Managing and Organizations
Summary chapter 1 of Managing People in Organizations
Contemporary managing and organizations in changing world
Organizations are tools: they are purpose, goal-orientated instruments designed to achieve a
specific objective. A tool, traditionally, is an extension of human agency (the fact that humans
have the choice to make a decision in today’s world); a hammer enables a hand to hammer, a
screwdriver to screw etc.
In large organizations of the post-war era, people were managed through their career aspirations.
Due to no single person having responsibility for any decision, executives became risk adverse.
From the 1980’s onwards, the rise of the new economy leaded by digitalization started. Many
jobs of the future are likely to be created and filled by digital nomads, which are mobile workers
armed with a laptop and connected to wifi. They can connect everywhere and choose mobility
rather than a fixed abode (place to live, residence). These nomads start living in placer where it is
gradually warmer because it doesn’t really matter where their residence is due to being able to
connect everywhere around the world with their colleges. They often stay in airbnb or in certain
countries for a short period of time making it hard for the tax authorities to track them and they fly
under the radar regarding tax payments. They also bring up the prices for the Airbnb because
they rent so much.
Also organizations are changing because of digitalization. Think of programs that do the work
instead of employee’s and robots who completely replace the work done by employee’s in
factories. There are many policy implications for digital developments, the idea of this is to make
labour gradually more expensive. The industries thrive only because they let the people from
countries where workers have fewer rights and low-labour costs work in their factories.
Should we tax robots? It will help to slow down the digitalization so that more jobs remain to exist
however it would also slow down innovations.
Organizations in the digital age are switching from managing through “hard power” (really based
on authority and harsh punishment) to “soft power” through indirect methods such as induction
into the organization (brotherhood creating in organization). The target of this is to create highly
skilled knowledge workers.
The idea of an organization as a culture became a theme for reforming the public sector (sector
regarding government organizations). This idea was led by something called new public
management; The idea that organizing the public sector more in a business way creates better
outcomes. Microeconomic theory, the “marked based model”, the creating of the so called
business understanding of the public sector made sure that for example citizens were seen as
costumers etc. The reinvention of the public-sector flourished afterwards. When this reinvention of
the public sector happened, many public sector organizations went bankrupt leaving a lot of
people who had a stable job in the past without work. These companies dropped by halve in
1996. Davis (2016b) argues that this decline in corporate jobs (jobs in which someone works for
someone else) is a root cause of income inequality, as well paid jobs in bureaucracies
(organizations with strict rules and many steps to complete an order and rules).
This decline in cooperate jobs varied from country to country. In the UK, large-scale companies
that had been created through government fiat (government authorization) were not efficient
enough to compete against private companies nationally and internationally.
Favorable economic policies for the rich such as:
I. Low taxation.
II. Minimal control of offshore accounts as tax havens (places where tax rates are really low).
III. The ease of intergenerations wealth through laws that make it easy to pass many money to
the next generation.
,The most recent application of this policy is that the Trump Administration in December 2017
singed into a law that will change the American Tax system, including a permanent 40%
cooperate tax reduction, substantial rate cuts for the wealthy and modes temporary cuts for the
majority of the population. They have praised tax cuts for the elites which would according to
them encourage economic activity and the benefits would be distributed in the form of more
employment opportunities and increased wages paid by more successful business.
According to Ruiz, Peralta-Alva and Puy (2017), it will indeed stimulate the economy however it
would also result in increased inequality. If the tax cuts are mainly for the wealthy it will increase
economic growth as more people buy goods however the prices also go up. For the less wealthy
it will be more difficult to pay for these product. If the tax cuts are focused on the lower and
middle classes there would still be economic growth however much less than the tax cuts for the
wealthy, it will indeed make the inequality rate less high.
Contemporary Organizational Changes
The change of the private and public sector was a significant shift in the wages/profits share of
the economy. People who are employers have lost big time to people who are shareholders.
Public companies got less investments and less efficiency drives. They were attacked on their
lack of market disciplines. Not relying on the market was seen as a failure.
Principal agency theory : the theory of employee’s having a benefit because they are not
monitored a lot and therefore only produce a product that can be seen by the Principal
(employer). Having principals and agents with a common interest will create less of a problem, for
example when the agent is a stakeholder. These ideas flourished in the USA and were also
implied in the postwar organizations.
In some organizations agents were rewarded highly while they didn’t even have to put their own
capital at stake.
Digital organization
An increase in knowledge-intensive work means that organizations have to employ – and
manage – different kinds of employees. Brains not brawn, mental rather than manual labour, are
the order of the day. Employees need to be able to work with databases etc. Technical and rational
skills are really important. Tacit knowledge: knowledge that is difficult to teach to another person.
Employees who are independent are more likely to thrive under the rule of an informal peer
interaction instead of an hierarchal one.
The digital world is really helpful for those who are able to use it correctly and efficiently. Whoever
has the most resources has the greatest advantage. The digital world also enhanced tribalism, a
party views on data and knowledge in a certain strict way. However it rather creates a community
with the same emotion than the same rationality.
There is also another currency to value an organization; likes, fame, visibility, public approval etc.
This results in a gig economy, where jobs are more focuses on freelancing rather than permanent
jobs. Organizations use employees for a short time to or example increase the fame of the
organization. The digital world also creates new ways of looking at things, it makes it possible for
the organizations to use output from the costumers in their strategies.
However digitalization can lead to loose of control of the company when being hacked it can also
create more openness and better work relation between organizations when they work together.
They know everything from the other company which builds trust in the relationship.
A holacracy is a system for managing a company where there are no assigned roles and
employees have the flexibility to take on various tasks and move between teams freely. The
organizational structure of a holacracy is rather flat, with their being little hierarchy.
,The major advantage of digital technologies for business and organizations is their virtual
possibilities for disaggregating (break up) existing designs. Increasingly, organizations are able to
segment activities that are critical to their competitive advantage and to specialize elsewhere those
that are not in low-wage-cost countries, or by substituting machines for human intelligence.
Machine intelligence is based on algorithms. They capture and replicate certain routines of people
on the internet. They also replace human labour. The people that have been replaced by
algorithms should participate in education and training to boost their skill formation.
Managing as sense making
For the past 40 years or so, the sense of what an organization should be has been modelled on
efficient private sector organizations. Sense-making is the common frame of the company of the
common sense, what it is and what it does.
Terms of sense-making:
I. Ongoing: We are always making sense – we never stop doing so, even when asleep – our
dreams are ways of making sense of deep issues that we must deal with in our wakeful
moments. Our sense of what we are experiencing is always of the moment – fleeting,
experiential, changing and contextual.
II. Retrospective: We make sense of something as it is elapsing and we are constantly reviewing
the sense we make in terms of additional sense data.
III. Plausible: We never make perfect but rather provisional sense, sense that is good enough for
the matter and people at hand. It allows us to go on with what we are trying to do. While
accuracy may be desirable, reasonable constructions that are continuously updated work
better as directional guides, especially when things are changing fast.
IV. Images: We often work with representations of things – models, plans and mental maps – as
we navigate our way around unfamiliar territory. We hear what the other is saying and try to
accommodate it to things we already know and carry round with us as our stock of knowledge.
V. Rationalize: We rationalize the meaning of things that are confusing to make them clearer and
justifiable.
VI. People: Although organizations contain many things that act which are not people – such as
computers and keypads – it is people who do the sense-making.
VII. ︎ Doing: We do things through thinking and action, which define one another. Weick uses a
rhetorical question, ‘How can I know what I think until I see what I say?’ The point he is making
is that when people act they discover their goals, which may be different even when we think
we are dealing with the same cues. Enactment is the key: what I enact may be very different
from what you enact.
A significant aspect of managing is trying to create the same sense-making among your
employee’s. Managers often create a frame, enabling things to be connected. Framing: deciding
on what’s relevant and what’s not.
, Framing does not only occur through sense-making but also through sense-giving, this attempts
to influence the sense making of others, and sense breaking, this occurs when organizational
members disrupt existing sense in order to make an alternative sense.
Managerial rationality
Managerialism is the belief in or reliance on the use of professional managers in administrating or
planning an activity. The belief in management as a means capable of solving any problem
elevates the necessity of management into an ideology of the modern world. An ideology is a
coherent set of beliefs, attitudes and opinions.
Managers who follow the ideology of managerialism assume that organizations should be
integrated by a single source of authority, legitimacy and decision-making embedded in the
management hierarchy that controls the organization. They seek sense-making within only the
managerial frame.
Pluralist organizational setting: setting with multiple sources of power and authority.
Economic rationalism: the theory that efficiency and productivity should be the primary measures
of economic success. Prices and markets are the only indices of value.
Capital is an asset owned with the intention of delivering a return to the owner, implying a complex
set of relations of ownership and control. Money which you still need to return.
Besides financial capital, symbolic capital which is the network you own, is also important.
Capital is literally a liquid asset, social capital is a metaphor; which is created by the literal meaning
of a phrase or word being applied to a new context in a figurative way.
Morgan argued about the metaphor of the machine that is most used by managers and
organizations.
A study done by Latusek and Vlaar found that the common metaphors in use by a cross-national
selection of managers, in respect to their day-to-day interactions in relationships with supplier and
client, was to see them as if they were performing acts, playing games and fighting battles.
Employees are increasingly becoming brand ambassadors for their organizations. The metaphors
in use reflect a value system in which the financial value of brands is supreme/paramount.
Most organizational life is lived through highly professionalized routines. Many times informations
has to flow from one department in the organization to a different part of the organization. These
integrations offer the opportunity to make plausible (wrong) sense of incomplete details.
Sense making is a particularly acute issue in moments of crisis, the origin of most of the sense
making literature comes from Weick.
Organizations are full of plausible stories, such as rumor, gossip, business plans etc, each making
sense in their own way but none necessarily coherent with the others. Formal talking; exchanging
words that are really work related such as the analysis of data, instructions, information etc. There
is much more informal talking in organizations, which is for example gossip, stories etc.
