The modern organizations are observed to follow various organizational theories in order to manage the operations of their organizations. These theories vary depending on the type of leadership or management of the organization. Along with that it can also be said that the organizational theories generally contain the variation of the approaches in order to analyse the organization. The organizations are following different theories like the bureaucracy, contingency, power politics, scientific management, institutional, paradox, and practice theories depending on market parameters (Jones and Jones 2013). With the application of this theories, the organization operates their business but each and every theory relates to some sort of issues along with the advantages. The paper describes two of the organizational theories in context of an organization named Lakeland Wonders. The paper specifies the focus of those theories in the organizational context and the limitations of those theories as well. Apart from that, the paper will also specify the knowledge and the capabilities, required by the managers of the organization to overcome the differences of perspectives generated from the organizational theories.
Lakeland Wonders was a small scale business organization from Minnesota, United States. The organization was primarily a classy manufacturer of the wooden toys. The organization operated in the manufacturing industry. The organization was a renowned name in the small scale business industry. But in the recent times it was significantly falling behind market competitors as the design section of the organization was not doing anything innovative and was significantly lacking the will to meet the customer trends. The organization was having three major plants for their business operations in Minnesota and it was experiencing the excellence of almost 5000 employees (hbr.org 2018). The organization was having a hierarchical structure where the employees were divided into several layers and Mark Dawson was the senior Vice President for the organization with Cheryl Hailstrom as the Chief Executive Officer. The organization was feeling the vulnerability around them and to get rid of that situation, they introduced Cheryl as the CEO of the organization. The organization was having a board of directors on top of the senior level management and in that board, Sean Curtiss’ company was having two seats along with the Swensen children who were having the same number of seats as well. Walley Swensen and Karen Winks from the Northern Minnesota Trust had one seat each in the Board of Directors as well (hbr.org 2018). The organization was conducting business in the concerned industry for more than 94 years. The organization was observed to follow the contingency theory in its approach to introduce and plan for the implementation of an idea of business expansion which included a precise focus on the offshore manufacturing and midmarket capturing. Along with this, the case also specified the organizational culture theory which had significant impact in the restructuring of the workforce with the objective of a rapid increment in the growth of the organization.
Two of the chosen organizational theories are the organizational culture and the contingency theory. These two theories are chosen because the mentioned case is significantly influenced by them. The contingency theory is considered to be an organizational framework which claims that there is no perfect method to arrange or organize a company or there is no perfect way to create decisions (Otley 2016). Rather the method has significant focus on the external and the internal equations because a contingent leader will concentrate on the organizational situation in order to make decisions. In the contingency theory, the leader has the right to apply his or her own way of leading as the theory suggests that a leader must act according to his or her assessment of the situation. The contingency theory is significantly influential in the business categories like the Technology, Suppliers and Distributors, Unions, Customer and Competitors, Consumers interest groups and Government (Mikes and Kaplan 2013). On the other hand the organizational culture theory significantly focuses in connecting the values and the behaviours which has high influence on the social and psychological environment of any organization (Shafritz, Ott and Jang 2015). In a nut shell, the theory of organizational culture portrays the collective beliefs, values of the organizational members. Many of the researchers of the organizational culture stated that the benefits of the theory will be in the form of the competitive advantages generated from the innovation and the customer service along with the stable and effective performances from the employees (Young and Ghoshal 2016). Apart from that, the theory is significantly influential in increasing the team bonding, creation of a high employee morale and it also helps the company to get aligned to the achievement of the goals in a strong manner. The theory of the organizational culture has great significance in leading the organizational change that may be a merger or an acquisition (Alvesson, 2016.).
For the explanation of the contingency theory two of the researches will be significantly suitable which are Fred Fielder’s contingency model and the contingency theory by L. Donaldson. In the contingency model of Fred fielder, the focus is on the leadership. The paper expresses the relationship between the leadership style and the appropriateness of the situation. The paper describes the situational favourableness in terms of three dimensions which are leader-member relationship, degree of task structure and the leader’s position power. Fielder in the research is able to specify that if the leader is acknowledged, accepted and respected by all the members, if the task is well structured and if the leader’s position has significant amount of authority and power then the situation is stated to be favourable for the leader. On the other hand in the Donaldson’s contingency theory, the main concept of the contingency theory is stated as the organization are open systems which is in need of attentive management in order to meet and balance the internal needs of the organization and apart from that theory is considered to be influential in the adaption of the environmental circumstances. The research also specifies that according to the theory the management must concentrate in getting well aligned with the goals of the organization. Along with that, it also specifies that the different parts of the organization are needed for the adjustment of the different types of the environments. Apart from that the paper is able to clarify that the theory allows the leader to consider the appropriate form of the management depending on the task environment.
In case of the organizational culture theory, the chosen researches are The value of corporate culture by Luigi Guiso, Paola Sapienza and Luigi Zingales and Understanding organizations by Charles Handy. From the paper named as The value of Corporate Culture, the classification of the corporate culture in the form apathetic, caring, exacting and integrative is achieved. The paper states that an apathetic culture portrays least amount concern to both people and the performance and on the other hand an integrative culture is stated to pose high concern for both people and the performances (Guiso, Sapienza and Zingales 2015). The paper also states that caring culture portrays significant concern for the people but shows least concern to the issues of the performances. On the other hand an exacting culture is stated to pose high concern for the performances but least concern for the people. Handy’s Understanding Organizations classifies the organizational culture into four different types which are the Power culture, Role culture, Task and Person Culture. The paper discusses that the power culture concentrates more on the power given to a small group or a central figure and that centre of power will control all the operations like a web. Along with that, it needs less number of rules as well. The concept of role culture ensures that the organization concentrates on the rules than any other thing and apart from that the role culture has significant influence in making sure that the individuals know what their roles and responsibilities are. The task culture is specified in the paper as a concept which creates the team depending on the nature or the merit of the task. As the task is the most important thing in the culture, the power inside the team may vary depending on the combination of the team members and the status of the task. In the person culture, the individuals in the organization consider themselves to be unique and superior o the organization. An organization having the Person culture is considered to be a mere collection of the individuals who are working in that organizations.
The organizational culture theory focuses on the general problems that an organization with the employees and the management faces. The concept of the organizational culture is able to acknowledge the gaps in the workplace environment, issue in effective team work in a particular organization. Along with these issue, the concept also covers the cultural differences among the employees of any organization. The mentioned issue is significantly visible with the operations of the multinational organizations where employees of different nations, cultures and languages are present. It is observed that the cultural differences among the employees have genuine impact on the effective team work. Apart from this, the communication among the employees are also a point of concern, depicted in a significant manner by the concept of the organizational culture. In context of the mentioned case or organization, the organizational culture was significantly creating headaches for the senior level management and the CEO where it was observed that the employees were not concentrating on their work and rather they were reducing the quality of the work culture by leaving the office almost even before the scheduled time finishes. Apart from that, the manufacturing section was concentrated in creating intentional barriers in case of increasing the growth and the design section was significantly following the unethical approach in order to favour the local and not so creative and mediocre design firms. Apart from that, Cheryl was observed to point out the concern related to the apathy of the manufacturing section to concentrate on offshore manufacturing which was producing a significant detrimental effect on the plan of achieving the desired growth.
The contingency theory allows the organizations to identify the threats and the issues on their own. It enables the organizations to find out the general and emergency issues that it faces. In context of the case mentioned above, the contingency theory can be used to evaluate the issues what Cheryl Hailstrom faced in the organization while introducing the offshore manufacturing and the plan to capture the midmarket along with the Bull’s Eye deal. The theory enabled the organization to evaluate the concerns like job cuts and the relocation of the workforce to some other midmarket just few months before the contract expiry with the employee unions. Apart from that the contingency theory also focused on the concern of the Senior Vice President Mark Dawson when he informed Cheryl that it is close to impossible to go to some other country and construct a plant in such a limited amount of time in order to catch the Bull’s eye deal. Apart from these issues, one more was highlighted by the contingency theory and that was related to the planning of going to the midmarket in order to reduce the price of the products and the concern of the management in this case was evaluated by the mentioned theory. The concern was that if the organization go to some other country for the offshore manufacturing, then the belief of American people regarding company’s origin may get influenced in a negative manner.
In the explanation of the difference in the perspectives, it can be said that some other stakeholders of the mentioned organization could also thought about delaying the plan of offshore manufacturing and the implementation of the concept of outsourcing. The preliminary reason behind the thought can be the fact that the organization was approaching a contract expiry with the union and any plan of the offshore manufacturing or the outsourcing can be assumed as a part of the job cut plan. This has the potential to create an employee unrest. Following the organizational culture theory, different stakeholder can reconsider the plan of Cheryl to recruit more effective employees like Pat Sampsen or Cecil Fleming and they could have spoken to the Barry Quince or the manufacturing head regarding their inefficiency.
Under the current situation the managers need to effectively plan or gather important insights on the operation of the two theories. In case of the differences in the organizational culture theory, the manager need to have the capability to decide whether the organization needs effective employees like Pat or Cecil or the organization is okay with the existing Barry Quince and just needs to effectively communicate the issues which the organization feels to be taken care by the concerned authorities. In case of the contingency theory, the manager must have the capability to decide whether the sense of urgency must be created among the employees like what Cheryl tried to do or the stabilized form of the business is needed where the existing union and their contract extension is much more important than the Bull’s Eye deal.
Conclusion:
On a concluding note it can be said that the organizational theories like the two mentioned are significantly important in the analysis of the particular case and from the assessment of the case, it is evident that the setting of the priority by the managers is much needed for the effective business. In the mentioned case Cheryl was significantly meeting each and every concern of the senior level management by following the contingency theory where she was able to answer the concerns depending on their own merits. Cheryl answered the concern of Mark by assuring him that offshore manufacturing or the midmarket planning will be a business expansion and in that case no job cuts will take place rather it will be job openings. Again when Mark had doubts on the plan of building the required infrastructure within such limited time, Cheryl was the one who introduced the concept of outsourcing. Among the many innovative ideas by Cheryl, these two were significantly productive and contained considerable vision as well.
References:
Alvesson, M. ed., 2016. Organizational culture. Sage.
Guiso, L., Sapienza, P. and Zingales, L., 2015. The value of corporate culture. Journal of Financial Economics, 117(1), pp.60-76.
Harvard Business Review. (2018). Welcome Aboard (But Don’t Change a Thing). [online] Available at: https://hbr.org/2002/10/welcome-aboard-but-dont-change-a-thing
Jones, G.R. and Jones, G.R., 2013. Organizational theory, design, and change. Upper Saddle River, NJ: Pearson.
Mikes, A. and Kaplan, R.S., 2013. Towards a contingency theory of enterprise risk management.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.
Shafritz, J.M., Ott, J.S. and Jang, Y.S., 2015. Classics of organization theory. Cengage Learning.
Young, C. and Ghoshal, S., 2016. Organization theory and the multinational corporation. Springer.
Donaldson, L., 2001. The contingency theory of organizations. Sage.
Fiedler, F.E., 2006. The Contingency model: H Theory of Leadership Effectiveness. Small Groups: Key Readings, p.369.
Handy, C., 2007. Understanding organizations. Penguin Uk.
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