15 February 2008

The Measure of Organizational Efficacy

"So much of what we call management consists in making it difficult for people to work."
- Peter Drucker

This morning at breakfast, my buddies Bill and Eric were bemoaning the fact that Detroit has wasted decades in responding to Japan and Germany's lead in cars. They were incredulous that we could still be regularly falling behind and did not understand why these companies had not yet been transformed.

I wonder if the measure of an organization's efficacy isn't a function of the difference between what it takes to be successful within the organization and what it takes to be successful within the community. If the gap is big, the organization is flawed, perhaps pathological. If the gap is small, the organization is healthy and vibrant.

For instance, what it takes to succeed within a gang is criminal behavior. This is the opposite of what it takes to be successful within the community - in fact, "successful" gang members will often end up as failures. Gangs are bad organizations.

Companies often divert a great deal of attention to pleasing management - people who sign paychecks and vote on pay raises but don't actually finance employees with their own money. To the extent that success in the company is dependent on how well employees please management rather than customers, the company is poorly designed, is flawed. Same with teachers who are busy pleasing administrators.

It seems a simple and obvious thing, but once organizations get to a certain size, it is an easy thing for the people within them to become fixated on pleasing others within the organization rather than the people outside the organization who ultimately make it successful or let it fail. Co-workers and managers asking for progress reports are often so much easier to see then the customers who buy the final product.


slouching mom said...

I think this is spot on. I don't know the literature in organizational behavior and management, but I have my PhD in psychology, and this reminds me of some of the social psychology lit. -- there are many processes with this "disconnect" between what's good for the individual and what's good for the group (e.g., diffusion of responsibility -- the Kitty Genovese murder in NYC). But you've added another variable -- the community. Which means there are multiple configurations -- something could be good for the individual, bad for the group, good for the community. In theory, at least. Or good, good, bad. Etc.

I like this, Ron! You've got me thinking on a Sat. morning.

Ron Davison said...

s. mom,
I'm stupidly optimistic enough that I think if people can see the consequences of what they're doing, natural empathy and desire to take pride in their work will kick in and people will do the right thing. Studies of power like the ones done by Milgram indicate that once people feel removed from the consequence, or ownership, or what they do they are bound to do lots of things that might otherwise seem pathological.
Plus there is the whole inefficiency thing - all the time and effort wasted pleasing management. (Somedays it is harder than others to be succinct in posts.)
PhD in psychology, eh? Makes perfect sense.

nunya said...

Insular, circular thinking inside large American Corporations?

Well... who da thunk it?


Lifehiker said...

Top management people take a lot of grief in America today, and many of them have done plenty to deserve it.

However, companies get to the top and stay there because their senior management people stay focused on customers, innovation, competition, and internal control (knowing what you're doing). And those people hire and promote others who follow that same model.

The U.S. auto company manangements and union leaders , with much help from government and the oil industry, thought they could tell customers what to buy forever. They believed that high-paying jobs were their primary output and reason for being. Now they are scrambling to stay alive and Michigan is a disaster area.

Let them scramble! Their foolishness has hurt our country badly. Perhaps some competitive auto companies will arise from the ashes.

HRH said...

Amen. You have described with accuracy my experience with hospital management. Pre-domestic goddess I was a Physical Therapist and found that there was a layer of people who worked for/with the patient, a layer of people who formed committees and met regularly to avoid work (but look really busy) and a layer of people who looked at the committee reports while on the golf course. It pretty much sucks for everyone.

Gypsy at Heart said...

I think this is one of the reasons why there is no company loyalty any more. The mysticism necessary for that die hard team rooting is gone. Everyone knows where their bread is buttered and worse, they know it doesn't pay to butter any one else's. Consequences: Insularity and disconnect with what is outside the known.

Ron Davison said...

well, that would have made for a shorter and more to the point posting. sigh.

part of me agrees with you - but part of me says that it sometimes is too expensive to the rest of the community to let the guy shooting the gun learn that this is not good behavior. Lots of damage to the community with this kind of management.

rule one: get beyond the ugliness of work. rule two: assign work.

sort of a "makes perfect sense" paradox: when the people in the organization focus on each other, they learn not to even do that because they've figured out that the organization is not sustainable.