Key words when talking about organizations are:
Stakeholders, culture, politics, power, bounded rationality, paradigms.
Stakeholders – People with an interest in an organisation’s success, failure or activities, and therefore a desire to influence its behaviour.
Examples of stakeholders
Organisations, politics and power
Given the existence of different stakeholder groups in organisations, it is likely that their interest will differ and that there will sometimes be tension between them. Such tension can be destructive, but it can also stimulate creativity and help more organisations forward.
Oragnisational politics
These tensions within organisations are resolved through political processes which are an important part of strategic decision-making.
Decisions may depend upon how much information the decision-makers have at their disposal, how well the different arguments are presented and the decion-makers’ desire to further their personal interests. Decision-makers may also be influenced by their past.
Power - the ability to get other people to do what you want even if it’s not something that they would otherwise have done.
Power, politics and rationality
The interplay of power and politics can result in strategic decisions that seem irrational to an outside observer. Such decisions may, however, make perfect sense to people who are conditioned to the way in which the organisation sees the world.
Bounded rationality - is a reasoning process which is not free, but shaped or determined – bounded – by factors which make particular ways of thinking about problems much more likely than others. These factors may be preconceptions, or lack of time, information or motivation to take a better decision.
Most organisations acquire a set of values and assumptions about the world, their industry and their organisation that become more homogeneous over time. This set of deeply held, often unspoken beliefs is known as the organisation’s dominant logic or paradigm or sometimes its theory-in use or organisational code. It forms a standard against which all new activities are being measured, conciously or unconciously, to determine how credible they are, or indeed whether they are to be considered at all.
Organisational culture - is ‘how things are done around here’. It is what is typical of the organisation, the habits, the prevailing attitudes, the grown-up pattern or accepted and expected behaviour. (Drennan, 1992)
Organization theory tries to offer a coherent framework for what usually are disparate individual assumptions and observations on the nature of the existence and functioning of organizations. A coherent theory on organizations should lead to:
“Help one to explain the Past which
in turn
Helps one to understand the Present
and thus
To predict the Future which leads
to
More influence over future events
and
Less disturbance from the Unexpected.” (Handy, 1987, p. 16)
A theoretical background to the understanding of organizations is essential to leadership. One of the strongest stereotypes in both western culture and, particularly, in our own, is that the human being is the master of the environment. Which means that whatever goes wrong is blameable on the individual who, depending on his/her skils and abilities, could and, obviously, should control this environment. However, research shows that this is not true at all and the individual and her/his abilities are only one of the various forces that influence a situation (see Fig. 1, Handy, p. 4). This stereotype has made many people unhappy, creating tensions and personal anguish, being one of the reasons that create stress. The study of organizational theory contributes to the relief of the individuals suffering from the above described conditions and helps them to carry out the analytical task of a manager which consists of:
“To identify the key variables in any situation;
To predict the probable outcomes of any changes in the variables;
To select the ones he can and should influence.”
(Handy, 1987, p.17)
No matter what the result of such an analysis is, the knowledge of what you can do, but also of what you cannot do, is very important. Individuals, as well as organizations, progress by both knowing what not to do in certain moments and recognizing what must be done. The importance of such knowledge, as well as its limitations for detailed, practical advice on how to behave in a particular situation, is underlined by Handy in the following fragments of his book:
It is a belief that developed with the extraordinary advances of science and technology. In Romania this belief was deepened by the communist regime: first as a natural representation of the successes of the “new order” and second by the almost total lack of religious education particularly for the young generations.