Framework 175 Understanding Organisational Change
Introduction
This framework
"...encompasses exogenous (market context, institutional context) and endogenous dynamics (beliefs, values, power, dependencies, and capacity for action)......to provide a more complete account of understanding organisational interpretations of, and responses to, contextual pressures, by stressing the political dynamics of intra-organisational behaviour and the normative embeddedness of the organisations within their contexts.....addressing the interplay of organisational context and organisational action..."
Royston Greenwood et al, 1996
Need to remember that change is more than cross-sectional and linear.
Furthermore, change has outcomes; it would become an input in market and institutional contexts, ie if an organisation successfully adopts a new structure it will put pressure on other organisations to follows suit, ie
"...Successful practices are mimicked and institutionalised..."
Royston Greenwood et al, 1996
To understand both persistency and change you need to look at all aspects of an organisational internal dynamics: interest, values, power, dependencies and capacity for action
"... Its use of influence, conditions, competing values were central and the emphasis was placed on the ways in which formal, rational mission of an organisation is diverted by the operations of group interests...... key forms of cognition are values, norms, and attitudes; conflicts of interest at best it is a central; the individual organisation is the locus of institutionalisation and the primary unit of analysis.....Institutionalise organisations come 'fused with value', become ends in themselves, but operating within essential moral frames of reference......the actual organisational practices diverge from expressed organisational goals..."
Royston Greenwood et al, 1996
There is a struggle between values and interests.
Framework
This framework
"...encompasses exogenous (market context, institutional context) and endogenous dynamics (interests, values, power, dependency is, and the capacity for action)..."
Royston Greenwood et al, 1996
In the diagrammatical form (see below), it is essentially cross-sectional and linear; however outcomes would become the next inputs for market and institutional contexts.
As competitive organisations closely monitor each other, any successful practices are imitated and institutionalised.
(source: Royston Greenwood et al, 1996)
Need to understand the exogenous and endogenous variables that can impact change initiative as they are the core themes in this framework
A. Exogenous variables (external dynamics, ie refers to external factors that can influence an organisation's environment and create pressures for change; they are pivotal for understanding how external factors can disrupt institutional stability and trigger a radical organisational change. Some key variables include
i) institutional context and logics (they are the over-arching belief systems and practices that guide behaviour within an industry, profession, sector, etc; also includes shifts in societal values, regulatory frameworks, technological advancements, competitive dynamics, etc; all can disrupt the status quo, eg change from a bureaucratic to a market-orientated focus can destabilise established norms, etc)
ii) shocks and crises (these can disrupt organisational stability; eg include economic recessions, globalisation, geopolitical challenges, technological changes, etc)
iii) stakeholders' demands (includes governments, customers, shareholders, community, etc)
NB These external variables can act as catalysts that undermine the status quo and create opportunities for alternatives. However, their influence can be modified by internal organisational dynamics, such as power relations, leadership, readiness to change, etc)
B. Endogenous variables (internal dynamics, ie intra-organisational)
There are 2 types of intra-organisational (see diagram above)
1) precipitating dynamics (need to understand the internal complexity of an organisation by functional units and employment status. For example, an accounting firm has separate functional groups like auditing, tax, small business practices, insolvencies, etc.
"...Handle growth and/or contextual complexity by differentiation into groups, each of which is focused on specialised tasks. The process of specialisation results in significant differences between groups in terms of structural arrangements..."
Royston Greenwood et al, 1996
The roles of interests and value commitments (see line 'h' in diagram above) are pivotal.
"...Functional differentiated groups are not neutral and indifferent to other groups..."
Royston Greenwood et al, 1996
Differentiation and conflicts in organisations demonstrate how technical boundaries between departments and sections are reinforced and buttressed by cognitive boundaries; this results in different points of view around organisational purpose, how it is organised, etc.
These organisational differentiations then compete for favourable allocation of scarce resources, ie vie for dominance.
A potential pressure point for change or inertia is the level of dissatisfaction within the organisation, ie a high-level dissatisfaction becomes a pressure point to change.
Interest dissatisfaction (see line 'c' in diagram above) can vary for 2 main reasons
a) the portfolio of services that can vary in scope and balance
"...These differences in operating practices influence the relative size of different groups within the organisation and their position of advantage and disadvantage......(line a)...."
Royston Greenwood et al, 1996
Intense levels of dissatisfaction can lead to a rethink about the organisational template.
b) patterns of value commitments (see line 'h' in diagram above) (there are 4 generic types"
i) status quo commitment (involves satisfaction with the current institutionalisd template in use; it has a degree of legitimacy)
ii) indifference commitment (groups are neither committed nor oppose the current situation, ie unwitting acquiescence)
iii) competitive commitment (some support for the current template and others want to change to an similar alternative)
iv) reformative commitment (active opposition to the current template and preference for an articulated alternative)
2) Enabling dynamics (see in diagram above)
"...organisational behaviours are responses not solely to market pressures, but also to institutional pressures (eg, pressures from regulatory agents, such as the State and professions, and pressures from general social expectations and the actions of leading organisations..."
Royston Greenwood et al, 1996
Internal pressures were change are derived from
- interest dissatisfaction
- the pattern of value commitments.
"... The intensity of those pressures is the outcome of their links with market and institutional contexts. Radical change......will occur only in conjunction with a appropriate 'capacity for action' and supportive power dependencies. Capacity for action and power dependencies are the enablers of radical change......organisational change that starts from groups with different beliefs and interest must incorporate power. Group used a favourable power dependencies to promote their interests...."
Royston Greenwood et al, 1996
(see line 'k' in diagram above)
"...the configuration or pattern of an organisation's structures is provided by underpinning ideas and values, that is, an interpretive scheme......stressing ideas, beliefs and values are the basis for identifying template of structure and systems..."
Royston Greenwood et al, 1996
"...change.....can only occur when either a new set of actors gains power or in is in the interests of those in power to alter the organisational goals..."
Fligstein as quoted by Royston Greenwood et al, 1996
This is can be accomplished by developing appealing 'vision or purpose'.
Importance of power
"...The operation of values and interest can be conceptualised and understood only in relation to the differential power of groups..."
Royston Greenwood et al, 1996
There is a reciprocal relationship with between power dependencies and value commitments (see line 'd' in the above diagram)
"...any normative scheme implies differential access to and control over key decision processes within organisations.....The prevailing archetype template in an organisation 'gives' power to some groups and not to others. To the extent that groups recognise this link, it will be to their advantage to promote the norms of that template. Positions of power. Also, can be used to buttress prevailing archetype......in a situation of competitive pattern of commitment, radical change would not be the likely outcome, unless those in positions of privilege and power were in favour of the proposed change. Power, dependencies either enable or support radical organisational change...."
Royston Greenwood et al, 1996
(see line 'e' in the above diagram)
Role of power can be used to explain the interaction of market and institutional contexts. (see line 'l' in the above diagram). Change in market pressures can influence power dependencies, which can enable change, ie precipitator for change
Institutional contexts (see line 'b' in above diagram)
Introduction
Sometimes the institutional context is referred to as the societal sector; this is defined as
"...To include all organisations within a society applying a given type of product or service together with the associated organisational sectors: suppliers, financiers, regulators and so forth..."
Scott et al as quoted by Royston Greenwood et al, 1996
Convergence of organisations stresses the homogeneity of organisation, not variation nor uniqueness. With the primary processes for this are 'coercive, mimetic and normative' so that organisations become isomorphic with their contexts.
"...Organisaations conform to contextual expectations of appropriate organisational form to gain legitimacy and increase the probability of survival..."
Royston Greenwood et al, 1996
An example of this coercive, mimetic and normative processes is the accounting profession. It mimics the legal profession and has adopted the partnership organisation format which emphasises independence, autonomy and responsible conduct, ie professionalism
"...the values of professional partnership accounting reinforced by professional association that work closely with universities and state agencies to promulgate and protect the self-regulating independence and autonomy of accounting firms..."
Royston Greenwood et al, 1996
The strong reciprocal exchanges have developed within the accounting field; expectations of appropriate behaviours and practices act as role models for other accounting firms
"...these coercive, mimetic and normative processes are part of the institutional contexts..."
Royston Greenwood et al, 1996
(see diagram above )
Value commitment
Organisations will vary on their value commitment (see line 'b' in the diagram above).
"... Organisations so can vary in their patterns of value commitments as they have different rates of success in the marketplace respond accordingly..."
Royston Greenwood et al, 1996
"...Organisation with high structural differentiation tend to have greater conflict among the groups of specialists. Each group made here to a set of institutional norms that is different from other groups, producing competitive commitment..."
Royston Greenwood et al, 1996
Some examples,
- with accountancy firms, there is a perceived decline client loyalty, growing maturity of the audit marketplace, etc result in these firms employing marketing specialists;
- with mergers, there is a growing complexity of organisational arrangement that has resulted a need for increasing human resource function.
This personnel changes results in different expectations and commitments in the ways things are done organisationally, ie
"...Organisations with high structural differentiation.....Tend to have greater conflict among the groups as specialists. Each group may adhere to a set of institutionalised norms that are different from other groups, producing competitive commitment..."
Royston Greenwood et al, 1996
Thus interests and values are linked and act as discreet precipitators (see line 'c' in the above diagram).
NB values can become taken for granted and can serve as a mute or tempered expressions of dissatisfaction
"... Dissatisfied groups made not recognise that the prevailing template is a cause of that disadvantage. The role of value commitments is as critical, because there is no direct path from interests to radical change, only from interest to converge change. Radical change will occur only if interest become associated with a competitive or reformative pattern of value commitment
Royston Greenwood et al, 1996
(see line 'x' in the above diagram)
An example is management consultants in an accountancy firm. Despite producing greater spheres of revenue and growth, the consultant are denied full reward in terms of renumeration and status; as a result they become dissatisfied with the status quo.
"...The pattern of value commitments in these firms thus moved from a status quo pattern to a competitive one, even though institutional pressures were unchanged.....An uneasy tension arose between accountants and consultants, as each profession became committed to different archetypes......competitive commitments......can occur even in tightly coupled situational fields, but if the degree of structuring is relatively modest, ideas and possibilities become more easily expressed an articulated. In situations of inconsistent cues in the absence of reinforcing institutional mechanisms, alternative template to develop and can be promoted by dissatisfied groups......market and institutional context interact with interest and value commitments to create pressure for change. pressures from the market and institutional contexts...... exacerbate the desire for change......the direction of change for the inertia is a function of the pattern of value commitments..."
Royston Greenwood et al, 1996
(see line 'c' in the above diagram)
or
"...competitive commitments......can occur even in tightly coupled institutional fields, but if degree of structure is relatively modest, ideas and possibilities become more easily expressed and articulate. In situations of inconsistent cues and the absence of reinforcing institutional mechanisms, alternative template develop and can be promoted by dissatisfied groups (line 'c" in the above diagram). In this way, market and institutional contexts interact with interest and value commitments to create pressure to change. Pressure from the market and institutional contexts.....precipitate the desired change....... the intensity of pressure will likely vary from one organisation to the next. The direction of change for of inertia is a function of the pattern of value commitments..."
Royston Greenwood et al, 1996
The more embedded and institutionalised an organisation is the harder it is to change. However, the stronger organisations are coupled to their current template, the greater the degree of instability in the face of an external shock
"...The rigidity of tight coupling and high structuredness produces resistance to change..."
Royston Greenwood et al, 1996
"... Organisations are structured in terms of archetypes (templates), which are institutionally...... radical change (movement from one archetype to another) is problematic because the normative embeddedness of an organisation within its institutional context. Convergent change is the more normal occurrence.... The greater the normative embeddedness of an organisation within its institutional context, the more likely that when change occurs, it will be revolutionary rather than evolutionary, ie the pace of our people will be fast, not gradual, and the scale large, not modest...... radical change is tightly coupled institutional fields will be unusual, but when it occurs, it will be revolutionary..... Regular change in loosely coupled fields will be more common (than in tightly coupled fields), and when it occurs, it will be evolutionary..... Institutional fields that are impermeable will be associated with low rates of radical change...... radical change that occurs in impermeable institutional fields will be revolutionary in place...... institutional fields that are impermeable will be associated with a higher incidence of radical change than will occur in impermeable institutional fields...... institutional fields that are impermeable will be with an evolutionary change..."
Royston Greenwood et al, 1996
In government and mature industries, like accounting, lawyers, etc, the pressures (normative, coercive and mimitic) favour conformity; while in less developed sectors like technology, the pressures for conformity are less pronounced.
Speed of change
"...A reformative commitment will be associated with revolutionary change because of the absence of resistance. A competitive change......is more likely to be evolutionary in pacing has resistance occurs..."
Royston Greenwood et al, 1996
A template suitable for one organisation may not be for a large number of organisation; this is an example of the normative tone to institutional discussion, ie
"...stress the stability of organisational arrangements and the characteristic of inertia rather than change..."
Royston Greenwood et al, 1996
Can look at organisations as a series of networks, ie as a population; organisations are made up of vertically and horizontally interlocking networks
Summary
- Organisations are structured in terms of archetypes (templates) which are institutionally derived
- Radical change (movement from one archetypes) to another is not easy because of the normative embeddedness of an organisation within its institutional context; convergent change is the normal
- The greater the normative embeddedness of an organisation within the institutional context, the more likely change will be revolutionary rather than evolutionary, ie the pace of upheaval will be fast, not gradual; scale large, not modest
- Radical change in tightly coupled to institutional fields is uncommon; when it occurs, it will be revolutionary
- Radical change in loosely coupled fields is more common than in tightly coupled fields; when it occurs, it will be evolutionary
- Impermeable institutional fields are associated with low rates of radical change which will be revolutionary
- Radical change in impermeable institutional fields will be revolutionary in pace
- More permeable institutional fields will have greater radical change than impermeable ones
- Permeable institutional fields are more likely to be associated with revolutionary change
- Radical change will occur if the pattern of value commitments is competitive or reformative, irrespective of market and institutional pressure
- Radical change will follow on from interest dissatisfaction only if it is associated with a competitive or reformative pattern of value commitments; otherwise interest dissatisfaction will be precipitate convergent change
- A reformative or competitive pattern of value commitments is more likely to be found in organisations that are
i) peripheral rather than core
ii) have a complex portfolio of products/services
iii) in institutional context that are loosely structured
- A reformative commitment will be associated with revolutionary change
- A competitive commitment will be associated with evolutionary change
- Radical change will not occur without an enabling pattern of power dependencies combined with either a reformative or competitive pattern of value commitments
- Radical change will not occur without sufficient enabling capacity for action combine with either a reformative or competitive pattern of value commitments
- High capacity for action will be associated with revolutionary change