Organizations in Action

Social Science Bases of Administrative Theory

James D. Thompson

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351501095
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Organizations act, but what determines how and when they will act? There is precedent for believing that the organization is but an extension of one or a few people, but this is a deceptively simplified approach and, in reality, makes any generalization in organizational theory enormously difficult. Modern-day organizations manufacturing firms, hospitals, schools, armies, community agencies are extremely complex in nature, and several strategies, employing a variety of disciplines, are needed to gain a proper understanding of them.Organizations in Action is a classic multidisciplinary study of the behavior of complex organizations as entities. Previous books on the subject focused on the behavior of people in organizational contexts, but this volume considers individual behavior only to the extent that it helps explain the nature of organizations. James D. Thompson offers ninety-five distinct propositions about the behavior of organizations, all relevant regardless of the culture in which they are found. Thompson classifies organizations according to their technologies and environments. That organizations must meet and handle uncertainty is central to his thesis.Organizations in Action is firmly grounded in concepts and theories in the social and behavioral sciences. While it does not offer an actual theory of administration, the book successfully extends the scientific base upon which any emerging administrative theory must rest. This classic work is of continuing value to organizational and management specialists, behavioral scientists, sociologists, administrators, and policymakers.

part one

Organizations act, but what determines how and when they will act?

There is precedent for considering the organization as but the lengthened shadow of one or a few men. If this were adequate, our search for understanding could be focused narrowly on personality variables, which would simplify the task in the specific case but make generalization enormously difficult. Leaving room for the influence of the individual (which we will explore later), we will set aside the personality approach as deceptively simple and consider in Part One some of the impersonal forces which generate and guide the behavior of organizations.

We will argue that organizations do some of the basic things they do because they must—or else! Because they are expected to produce results, their actions are expected to be reasonable or rational. The concepts of rationality brought to bear on organizations establish limits within which organizational action must take place. We need to explore the meanings of these concepts and how they impinge on organizations.

Uncertainties pose major challenges to rationality, and we will argue that technologies and environments are basic sources of uncertainty for organizations. How these facts of organizational life lead organizations to design and structure themselves needs to be explored.

If this thesis rings true, then those organizations with similar technological and environmental problems should exhibit similar behavior; patterns should appear. But if our thesis is fruitful, we should also find that patterned variations in problems posed by technologies and environments result in systematic differences in organizational action.

Our ability to find patterns in phenomena rests on the adequacy of the conceptual schemes we employ; that is, the kinds of answers we get are limited by the kinds of questions we ask. We begin our analysis of organizations in action with an inventory of the alternative conceptual schemes available to us.

1

strategies for studying organizations

Complex organizations—manufacturing firms, hospitals, schools, armies, community agencies—are ubiquitous in modem societies, but our understanding of them is limited and segmented.

The fact that impressive and sometimes frightening consequences flow from organizations suggests that some individuals have had considerable insight into these social instruments. But insight and private experiences may generate private understandings without producing a public body of knowledge adequate for the preparation of a next generation of administrators, for designing new styles of organizations for new purposes, for controlling organizations, or for appreciation of distinctive aspects of modem societies.

What we know or think we know about complex organizations is housed in a variety of fields or disciplines, and communication among them more nearly resembles a trickle than a torrent (Dill, 1964; March, 1965). Although each of the several schools has its unique terminology and special heroes, Gouldner (1959) was able to discern two fundamental models underlying most of the literature. He labeled these the “rational” and “natural-system” models of organizations, and these labels are indeed descriptive of the results.

To Gouldner’s important distinction we wish to add the notion that the rational model results from a closed-system strategy for studying organizations, and that the natural-system model flows from an open-system strategy.

CLOSED-SYSTEM STRATEGY

The Search for Certainty

If we wish to predict accurately the state a system will be in presently, it helps immensely to be dealing with a determinate system. As Ashby observes (1956), fixing the present circumstances of a determinate system will determine the state it moves to next, and since such a system cannot go to two states at once, the transformation will be unique.

Fixing the present circumstances requires, of course, that the variables and relationships involved be few enough for us to comprehend and that we have control over or can reliably predict all of the variables and relations. In other words, it requires that the system be closed or, if closure is not complete, that the outside forces acting on it be predictable.

Now if we have responsibility for the future states or performance of some system, we are likely to opt for a closed system. Bartlett’s (1958) research on mental processes, comparing “adventurous thinking” with “thinking in closed systems,” suggests that there are strong human tendencies to reduce various forms of knowledge to the closed-system variety, to rid them of all ultimate uncertainty. If such tendencies appear in puzzle-solving as well as in everyday situations, we would especially expect them to be emphasized when responsibility and high stakes are added.

Since much of the literature about organizations has been generated as a by-product of the search for improved efficiency or performance, it is not surprising that it employs closed-system assumptions—employs the rational model—about organizations. Whether we consider scientific management (Taylor, 1911), administrative management (Gulick and Urwick, 1937), or bureaucracy (Weber, 1947), the ingredients of the organization are deliberately chosen for their necessary contribution to a goal, and the structures established are those deliberately intended to attain highest efficiency.

Three Schools in Caricature

Scientific management, focused primarily on manufacturing or similar production activities, clearly employs economic efficiency as its ultimate criterion, and seeks to maximize efficiency by planning procedures according to a technical logic, setting standards, and exercising controls to ensure conformity with standards and thereby with the technical logic. Scientific management achieves conceptual closure of the organization by assuming that goals are known, tasks are repetitive, output of the production process somehow disappears, and resources in uniform qualities are available.

Administrative-management literature focuses on structural relationships among production, personnel, supply, and other service units of the organization; and again employs as the ultimate criterion economic efficiency. Here efficiency is maximized by specializing tasks and grouping them into departments, fixing responsibility according to such principles as span of control or delegation, and controlling action to plans. Administrative management achieves closure by assuming that ultimately a master plan is known, against which specialization, departmentalization, and control are determined. (That this master plan is elusive is shown by Simon, 1957.) Administrative management also assumes that production tasks are known, that output disappears, and that resources are automatically available to the organization.

Bureaucracy also follows the pattern noted above, focusing on staffing and structure as means of handling clients and disposing of cases. Again the ultimate criterion is efficiency, and this time it is maximized by defining offices according to jurisdiction and place in a hierarchy, appointing experts to offices, establishing rules for categories of activity, categorizing cases or clients, and then motivating proper performance of expert officials by providing salaries and patterns for career advancement. [The extended implications of the assumptions made by bureaucratic theory are brought out by Merton’s (1957) discussion of “bureaucratic personality.”] Bureaucratic theory also employs the closed system of logic. Weber saw three holes through which empirical reality might penetrate the logic, but in outlining his “pure type” he quickly plugged these holes. Policymakers, somewhere above the bureaucracy, could alter the goals, but the implications of this are set aside. Human components—the expert officeholders—might be more complicated than the model describes, but bureaucratic theory handles this by divorcing the individuars private life from his life as an officeholder through the use of rules, salary, and career. Finally, bureaucratic theory takes note of outsiders—clientele—but nullifies their effects by depersonalizing and categorizing clients.

It seems clear that the rational-model approach uses a closed-system strategy. It also seems clear that the developers of the several schools using the rational model have been primarily students of performance or efficiency, and only incidentally students of organizations. Having focused on control of the organization as a target, each employs a closed system of logic and conceptually closes the organization to coincide with that type of logic, for this elimination of uncertainty is the way to achieve determinateness. The rational model of an organization results in everything being functional—making a positive, indeed an optimum, contribution to the overall result. All resources are appropriate resources, and their allocation fits a master plan. All action is appropriate action, and its outcomes are predictable.

It is no accident that much of the literature on the management or administration of complex organizations centers on the concepts of planning or controlling. Nor is it any accident that such views are dismissed by those using the open-system strategy.

OPEN-SYSTEM STRATEGY

The Expectation of Uncertainty

If, instead of assuming closure, we assume that a system contains more variables than we can comprehend at one time, or that some of the variables are subject to influences we cannot control or predict, we must resort to a different sort of logic. We can, if we wish, assume that the system is determinate by nature, but that it is our incomplete understanding which forces us to expect surprise or the intrusion of uncertainty. In this case we can employ a natural-system model.

Approached as a natural system, the complex organization is a set of interdependent parts which together make up a whole because each contributes something and receives something from the whole, which in turn is interdependent with some larger environment. Survival of the system is taken to be the goal, and the parts and their relationships presumably are determined through evolutionary processes. Dysfunctions are conceivable, but it is assumed that an offending part will adjust to produce a net positive contribution or be disengaged, or else the system will degenerate.

Central to the natural-system approach is the concept of homeostasis, or self-stabilization, which spontaneously, or naturally, governs the necessary relationships among parts and activities and thereby keeps the system viable in the face of disturbances stemming from the environment.

Two Examples in Caricature

Study of the informal organization constitutes one example of research in complex organizations using the natural-system approach. Here attention is focused on variables which are not included in any of the rational models—sentiments, cliques, social controls via informal norms, status and status striving, and so on. It is clear that students of informal organization regard these variables not as random deviations or error, but as patterned, adaptive responses of human beings in problematic situations (Roethlisberger and Dickson, 1939). In this view the informal organization is a spontaneous and functional development, indeed a necessity, in complex organizations, permitting the system to adapt and survive.

A second version of the natural-system approach is more global but less crystallized under a label. This school views the organization as a unit in interaction with its environment, and its view was perhaps most forcefully expressed by Chester Barnard (1938) and by the empirical studies of Selznick (1949) and Clark (1956). This stream of work leads to the conclusion that organizations are not autonomous entities; instead, the best laid plans of managers have unintended consequences and are conditioned or upset by other social units—other complex organizations or publics—on whom the organization is dependent.

Again it is clear that in contrast to the rational-model approach, this research area focuses on variables not subject to complete control by the organization and hence not contained within a closed system of logic. It is also clear that students regard interdependence of organization and enviroment as inevitable or natural, and as adaptive or functional.

CHOICE OR COMPROMISE?

The literature about organizations, or at least much of it, seems to fall into one of the two categories, each of which at best tends to ignore the other and at worse denies the relevance of the other. The logics associated with each appear to be incompatible, for one avoids uncertainty to achieve determinateness, while the other assumes uncertainty and indeterminateness. Yet the phenomena treated by each approach, as distinct from the explanations of each, cannot be denied.

Viewed in the large, complex organizations are often effective instruments for achievement, and that achievement flows from planned, controlled action. In every sphere—educational, medical, industrial, commercial, or governmental—the quality or costs of goods or services may be challenged and questions may be raised about the equity of distribution within the society of the fruits of complex organizations. Still millions live each day on the assumption that a reasonable degree of purposeful, effective action will be forthcoming from the many complex organizations on which they depend. Planned action, not random behavior, supports our daily lives. Specialized, controlled, patterned action surrounds us.

There can be no question but that the rational model of organizations directs our attention to important phenomena—to important “truth” in the sense that complex organizations viewed in the large exhibit some of the patterns and results to which the rational model attends, but which the natural-system model tends to ignore. But it is equally evident that phenomena associated with the natural-system approach also exist in complex organizations. There is little room to doubt the universal emergence of the informal organization. The daily news about labor-management negotiations, interagency jurisdictional squabbles, collusive agreements, favoritism, breeches of contract, and so on, are impressive evidence that complex organizations are influenced in significant ways by elements of their environments, a phenomenon addressed by the natural- system approach but avoided by the rational. Yet most versions of the natural-system approach treat organizational purposes and achievements as peripheral matters.

It appears that each approach leads to some truth, but neither alone affords an adequate understanding of complex organizations. Gouldner calls for a synthesis of the two models, but does not provide the synthetic model.

Meanwhile, a serious and sustained elaboration of Barnard’s work (Simon, 1957a; March and Simon, 1958; Cyert and March, 1963) has produced a newer tradition which evades the closed- versus open-system dilemma.

A NEWER TRADITION

What emerges from the Simon-March-Cyert stream of study is the organization as a problem-facing and problem-solving phenomenon. The focus is on organizational processes related to choice of courses of action in an environment which does not fully disclose the alternatives available or the consequences of those alternatives. In this view, the organization has limited capacity to gather and process information or to predict consequences of alternatives. To deal with situations of such great complexity, the organization must develop processes for searching and learning, as well as for deciding. The complexity, if fully faced, would overwhelm the organization, hence it must set limits to its definitions of situations; it must make decisions in bounded rationality (Simon, 1957b). This requirement involves replacing the maximum-efficiency criterion with one of satisfactory accomplishment, decision making now involving satisficing rather than maximizing (Simon, 1957b).

These are highly significant notions, and it will become apparent that this book seeks to extend this ‘newer tradition.” The assumptions it makes are consistent with the open-system strategy, for it holds that the processes going on within the organization are significantly affected by the complexity of the organization’s environment. But this tradition also touches on matters important in the closed-system strategy: performance and deliberate decisions.

But despite what seem to be obvious advantages, the Simon-March- Cyert stream of work has not entirely replaced the more extreme strategies, and we need to ask why so many intelligent men and women in a position to make the same observations we have been making should continue to espouse patently incomplete views of complex organizations.

The Cutting Edge of Uncertainty

Part of the answer to that question undoubtedly lies in the fact that supporters of each extreme strategy have had different purposes in mind, with open-system strategists attempting to understand organizations per se, and closed-system strategists interested in organizations mainly as vehicles for rational achievements. Yet this answer does not seem completely satisfactory, for these students could not have been entirely unaware of the challenges to their assumptions and beliefs.

We can suggest now that rather than reflecting weakness in those who use them, the two strategies reflect something fundamental about the cultures surrounding complex organizations—the fact that our culture does not contain concepts for simultaneously thinking about rationality and indeterminateness. These appear to be incompatible concepts, and we have no ready way of thi...