Organisational Stages - Growth and Change

Growth Stages in relation to Organisational Size and Age

Illustrate the series of crisis and growth, that influence leadership growth styles and leadership crises management in the different phases

Category	Phase 1	Phase 2	Phase 3	Phase 4	Phase 5
Management Style	Make and sell	Efficiency of operations	Expansion of market	Consolidation of organisation	Problem solving and innovation
Organisational Structure	Informal	Centralized and functional	Decentralised and geographical	Line staff and product groups	Matrix of team
Top Management Style	Individualistic and entreprenurial	Directive	Delegative	Watchdog	Participative
Control System	Market results	Standards and cost centres	Reports and profit centres	Plans and investment centres	Mutual goal setting
Management Reward	Ownership	Salary and merit increases	Individual bonus	Profit sharing and stock options	Team bonus

Phase 1	Creative and informal management	Crisis of leadership – Growing organisation cannot be managed by informal methods alone
Phase 2	Capable business management, more structure and formality	Crisis of autonomy – Demands for greater autonomy by lower-level managers
Phase 3	Delegation and decentralisation	Crisis of control – Loss of control over diversified operations, parochial attitudes
Phase 4	Greater coordination, systems and planning	Crisis of red tape – Procedures take presedent over problem-solving. Tension between line and staff
Phase 5	Strong interpersonal collaboration, greater spontaneity in management	Crisis of ? – Employee burnout – need for revitalisation team problem-solving

Limitation of size within each phase

Length of phase dependent of industry growth rate

Today’s solution tomorrows problem

“Strategy drives structure”, Chandler (1962)

Organisational architecture as an important source of resource based advantage – Kay (1993)

Key initiatives might be:

Structual change and redesign, creation of networks, removal of bureaucracy

Attempts to create a “learning organization”

Reorganisation around core capabilities and “outsourcing” of others

New motivation and reward structures

Redesign career paths and novel human resource management principles

Leadership styles in phases:

Phase 1 Creative and informal management

Phase 2 Capable business management, more structure and formality

Phase 3 Delegation and decentralization

Phase 4 Greater coordination, systems and planning

Phase 5 Strong interpersonal collaboration, greater spontaneity in management

To determine the organisations growth phase and appropriate leadership style and identify present stage to anticipate future challenges

Organisational Stages – Growth and Change