Elements Organisational Stages:

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

CategoryPhase 1Phase 2Phase 3Phase 4Phase 5
Management StyleMake and sellEfficiency of operationsExpansion of marketConsolidation of organisationProblem solving and innovation
Organisational StructureInformalCentralized and functionalDecentralised and geographicalLine staff and product groupsMatrix of team
Top Management StyleIndividualistic and entreprenurialDirectiveDelegativeWatchdogParticipative
Control SystemMarket resultsStandards and cost centresReports and profit centresPlans and investment centresMutual goal setting
Management RewardOwnershipSalary and merit increasesIndividual bonusProfit sharing and stock optionsTeam bonus

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

Source Organisational Stages:

Evolution and revolution of organisations, (Larry E Greiner, 1972)