Summary
Theories and Approaches to Change Management
Rijksuniversiteit Groningen – Faculty of Economics and Business
Content:
#1 – Burnes (2009), Ch.1; From trial and error to the science of management
#2 – Smith & Sutherland/Graetz (2011), Ch. 1; Philosophies of organizational change: ‘changing context’
#3 – Smith & Sutherland/Graetz (2011), Ch. 2; Theories about theories: ‘changing theories’
#4 – Burnes (2009), Ch.2; Developments in organization theory
#5 – Burnes (2009), Ch.3; In search of new paradigms
#6 – Burnes (2009), Ch.4; Critical perspectives on organization theory
#7 – Smith & Sutherland/Graetz (2011), Ch. 10; The critical philosophy: ‘changing reality’
#8 – Burnes (2009), Ch.5; Culture, power, politics and choice
#9 – Burnes (2009), Ch.6; Approaches to strategy
#10 – Burnes (2009), Ch.7; Applying strategy
#11 – Burnes (2009), Ch.8; Approaches to change management
#12 – Burnes (2009), Ch.9; Developments in change management
#13 – Burnes (2009), Ch.10; A framework for change
#14 – Burnes (2009), Ch.11; Organisational change and managerial choice
#15 – Burnes (2009), Ch.12; Management – roles and responsibilities
#16 – Smith & Sutherland/Graetz (2011), Ch. 11; Conclusion. The dualities philosophy: ‘changing tensions’
#1 – Burnes (2009), Ch.1; From trial and error to the science of management
Introduction
This chapter sets out to explore and discuss the origins of organizations, from the Industrial Revolution to the early years of the twentieth century. Two of the overarching and complementary characteristics of this period were the conflict between workers and managers, and the search for a systematic, scientific, and above all efficient approach to running and changing organizations.
The rise of commerce and the birth of the factory
The birth of the factory system in the UK gave the impetus to and created the model for all that was to follow. The way the entrepreneur organized and centralized elements of production distinguished it from what went on before. This was done in order to take full advantage of expanding market opportunities to reap even greater rewards and to dodge the complex intermediary system from before. With few capital investments, wages and raw materials formed the bulk of manufacturing costs. It is this, and the original motive for moving to the factory system in the first place (to have greater control over labour) which explains the prevailing attitude of employers towards labour in the nineteenth century.
The relationship between employers and employees
The attitude of British employers towards employees is based on two basic propositions; (1) labour is unreliable, lazy and will only work when tightly controlled, and (2) the main controllable business cost is labour. This hostility was reciprocated by the labour force in its hostility towards the factory system for 3 reasons; (1) it involved a wholesale change of culture and environment they were used to, (2) the discipline of the factory was harsh and unremitting, and (3) employers often modeled factories like workhouses or prisons. This clash of interests echoed through the industrial world ever since, although it must be said that entrepreneurs had no text book cases that they could copy.
Industrialization and the organization of work
The system of organizing work that came to characterize life in Britain and continental Europe was based on the hierarchical and horizontal division of labour based on the principles of Adam Smith (experience on one task, no loss of time moving persons, concentration of attention leads to invention of machines). Change tended to be managed by imposition and force rather than negotiation and agreement. Resistance to new changes was met with physical violence, manifesting in high labour turnover.
Europe: The self-generating and autonomous nature of British industrialization became an example for the rest of Europe to follow. For Germany and France, this was a matter of maintaining their position in the world. Though countries used Britain as a benchmark, the actual process of industrialization in each depended upon the unique political, social and economic circumstances that prevailed there.
Germany: The formation of a unified empire made Germany driven forward by a rapidly expanding, technologically-centered industrial base. The two key factors that were responsible for this rapid pace were the geographical and political conditions of the country (cooperation with other states), and the fact that German industrialization was state-promoted rather than market driven (stimulated by nobility). This was aided by the dominant role of Prussia and the creation of the customs union (Zollverein). The state saw German industry as an extension os government, bolstering managerial authority and restricting workers rights. Based on the governmental and banking encouragement, Germany took over the British position by moving to vertical integration. All in all, the influence of the Prussian autocratic tradition, the development of a strong bureaucratic approach within both private- and public-sector organizations, and the close relationship between industry and state meant that industrial and political resistance was met by a unified and implacable alliance between employers and government.
France: The French industry developed rather late, which seem to have been caused by two key factors: political change and agrarian stagnation, both of which are linked with the French Revolution of 1789. A twin-track approach was instituted. On the one hand, state aid was poured into industry, whilst on the other hand, there was the suppression of every obstacle to individual entrepreneurship. However, the progress was reversed by the revolution which seems strange, as those dominating the revolution were men of property and substance who believed in upholding property rights and placed employees in an inferior legal position. However, this was outweighed by the loss of most of France’s colonial empire and its isolation imposed by the British naval blockade. Only after the 1850s, with the upsurge in economic activity across Europe and the coming to power of Napoleon does the French economy really seem to have taken of. The other main factor which held back industrialization was the backward state of agriculture. The agricultural sector, with a strong position after the revolution, remained self-sufficient and inefficient. Second, by depressing the rate of population growth, it prevented mass supply of labour for the industry. Finally, import barriers produced a strong bond of self-interest between peasants and factory owners, both of whom saw free trade as a threat to their way of life.
Scandinavia: In the nineteenth century, Norway, Sweden, and Denmark had weak domestic economies, depending heavily on exporting the products of their agricultural, mining, and forestry industries. However, the so-called compromise between capital and labour, which extended cooperation between employers and social democratic governments lead to a Nordic model of industrial relations. The close ties between these three countries meant that political and industrial developments in one affected the other two.
For Sweden, the nineteenth century brought a rapidly rising population and a strong export market in grain and timber. Sweden’s progress was significant. First, changes in the 18th century had removed barriers to social mobility and created the conditions for the emergence of entrepreneurs. Second, these entrepreneurs showed an unrivalled ability to exploit Sweden’s natural resources. Finally, the high quality of the education system provided a workforce able to adapt to changing industries.
For Denmark, it was changes in agricultural production that gave a large boost to the economy in the 19th century. With many fragmented producers, Denmark started working with cooperatives for the export, hereby making small-scale farming compatible with large-scale international demand. Remarkable is the degree to which Denmark preserved peasant and craft traditions. It could claim to have avoided the clash of cultures and the rise of industrial conflict.
For Norway, the exports were more service-based than product-based, as shipping was its chief earner. Just before WW1, an influx of foreign capital wishing to take advantage of Norway’s potential for cheap hydroelectricity enabled the industry to flourish. Uniquely, merchants and gentlemen-farmers formed the top layers of society. All in all, its dependency on foreign capital without any local impact lead to Norway remaining a relatively poor country, though far ahead in terms of democracy and educational provision.
USA: In the USA, the need for a workable, overall approach to organizational design was perhaps more acute than everywhere else, as it had industrialized far more rapidly than any other nation. Huge conglomerates dominated the entire industry. The American approach, characterized by high pressure and harsh conditions, owed little to government aid or encouragement, and much more to individual entrepreneurship. There was great pressure to find an organizational arrangement that would allow employers to control and organize their employees in a way that reduced conflict, was cost-effective, and applicable to the American philosophy. Though similar development were taking place in Europe, they lacked the intensity, commitment and scale of events in the USA.
Organization theory: The Classical approach
All over the industrialized world, groups of managers and specialists were forming their own learned societies to exchange experiences, and to seek out in a scientific and rational fashion the solution to all organization ills: to discover the ‘one best way’. Out of these endeavors emerged the Classical approach, portraying organizations as machines, and those in them as mere parts which respond to the correct stimulus and whose actions are based on scientific principles. Organizations were seen as closed and changeless entities unaffected by the outside world. This approach is characterized by three propositions: (1) organizations are rational entities, (2) the design of organizations is a science, and (3) people are economic beings.
Frederick Taylor’s Scientific Management: Taylor created a general ideology of efficiency. His focus was on the design and analysis of individual tasks; this process inevitably led to changes in the overall structure of organizations. He believed that it is possible and desirable to establish, through methodological study and scientific principle, the one best way of carrying out any job. Furthermore, human being are predisposed to seek the maximum reward for minimum effort (soldiering). To overcome this, managers must lay down in detail what each worker should do, step by step, ensured through close supervision, and to give positive motivation by linking pay to performance. His precepts for Scientific management comprised three core elements: (1) the systematic collection of knowledge about the work process by managers, (2) the removal or reduction of worker’s discretion and control over what they do, and (3) the laying down of standard procedures and times for carrying out each job. Doing so removes the last bargaining counter of labour; scarcity of skill. Taylor met high levels of managerial acceptance as he believed in the need to reform managerial authority to be based on competence rather than the power to hire and fire.
The Gilbreths and motion study: Motion studies were thought to cut down production costs and increase the efficiency and wages of the workman. To be successful, a mechanic must know his trade, must be quick motioned, and he must use the fewest possible motions to accomplish the desired results. Breaking down work into constituent components, the Gilbreths used flow process charts to split human motion into five basic elements: operations, transportation inspection, storage, and delay. Through a microanalysis, they established what was done, but also to whether a better method of performing the task could be developed. They viewed organizations and workers very much as machines. They were devoted to discovering the best method of doing any job.
Henri Fayol and the principles of organization: Fayol’s focus was on the organizational level rather than the task level: top-down rather than bottom-up. However, similar to Taylor, he advocated the need for professionally educated managers who would follow the rule rather than acting in an arbitrary or ad hoc fashion. Fayol described 14 principles of organization (Division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual or group interest, remuneration of personnel, centralization, scalar chain, order, equity, stability of tenure of personnel, initiative, and esprit de corps. In order to achieve this, he prescribed the main duties of management as follows: forecasting and planning, organizing, commanding, coordinating, controlling.
Max Weber on bureaucracy: Weber his work on bureaucracy is related to that of Fayol in that it is focusing on the overall structure of organizations and the principles which guide senior managers in this task. He argued that for a ruling elite to sustain its power and dominance, it is essential for them both to gain legitimacy and to develop and administrative apparatus to enforce and support their authority. Weber identified ‘three pure types of legitimate authority’, being (1) rational-legal, (2) traditional, and (3) charismatic. In the context of the rational-legal authority systems which prevailed in the West, the bureaucratic approach was the most appropriate and efficient. Here, laws, rules, procedures and predefined routines are dominant and not subject to the vagaries and preferences of individuals. Following this would eliminate emotions from decision making. Bureaucracy is characterized by the division of labour, a clear hierarchical authority structure, formal and unbiased selection procedures, employment decisions based on merit, career tracks for employees, detailed rules and regulations, impersonal relationships, and a distinct separation of members organizational and personal lives.
Conclusions
The rise of capitalism in Britain and other countries created new opportunities and new problems that could not be accommodated under the old order. The result was a move away from self-sufficient autonomous individual units to collective units of production controlled by an entrepreneur. The central features of this factory system were autocratic control, division of labour, and antagonistic relations between management and labour. However, the process and implementation style of this new system differed per country. One clear image however stands out: the factory did not emerge because it was a more efficient means of production per se; it emerged because it offered entrepreneurs a more effective means of controlling labor.
The Classical approach had many merits: not least in its attempt to replace arbitrary and capricious management with rules and procedures that apply equally to everyone in the organization. Summarized, the classical approach proclaims that there is one best way, founded on the rule of law and legitimate managerial authority. Furthermore, organizations are ration entities and people are motivated to work solely by financial reward. Human fallibility and emotions should be eliminated and as a result, the most appropriate form of job design is achieved through the use of the hierarchical and horizontal division of labor.