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Organisation structure, management style and company performance: Some recent results
Omega, Vol. 3, No. 5 These findings are further supported by examination of the major reasons that were cited for not accepting another temporary assignment: concern about not getting a responsible position u p o n return (18 responses), family reasons (10), salary hardships (3), and 'other' (9). CONCLUSIONS We see strong evidence that one of the major difficulties with temporary assignments is not the salary upon return or position while reassigned. These are, of course, important considerations; however, the most important concern for both the individual and the firm is the proper placing of the individual upon return. Organizations today are in a constant state of change and it is therefore reasonable to expect that the returning individual may often not be able to return to his previous position and in fact has difficulty fitting into the changed organization. Many firms and individuals fee[ that in the long run the temporary assignments are helpful to ones' career. Yet, unless one is able to refit into the organization, the long run may never arrive. From the organization's point of view, the potential loss is twofold. First, the firm may lose these people, who by virtue of having been selected for the temporary assignment are likely to be key contributors to the future well being of the firm. Secondly, poor placement of returned personnel may result in the individual's lack of real participation in the organizational affairs [4]. In cases where the firm is transferring an individual in order to simply remove him from his present position we believe that the reason should not be disguised. It is only through open and honest communication
between the management and the employees that commitment can be expected. We recommend that organizations recognize the problems described earlier and take steps to have the returning individuals placed in positions at least comparable to those that they left and preferably in positions to utilize their recent experience while away from the firm. Furthermore, for temporary assignments of longer duration there should be regularly scheduled visitations of the temporarily assigned person to the home base so that he may appraise and adapt to the changing organizational environment. These return visitations should include one taking place specifically about a month before the actual return is anticipated, with the express purpose of spreading the adaptive process over a longer period of time (and beginning this process prior to actual permanent return). REFERENCES I. LEAVXTTH (1965) Applied organizational change in industry. In Handbook of Organizations. Rand-McNally, Chicago. 2. GE~.STENFELD A (197l) Technological forecasting. J. Bus. January. 3. SCHEIY E (1971) Organizational Psychology. Prentice-Hall, Eng[ewood Cliffs, New Jersey. 4. MARCH J and SIMOy H (1958) Organizations. Wiley, New York. A GERSTENFELD P BERGER
(January 1975) School of Management Boston Unirersity 212 Bay State Road Boston, Massachusetts 02215, U.S.A.
Organisation Structure, Management Style and Company Performance: Some Recent Results INTRODUCTION [N AN earlier paper [1] the relationship between organisation structure and management style and their influence on organisational effectiveness measuring in both ' h u m a n ' and financial terms was considered. Using information collected from a sample of 50 small and medium size printing and building firms conceptual models were elaborated 615
involving the independent attributes of: I N T E G R A T I O N , CONTROL, TASK ORIE N T A T I O N and PEOPLE ORIENTATION. The validity of these models was operationally tested and examined against the background of evidence reported by other research workers on the contextual determinants of organisation structure and management style.
Memoranda Substantially different patterns of association between "organisation' and 'style' and company performance were found for the two industries. As far as the printing industry was concerned the form of organisation structure most closely associated with success appeared to be a bureaucratic one while for the less homogeneous building industry appropriate structures tended to vary according to the nature of the work undertaken. For example, successful general contractors tended to have organic structures, specialist contractors 'bureaucratic' and small works firms 'mechanistic' structures. The management style results suggested that in both industries a high level of TASK ORIENTATION tended to enhance performance while the influence of PEOPLE ORIENTATION, was of secondary rather than primary importance. The previous work added further weight to the argument that there is no one best way of organising a business and no such thing as a best management style. Indeed the findings produced considerable evidence in favour of the contingency theory of behaviour. In particular, the results suggested that those companies which were appropriately organised and managed for the nature of their major type of work were more likely to achieve superior financial results in the long term than those who were judged to be inappropriately organised. The opportunity has arisen since these previous findings were reported to review the
financial performance of the firms studied against the criteria of organisatioaal and managerial appropriateness.
RESULTS Table i shows the fortunes of 48 of the companies studied since the original fieldwork was completed in 1970. Of the 22 firms with appropriate or near appropriate forms of management (that is to say that their observed style and structure characteristics accorded with those which it had been hypothesised were best suited to the demands of the major building activities undertaken by them and which were most likely to lead to success measured in either human or financial terms). Only one has suffered a fall in its business standing which has been brought about by a decline in its profitability. Twelve of the remaining 21 companies have either improved their financial and business achievements by entering new regional markets (this appeared to be particularly so for the building sample) or through product diversification. Only two of the firms with inappropriate forms of organisation and management, on the other hand, had improved their financial performance whereas two-thirds had suffered substantial setbacks or declines. Six of this group of companies had been forced, through their poor viability to cease trading or to be taken over in order to survive.
TABLE I. FORTUNESOF 48 COMPANIES1970--1974 Form of management and organisation Changes since 1970 Improved profitability Business expansion Decreased profitability Business contraction Bankruptcies and 'takeovers' No major changes in profitability, organisation or management Total
Appropriate Building Printing
Inappropriate Building Printing
7 1 ---
2 2 1 --
1 -3 --
1 -3 4
--
--
4
2
2
7
6
2
10
12
14
12
616
Omega, Vol. 3, No. 5 Another four companies had found it necessary to make major reorganisations some involving the redundancy of senior and middle management which in consequence has obliged them to cut back or restrict their trading activities. DISCUSSION It could be argued that these results are largely self-fulfilling prophecies and that over the short period of time which has elapsed since 1970 successful firms were bound to remain successful. It is suggested, however, that this is not so since several of the appropriately organised firms which increased in profitability are firms which, in 1970, failed to fit satisfactorily within the general models postulated. One possible explanation for this is that those firms which had reorganised themselves in the late 1960's would have been unable to reap the benefits of such reorganisations by 1970. Despite their poor profitability records, however, they still appeared to be appropriately organised and were classified as such for purposes of the previous analyses. At the other extreme there were firms with apparently inappropriate forms of management which had very favourable performance records. Again, although these firms failed to fit the models in 1970 once the dynamic element of time has been taken into account the 'degree of fit' has improved. This argument seems to accord with experience since it would be most unlikely that organisational or other changes in the management of firms would make themselves immediately apparent in their financial results. How quickly the benefits of reorganisation are reflected in balance sheets is arguable and, of course, depends on the nature of the firm's activities. For the building firms, however, and to a lesser extent, the printing firms too, research has suggested that such benefits
appear after a period of 18 months to 2 years, i.e. well within the 4 year reassessment period adopted for the purpose of this subsequent investigation. CONCLUSIONS The further evidence presented here lends considerable support to the findings of the original research that companies appropriately managed and organised for the nature of their major type of work achieve consistently superior financial results when compared with those who are judged to be inappropriately organised. This subsequent analysis, however, also highlights the importance of the time-dimension in the diagnosis and examination of organlsational and managerial problems. It appears that considerable difficulty is often experienced by organisational analysts in relating performance measured in financial terms to the behavioural aspects of the organisations under scrutiny and it is suggested that the missing link is an appreciation of the timescale of the processes involved. The problem of studying and accounting for these processes is one which currently confronts the authors in their long term programme of research directed at examining the problems of management and organisation in conditions of growth and change. REFERENCES 1. LANSLEY PR, SADLER P J" and WEaB TD (1974) Organisation structure, management style and company performance. Omega 2 (4), 467-485. PR LANSLEY PJ SADLER TD WEBS
(May 1975) Ashridge Management College Berkhamsted Hertfordshire HP4 1NS, England
Stochastic Game Model of Organized Strikes IN RECENT years, mathematical modeling of strikes and bargaining has received considerable attention, mostly as static analyses [1, 2, pp. 162-190, 3-6,]. However, strike activity is evolutionary and stochastic and only a dynamic and probabilistic theory can analyse the problem realistically. A dynamic but deterministic model has been developed 617
recently [7], but it does not incorporate the conflicting interests directly. In this note, the strike process is modeled as a two-person, non-zero sum stochastic game of finite steps appealing to the theory of non-zero sum stochastic games [8, 9] and the model is solved by a recursive process. Let there be a 'union' representing the set
between the management and the employees that commitment can be expected. We recommend that organizations recognize the problems described earlier and take steps to have the returning individuals placed in positions at least comparable to those that they left and preferably in positions to utilize their recent experience while away from the firm. Furthermore, for temporary assignments of longer duration there should be regularly scheduled visitations of the temporarily assigned person to the home base so that he may appraise and adapt to the changing organizational environment. These return visitations should include one taking place specifically about a month before the actual return is anticipated, with the express purpose of spreading the adaptive process over a longer period of time (and beginning this process prior to actual permanent return). REFERENCES I. LEAVXTTH (1965) Applied organizational change in industry. In Handbook of Organizations. Rand-McNally, Chicago. 2. GE~.STENFELD A (197l) Technological forecasting. J. Bus. January. 3. SCHEIY E (1971) Organizational Psychology. Prentice-Hall, Eng[ewood Cliffs, New Jersey. 4. MARCH J and SIMOy H (1958) Organizations. Wiley, New York. A GERSTENFELD P BERGER
(January 1975) School of Management Boston Unirersity 212 Bay State Road Boston, Massachusetts 02215, U.S.A.
Organisation Structure, Management Style and Company Performance: Some Recent Results INTRODUCTION [N AN earlier paper [1] the relationship between organisation structure and management style and their influence on organisational effectiveness measuring in both ' h u m a n ' and financial terms was considered. Using information collected from a sample of 50 small and medium size printing and building firms conceptual models were elaborated 615
involving the independent attributes of: I N T E G R A T I O N , CONTROL, TASK ORIE N T A T I O N and PEOPLE ORIENTATION. The validity of these models was operationally tested and examined against the background of evidence reported by other research workers on the contextual determinants of organisation structure and management style.
Memoranda Substantially different patterns of association between "organisation' and 'style' and company performance were found for the two industries. As far as the printing industry was concerned the form of organisation structure most closely associated with success appeared to be a bureaucratic one while for the less homogeneous building industry appropriate structures tended to vary according to the nature of the work undertaken. For example, successful general contractors tended to have organic structures, specialist contractors 'bureaucratic' and small works firms 'mechanistic' structures. The management style results suggested that in both industries a high level of TASK ORIENTATION tended to enhance performance while the influence of PEOPLE ORIENTATION, was of secondary rather than primary importance. The previous work added further weight to the argument that there is no one best way of organising a business and no such thing as a best management style. Indeed the findings produced considerable evidence in favour of the contingency theory of behaviour. In particular, the results suggested that those companies which were appropriately organised and managed for the nature of their major type of work were more likely to achieve superior financial results in the long term than those who were judged to be inappropriately organised. The opportunity has arisen since these previous findings were reported to review the
financial performance of the firms studied against the criteria of organisatioaal and managerial appropriateness.
RESULTS Table i shows the fortunes of 48 of the companies studied since the original fieldwork was completed in 1970. Of the 22 firms with appropriate or near appropriate forms of management (that is to say that their observed style and structure characteristics accorded with those which it had been hypothesised were best suited to the demands of the major building activities undertaken by them and which were most likely to lead to success measured in either human or financial terms). Only one has suffered a fall in its business standing which has been brought about by a decline in its profitability. Twelve of the remaining 21 companies have either improved their financial and business achievements by entering new regional markets (this appeared to be particularly so for the building sample) or through product diversification. Only two of the firms with inappropriate forms of organisation and management, on the other hand, had improved their financial performance whereas two-thirds had suffered substantial setbacks or declines. Six of this group of companies had been forced, through their poor viability to cease trading or to be taken over in order to survive.
TABLE I. FORTUNESOF 48 COMPANIES1970--1974 Form of management and organisation Changes since 1970 Improved profitability Business expansion Decreased profitability Business contraction Bankruptcies and 'takeovers' No major changes in profitability, organisation or management Total
Appropriate Building Printing
Inappropriate Building Printing
7 1 ---
2 2 1 --
1 -3 --
1 -3 4
--
--
4
2
2
7
6
2
10
12
14
12
616
Omega, Vol. 3, No. 5 Another four companies had found it necessary to make major reorganisations some involving the redundancy of senior and middle management which in consequence has obliged them to cut back or restrict their trading activities. DISCUSSION It could be argued that these results are largely self-fulfilling prophecies and that over the short period of time which has elapsed since 1970 successful firms were bound to remain successful. It is suggested, however, that this is not so since several of the appropriately organised firms which increased in profitability are firms which, in 1970, failed to fit satisfactorily within the general models postulated. One possible explanation for this is that those firms which had reorganised themselves in the late 1960's would have been unable to reap the benefits of such reorganisations by 1970. Despite their poor profitability records, however, they still appeared to be appropriately organised and were classified as such for purposes of the previous analyses. At the other extreme there were firms with apparently inappropriate forms of management which had very favourable performance records. Again, although these firms failed to fit the models in 1970 once the dynamic element of time has been taken into account the 'degree of fit' has improved. This argument seems to accord with experience since it would be most unlikely that organisational or other changes in the management of firms would make themselves immediately apparent in their financial results. How quickly the benefits of reorganisation are reflected in balance sheets is arguable and, of course, depends on the nature of the firm's activities. For the building firms, however, and to a lesser extent, the printing firms too, research has suggested that such benefits
appear after a period of 18 months to 2 years, i.e. well within the 4 year reassessment period adopted for the purpose of this subsequent investigation. CONCLUSIONS The further evidence presented here lends considerable support to the findings of the original research that companies appropriately managed and organised for the nature of their major type of work achieve consistently superior financial results when compared with those who are judged to be inappropriately organised. This subsequent analysis, however, also highlights the importance of the time-dimension in the diagnosis and examination of organlsational and managerial problems. It appears that considerable difficulty is often experienced by organisational analysts in relating performance measured in financial terms to the behavioural aspects of the organisations under scrutiny and it is suggested that the missing link is an appreciation of the timescale of the processes involved. The problem of studying and accounting for these processes is one which currently confronts the authors in their long term programme of research directed at examining the problems of management and organisation in conditions of growth and change. REFERENCES 1. LANSLEY PR, SADLER P J" and WEaB TD (1974) Organisation structure, management style and company performance. Omega 2 (4), 467-485. PR LANSLEY PJ SADLER TD WEBS
(May 1975) Ashridge Management College Berkhamsted Hertfordshire HP4 1NS, England
Stochastic Game Model of Organized Strikes IN RECENT years, mathematical modeling of strikes and bargaining has received considerable attention, mostly as static analyses [1, 2, pp. 162-190, 3-6,]. However, strike activity is evolutionary and stochastic and only a dynamic and probabilistic theory can analyse the problem realistically. A dynamic but deterministic model has been developed 617
recently [7], but it does not incorporate the conflicting interests directly. In this note, the strike process is modeled as a two-person, non-zero sum stochastic game of finite steps appealing to the theory of non-zero sum stochastic games [8, 9] and the model is solved by a recursive process. Let there be a 'union' representing the set