nature while the invisible nature of changes associated to staff, skill, shared values and style make them difficult to overcome.

Whereas McKinsey 7S model’ strategic notion represents future-oriented measures to counter emerging challenges posed by both internal and external changes to the organisational environment, the structural considerations mirror changes to duty and responsibility allocation and coordination of different organisational functions as dictated by size, values and objectives of the organisation (Peters & Waterman, 1982).

The style element in the McKinsey 7S model defines the cultural and managerial aspects in organisations, with the model’s staff element referring to the value and management structures relative to the cultural framework of organisations. According to Peters & Waterman (1982) the prevailing cultural orientation determines the appreciated and recognised organisational specific and unique practices. Furthermore, an organisation’s culture is emphasised along the foundations of consistent approaches towards human resource and change management (Pedler & Aspinwall, 1998).

The McKinsey model further addresses the skill related issues by acknowledging the significance of skills in developing core competencies in regards to changes to technical and general operational modes (Peters & Waterman, 1982). Of course, the shared values aspect of the McKinsey model is what echoes most the significance of cooperative approach towards achieving overall organisational goals even during periods of `organisational transitions (Pedler & Aspinwall, 1998).

The McKinsey 7S model emphasises that shared values bear the significance of creating cohesion and relationship building among employees as well as between owners and employees of organisations even under organisational transformational circumstances (Peters & Waterman, 1982). Therefore, the McKinsey 7S model effectively summarises the close relationship among different organisational functions and how slight changes in any of the elements leads to alterations in the operational functions of the entire organisation. The model plays an important role of managing change whenever subjecting any alterations to organisational core competencies.

Conclusion The concept of organisational life cycle plays a very significant role of aligning the future plans of organisations to their past and present experiences so that change is adopted within relevant operational frameworks. So far, it is clear that the transition of organisations from one phase to another present numerous challenges most of which are associated with resistance to change. It is particularly clear that change associated with centralisation and decentralisation of power is always met with resistance to critical levels (Armenakis &Bedelan, 1999).

Lack of clearly set goals and inadequate data backup are the ingredients of resistance to change (Rhydderch et al.. , 2006). These challenges are easily identifiable to the arguments presented by the theories of change management. The systems theory clearly states that the responsibility of leadership involves setting of goals and measuring feedback with the objective of achieving consistency in management processes (Rhydderch et al.. , 2006). Equally, the complexity theory acknowledges the cognitive nature of change and identifies leaders as the agents of interpreting change to individuals.

The social worlds theory perceives resistance to change as necessary component of leadership designed to achieve balance between conflicting interests and perspectives. The theory of organisational development sums it all up by stating that it is upon the leader’s mandate to overcome resistance to change by encouraging both team and individual participation in organisational processes, with particular emphasis towards distinction between organisational oriented goals and individual goals (Barnes, 2005).

Therefore, the transitional elements of organisational life cycle provide basis for clear understanding and evaluation of organisational change. References Armenakis, A. A. & Bedelan, A. G. (1999), ‘organizational change: a review of theory and research in the 1990s’, Journal of Management, vol. 25, no. 3, pp. 293-315. Beer, M. & Nohria, N. (2000), ‘Cracking the code of change’, Harvard Business Review, pp. 133-141. Burnes, B. (2005), Managing change 4th ed. , FT Prentice Hall.

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com/companies/vodafone. php. Heller, R (2005), Business corporate strategy: Microsoft management, Retrieved on March 18, 2009 from: www. thinkingmanagers. com/companies/microsoft. php. Palmer, I. and hardy, C. (2000), Thinking about management, Sage, London. Paton, R & McCalaman, J. (2000), Change management, a guide to effective implementation, Sage Publications, London. Pedler, M & Aspinwall, K. (1998), A concise guide to the learning organisation, Lemos & Crane London. Peters, T. J. & Waterman, R.

H. , (1982), In search of excellence: Lessons from America’s best run companies, Harper & Row, New York. Rhydderch, M. , Elwyn, G. , Marshal, M. & Grol, R. (2006), ‘Organisational change theory and the use of indicators in general practice’, BMJ Journal, pp. 215-221. Weiss J. W. (1996), Organizational behaviour and change: managing diversity, cross-cultural dynamics and ethics. Williams, A. , Dobson, P. & Walters, M. (1993), Changing culture: new organizational approaches, 2nd ed. , London IPM.

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