Productivity Improvement

Organizational Growth Cycles

A organization developmental theory developed by Larry E. Greiner is helpful when examining the problems associated with growth on organizations and the impact of change on employees. It can be argued that growing organizations move through five relatively calm periods of evolution, each of which ends with a period of crisis and revolution.

  • Each evolutionary period is characterized by the dominant management style used to achieve growth, while
  • Each revolutionary period is characterized by the dominant management problem that must be solved before growth will continue.

Creativity / Leadership

As illustrated below, the first stage of organizational growth is called creativity. This stage is dominated by the founders of the organization, and the emphasis is on creating both a product and a market.

Organizational growth cycles of Larry E. Greiner

These "founders are usually technically or entrepreneurially oriented, and they disdain management activities; their physical and mental energies are absorbed entirely in making and selling a new product."

But as the organization grows, management problems occur that cannot be handled through informal communication and dedication. Thus the founders find themselves burdened with unwanted management responsibilities and conflicts between the harried leaders grow more intense.

Direction / Autonomy

It is at this point that the crisis of leadership leadership occurs and the first revolutionary period begins. "Who is going to lead the organization out of confusion and solve the management problems confronting the organization?" The solution is to locate and install a strong manager "who is acceptable to the founders and who can pull the organization together." This leads to the next evolutionary period-growth through direction.

During this phase the new manager and key staff "take most of the responsibility for instituting direction, while lower level supervisors are treated more as functional specialists than autonomous decision-making managers." As lower level managers demand more autonomy, this eventually leads to the next revolutionary period-the crisis of autonomy. The solution to this crisis is usually greater delegation.

Delegation / Control

Yet it is difficult for top managers who were previously successful at being directive to give up responsibility. Moreover, lower level managers are not accustomed to making decisions for themselves. As a result numerous organizations flounder during this revolutionary period, adhering to centralized methods, while lower level employees grow more disenchanted and leave the organization.

When an organization gets to the growth stage of delegation, it usually begins to develop a decentralized organization structure, which heightens motivation at the lower levels. Yet, eventually, the next crisis begins to evolve as the top managers "sense that they are losing control over a highly diversified field operation? freedom breeds a parochial attitude."

The crisis of control often results in a return to centralization, which is now inappropriate and creates resentment and hostility among those who had been given freedom.

Coordination / Red Tape

A more effective solution tends to initiate the next evolutionary period—the coordination stage. This period is characterized by the use of formal systems for achieving greater coordination with top management as the "watch dog."

Yet most coordination systems eventually get carried away and result in the next revolutionary period-the crisis of red tape. This crisis most often occurs when "the organization has become too large and complex to be managed through formal programs and rigid systems."

Collaboration / ?

If the crisis of red tape is to be overcome, the organization must move to the next evolutionary period-the phase of collaboration. While the coordination phase was managed through formal systems and procedures, the collaboration phase "emphasizes greater spontaneity in management action through teams and the skillful confrontation of interpersonal differences. Social control and self-discipline take over from formal control."

Greiner is not certain what the next revolution will be, but he anticipates that it will "center around the 'psychological saturation' of employees who grow emotionally and physically exhausted by the intensity of teamwork and the heavy pressure for innovative solutions."

It is felt that to overcome and even avoid the various crises managers could attempt to move through the evolutionary periods more consistently with the sequencing -direction to coordination to collaboration to delegation-rather than the ordering depicted by Greiner.