1. Historical Vision
The "Organizational Development Conference, Buenos Aires - June 2005" were enriched with many questions from the participants of said Conference, one having emerged that is strongly related to the survival of organizations in the era of globalization and post-globalization: " What should companies DO to survive and sustain themselves over time? "
In a work published on www.gestiópolis.com a little over a month ago, we have stated that in principle it is important to locate ourselves “within” the context we are trying to answer this question.
Taking into account that said article and perspective has generated an intense and very rich debate from which new questions have arisen, we have to dedicate some time to position ourselves in the previous work, from then on we will deal with the new questions that have emerged and finally we will make an effort with closing in some conceptual framework that allows businessmen and entrepreneurs to put these abstractions into practice in order to increase the effectiveness and efficiency of their organizations.
Our focus must be placed on the development and organizational change within the Latin American communities and countries that, of course, must be integrated within the Behavioral Sciences in Organizations. We have previously stated that it is not the same "to develop and grow institutions, organizations and companies" in the most developed and civilized countries and communities where institutions have several years of history and pilgrimage exploring, learning, acting and evaluating to return in a second cycle to explore, than to do it within communities and countries with a lower degree of development and civilization as is the case of Latin American countries.
The question we ask readers and people interested in Organizational Change and Development is the following:
What would become of developed countries if they did not have organizations and multinational corporations dedicated to marketing their products and services in the world?
And yet another: Could the United States of America have its current low level of unemployment and a relatively high per capita income for its inhabitants if some of its organizations (General Motors Corporation, Exxon, Citibank, Ford Motor Co., Microsoft, Mc Donald, Citigroup, Diners Club, Oracle, Burger King, Bank Boston, American Express, among others) will not market their products outside the United States of America? The same is applicable to Sweden (Scania), Germany (Mercedes Benz), Spain (Santander Bank), Italy (Fiat), France (Peugeot), England (Rolls-Royce).
We can say that one of the indicators of development and growth is related to the appearance of an additional unit of analysis with respect to those that "existed" until the pre-industrial era and even until the beginning of the last century, being the organization / institution. The most primitive communities are generally characterized by having within them two main units of analysis: the people in the first place and also the community or country in which these people live. On the other hand, the more developed communities are characterized by having an additional unit of analysis, this being the organization that represents a key link between the “individuals” and the “community”.
We have recently found evidence of the importance of the scheme of different "Intelligences" (see www.theodinstitute / The Organization Development Institute International, Latin America - Eric Gaynor Butterfield: "The 7 Intelligences" - September 2005), including among them:
Cognitive
Intelligence Emotional
Intelligence Creative
Intelligence Practical
Intelligence Business
Intelligence Financial
Intelligence Organizational Intelligence
The first three intelligences are closest to what Eric Gaynor B. has defined as a “survival kit” (Eric Gaynor B.: “Career Development and Executive Development”; The OD Institute International, Latin America - 2005) and the following three intelligences are linked to the "outward" relationship that people must necessarily do.
This outward relationship implies the development of abilities, knowledge, skills and competencies in being efficient and effective with "others" which are not always properly developed for Professionals in excellent Universities and Higher Education Centers, and therefore it is totally essential that “after entering companies and organizations”, the Diploma Professionals become aware of and are trained in content and topics such as: Teamwork, Coaching, NLP among others.
This second group that includes the Practical, Commercial and Financial Intelligences allows to empower people beyond what they can do and obtain on their own. Or as Eric Gaynor stated ("Workshop of the 7 Intelligences"; Buenos Aires - April 2003): with the first intelligences, people empower ourselves to our maximum splendor but we must not forget that if we do not empower ourselves beyond them "we have to finish exploiting ourselves ”.
This happens to many professionals who become independent from working in companies and other organizations and are themselves their own employer who pays them a salary at the end of the month; they can end up exhausted from working so many hours a day (sometimes 12-14 hours) and never make a big difference.
The monumental work of the German sociologist Max Weber ("The Theory of Social and Economic Organization", Free Press - 1947) exhibits characteristics of the different communities in their development process where the differences and systematic similarities between them can be observed. Weber distinguishes different "Organizational Types" where 3 main categories emerge: the traditional organization, the charismatic and mystical, and the legal - rational (Bureaucratic).
The traditional type of organization has as examples the clan, the tribe, the family and medieval society, and it should be noted that there are practically no three units of analysis that are present in more developed societies. A second type of organization is what Weber has called the "Charismatic and Mystical" type that is present in non-productive organizations such as political parties that are characterized by being "non-rational" and led on the basis of certain personal characteristics (such as mental power, magic, heroism) based on the leader's charisma. In the traditional type of organization, power was legitimized instead, by tradition, habits, and uses and customs.
In their development, organizations in different communities can go from a “traditional” organizational type to a “charismatic or mystical” type, and the price of positioning - and staying in this type is very high for the incipient organization - since low the second option has to function in a fickle and unstable way. Leaders under this second organizational type privilege "subordination" to the leader, who is hidden under the guise of "loyalty" which, in practice, is nothing more than a devotion to the leader "for the leader himself" and not for the situation. nor the circumstances that the organizations are experiencing or confronting at that time.
In this wandering between these different organizational types, Max Weber makes it clear that the effective and efficient form is one that is based on the "rationality between means and objectives" that is characteristic of modern states and leading organizations.
This third type of organization is characterized by being “meritocratic” and formal based on two important dimensions: the legal and the rational. These types of organizations are subject to the "justice of the Law" and operate within a certain regulatory framework where the legal norms have been previously defined as well as the consequences of the different actions. Max Weber gave the name of "Bureaucracy" to this organizational type that is required to function effectively and efficiently. For Max Weber the communities in their development process can try to orient themselves towards a rational-legal type of organization based on meritocracy but only a few of them achieve it.
2. Economic - Financial Implications
The creation of organizations and institutions within less civilized communities has led many to believe that organizational and institutional development is similar. But this is unfortunately NOT so. Many organizations in less civilized communities grew from the end of the Second World War - when the monetarist theory of the Englishman John M. Keynes ("The General Theory of Empoloyment, Interest and MKoney; London: Mac Millan - 1936)" was "imposed" on the conception of the “innovative entrepreneur” of the German economist Joseph Schumpeter (“Capitalism, Socialism and Democracy”; New Cork: Harper - 1942) allowing and facilitating the creation of non-generative and even degenerative institutions that adopt various names (public bodies, state agencies, provincial and municipal institutions,para-state companies, joint capital and state companies, among others). The English John M. Keynes believes in the potentiality of the force of money over the potential of the "innovative entrepreneur" referred to by the German Joseph Schumpeter.
Money did not necessarily have to be created through a productive effort where the company as an entity represented the main engine of the economy.
Money for John M. Keynes is rather a fiction (which can be created through a printing press) and not a reality, and therefore it is not necessary to obtain it as a result of productive work in a company or by the appearance of an entrepreneur innovative. Under the thought of the English John M. Keynes, money can be obtained and earned without the effort of production; the only thing that is necessary is that some governmental authority prints paper money with the approval of the Central Bank of said community and it is also accepted within the international financial community.
The conception and practical suggestions of the Englishman Keynes reached such a point that he suggested “digging wells in the street and then covering them”, an expression that has made him famous. From this conception and practice of Keynes it is no longer essential to produce and have a really productive activity to move forward in life; Keynes proposed the creation of money through paper - money, which later expanded to an immense number of other papers (titles, securities, bonds, among others). This conception of money as a fiction that begins to work through a printing press, represented the perfect marriage for the rulers of less civilized communities.
People who came to power and government in less civilized countries after World War II have seen this philosophy of “creating money without producing” as a source of inspiration.
This is how Keynes's thought found a natural ally since both forces, the international financial and the local rulers of less civilized communities, formed a perfect marriage. The creation of money is not done through productive elements such as the company, but is done through financial and virtual businesses, such as money represented in paper money.
The seasoned reader must remember the enormous energies that Charles de Gaulle devoted (see: www.nytimes.com during the decade of the 60s of the last century) for many years so that the world economy escaped from this monetarist, financial position, and virtual and instead focus on the productive - concrete - real. Charles de Gaulle spared no effort in returning the world economy to the "gold standard" as a real measure linked to production (see: www.lanacion.com.ar and also: www.clarin.com.ar, material of the decade 1960) but his attempts, like those of the German Joseph Schumpeter, could not overcome the monetarist thought and philosophy of the Englishman John M. Keynes, who ended up imposing himself globally.
That is why Eric Gaynor B. ("Workshop of the 7 Intelligences"; already mentioned) highlights the importance of Financial Intelligence in the growth and development of business activities. In Latin American communities and countries, a great majority of businessmen and entrepreneurs were incredibly empowered from their financial benefits (over and above the practical and commercial applications of their company), as well as many others rushed towards bankruptcy.
It must be essential that entrepreneurs and business leaders are able to successfully complete the competencies implicit in the “survival kit (which includes Cognitive Intelligence, Emotional Intelligence and Creative Intelligence) and then develop concepts and practices applicable to organizational contexts within of the other Group Intelligence, as we call Practical Intelligence, Business Intelligence and Financial Intelligence. Groups represent the mandatory link through which successful businessmen and entrepreneurs must pass.
3. The scenario faced by Organizations in an era of globalization and post-globalization
In the vast majority of the best Universities and Higher Studies Centers in the field of Administration in the world, the problems experienced by organizations are shared with students and participants. However, the evidence shows that many of the practices, approaches, conceptions, theories and orientations in these prestigious institutions have more to do with what happens within the “great corporate world” that is not represented within Latin American countries (there are these companies in different Latin American countries but they are NOT owned by the same Latin American countries). And this great corporate world generally operates in a monopolistic or oligopolistic way, hence the question that we initially asked:
What need could there be to know what “Harvard University” teaches if our company is really monopolistic or oligopolistic? And what do all those companies, their businessmen and entrepreneurs, have to know that are NOT (more than 99.9% of companies on the planet!)
And here we suggest reflecting on a very interesting question formulated in a debate by a participant: Can organizations survive and grow away from the macro-economic reality where the financial market "looks at the results of companies" and then takes action? In the movie "Pretty Woman" the prostitute asks a financial investor who is her lover (played in the role of Richard Gere) who lives in a luxury hotel. What do you really do to make money? In the development of the film, it is evident that her main role consisted of "observing" the results of different companies and then acting based on the needs that these companies may have, without hesitating to divide or exterminate them.
(The Gillete corporation has been wiped off the map - it is actually more correct to say that more than 40,000 people globally stopped working at Gillete - during the merger process with a large global corporation along with all its staff).
Companies and organizations must therefore not fail to take into account this phenomenon at a global level where financial markets operate strongly linked to governments within less developed communities. There are dramatic cases of this in more than one Latin American country where financial institutions have not returned the deposits that businessmen, entrepreneurs and the general public had made in said institutions, leading to a position of bankruptcy or quasi-terminal to thousands of organizations that it dragged a growth in the level of unemployment without precedent in the history of these communities.
In any case, this coalition - and its respective devastating impact on organizations - is not only present in less developed communities. A participant has asked us: What protection can we have within an organization, even more so, why do we have to work so hard in our company, if overnight someone carries out a financial operation and wipes us off the map? This question was the subject of an interesting debate.
This year 2005 was designated as the "Year of Mergers & Acquisitions" that is to say of mergers and acquisitions (see New York Times of January 2, 2005; www.newyorktimes.com). The participant's question was extremely valid: the Gillete company, which has survived many decades, served clients for several generations, and which gave thousands of people around the world the opportunity to work, “has disappeared”. It was acquired by one of the largest companies in the mass products sector that - for the moment - is alive.
We see then that organizations to survive must be prepared for something more than to survive the "forces of context" (Tom Burns in "Industry in a New Age", New Society - 1963; James D. Thompson in "Organizations in Action", McGraw-Hill, 1967; Paul Lawrence & Jay Lorsch in "Organizatons and Environment", Harvard - 1967; Charles Perrow in "Organizational analysis: A sociological view"; Brooks / Cole; 1970). Some economists who observe this phenomenon from the macro level share the dysfunctional impact and consequence of financial forces in the market on productive organizations (or companies).
There are some particularities that entrepreneurs and entrepreneurs who are business owners in Latin America must adopt. And please note the interesting distinction between large corporations that do not actually have owners but rather have shareholders. And another important distinction lies in the fact that large corporations in addition to "shareholders" have a figure that does not exist within Latin American national companies, which usually receives the name of "stakeholder." National businessmen and entrepreneurs in contrast have the owner and eventually a “General Manager” who does not resemble a “stakeholder” at all.
And if the differences are so notable at the top of what happens in the global corporate world than what happens at the top of companies where there are “Latin American owners”, it is very possible that what we have to do in our own companies is quite a lot. different from what the Harvard University findings are suggesting to us.
Dr. Donald Cole ("Congress of Organizational Development"; Argentina - 1997) mentions the interesting case of businessmen in India who in the 70s sent their children to Harvard University and when they returned, they insisted on implementing it in the company from his father a decentralized organizational arrangement based on the specialization of functions. And the paradox is that already upon their return to the United States of America, companies were discarding the decentralized organization based on the specialization of functions and were oriented towards "Teamwork". And India has the conception and practice of how to work in a team without ever having gone to Harvard since they have been doing it for several centuries and in a natural way !!
As we approach this new closing, I do not want to miss the opportunity for you to get acquainted with some of the works of notable experts who have observed from the macro different aspects that impact on companies.
These are some prestigious economists who with a macro vision show that many times organizations, their businessmen, entrepreneurs and staff can be subject to the forces "of the economy and finance" and that the consequences of the same can be lethal for the organization (It is no coincidence that so few organizations dedicated to productive activities survive; less than 10% of them have completed their first 7 years of existence within the mechanisms in which they have been created). Some of them are:
4. Experts in the "macro" and that in turn impacts on Organizations
- Kenneth E. Boulding
Kenneth Boulding was born in England at the beginning of the 20th century (year 1910) and being a Quaker he devoted many of his efforts to studying the relationship between organizations and moral values. For Boulding (“The Organizational Revolution: A study in the ethics of economic organization”; New York: Harper - 1953) much of what happens on the planet has more and more to do with organizations in their different manifestations (companies, unions, political parties, voluntary organizations, the national, provincial and municipal government and different Business Chambers both in the industrial sector and in the primary sector). Kenneth has called this type of paradigm shift "Organizational Revolution."
Boulding points out that what has really impacted the “organizational revolution” the most are the changes that have occurred in the techniques, procedures, techniques and methodologies of how it should be organized.
The sustained growth of organizations has left its mark, since there are members who belong to the internal organization and other members who are outside the organization. And, according to Boulding, this creates an ethical dilemma that cannot be resolved within the 10 Commandments or with the Sermon on the Mount in mind. In addition, the ethical dilemma has to do with the different levels of the organizational hierarchy, since senior management may have to respond to several fronts, in addition to having to respond to society as a whole.
From the moment that companies are subjected to the market - which has more to do with (financial) business than with companies - and the market does not necessarily respond to competitive and specialization rules, the organizational revolution comes into conflict with the ethical component due to super-monopolies and conglomerates under rules of economies of scale, both productive and financial. This makes necessary the existence of a market economy that is regulated and that it is through political representation, which can be achieved through a social democracy. The implications of this remarkable economist are being developed and expanded within Latin American cultures by The Organization Development Institute International, Latin America (see: www.theodinstitute.org).
- John Kenneth Galbraith
JK Galbraith was born in Canada but spent most of his life in the United States of America and has spent many of his years in this life striving to demonstrate that capitalism in the United States of America has undergone very important transformations and therefore traditional economic theory is of no practical use. It suggests that despite the fact that in the beginning companies seem to compete harshly, over time this situation is turned upside down with very few organizations that do them, presenting a situation that is known under the name of oligopoly.
Galbraith (“American Capitalism: The concept of countervailing Power; Armonk: NY: ME Sharpe - 1952; and“ The affluent society ”; Boston: Houghton-Mifflin - 1958) suggests that there are not so many significant differences between organizations in different countries, in terms of their structure and in relation to planning, decision-making and control mechanisms. When the company begins to circulate near the limits of a (financial) business, the equipment, machinery and capital requirements will almost always privilege the large corporation which in turn will depend on the government (who is always attentive to its operations and profits).
Large corporations have increasingly greater and better advantages over small and medium-sized companies since, due to their volume and economy of scale, they are in a better position to dedicate financial resources to research and development. This type of organization is in a better position to satisfy technological requirements by strengthening the relationship that the "organization-company" maintains with the financial market and the government.
Galbraith suggests that there are six fundamental aspects that appear in the process by which organizations gain in size and scope.
John Kenneth Galbraith suggests that we must bear in mind that as the capital dedicated to production increases, more investment is required. Second, consideration must be given to the fact that once we have committed so much time, money, and energy, our chances of backtracking diminish.
Third, large corporations require a professionalized techno-structure, and fourthly, organizations gain in complexity through matrix and even more complex organizational arrangements, which in turn make it more necessary to develop coordination and cooperation mechanisms between individuals who distance themselves more and more with each other. Finally, the above-mentioned requirements put more and more pressure on planning needs. All these requirements together show that the typical "industrial system" under the proposal of large corporations are the only ones that can make use of the benefits of new technologies that are presented in contexts under risk situations.
Actually for Galbraith the major planning of large corporations is really oriented towards “replacing the role of the market” over reducing uncertainties and risks, and companies can then have greater control over the consumer making it dependent on the organization - as for example through advertising - or by having a single customer (as when the government becomes the Customer).
Under both situations, there is a tendency for the company to be no more than a small administrative apparatus of the government, as when it acts as a tax collector. Sooner or later, companies will have to grow and transform into businesses to survive the forces of the market, and finally they will be dependent bodies of the government that has too much free time to choose what exact portion of the cake (taxes) it should demand.
- James Burnham
He was an interesting character as he started out as a member of the Trotskyist party and ended his days struggling to uphold his basic hypothesis which was that society would move towards being run by "managers", which he called the "managerial revolution." William Whyte in his well-known book entitled “The Organization Man” (Simon & Schuster - 1956) stays within the Burnham line.
According to Burnham, even in the communist countries there was a managerial force that was the ruling class, since for example the Soviet Union did not move towards socialism but neither did capitalism. In order to discriminate between the different profiles of individuals and organizational units, Burnham develops a typology made up of four characters:
the shareholders who have a totally passive role within the company the financiers who have an interest only in the financial aspects that the company reaches, and that is totally independent of what the company does the executives who establish the organizational vision and mission, are interested in the strategy and closely follow the profits and return on investment as main indicators as well as the progress of income people who have to do with the organizational processes and the operation of the organization on a day-to-day basis, who deal with effectively integrate financial, material, technological and human resources, whom James Burnham calls managers.
According to James Burnham, only those that are included in the fourth category are those that play a vital role in the production process.
- E. Fritz Schumacher
The implications regarding Organizational Behavior of this author are strongly applicable especially within communities and “developing” countries. Those consultants interested in the processes of change and Organizational Development can greatly benefit from the contributions made by E. Fritz Schumacher, who, as a German, privileges the productive world over the financial one. His conclusions and suggestions for those involved in the processes of improvement of organizations and in Organizational Development, have strong implications for the different "sizes" that organizations should adopt, showing a special preference for smaller organizations.
This orientation of Schumacher towards smaller organizations shows how those of “large size” are more oriented towards markets where money - from the market - can have a major impact on the organization's results, even exceeding that of the variables internal of it.
Fritz Schumacher had a very interesting trajectory in his life. He studied economics in England and the United States of America, and in recent years he devoted himself to agriculture - becoming President of an organic agricultural organization - and journalism.
His thoughts diverge from those of economists and political science professionals. For Fritz Schumacher “small is beautiful; to go after the great is to approach destruction ”, which makes it clear what he thinks about large corporations and large conglomerates. Some of Schumacher's main postulates are described below:
1. It is not possible to solve human problems on the planet through industrial and / or mass production
2. It is important to create small decentralized units that group people
3. In those situations where it can only be produced on a large scale to be competitive, it is still possible to “work from the small even within the large”
4. Organizations need to work two-dimensionally focusing both on order and the exercise of freedom
5. Use intensive technology in third-party countries world is absolutely meaningless
6. Intermediate technologies should replace “gigantic technologies”
7. Change with intermediate technologies can be done in a smooth and moderate way, especially in third world countries where people are not used to a “high” rate of transformational change
8. Organizations should be based where people live
9. Large urban centers are not the best places for people to spend a significant part of their lives working
10. It is not reasonable that those responsible for managing organizations have to relocate themselves and their family every three to five years as a result of a promotion or lateral movement
11. The creation of small and medium-sized entities that require very little capital investment to launch should be facilitated
12. Production in companies must take into account mainly those materials that are easily available within the context in which the organization operates.
13. A technology "with a human face" is needed, "a non-violent technology" where it is not done. abuse of resources or people
14. It is necessary to move away from the current production scheme where industrialized countries consume resources at very high rates
As a consequence of his conceptions and postulates, E. Fritz Schumacher is encouraged to develop five principles to manage large corporations in order to orient them towards relatively autonomous business centers. They are:
to. the principle of the subsidiary function supported by the fact that no task should be performed in a higher hierarchy than where it is possible to be performed
b. the principle of revenge where the subsidized unit must be protected against all kinds of reproaches
c. the principle of identification where the results of each of the results centers must be made visible
d. the principle of motivation that suggests that all efforts should not be geared toward replacing personal work with computerized or automated equipment
e. the principle of the axiom of the means that it is not beneficial to try to achieve compliance by one of two extremes: persuasion or detailed instructions
E. Fritz Schumacher is a strong adherent to small organizations since in these it is possible to develop participatory schemes, relate efforts to rewards, and the owner develops his role in a natural and equitable way. In medium-sized companies, many of these virtues begin to fade and their contributions are not visible. Finally, in large corporations, the entity itself is nothing more than a fiction since it allows shareholders to live like parasites, predating what others work for. There is no doubt that above all for Schumacher “small is really beautiful”.
It is not easy to synthesize the contributions of these remarkable economists. Many times I have been asked: What is left for small and medium-sized organizations? It is not easy to give a single answer to this question, but what we do know is that those that survive roam like “propeller planes”; this means that they do not have to fly as high as jets or as low as to crash into mountains and crash (Eric Gaynor: "Organizational Development Congress - Workshop: Entrepreneurs and Entrepreneurs"; April 2001. Organized by The Organization Development Institute International, Latin America).
5. Organizations: Which ones are born and how many remain active
Taking into account our interest in the development of organizations within less developed economies - and after a short synthesis at the global level - we will now try to focus on what happens within them. And here are some aspects that should not escape analysis.
Authors Michael T. Hannan & John H. Freeman (“Organizational Ecology”; Harvard University Press - 1988) relate what happens in the life of organizations to that of rabbits. They both have a high birth rate and also a high "death" rate. And the subsistence and existence of an organization can then be linked to the process of “transformation” that rabbits and the organization can undergo, which allows them to strengthen and survive beyond the existence of their peers.
Businesses and organizations can do it in a number of ways; Some choose technology, others processes, and there are also preferences for focusing on organizational participants and Clients. In general, the different "Best Practices" make a particular selection and through it the organization is intervened in pursuit of better and greater performance (see article published in www.monographies.com entitled: "Organizational Development: do they complement each other? the “Best Theories” with the “Best Practices”? - Lessons that consultants interested in the Organizational Development profession should take ”and also an article published at www.gestiopolis.com entitled“ Organizational Development: An effort to integrate WHAT IS what we must do with HOW to do it.Will business consultants be able to integrate WHAT should be done in an Intervention with HOW to do it? The Clients have ALREADY learned enough to evaluate the Consultants. "
Now, the question that follows is the following: Is it enough to have a Best Practice that can even be supported by a Best Theory? And here we must turn to a singular fact that is present on the planet especially since financial globalization and that puts enormous pressure on the very existence of organizations: the peremptory nature of products and services.
Until just a couple of decades ago, the products and services of organizations were in force in the market for many years, sometimes reaching the entire life of the organization. This offered many advantages since, in the first place, it allowed to assume the costs of research and development in many years of production and sale. On the other hand, the staff did not need permanent training. On the other hand, the changes were more of a traditional type and eventually transitional, but almost never of a transformational type (as it is after financial globalization). If we add to this the growing and sustained costs in tax matters in recent years, we see that productive companies and organizations are facing attacks against them on all sides:
Increasing and increasingly frequent costs of research and development
Insufficient life span of products and services to allow them to be afforded during their useful life
A decreasing market in number for the product and service
A market with a shorter shelf life for the commercialization of products and services
A higher tax cost, which is sustained and increases over time
A higher labor cost that is not even passed on as a benefit to staff
NOW, organizations have more problems to have Clients, more problems to offer development to their staff, more problems in terms of labor costs, more problems to face tax burdens and finally in the eventuality of having some profits, taxes and the non-refund of deposits from banks and financial entities can lead to bankruptcy.
Statistics in the different Latin American countries show a growing level of unemployment in terms of “genuine work”, that is, work that is not paid for or subsidized by another worker. And the growing unemployment is largely a consequence of the immense reduction in importance of small and medium-sized companies. To this must be added the fact of the lack of incentives for entrepreneurs and businessmen who generate genuine work; In other words, we are distinguishing those who generate genuine work by facing the competitive aspects of those entrepreneurs who have been generated and still continue to exist in their capacity as "State contractors."The latter are not entrepreneurs (see Joseph Schumpeter -) since they operate under a "Cost + a Plus" system where their inefficiencies are subsidized - to say the least - through genuine taxpayers.
Many participants observe that in the face of this important “opposition of forces”, few entrepreneurs and businessmen are willing to continue competing in such disadvantageous conditions. Statistics show an unusual number of people in the business world, as well as athletes, artists and entertainment people who decide to change their “profession” and enter the world of politics where the rewards seem to be more continuous and also generous.
6. Prevailing organizational type
Before turning to the prevailing organizational type, it may be useful to respond to those participants who are interested in Organizational Development. At the end of the day, Organizational Development is strongly linked to Organizational Behavior.
In an article published in www.monographies.com entitled "Organizational Development and Change: What IS - Definitions" there is a brief review of the different definitions of OD as well as a retrospective account of its origins.
And here it should be borne in mind that those communities that have been applying and trying to improve their organizations through the application of behavioral sciences and making use of tools, technologies and methodologies within the discipline of Organizational Development, have antecedents within the business world that are not common to us in less civilized and less developed communities.
The emergence of Organizational Development can be traced back to the 60s of the last century and was strongly influenced by different alterations in the context of companies that transformed the way in which organizations should function from then on. For example, the matrix organization (Robert Blake & Jane Mouton: "Managerial Grid III"; Gulf Publishing, 1985), had an enormous impact on each and every one of the people who made up an organization. From the matrix organization the organizational participants would each begin to report - at least - two people, something for which they were not fully prepared (and even went against the biblical passage as stated by Dr. Donald W. Cole).
But this is even more complex. The Organizational Development that arises around the 60s in the United States of America had an important precursor that was the Industrial Revolution developed around the year 1850. And this does not stop there; It took about 60 more years for the first Management book to be published in the United States (Frederick W. Taylor - "Scientific Management"; Harper & Row - 1947). And somewhat later it is learned in the USA that Universities did not always provide graduates who served the best interests of companies and therefore Harvard University developed a relatively new learning method that consists of strengthening the "contents" with the "Method of Cases ”(Case Studies).
And the case method has been renewed by role-playing around the 40s and 50s of the last century, to get to learn in the 60s that learning has to go something beyond the content + the case method + the role-playing method, and what that experiential learning means. It is also learned that not necessarily the knowledge corresponding to the Profession from the University Diploma are what should help these people to Lead organizations (note the reader that we have said lead and not manage).
And it is learned that in order to lead, people need to develop skills that the best Universities and the best Study Centers were generally not "delivering" to their students: they are intra and inter personal skills.
Therefore, when today I find that "they want to do Organizational Development in my company" and they ask me for help, I try to be cautious and I can ask them this question "before" giving an answer: In that country (yours) - where you have your company - How long ago did you make the Industrial Revolution? - When was it that you made the first Management book? - How long ago did you implement the matrix organization? And, of course, we are talking about local companies and not the subsidiaries of multinationals. In short, learning is not substitute but rather cumulative (Jean Jacques Rousseau: "The Social Contract"; London: Dent - 1762) said that each generation accumulates the knowledge of the previous one. In the different Latin American countries, organizational learning has been very limited,and it still is. And when one wants to make a jump, one must be careful that this jump is not into the void and falls off a cliff.
7. "Prevailing Organization"
An interesting fieldwork developed a short time ago has shown that the vast majority of people consider that the prevailing type of organization in Latin American communities is of the hierarchical-pyramidal or bureaucratic type (Eric Gaynor Butterfield: “Congreso de Desarrollo Organizacional“, Trelew, 1999).
In a study carried out several years ago at the Universidad del Pacífico, Lima, Peru (Eric Gaynor; IAE - Year 2006) it has been found that more than 80% of the organizational participants consider that they work in a hierarchical pyramidal organization of a bureaucratic type.
And it is very common for the term and concept of bureaucratic organization to be generalized as one that operates under the hierarchical pyramidal form. Furthermore, the vast majority of people - even those who direct and manage companies, institutions and organizations - are unaware of the main dimensions on which the extraordinary German sociologist has built his conceptual framework in relation to “the Bureaucracy”.
This is extremely unfortunate since "the Bureaucracy" is precisely for Max Weber the most efficient way to organize work in productive organizations. We can say that it bears an immense similarity with the excellent and inspiring work of Frederick Taylor at the beginning of the nineteenth century, keeping the distances and the circumstances that were lived within the world of productive organization.
Taylor concentrated his efforts on developing better methods and processes to solve the incipient Industrial Revolution; back then the vast majority of organizational participants were workers and therefore Taylor's focus has been on them. On the other hand, some 30 years later, and industrial processes having been largely automated, most of the organizational members are found within the administrative, commercial and service personnel, with a minimum (proportionally) the number of people employed in the areas dedicated to production. The exemplary work of Max Weber shows how the Bureaucracy can face this new dilemma that the director of a company begins to live from that moment.
An observer with certain analytical capacities who focuses on the organizational processes in the vast majority of companies in Latin America has to find that in reality, few of the suggestions from Taylor (within the production area) or from Weber (within the administration area in general) have been taken into account and even less applied. It is true that these models of organizational arrangements are not the "best under all circumstances and all times" but they can definitely be a good start for those interested in productive performance within a company.
We all know what has happened later, in relation to the development of new organizational theories and new best practices in companies (please see work already cited by Eric Gaynor Butterfield in: www.monografias.com) where reference is made to some 60 theoretical and 60 practical conceptions in addition to those formulated by Taylor and Weber.
Of course we also recognize that each conception (theoretical) and also application (practice) must be subject to the conditions and situations that are experienced at that particular moment and therefore the suggestions made by Alvin W. Gouldner (“Patterns of Industrial Bureaucracy ”, Routledge & Keegan - 1955) and Philip Selznick (“ TVA and the Grass Roots ”; Berkeley, 1949) in relation to their respective critical analyzes of bureaucratic and pyramidal organization.
Between 1991 and 1995, various advisory work on "methods and procedures" was carried out in more than 25 companies within Argentina, the vast majority of them (23) being "large" companies. No use was made in these companies of time and motion studies applied to the administrative area and there was no significant degree of formalization (Max Weber) either. Some 20 years before, a review had been carried out of the main “consulting” works carried out by the “Consulting” department of one of the “Big Six” firms in Peru and practically all said professional services originated in the development of a new “formal organization chart” for the company and some Manuals such as Functions, Duties and Responsibilities, and also the main Processes.
With the changes produced as a result of financial globalization, this panorama has not changed for the most part and many of them are trying to move towards a more “open” and “virtual” model, but with the difficulties of achieving it. And the interesting question remains regarding what is the prevailing organizational model in less developed cultures and economies. The hypotheses, conclusions and predictions of the notable economists Boulding and Galbraith (already cited) appear to be correct.
Our investigations, fieldwork and research show some details regarding an organizational type that "precedes" the organizational types of Frederick Taylor and Max Weber; In other words, this organizational arrangement would represent what we call the pre-history of organizations in less developed economies and countries. Organizations and companies in Latin America tend to organize and function based on an organizational arrangement that is recognized as being of the nepotic type. In this organizational type, the concepts and practices of both the hierarchical pyramidal organization and that of the bureaucratic company do NOT apply.
The "Organizational Nepotism" seems to be a prevailing model and it is very difficult to have efficient companies at a competitive level, when the selection of the personnel and the directive members involved in the decision-making of the organization is based on the "Nepotism".
As we remember from our early years in formal educational institutions, Nepotism bases its selection and election to leadership positions on the basis of a relationship of consanguinity that can extend and expand into diffuse and difficult to appreciate practices such as "supposed loyalty." that sometimes does not mean neither more nor less than a “total subordination” to the top, which makes all kinds of questioning and organizational criticism impossible. Conflict as such is viewed as negative - and therefore acted upon.
The influence of globalization and financial concentration and that of the political forces that are present in the business environment is of great impact today, as we have mentioned in the first part of this short treatise. And we see how both components - the financial and political forces - gain power (unfortunately) through Nepotism that invades practically all orders.
In particular within Argentina, this is terribly harmful, and it is enough to simply take a look at the "new candidates" and emerging in politics where we find ourselves with increasing frequency of family nominations for political positions where it is taken Decision making is of prime importance.
The loss of the rationality criteria implicit in the inspiring works of Frederick Taylor and Max Weber of so many years ago is not even taken into account within the corporate and productive world. Expecting organizations in Latin America to rapidly evolve towards Organizational Development applications in the most developed and civilized economies and societies is just a mere Utopia.
We have already mentioned that one generation accumulates the knowledge of the previous one (Jean Jacques Rousseau, already cited) and of course this implies that it is also true of individuals, of groups in organizations. Organizations - to return to them - cannot “learn” from “the void”, they simply learn as a consequence of the cycle of experimentation, action, consequences, results, evaluation and new experimentation (Eric Gaynor: “Congreso de Desarrollo Organizacional”, Argentina - 2001).
The blocking of experimentation - a characteristic implicit in the nepotic type organization - blocks learning and subsequent eventual growth of the organism.
We believe it is also appropriate at this time to make a small call for attention to the professors of the discipline "Administration" and related, within Latin American cultures. The criticisms made by them of the approaches of Taylor and Weber - sometimes without the knowledge of the dimensions of both theories - has caused many executives, managers, entrepreneurs, consultants and practitioners to dismiss the contributions of these two important and notable experts.
In reality, there is not a single author and consultant who has matched Taylor's contributions in relating "pay to level of productivity," which in a nutshell amounts to "rewarding according to productivity." Frederick has not been equaled in this regard despite the almost 100 years that have passed, and in addition Max Weber's conceptions and practices are not valid within the vast majority of organizations guided by Nepotism within Latin American cultures. The results are visible.
If to the ignorance of the most notable authors we add to the Latin American communities a nepotic way of operating and functioning, it is very possible that Latin American companies can only achieve the results - limited - that they achieved several centuries ago, when nepotism was Present.
Civilized communities constantly try to abandon such practices and this allows them to enjoy arrangements and organizational types that remain competitive despite the fact that their costs - and consequent standard of living of their population - are often significantly higher. We can follow their example and transform an "organizational barbarism" into a "civilized organization"; the option is ours alone.
Thank you very much for sharing!
