Understanding leadershipJanuary 29, 2016

Understanding leadership – Part 20: Organisation shapes people (and vice versa)

In recent posts I explored images of human nature and how we "construct" others—based on our image of humanity—so we get what we always expected. This happens not only between people but in organisational culture: which organisation requires which employees and how do employees change in their organisation?

Types of organisation

From organisation studies we know organisational ideal types (cf. Hill/Fehlbaum/Ulrich 1994). They describe extremes between which real companies move. We call the extremes Type A and Type B companies.

Type A companies

In Type A companies high routinisation potential. The company is embedded in a homogeneous, stable environment with constant demands on production and business and therefore high autonomy from its environment. Tasks can largely be performed routinely, processing always similar events. Such a work environment needs staff with low problem-solving potential. They consider only a few similar factors that stay constant over long periods. Work goals and necessary measures are clear to all. Little ability to solve unforeseen problems is required; problem-solving potential and adaptability are low. Knowledge and skills are limited to few areas; thinking is partial, shaped by hierarchy and security. Management functions are little specialised, kept uniform and separate (line organisation) for clear competencies and long-term valid decisions in a central structure. Low task complexity allows detailed advance planning; key decisions are taken at the top, coordinated centrally, with less need for qualified managers. Staff need not face new tasks or risky decisions. A repressive-authoritarian leadership style prevails. Staff barely join goal-setting by superiors—not needed for low-complexity tasks. They are not confronted with dissent, reinforcing trust that the boss is right.

Type B companies

In Type B companies routinisation potential is low. The company faces many heterogeneous environmental demands that change rapidly, sometimes abruptly; it depends heavily on meeting them. Task fulfilment requires many factors; knowledge of procedures and problem-solving strategies is limited. Exceptions are frequent and hard to handle. Goals cannot be stated exactly; paths to goals are disputed. Such companies need staff with high problem-solving potential. They are expected to solve problems independently and holistically, with broad knowledge, openness and adaptability, long training and generalist traits, strong communication and teamwork, and limited acceptance of positional authority. High complexity and low comparability of tasks require specialised and cross-functional knowledge and direct information. Matrix organisation supports self-determination and project teams. Full use of each person's problem-solving capacity is required; skills are too diverse to be held centrally. Short decision times mean staff should largely determine their behaviour and bear responsibility. They participate strongly in company-wide goal-setting because complex tasks need everyone's expertise. Semi-autonomous teams are on the agenda; participation and self-responsibility strengthen identification with the company.

Companies between Type A and Type B

Today real companies in developed service societies are generally seen as moving toward Type B, as markets internationalise and customers gain influence, making the environment more turbulent. Further reasons include high technologisation automating standardisable work, leaving mainly complex problem-solving for staff, and employee needs interpreted more as autonomy and self-realisation. Often both types coexist: white-collar areas tend toward Type B, workshops and production toward Type A. While leadership levels preach decentralisation, delegation, participation and holistic jobs, production-near areas such as logistics often remain Taylorist. Thus a sometimes sharp boundary runs between two cultures that presuppose and reproduce different employee needs.

Work 4.0?

Work and leadership structures arise from concrete organisational considerations: location, product range, staff needs and qualifications, and more. Where routinisation and standardised processes are high, participative leadership will not prevail; managers will not be elected by staff because line organisation and authoritarian style remain economically sensible. Staff there expect job security and invoke occupational safety rather than participation experiments. Yet change is always present. Whether Type A staff are long-term satisfied with routinised conditions is questionable; whether Type B staff see their life task as creative self-exploitation for revenue records is doubtful too. Exaggerated autonomy may mean harmful solo ventures (negative intrapreneurship) or new alliances against management—as in the 2000 New Economy collapse when works councils were founded overnight amid layoffs and worsening conditions.

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