Thursday, December 15, 2011

Collaboration phase of Organization Growth

In the last blog, we discussed about the organization development phase of Delegation and the associated characteristics along with the build up to the next revolution. In today's blog we look at the next phase - Coordination.

Phase 4: Coordination

The top-management which had a lot of issues in the delegation phases achieves control over the organization's functioning in this Coordination phase. The evolutionary period of this phase would be characterized by the following:

  • Decentralized units are merged into product groups
  • Formal planning and procedures are established and intensively reviewed
  • Numerous staff personal are hired and located at headquarters to initiate company-wide programs of control and review for line managers
  • Capital expenditures are carefully weighed and parceled out across the organization
  • Each product group is treated as an investment center where return on invested capital is an important criterion used in allocating funds. 
  • Certain technical functions, such as data processing are centralized at headquarters, while daily operating discussions remain decentralized
  • Stock options and company-wide profit sharing are used to encourage identity with the firm as a whole.

These coordination systems enable the organization grow efficiently allocating a company's limited resources. The field manager begins looking beyond the local unit needs. They still enjoy much of the decision making authority, but they would have to justify their actions to the headquarters. This smooth sailing begins to rock when the lack of confidence begins to creep in. 

The lack of confidence would be between the line and staff and between headquarters and the field. The proliferation of system and programs being to exceed its utility - a red tape is created. A lot of paper work is seen as highly bureaucratic. Procedures take precedence over problem solving, and innovation takes a backseat. The organization would have at the time of the next revolution become larger and complex to be managed through such rigid processes and formal programs. 

The next phase following this revolution is that of Collaboration

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