How to overcome organizational sclerosis

Alejandro Serralde S.*

The passing of time is the natural test for all living organisms and the evidence of their real capabilities. During youth, an organism gains strength and forcefulness to the extent that it accumulates experience; the young organism’s response is agile and timely; it is punctual and vigorous. With advancing age, abilities begin to deteriorate and tissues harden; perhaps exercise and good habits may help to lessen the effects, but they can in no way cancel them.

Organizations exhibit the same phenomena due to similar causes. Thus, the purpose of this article is to outline a way of proceeding to successfully address organizational sclerosis.

Organizational complexity

Human organizations are by definition the most complex of systems; because this is where group interests as well as individual interests come together. They are likewise considered to be very complex systems because they in turn integrate economic, social and even political interests and operate in an environment that is ever less predictable, plural, where the law of the jungle prevails, emphasizing the survival of the fittest. Above all in public or private bureaucracies, there is a voluntary submission that is often accompanied by resentment and frustration.

The epic dramas of yesterday are lived in today’s organizations; we thus have today that the market is the scenario for battles that were at one time fought in open fields and in cities. There was formerly the disgrace of persons and whole countries; there were dead and missing, destruction and desolation. In the struggle for the market, there are decimated or disappearing organizations, there is alienated personnel; there is unemployment and despair. The only thing that remains the same and constant at all times is: competition.

Even the simplest form of organization that we can imagine turns out to be extraordinarily complex; for example, an individual before his (her) environment. It is complex because, although it only involves the “individual-environment” interphase, understanding and comprehending this duality must consider, on the one hand, the individual’s beliefs about himself (herself) and his (her) own origin and, on the other hand, the knowledge and convictions he (she) has about the environment and also the degree of satisfaction he (she) obtains from this interphase.

If we wanted to improve “organizational quality” in this simple example, we would have to start by defining the attributes of said quality, measure the degree to which they are found in the present, and act accordingly. Now then, whatever action is undertaken, it must cover the three essential elements of said organization:

a) the individual b) the interphase c) the environment

According to the above, the success of the plan to improve the quality of the organization will depend upon the following factors:

• Clearly defining the attributes
• Precision in measuring its present status
• Impartiality in setting the plan’s objectives
• Appropriate selection of the forms of action
• Degree of influence over the essential elements
• Effective implementation

If we for a moment extrapolate this example toward a more complex organizational scheme, say one involving two individuals facing their environment, it would in principle seem that the complexity is merely duplicated; but if we consider the diverse forms that the relationships among them can take while they agree on common purposes, we can well understand that the complexity has been multiplied. Agreement among them assumes ethical behavior, so that any deviation could jeopardize the attainment of the purposes and probably the equilibrium in the relationship. Let us accept that the agreements and the supporting behavior represent the structure of the organization and that the way the two individuals act to accomplish the common purposes represent the organization’s culture.

Let us take this second organizational example to the most common case of our time, where a group of individuals are the “owners” of an organization and require the services of others in order to accomplish the purposes of them, without such purposes being necessarily common to the individual employees. An additional variable is introduced here that will undoubtedly affect factorially the complexity that we have been analyzing.

Structure and culture are complicated, and it becomes more difficult to attain the purposes. A means is then required for managing this complexity and providing direction and pace in striving toward the purposes; the above is represented by the action of management.

It may be concluded from the above that contemporary organizations are more complex than any other system known up to now. Profitable organizations particularly involve such diverse interphases that the best human talent is required to achieve a synchronization among them. Such interphases include:

1. Board of Directors – Stockholders’ Meetings
2. Executive Officers – Board of Directors
3. Executive Officers – Area Directors
4. Functional areas among themselves
5. Superiors – subordinates
6. Subordinates – peers
7. Persons – structure
8. Organization – environment

Because of their characteristics, all of the above represent tangible frontiers, some of them technical and others social, which interact to produce movements as expected by the whole organization: namely progress. But there is a very special, intangible, frontier referring specifically to the continuous desired states, which serve as a guide for setting objectives and issuing plans. This frontier deals with all the others and is probably the most sensitive and influential among them, having a determinant action.

Thus the finest and most important responsibility of management consists of determining objectives and planning, as well as implementing all the required action in order to convert desired situations into actual situations. The success of an organization thus depends upon this particular conversion capability.

It is common for an organization’s form and performance to be imperfect during the first few years and for there to be required a kind of settling among its components to achieve harmonious operation. Experience indicates that organizational structures begin to have high performance after the second year and, more concretely, during the third year. Experience also shows that organization structures suffer from old age problems, which may be due to one or more of the following:

• Members have evolved more rapidly than what the structure is able to require.
• The structure does not receive the needed drive from its members.
• The structure is incompatible with the life cycle it is currently undergoing.
• There is a kind of fatigue that leads to late responses toward stimuli, either from management or from the environment

The appearance of these features may begin to reveal organizational sclerosis.

The main symptoms of sclerosis

The variety of symptoms that enable one to conclude that an organization has sclerosis may be very ample. The following is a generic list that does not suggest an order for their occurrence but only a set of symptoms:

• Orientation toward activities
• Orientation toward the internal functions of the organization
• Striving for efficiency rather than effectiveness
• Ignorance about the environment
• Delayed decision-making
• Little and delayed innovation
• Weak orientation toward customers and the market
• Outdated technology
• Rejection toward change
• Outdated procedures and policies
• Little personnel commitment
• Slow management of change
• Obstinate authoritarianism
• Suppression or dilution of conflicts
• Poor communication
• Separatism by areas

Orientation toward activities

This is a functional characteristic representing a set of attitudes that are primarily aimed toward keeping the form of the “activity”, so that everybody is busy at any given moment, which is due to the existing conviction that productivity decreases when there is idleness. The drama of this phenomenon is that organizational results do not improve, and even worse deteriorate frequently, even if the level of activity is kept at its maximum.

Orientation toward internal functions

By means of this orientation, the members of an organization devote all their energy to support the heavy organizational machinery, being careful that everything occurs as stipulated in the procedures and thus remains within the standards. It may happen that a number of business opportunities are rejected because they seem contrary to organizational policies. Internal order and discipline prevail instead of the organization’s position in the market, versus competition, toward customers and toward the community in general. The organization’s direction looks inward and ignores what is happening outside of it.
Efficiency instead of effectiveness

Perfection gets to be worshipped when efficiency is emphasized and effectiveness is disregarded or overlooked. Personnel is trained and coaxed to reproduce routines precisely and adhere with discipline to superiors’ decisions. Formality and appearance, tolerance and acquiescence are more important than effectiveness and frankness.

Ignorance about the environment

Sclerotic organizations live highly impressed with their own products, strategies and decisions, attaching little importance to the movements occurring in their environment, since they believe they enjoy a particular immunity. The prevailing mentality is that national events occur very far from the organization’s reality; the problems facing other companies in the same economic sector are glanced at obliquely as not at all connected with potential problems in their own company. If information about loss of image and prestige is received, there are plenty of reasons to explain and justify such facts, and any possible damage is done away with at the time the explanation is offered.

Delayed decision-making

Decision-making is centralized, propitiating a number of functional faults in sclerotic organizations:

• Information to activate decisions is not received on time
• Information is incomplete and inexact
• Those empowered to decide have not “felt” the need for a decision
• Those who provide the information do not have the same sense of urgency and opportunity as those who decide
• Once any decision is made, it is necessary to wait for the time it takes to implement it
• When a decision is implemented, it is necessary to make corrections and adjustments to come close to the original objective

Delays are obvious due to this long decision-making process.

Little and delayed innovation

The effects of centralism are seen and felt not only in decision-making; the fields of creativeness and innovation are the ones most highly affected. Thus the flow of creativity coming from the people who are in contact with daily operating issues are stifled or detoured by the decision-making process. In sclerotic organizations, good ideas must have a high-ranking sponsor so they can come to light.
Because of this singular fact, the creativity and innovation process becomes personalized and thus subject to the avatars of human relations. That is to say, if there are harmonious and willing relationships, there will be innovation; if on the other hand there is coldness and tension, nothing can be expected. It should be pointed out that organizational sclerosis propitiates the latter.

Weak orientation toward customers and markets

When the point is reached where it is felt that customers are free to want or not want the product or service provided, or else when market activities are independent of our organization’s participation in them, this is the time to think that another symptom of sclerosis has appeared. Similar thinking is appropriate if it is categorically maintained that the product lines and the products themselves are designed “at home” and that agents of the market may not express an opinion about this. The above may indicate that the organization is participating in a market to which it does not belong or else offering products that are different from existing needs.

Outdated technology

Obsolescence is something that has accelerated nowadays. Even when advancing toward updated technology, an organization may become obsolete if it has not concentrated its attention on the competitive advantages provided by technology. Outdated technology is apparent when the organization still has a substantial majority of operations done by human energy instead of doing them through automated processes.

Rejection toward change

The first symptom of rejection toward change appears when the organization’s top management does not feel the need to change, because circumstances do not press them to do so, or else because what has been done in the past is well done.

Sclerotic organizations perhaps feel this rejection toward change because they do not know in which direction to make it, and also because what they already know is more comfortable and safer. This position feeds the members’ attitudes, by virtue of which social processes become difficult and organizational performance becomes less effective.

Ideas for change are also rejected when they seem to threaten structure and power centers above all; implementing them would mean lost influence for those who now dominate the status quo. There appear exact, precise, profuse, solid and rational arguments in each of the defenses against change, so that it is hard to distrust them. If those who wield them also hold authority, then the possibility of overcoming them is diminished, and the status quo finally prevails.

Outdated procedures and policies

In all organizational development processes, there arises the need for standardizing performance in all areas, and this leads to the instance of deciding what is permitted and what should not be permitted. Policies are thus born, each of which has its moment and has had a specific stimulus in a given context.

The great question is whether such circumstances arise continually enough for the particular policy to remain in force. Policies, like life itself, should be subjected to a “metamorphosis” that does not exist in the sclerotic organization, where it is predominant to wait for circumstances to change and not the policies; let people change, but not the standardization.

Little personnel commitment

The routine driven by the force of inertia soon becomes alienation, so that people work simply to comply with a formality and get time to pass because maybe things will change tomorrow. They blindly bet on an unknown future, containing only good wishes; perhaps the only motivation is survival within the structure and hoping that opportunities will appear for personal progress, because the latter are canceled at the present time. Thus, superiors do not become involved and subordinates commit themselves conditionally without contributing their maximum talent.

Slow management of change

Because of all the above-mentioned characteristics, there do not exist in the organization strong reflexes or muscles to react opportunely. This is where decisions to change are often made reacting to competitive pressure, or else facing changes in government policy, even toward opportunities that arise unexpectedly. In such circumstances, changes are made drastically, with insufficient planning and of course late and defensively.

Obstinate authoritarianism

Because sclerotic organizations live in the kingdom of continuity, since ideas and those who originate them are considered intruders, there prevails an environment requiring submission and discipline; if circumstances require creativeness, the latter can only come from top management, either from their own neurons or from those they decide to contract outside. If reorganization is required, temporary specialists (consultants) are contracted; the same source is resorted to when a new market strategy is required, or a change in the levels of motivation.

Personnel are continually set aside; they are not expected to contribute but to abide, and those who refuse to do so are forced or limited.

Suppression or dilution of conflicts

Sclerotic organizations do not in principle tolerate conflicts; these arise when people are against something and defend their respective positions. The high command will never let anyone to go against their precepts and much less their orders. So any notion of confrontation is stifled by authoritarian and repressive means, even going to extreme limits if necessary. Otherwise, some dissident attitudes may even be covered up through concessions until disagreement is appeased, noise ceases and harmony is reinstated.

Poor communication

It is quite frequent for communication in the sclerotic organization to be in one or more of the following forms:

Unidirectional, only from the top downward
Formal, with protocol and in writing
Informal in all directions except upward, because there prevail complaints, disagreement and rumors.

No frankness is evident toward the high command, and facts are handled with speculation.

Separatism by areas

Since there is a constant struggle for survival in an authoritarian environment, the defense of personal territory and vital space arises as a spontaneous response. Opposite a leadership that demands, points out and criticizes but does not reconcile a group spirit grows based on consolation and memories of difficult times in the past; the pride of belonging is high but unhealthy. People think other areas are bad and that their own functions perfectly.

Some treatments

Just as in modern medicine there exists the option of transplants to substitute for damaged organs or tissues, some organizations follow this practice, that is to say human teams are replaced. This alternative allows certain regions of the organization to be invigorated, and organizational culture can sometimes be changed completely.

Although some organizations decide on radical surgery hoping that the rest of the organism will come to compensate for and substitute the functions of the removed organ, others follow the indications of allopathic applying doses of medicines to the organs that do not respond. Likewise, there are also some others who follow the indications of homeopathy and alternative medicine, trying to cure the origin of the problem even though this may mean a very long healing period. There are often found some successful cases of self-medication, but there is a predominance of those where the patient had to receive emergency attention by a specialist.

As with any medical treatment, the medullar part is based on the diagnosis. The technology available today makes it possible to prepare detailed studies to identify the origin of the problem, and it is also possible to make very sophisticated operations to root out the evil.

It can be said regarding organizational sclerosis that the origin is always located in the same focus: management. Sclerotic organizations got there due to their slow response to change, which is perhaps the primary function of management.

Although radical surgery is usually a good alternative, that is not always so. Treatments that enable the organization to maintain its capacity of response are perhaps more adequate, and this is precisely what organizational development prescribes. Certain conditions are required for this type of intervention, for example adequate prescription, having a good team of specialists, technological and economic resources, but mainly the will power of the patient. This metaphor seeks to make it understood that the support of top management is indispensable; this does not always occur. Even when the illness is known, it is difficult to face, mainly due to the resistance toward change.

Thus, a first obligatory step in counteracting sclerosis involves a series of several applied doses in order to reduce upper management’s resistance toward change, because good results can hardly be expected if the latter is not obtained.

First dose: PARTICIPATIVE DIAGNOSIS

Resistance toward change can be reduced if the situation is first diagnosed by those who are affected by said change. This diagnostic process leads to a greater awareness of what is wrong, which in turn leads naturally to the steps that must be taken in order to change the situation.

Joint diagnosis can be accomplished through teamwork, having the top management group discussing the question: “What major problems could we solve if we worked jointly toward a solution?” This kind of question has been used successfully many times at all managerial levels. Not only is the final diagnosis produced important, but also the profound thawing (diminished resistance) that is generated among all the people of the area involved in the discussion about matters that have not been addressed before. The people often gain new expectations about old problems; it is sometimes perceived that they themselves are the main cause.

Second dose: JOINT DETERMINATION OF OBJECTIVES

Resistance toward change is reduced when getting the people who institute the change to determine the objectives, in collaboration with those who will be affected.

Most of the resistance is simply based on lack of understanding and agreement regarding the purposes. When agreement is reached regarding the terminal point, a direct road is opened for its attainment. In the joint determination of objectives, it is sometimes necessary to resort to bargaining, since the latter leads to commitment; it should be pointed out that said bargaining is not necessarily a sign of weakness but rather an acceptance of reality.

Third dose: INTERPRETATION OF RESISTANCE

Normally, when people understand why they have been resisting a change, such understanding diminishes their reluctance or at least makes it acquire a rational level. Interpreting resistance with those who have been opposing change is a vital step for the agent of change, both in psychoanalysis and in organizational development.

Resistance has been seen to be a symptom of something else, perhaps fear of the future or else unwillingness to yield. The form of the resistance is invariably an indicator of its true nature; very rarely is the reason openly established. Discovering these reasons and discussing them may lead to the true cause of the problem.

Fourth dose: TRAINING IN RESULTS

A solid way of combating the root of sclerosis involves training management to focus toward results and be capable of becoming a strong fabric on which to build an organization oriented toward results.

Some managers think romantically that it is enough to read a book or attend a conference for one or two hours to acquire a results-oriented mentality; but these methods only manage to impress, since the mind is left intact. An approach is required that moves them to believe, understand and apply the notion of results in each specific situation.

Experience shows that it is necessary to invest around 150 hours of training in each manager to achieve the development of a totally results-oriented mentality, as well as systematic and orderly work with each managerial group to achieve this same effect in the whole organization.

There exists a specific program called 3D Managerial Effectiveness Seminar that teaches managers exactly what results are and how to apply this criterion to their situation. Some reasons explaining why this seminar is useful are mentioned below:

• Managerial Effectiveness is the basis for this experience
• Each participant undergoes vigorous learning about the meaning of “outputs” and “Effectiveness Areas”
• Change is emphasized as an absolutely necessary part of a manager’s job
• The need is emphasized to continually measure outputs in separate stages
• High priority is given to both teamwork and its objectives
• Work teams are led to evaluate themselves at least once a day, and internal team criticism sometimes lasts several hours
• The practice of non-evaluating feedback is very much taught and promoted

The dominant theme is that managerial effectiveness is the central element of management: the manager’s job consists of being effective; that is his (her) only job. Moreover, every manager has the social responsibility of being effective.

Fifth dose: FROM THEORY TO PRACTICE

The ideas of training in outputs must find a way of application in order to have any meaning. Thus, after all management has been trained under this focus toward outputs, it is necessary to carry out a series of deliberately structured meetings in order to bring concepts down to earth, define results for the organization, set objectives and evaluate effectiveness.

Although there are many perceptions about the meaning of the term “meetings” (some positive, others negative), it is nevertheless a good idea to think about their concept as a way of helping to change things.

Under the focus adopted in preparing this article, corresponding to the organizational change ideas proposed by William J. Reddin, five types of meetings are identified to help to stimulate and guide change within an organization:

• Management Team Meeting
• One-to-One Meeting
• Inter-team Meeting
• Corporate Strategy Meeting
• Large Group Meeting

Creating an outputs-oriented organization may require only one of such meetings, or all five.

The management team meeting is for building a team on common outputs and improving the effectiveness of both the team and its members, including the head manager. It normally lasts three or four days at a place far from the city of origin. The topics of the team meeting are generally:

• Team output areas
• Individual member output areas
• Team effectiveness as perceived by its leader and by the members
• Management style improvements that each person, including the superior, should make
• How to make decisions in the future
• How to handle team meetings
• How to reorganize the team

The one-to-one meeting takes place between the supervising manager and each of his (her) subordinate managers and is designed to strengthen the interphase, clarify results expectations in both directions; it likewise establishes frank and open communication, as well as a relationship of support.

The inter-team meeting is for solving important problems between functional areas that are presently in conflict. The idea is to seek solutions to existing blocks that limit effectiveness by setting common objectives and establishing individual and group commitments. The teams that commonly participate are:

Production – Sales Purchasing – Production Human Resources – any area; etc.

The corporate strategy meeting is attended only by members of the top management team and has the main objective of improving company strategy. The central idea of such a meeting consists of making decisions to improve the relative position of the company in the market.

The large group meeting is rather unusual but normally successful. It should assemble 30 to 300 persons, not necessarily managers; it consists of a three-day session integrally devoted to problem solving and determining the best thing for the organization on each matter. It is also considered to be an excellent way of driving reorganization projects, policy changes, etc. Strategic results are likewise defined, and objectives for change are set.

In summary, the sclerotic organization is a phenomenon that arises very often and requires special attention; we have given here a few ideas to help in combating it.

The first Spanish version of this article was published in the journal
Management Today en Español, Mexico, February 1991.

* Alejandro Serralde is an organizational effectiveness consultant
and Reddin Consultants’ President.