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This essay examines the influence wielded by managerial politics and environmental contingencies on organizational design and specifically attempts to critically analyse the theories in regards to their approach to shaping organizational design in terms of their weaknesses and strengths. A design is a mapped out plan in which puts in place a systematic process to be followed to achieve a desired outcome(s). Every organisation or business starts off with an idea; the process in which it is turned into reality is the design of the organisation, where the goals and objectives are used to keep focus.
1.1 Organisational Design:
This process has been defined by the business dictionary as "the manner in which a management achieves the right combination of differentiation and integration of the organization's operations, in response to the level of uncertainty in its external environment."
There have been different definitions by different authors but a general understanding is that organisational design is an architectural plan which links the organisational structures, reporting lines, coordination, roles and task allocations amongst individuals/employees into a systematic process in order for the organisation to run smoothly and effectively.
To properly understand how organizational design is brought about, a definition of managerial politics and environmental contingencies, the other key terms used in this essay, is required.
1.1.1 Managerial Politics: According to Heery and Noon(2008), their definition of strategic choice is that "its captures the belief that leaders of organisations, private corporations, state agencies, or trade unions have the scope to make significant choices over the strategic direction of the organisations they lead."
Managerial politics include those activities undertaken by the management team within an organisation to acquire, develop, utilise power and other resources in order to obtain the preferred outcome in the state of affairs in which there is uncertainty or disagreements about choices. It has also been called the "strategic choice" in an organisation design (Hatch, 1997). The political theories of organisations originally focused on the relationship between power and structural agreements (e.g. the hierarchy of authority).
Dominant coalition, senior management and other key decision-makers are usually seen to play a strategic role in charting the course of environmental change for the rest of the organisation. This strategic direction is more often than not, heavily influenced by personal political preferences and cultural values. Due to the fact that the holders of these dominant positions are generally more interested in keeping and maintaining their managerial roles and influences or power they wield in the organisation than in implementing constructive change, the link between the environment the internal process breaks down (Child, 1972).
1.1.2 Environmental Contingency: An understanding of the organizational environment may be required in order gain better understanding on what environmental contingency is. According to Hatch (1997), organizational environments are typically defined by their elements, which are broken into three parts, the first element is the interorganisational network which in summary regards to how every organisation interacts with other members of its environment such as unions, customers, suppliers, competitors, partners, regulatory agencies etc. The second element is the general environment which shows the interaction between the organisation, the external environment and other sectors be they social, cultural, legal, political, economic, technological and physical. The final element is the international and global element, which is the environment that crosses national boundaries and maybe organised on a global scale. The latter element includes international organisations such as the United Nations, international consulting firms etc. With this preamble in mind, the environmental contingencies are developments in the environment following the interactions of different elements, leading an organisation to adapt to these changes.
A key related theory that further develops an understanding of this topic is the contingency theory. Henry and Noon (2008) defined contingency theory "as the effectiveness of an organisation that is dependent upon managers taking into account various factors that can impact in a negative or positive manner on the organisation. The various factors include: the environment, technology, size of the organisation, product diversity and the people employed in the organisation". The contingency theory encompasses the environmental contingencies and these factors have a part to play in the designing of an organisation.
2.0 Managerial Politics and Environmental Contingencies.
2.1 Managerial Politics or Strategic Choice. Following on from the definition of Managerial Politics in Section 1.1.1 of this essay, this section seeks to examine the contribution on managerial politics to organizational design in greater detail.
Politics in organizations has been used to promote interests and gain advantages over competitors in the environment; even in the non-profit sector. The organisation is often faced with the interaction of internal processes and the ever evolving environment. Despite the fact that the environment focuses on the population, technology and sizes of the organisation it is important not to forget that the strategic choice (which puts the markets in place) is a necessary element in the structure and design of any organisation. Child (1972), attempted to draw attention to the role played by individuals, especially the powerful ones in organisational structures. He further went on to criticise situational theory for ignoring the influence of leaders' perceptions, preferences and choices on organizational forms and identifies three key issues in shaping organisational structure:
1. The role of agency and choice in organisational analysis;
2. The nature of the organisational environment;
3. The relationship between organisational agents and the environment.
In Nigeria, many organisations are owned and run rather inflexibly and often to their detriment as a business. The management of the business know the direction of travel they want the organisation to take and insist on the direction without due regard to the current business environment that their organization operates in. As a result, many of these organisations tend to miss their key targets and objectives, becoming less successful as a result of constant insensitivity to the environment and other factors. This is unsurprising as they would lack relevant information required to formulate effective business strategies and assist in their structure and design plans, which in turn would positively affect the performance of their organizations. Nestoil a public liability company traded on the Nigerian Stock Exchange, offering engineering, procurement and construction services is a good case study on this point. Its clients include large multinational organisations in the oil industry such as Chevron, Shell and Mobil. Getting too complacent with its business policies and not paying attention to its environment, Nestoil missed several key targets, did not deliver on its contracts and was on the verge of losing clients. The head of human resources had to intervene by taking and pushing through a strategic decision to hire experts to oversee the restructure and design of the existing corporate structure and introduce new policies to bring the company back on track. The effective use of managerial politics in this scenario saved the company from going under. .
The strategic choice is not without its problems. For instance it embraces the goal yet outlines a Programme which cannot by itself produce an in-depth knowledge of organisational design. Another problem is the significance of the individual and society in organisational design. The decision-making required in organisational design relates to either maintaining an existing structure or to moving towards a different type of structure. It is a result of the outcome of a political process in which the technical issues are always interpreted through the power relations, struggles and networks that contribute e towards the organisation's political system.
Organisational design through managerial politics has some distinct characteristics; there are usually a number of people with specialized functions and titles e.g. Head of Research, Head of Marketing etc., who report to the chief executive. By virtue of their positions, there may be a tendency to feel indispensable and gradually over time become insensitive to the organisation's strategic goals and objectives, and invariably taking decisions that best satisfy self-interests. This leads to a further variable in managerial politics, relating to the centralization of decision making authority. If decision-making authority is concentrated in these specialized roles, any unresponsiveness to the business environment would in time become harmful to the business.
In some organisations major decisions are almost always taken at the top level, with appointed middle or junior level management resources accountable to top level management and having to refer major decision making requests up the ladder, leading to a bureaucratic structure and design. As an organisation grows, there comes a point at which top level management can no longer immediately supervise all the subordinates, leading to the nominations of subordinates to become supervisors and splitting the rest of the employees into sections. In this way, the hierarchy increases with the growth in size, due to limitations on optimum span of control (Donaldson, 1985). Sub-units with differential interests make claim on scarce organisational resources. The extent of the claims is likely to be a reflection of the unit's perception of how critical the resources are to its survival and development (Pettigrew, 1985). This eventually leads to power struggles among employees, as each one knows that attaining the position of supervisor brings with it considerable power and influence over the other employees and organisation (in terms of calling the shots and making decisions). The eventual outcome of this process is a collapse especially if where the supervisor's goals and objectives are not aligned to the organisation.
2.2 Environmental Contingency or Contingency Theory:
The contingency theory accounts for diverse organizational structures given different technological and task environments. It assumes that as technology and product markets become more complex and uncertain, and task activities more heterogeneous and unpredictable, organizations will adopt more adaptive and flexible structures; and they will do so by moving away from bureaucratic to dynamic forms of organizing. The underlying difficulties in achieving the adaptation, however, are not addressed in this strand of research. Contingency theory neglects the possibility that the elements it identifies as being most important are susceptible to different interpretations by organizational actors. It also ignores the influence of other factors such as managerial choice (Child 1972; 1997).
Although the environment plays an important role in an organisation, for the latter to only concentrate on the contingency theory approach to organisational design could negatively affect the organisation. The contingency theory approach to organisational design emerged from the constant critique of the classical approach to organisational design. The classical approach is based on the assumption and principle that there are sets of general laws which can provide the basis for designing the singular best way for structuring organisational relationships. Out of the numerous structural forms that an organisation can take, the best form will be that which is irrespective of their size, technology, markets, environments and employees. The machine bureaucracy became the design blue print that the classical approach writers recommended as the universal solution to the problem of organisational design (Taylorism and Fordism). However, their approach was increasingly seen as being inadequate for a number of reasons which included the argument that organisations ignored the influence of the environment, thereby creating a 'closed system'. Another reason for criticism was the assumption that organisational structures were stable, fixed entities which could effectively neglect their dynamic qualities over long periods whilst continuing to assume that managerial decision-making over organisational design was entirely a rational process in which the social, political and cultural influences could be excluded. Its objective and aim was to show that things like culture and history did not have any influence on the organisational design.
Relevant literature describes the organisation environment with the general and global concepts of uncertainty. Some of the uncertainty includes randomness, complexity, unpredictability or lack of information which the organisation has to be able to deal with (Karpik, 1978). There is also a contrasting view from proponents of the contingency approach, with some being of the opinion that organisations should adapt to their particular circumstances, whilst others suggest that the organisation, through its actions can influence or change its circumstances (Heery and Noon, 2008).
According to Donaldson (1985), the modern approach to prescribing how best to structure an organisation asserts that there is no single form which will be equally effective under all circumstances. In other words, there is no best way. He went on to say that the organisational structure is perceived as being made up of several different facets, in other words departments and specialisations.
The contingency theory is underpinned by different approaches. For instance, the approach suggesting that the organisation be seen and treated as an open system which, if exposed to uncertainties and threats that the environment throws its way, influences the structure and design of the organisation in such a way as to accommodate such unforeseen events. Another approach is the "adapt or die" method, which posits that the organisation must mould its structure to fit the contingencies that are operative in its environment in order to ensure its survival in a well-integrated and effective social system.
There have been criticisms about how different organisations can achieve success by responding to contingent factors in different and seemingly random ways. The environment contingency theory imposes a very strict limit on the design of an organisation, to a point that management really has very few options available to it in any particular situation as a result of its reaction to environmental contingencies; and in the long run, this will determine the organisation's viability and effectiveness. Some organisations tend to mimic other organisations regardless of their size, structure and environment. Adopting these processes without considering what is in the best interest of their own organisation, might lead to a downturn in the fortunes of the business. On the other hand, some organisations could be fortunate enough to survive and even thrive in the midst of environmental contingencies by adopting other organisation's processes.
Another problem that relates to the environmental contingency theory is the availability of personnel that will be able to study, understand and deduce the effects of the contingencies and in return applying the right measures and policies, designed to save the organisation from a negative outcome.
According to Pfeffer (1976) cited in Karpik (1978), adopts a resource perspective relative to the environment; arguing that the level of resources and the terms on which they are available in the organisation's environment constitute the critical factor; the process through which information about the environment is apprehended by decision-makers is not given much attention.
Child( 1972) observes that companies with greater levels of bureaucracy at higher size levels tend to have higher financial performance This finding is compatible with the notion that a certain increase in bureaucratization is required as an organisation grows, and failure to develop more specialized and formalized administration leads to reduced effectiveness (Donaldson, 1985).
Managerial politics tends to have the people who are prepared to use the power at their disposal in their efforts to influence others and secure personal or collective interests; or, alternatively, to avoid negative outcomes within the organization (Bozeman, Perrewe, Kacmar, Hochwarter, and Brymer, 1996). The avoidance of the negative outcomes could be attributed to the type of culture that has been developed in the organisation and what their objectives are in terms of how their employees are paid. For instance, by piecework, which means they have a day to day target and should production fall below target, their pay is reduced accordingly; or paid by time spent in the organisation. These factors - pay, appraisal, performance management etc., can be attributed somewhat to the general performance of the organisation in terms of growth and productivity. The employees tend to conform to the rules and this can affect the performance of an employee, which in turn affects the organisation as a whole, Mintzberg (1989), stresses that managerial politics reflects illegitimate force relations between the organisation's members.
This essay has sought to answer the question on which of managerial politics or environmental contingencies is the key factor shaping organizational design. Organisational design is the layout by which management achieves the right combination of differentiation and integration of the organization's operations, in response to the level of uncertainty in its external environment
Both factors, as well as the various ways in which they bring about organizational design have been examined at some length and both clearly have distinct strengths and weaknesses. It should be noted that the more effective strategy, in shaping organisational design, would be to employ a fusion of the two theories, in order to arrive at a middle ground. This is because there is a no perfect organisation that can flourish by exclusively and rigidly applying the tenets of one extreme theory of designing the organisation. The organisation as a whole needs to know what it core values are, examine its size, understand the product or services it is expected to produce, its location, size of the market etc., as all these factors could have a major impact in designing an organisation. The existence of politics in an organisation cannot be made extinct and there is never a guarantee that power will not be exploited by those who possess it.
The adage that says that no man is an island, also applies to organisations in terms of adopting the best practices by taking a look at what similar organisations have in place, adopting strategies that will fit its own business and foreseeing, as far as is possible, any difficulties that may develop along the way. Managerial politics may play its part in an organisation, if, taking the organisation's structure into account, it best suited to that company. However, the company and those in managerial positions must remain flexible but focused in order to ensure that they do not ignore the impact of any internal or external environmental contingencies which may be affecting the organisation.
In summary, although a case could be made for it, even if not an overwhelming one, managerial politics is not necessarily more effective than environmental contingencies in achieving organisational design. However, as organisational design is a vital aspect of business entities in terms of the organisational structure, culture, reporting lines, control and coordination with tasks and responsibilities, a combination of the strategic choice and environmental contingencies will ultimately be even more effective in achieving the dynamic organisational design rather than either factor employed on its own as the organization will be able adopt and rely the strategic vision and influence wielded by its key decision makers whilst remaining flexible enough to respond to any environmental factors in an effective manner.