Chapter 9 Communication and Organizational Development Learning Objectives What We Will Be Investigating: • Examine the demands to continually refine organizing processes to promote organizational effectiveness and survival. • Examine the use of communication strategies for identifying current and emerging performance gaps in the organizing process. • Explain how the diagnosis of performance gaps suggests directions for organizational renewal. • Examine applications of Weick’s model of organizing to highlight the central role of communication in responding to organizational problems and guiding organizational adaptation. • Explain how organizational intelligence is developed and stored in organizational life, as well as how organizational intelligence is used to guide organizational activities. • Identify effective strategies for developing, implementing, and evaluating interventions for promoting organizational development. • Identify strategies for promoting the balance between innovation and stability in organizational life. • Explain how slack resources can be used to energize organizational development activities. • Describe criteria for assessing organizational effectiveness, including differentiating between output and process measures of effectiveness. • Examine strategies for implementing communication policies, processes, and systems for promoting ongoing organizational assessment, evaluation, intervention, and organizational development. Kre66464_09_ch09_p197-220.indd 197 11/3/11 2:45 PM CHAPTER 9 Introduction Chapter Outline 9.1 B  alancing Innovation and Stability in Organizational Life Two monologues do not make a dialogue. —Jeff Daly 9.2 W  eick’s Model of Organizing and Organizational Adaptation Rules and Communication Cycles Requisite Variety Communication Phases Feedback Loops Gathering Organizational Intelligence 9.3 C  ommunication and the Process of Organizational Development The Nature of Organizational Development Organizational Reflexivity Performance Gaps and Slack Resources Being Proactive 9.4 O  rganizational Development and Organizational Effectiveness Output Measures of Effectiveness Process Measures of Effectiveness Combining Productivity and Process Introduction The process of organizing, which is fraught with challenges and difficulties, is an ongoing struggle for many organizations. It takes a great deal of effort and effective communication to build the networks of cooperative relationships and coordinated activities needed to accomplish complex organizational goals. Yet the goals facing organizational participants do not stand still. There are always new constraints, problems, and demands that arise in organizational life that can break down an organization. As we have discussed earlier in the book, in systems theory language, this threat of organizational erosion is known as entropy, the natural degradation of systems that leads to disorganization (Berrien, 1976). There is an innate tendency for all systems, but particularly for human systems (such as the organizations we all participate in), to deteriorate and disorganize over time. In physical systems, the entropic threats that break down buildings and machinery can be traced to environmental and chemical processes such as the negative effects of gravity and oxidation. In social systems, entropy is often caused by human processes. Human beings are imperfect, fallible, and are less reliable than the automated machines we have built to help us handle complex tasks. People get tired, angry, and distracted. They forget what they need to do. They don’t show up for work. In sum, they make mistakes, and the process of organizing suffers. No matter what the reasons for organizational decline, we can expect social systems to break down over time, and concerted efforts need to be made to revitalize these systems. Kre66464_09_ch09_p197-220.indd 198 11/3/11 2:45 PM Section 9.1 Balancing Innovation and Stability in Organizational Life CHAPTER 9 Many things can be done to resist the natural trend toward entropy, to help keep organizational members on task, to adapt organizational processes to meet new demands, to identify emerging threats to organization, and to implement plans to overcome these threats. The process of organizational renewal that helps organizations resist entropy and promote ongoing organization is known as organizational development (Schein, 1969). Organizational development is a critical process in modern organizational life, and it depends largely on strategic organizational communication. This chapter examines the importance of using organizational communication processes to evaluate organizational performance and direct organizational renewal. We describe the use of strategic feedback mechanisms to identify deficits and emerging problems in organizing processes and will examine a model of organizing that illustrates the central role of communication in guiding organizational adaptation. We also examine the process of conducting ongoing organizational development activities as a strategy for adapting to emerging organizational constraints and enhancing organizational processes and policies. We analyze communication intervention strategies, including introduction of new training programs, internal public relations efforts, job redesign, reinvention, restructuring, and consolidation as unique opportunities for improving organizational performance. Finally, the chapter closes with a case study that illustrates communication processes for identifying organizational challenges, designing interventions, and implementing changes to promote organizational effectiveness. 9.1 Balancing Innovation and Stability in Organizational Life T wo contradictory and competing primary goals exist in organizational life: 1. The promotion of organizational stability, and 2. The promotion of organizational innovation There tends to be greater focus on promoting stability within organizations than on promoting innovation. Traditional hierarchical organizational systems have been designed to establish operational order and stability, following the tenets of the bureaucratic model of organization described in Chapter 7 (Weber, 1947). Indeed, a great deal of planning and hard work goes into promoting order, predictability, and stability in organizational operations, especially because stability is difficult to achieve. Rules and regulations are carefully developed to promote coordination, precision, and order in organizational activities. Although there are clearly demonstrated needs for stability in organizing processes to promote order, there are also compelling needs for innovation in organizational life to meet changing opportunities, constraints, and demands. Many often uncontrollable and unpredictable changes occur in organizational life that demand the development of adaptive social systems. The systems principle of equifinality suggests that social systems need to be adaptive, finding different ways to achieve system goals depending on the unique and changing constraints confronting the systems (Berrien, 1976). Organizations therefore have to balance their needs for both stability and innovation. Kre66464_09_ch09_p197-220.indd 199 11/3/11 2:45 PM Section 9.1 Balancing Innovation and Stability in Organizational Life CHAPTER 9 The old saying there are “many roads to Rome” suggests that there are various ways to accomplish goals. This is absolutely the case in organizational life, where changing constraints often demand unique organizing strategies. For example, with growing public concern over the health issues related to the use of gluten (wheat) in many foods, companies that make baked goods began to design ways to prepare cookies, crackers, and cakes from rice flour, rather than from wheat, to meet new consumer demand. They were still producing baked goods, just using new ingredients and processes to achieve their goals. Unfortunately, there is a tendency in many formal organizations to place too much focus on promoting order and stability, often at the expense of organizational responsiveness and adaptation. Various changing constraints demand organizational adaptation and innovation. For example, personnel changes often occur in organizations as workers change or lose jobs, get injured, quit, retire, or die. These changes may necessitate corresponding changes in organizational activities to achieve desired goals. For example, when the star quarterback on a football team gets injured and the backup quarterback is sent into the game, it is likely to change the entire offensive strategy for the team. The backup quarterback may not have the same offensive skills, strengths, and knowledge as the starting quarterback. A good football coach will implement new offensive plays for the replacement quarterback that reflect that player’s specific skill set. Sometimes organizational goals shift, demanding the performance of new organizational activities to meet the updated goals. For example, leaders may alter the kinds of products that organizations create and market in response to changes in society, technology, and consumer demand. With the increase in the price of gas over the past few years, consumer demand for fuel-efficient automobiles, such as hybrids and compact cars, has grown, whereas demand for large fuel-thirsty SUVs has gone down. To meet these changing How do hybrid cars relate to the systems prindemands and to maintain profitability, ciple of equifinality? automobile manufacturers had to shift their operations to increase production of fuel-efficient automobiles, leading to changes in automotive design, the use of raw materials, and factory operations. The failure to innovate in the face of societal change could be disastrous for the car companies. New regulations that arise from within and outside of organizations, such as governmental regulations, also influence organizational operations. For example, when the Food and Drug Administration (FDA) rules that a certain class of prescription medications is unsafe and blocks the sale of these drugs, the pharmaceutical companies that produce these medications must make significant changes in their operations to meet the new regulations. Not only must they stop producing and selling the medications, they must shift their operations to other products and services to maintain profitability. As is clear from this discussion, there are many threats to the organizing process, especially as organizational participants confront new challenges and work to accomplish Kre66464_09_ch09_p197-220.indd 200 11/3/11 2:45 PM Section 9.1 Balancing Innovation and Stability in Organizational Life CHAPTER 9 new organizational goals. A wide range of emergent internal and external organizational constraints impinge on organizations and demand adaptation and innovation from them. These emerging constraints may include changing personnel, regulations, technologies, products, services, customer demands, competition, economic conditions, and more. These constraints necessitate the development of adaptive organizing strategies to meet the demands of new situations. Yet it is not easy to predict what changes in organizational life are needed. It is also not easy to implement change in organizations, especially since, as we have discussed, there is such a strong focus in many organizations on promoting stability. In the next section, we’ll look at one model of organizing and organizational adaption. Organizations in Action Innovation and the U.S. Auto Industry Innovation is critical to organizational effectiveness. But as explained in this chapter, organizations also have a need for stability, which often compromises the ability to innovate. British organizational theorist Charles Handy has argued that when organizations get large and bureaucratic, they lose their drive to innovate. As he puts it, “Bureaucracies polish but they do not invent.” (1995) And Handy says that when faced with a changing environment, bureaucracies often first respond by doing more of what they already do, just with a little more energy and enthusiasm. The experience of the U.S. auto industry could be regarded as a case of dealing with the tension between stability and innovation in a dysfunctional manner. Despite a turbulent environment—an increase in gas prices and changes in the size and transportation preferences of American families— Detroit continued to manufacture lots of gas-guzzling sedans in the 1970s and 1980s. Not only that, but the cars being built in Japan were perceived to be of better quality. As a result, U.S. market share declined in the last decades of the 20th century, and it’s only recently that American cars have once again passed a 50 percent market share. But still, as of 2010, six of the ten best-selling vehicles in the United States were Japanese. How would Karl Weick, who we discussed in this chapter, analyze the situation? Within the U.S. auto industry, there was a degree of entropy—things were breaking down. There was also equivocality— Detroit was unsure how to make sense of and respond effectively to these new situational demands. In the process of enactment, selection, and retention, U.S. automakers tended to rely on “old tapes.” They had a product—bigger cars—and they were bound and determined to sell them. (And they hoped to continue selling them because there’s a greater profit margin on bigger vehicles.) In Weick’s framework, for an organization to succeed, it must pay attention to what’s going on in the environment and be willing to enact new roles and procedures in response to any changes. Unfortunately for American firms, this lesson regarding change was learned pretty late in the game. Even with recent improvements in market share and quality, the jury is still out as to whether America’s “big three” automakers have become learning organizations in the manner that Weick would advocate. President Obama’s automobile task force contends that while General Motors has done well to restructure its business in recent years, such progress had been “far too slow.” According to The Economist, the task force identified several areas where it found GM to be overly optimistic or “in denial,” including unrealistic estimates of domestic market share, continuing doubts about GM quality, and “a weakening product mix as consumer tastes and tighter fuel-economy regulations eat into sales of high-margin trucks and sport-utility vehicles.” (America’s car industry: time for a new driver) Will U.S. automakers be able to turn the tide? Much will depend on their ability to come to terms with equivocality and find ways to promote innovation over stability. (continued) Kre66464_09_ch09_p197-220.indd 201 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 Organizations in Action (continued) Critical Thinking Questions 1. If large organizations are indeed prone to value stability, what can enable them to promote innovation? 2. In your view, has the U.S. auto industry enacted new roles and procedures that will ensure that they succeed? 3. In what situations, if any, should stability take precedence over innovation within organizations? Sources Handy, C. (1995). Gods of Management: The Changing Work of Organizations. New York: Oxford University Press. America’s car industry: time for a new driver. (2009, April 2). The Economist. Retrieved from http://www.economist.com/node/13414108 Korzeniewski, J. (2011, January 4). America’s best-selling cars and trucks of 2010 are. . . . In Autoblog. Retrieved from http://www.autoblog.com/2011/01/04/americas-best-selling-cars-and-trucks-of -2010-are/ 9.2 Weick’s Model of Organizing and Organizational Adaptation C ommunication performs a central role in identifying rules needed to promote stability in organizational life. Communication is also essential for spurring innovation when organizations need to adapt. As we discussed in Chapter 4, American organizational theorist Karl Weick (1979) introduced an innovative model of organizing that provides a particularly insightful description of the ways that communication can be used to balance innovation and stability in organizational life. Weick’s model of organizing is grounded in information theory, which describes how the communication of relevant information helps to reduce uncertainty and increase understanding. Weick describes the organizing process in terms of the communication of relevant information to promote a balance between organizational stability and innovation. Weick’s model explains that social organization is developed through the use of interconnected communication processes that help organizational participants make sense of the complex situations they confront. These interconnected communication processes promote problem solving, adaptation, and growth in organizational life. Weick’s model explains that social organizing occurs in response to uncertainty. When organizational participants confront complex and uncertain situations that are difficult for them to make sense of and handle by themselves, they must interact with others to collaboratively address these issues, demonstrating social organization. Weick refers to the uncertain situations that organizational actors confront as equivocal information inputs. Equivocality (uncertainty, ambiguity, and unpredictability) is inherent in the many complex situations, problems, and issues that organizational actors must confront. For example, when new goals, products, processes, or regulations are introduced, these new demands can lead to uncertainty for organizational participants who are unsure of how to make sense of and respond effectively to these new situational demands. Kre66464_09_ch09_p197-220.indd 202 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 Many complex and uncertain situations, problems, and issues confront organizational participants in modern organizational life. Technology upgrades, changes in personnel, new customers, and emerging societal constraints are just a few of the situations (often seen as problems) that can challenge organizational participants. Weick’s model of organizing suggests that the more equivocal these problems are for organizational actors, the more those actors need help from others to cope with these complex problems. In fact, it is Weick’s contention that organizations have developed expressly as communication systems for helping organization members respond effectively to complex situations. Strategic organizational communication helps these individuals reduce equivocality, and by doing so, it helps to increase certainty and direction in organizational life. According to Weick’s model of organizing, challenging organizational situations are best resolved through the participation in communication and information processing activities by organizational participants to help reduce uncertainty. These communication-based sense-making activities not only help organization members increase their understanding of new demands, they also help these participants gather How have the complexities of increased new and relevant information for guid- unemployment demanded new job-seeking ing the creation of appropriate rule-based strategies? organizational responses to effectively handle these situations. The model suggests that in the process of organizing, organizational actors are confronted by many complex, difficult, unpredictable, and equivocal situations. Each of these difficult situations presents unique information-processing problems for organizational participants. To be effective, organizing efforts depend on the abilities of organizational members to engage in active cycles of communication to resolve equivocal organizational situations by establishing reliable and accurate interpretations (meanings) and establishing effective evidence-based responses to these uncertain situations. For example, when a newspaper reporter is assigned to cover a story about an issue she is not familiar with, she needs to interview a number of experts on this topic to reduce her uncertainty and increase her understanding of the issues so she can write an article about the issue. It is the communication interactions with experts that helped her make sense of the issue she was covering and helped her make good choices about how to write about the issue. Rules and Communication Cycles Weick’s model identifies two primary interrelated communication processes that should be used to cope with the level of equivocality of information inputs, the use of rules and cycles. Rules are guidelines for interpreting and responding to situations that are established through interaction experiences between organizational participants. (Karl Weick sometimes calls these rules “assembly rules” to illustrate how they direct organizational participants’ development of strategies for making sense of and reacting to issues.) The Kre66464_09_ch09_p197-220.indd 203 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 rules guide interpretation and response to different organizational situations. Every time organizational participants figure out how to respond effectively to a new situation, they develop guidelines (rules) from these interactions for dealing with similar situations in the future. These evidence-based rules help guide organizational activities and increase predictability for organizational participants, ultimately promoting stability in organizational life. Organizational participants can usually respond to simple and familiar (relatively unequivocal) organizational demands with preset rules. For example, the use of instruction manuals, rate schedules, operational guidelines, form letters, and printed instructions are common rule-based strategies used in organizations to guide participants’ responses to common situations. However, rules are not so useful for guiding appropriate responses to novel and highly uncertain organizational situations. These unique situations have not been dealt with before, and there are not likely to be any established guidelines for handling them. In these situations, organizational participants must engage in communication to develop new rules. Communication cycles are enacted to help organizational actors develop new and innovative strategies for responding effectively to difficult organizational situations. Weick describes cycles as a series of interlocked message exchanges between organizational actors that allow them to more easily process difficult situations. As we have discussed in earlier chapters of this book, to help reduce the equivocality of complex problems, Weick suggests the cycle, a double interact, as an exchange of conditionally related messages with three components: act, response, and adjustment. In essence, the communication cycle introduces an idea, elicits a response to that idea, and enables an adjustment to the response. It is an interactive means for gathering relevant information and feedback to help organizational participants make sense of challenging demands. (Figure 9.1 shows a depiction of a communication cycle.) For example, imagine that you are preparing a report on a complicated topic you don’t know much about and you don’t know where to start. Perhaps you need to engage in some communication cycles to help make this task less equivocal for you. You could speak with a reference librarian who might suggest some good sources of information available in the library. This is one communication cycle that can help you make sense of this task. If you follow the librarian’s advice and find several sources of information to consult concerning this topic, each of these information sources that you consult could also be seen as a communiFigure 9.1: A Communication Cycle cation cycle that can help you underAct Response Adjustment stand the topic. You would continue to engage in as many communication cycles as you needed to make sense of the task Equivocality Removed until you were able to write the report. The more equivocal a given situation is for organizational members, the more these participants must depend on performing a number of communication cycles to interpret and respond to the problem. Each communication cycle that organizational participants perform helps to process some equivocality out of the challenging situation, making the situation more understandable and enabling organization members to develop and apply Kre66464_09_ch09_p197-220.indd 204 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 new rules for responding to these kinds of situations. However, not every cycle reduces the same amount of equivocality from an information input, but each cycle reduces some of the initial equivocality. Therefore, it behooves organizational participants to identify the most effective communication cycles to use (i.e., interacting with individuals who can provide them with the most relevant information) to help them make sense of difficult organizational problems. For example, identifying and making available to managers the most knowledgeable technical experts to consult with when making difficult decisions about the best uses of computer technologies for addressing organizational demands can provide these managers with useful communication cycles for reducing equivocality and guiding appropriate organizational decision making. Requisite Variety The principle of requisite variety describes the appropriate use of rules and cycles in organizational life. Requisite variety suggests that the more equivocal an organizational problem is for organizational participants, the more they need to develop correspondingly complex processes to cope with the issue. For example, if a relatively simple and common request is made of organization members, such as when a customer orders the breakfast special at a diner, the server can easily place the breakfast order, listing the order succinctly in her request to the cook, and listing the price for the order on the bill for the breakfast order. The server can use preset rules for responding to this low equivocality request that is relatively simple to perform. On the other hand, if a customer orders a special omelet for breakfast that is not on the menu and contains a long list of ingredients that are not normally ordered, the request is much more equivocal. The server may have to question the customer to make sure what the order comprises, consult the cook to make sure all the ingredients are available, and discuss with the diner owner how to price the order. This equivocal order can’t be handled simply with preset rules. The server has to engage in a number of communication cycles concerning the order to reduce its equivocality and guide correct organizational response to the request. Unfortunately, too often, organizational representatives violate the principle of requisite variety, either using rules to cover complex issues that demand cycles, or engaging in cycles to respond to simple requests that could have been handled with rules. When complex organizational issues are handled with rules, errors are likely to occur, and organizational effectiveness will inevitably suffer. When simple organizational issues are responded to with communication cycles, organizational resources are unnecessarily strained, organizational participants are inconvenienced, and it takes a much longer time to accomplish organizational tasks. This is not very efficient. Communication Phases Weick’s model of organizing suggests that there are three major communication phases that facilitate organizing and adaptation: enactment, selection, and retention (see Figure 9.2). Rules and cycles are used in each of these three organizing phases to help register the complexity of organizational situations and to determine whether appropriate rules should be selected (if available) or communication cycles should be performed (if the Kre66464_09_ch09_p197-220.indd 205 11/3/11 2:45 PM CHAPTER 9 Section 9.2 Weick’s Model of Organizing and Organizational Adaptation situations are too complex to be handled by rules). In each phase of organizing, information is processed by organizational participants through the appropriate use of relevant rules and communication cycles. Figure 9.2: Weick’s Model of Organizing Ecological change Enactment Selection Retention Feedback of identity on selection and enactment Enactment Phase In the enactment phase of organizing, organizational participants attempt to make sense of the different situations and demands confronting the organization. For example, if a customer asks a mechanic to fix her broken car, the mechanic may have to ask some questions and do some investigation to ascertain what is wrong with the car and what needs to be fixed. In the enactment phase of organizing, the mechanic ascertains the complexity of the request being made by the customer and utilizes the most appropriate rules and cycles to make sense of the request. Decisions need to be made about whether the use of rules and cycles by organizational participants have helped to make sense of different situations and whether more cycles should be enacted to further reduce uncertainty about these situations. On the basis of decisions made in the enactment phase, additional rules and cycles are chosen and repeated to continue reducing the level of equivocality of difficult situations until achieving an optimal level of understanding. Selection Phase In the selection phase of organizing, decisions are made after the enactment process is completed about whether there are rules available to guide effective responses to different situations, or whether communication cycles need to be enacted to guide response strategies. On the basis of decisions made in the selection phase of organizing, additional rules and cycles are chosen and repeated to guide the best responses to difficult situations, enabling organization members to effectively react to different inputs. In the selection phase of organizing, organizational participants develop the best communication strategies for addressing specific organizational issues. For example, in the mechanic situation, the selection phase of organizing would involve the mechanic using rules and cycles to determine what actions to take to actually fix the broken car. The mechanic might have to consult some repair manuals or ask advice from other more experienced mechanics (use of communication cycles) to Kre66464_09_ch09_p197-220.indd 206 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 determine the best actions to take to repair the car. Each of those communication cycles will help the mechanic develop rules for guiding car repair activities. Retention Phase In the retention phase of organizing, information about the ways organization members have responded to different inputs during the enactment and selection phases is gathered and stored. The various communication cycles developed and used to process equivocal information are evaluated for their usefulness, and if they are deemed to be successful strategies for coping with equivocal situations, they are made into rules for guiding responses to similar inputs in the future. A repertoire of rules is developed and stored in the retention phase to be used as a form of organizational intelligence to guide future organizational actions. It is this organizational intelligence that makes experienced organizational members so valuable. They can use the wisdom they’ve developed from past experiences to guide future action and response. Once again, in terms of the mechanic situation, the retention phase of organizing would involve the mechanic using rules and cycles to determine what was learned from the enactment and selection phases of organizing for fixing this broken car and for guiding similar car repairs in the future. The mechanic might test drive the car after completing the repairs to see how well the repairs worked (a communication cycle). The mechanic might also ask the customer how satisfied she was with the repairs to assess the effectiveness of the repair strategies used (another communication cycle). Based on what the mechanic learns from these communication cycles, he can determine how effective the enactment and selection phases were and establish rules to guide future enactment and selection activities when encountering similar car repair requests. These rules, if shared with other mechanics, can become part of organizational intelligence that can enhance organizational response and functioning. Feedback Loops The enactment, selection, and retention phases work together in the process of organizing, and feedback loops among the phases are used to coordinate their activities (see Figure 9.2). Feedback loops are message systems connecting the phases, enabling coordination. Weick’s model identifies two feedback loops: one connects retention to enactment, the other connects retention to selection. In this way, the retention phase, which contains the organization’s intelligence, can be used to guide the enactment and selection activities. In modern organizations, positive feedback loops are used to gather information from past experiences (retention) to guide interpretation (enactment) and response (selection) to confront new organizational issues. For example, in organizational development efforts, positive feedback loops are used to initiate the gathering of relevant information from key constituents and experts to guide problem diagnosis and the development of interventions to improve organizational operations. Negative feedback loops are used to stop the flow of information from retention to enactment and selection, halting the performance of new behaviors; negative feedback loops are also used to check the flow of information about enactment and selection activities Kre66464_09_ch09_p197-220.indd 207 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 to the retention phase. In low equivocality organizational situations, negative feedback loops are used to minimize over-responses, limiting the use of unnecessary and wasteful communication activities. For example, a thermostat is used to regulate heat in your home. When the actual temperature in your home falls below the temperature set on your thermostat, an electronic positive feedback loop is sent to the furnace to start pumping out heat in the house. Once the set temperature is reached, a negative feedback loop is used to electronically alert the furnace to stop pumping out heat. The use of feedback to regulate activities has become known as cybernetic control, because it controls organizational activities to achieve goals. To summarize: In the enactment phase, message inputs are interpreted to assess their level of equivocality for the particular organization. How easy or difficult will this issue be for organization members to make sense of and respond to? Feedback loops between the enactment and retention phases of organizing allow organization members to use the information stored in the retention phase from past organizational experiences to guide evaluation of messages and to store the information about the messages enacted for future reference. In the selection phase, during which rules and cycles are chosen and created in response to information inputs, feedback loops from retention are used to guide organization members in deciding how to process message inputs by drawing on organizational intelligence and the repertoire of rules stored in the retention phase. The retention phase constantly draws information from enactment and selection through feedback loops to update organizational intelligence (relevant information about message inputs and organizational response strategies). Organizations in Action Why Did Facebook Succeed Where MySpace Didn’t? Some rivalries between corporate giants are hotly but pretty evenly contested—think Coke and Pepsi, McDonald’s and Burger King, Ford and Chevy. But in the 21st century- “social media” world, one particular corporate rivalry has turned out to be a huge mismatch: the contest between Facebook and MySpace. That competition is all but over, and Facebook is the clear winner. At its peak in 2006, MySpace had more than 100 million unique users per month, but that dropped to 70 million in 2010. Meanwhile, Facebook now has more than a half billion personal accounts, along with huge visibility (including an Oscarwinning movie on the life of Facebook’s CEO Mark Zuckerberg), not to mention profits in the range of $2 billion annually. The question is, why did Facebook succeed where MySpace didn’t? And what principles of organization development (OD) might be relevant here? Why isn’t MySpace as popular as Facebook? Kre66464_09_ch09_p197-220.indd 208 As outlined in this chapter, organizations must do something to make sense of uncertainty (enactment), choose how to respond (selection), and then use this response as a way to guide their activities (retention). To the extent that this process promotes an adaptive, learning organization, Facebook just plain outanalyzed its main competitor. (continued) 11/3/11 2:45 PM Section 9.2 Weick’s Model of Organizing and Organizational Adaptation CHAPTER 9 Case Study (continued) Wisely, Facebook used the experiences of MySpace as a key part of the enactment phase. Kevin Kelleher, a contributor to CNN Money, believes that Facebook is succeeding where MySpace floundered because it learned from its rival’s mistakes. When it started in 2004, he writes, MySpace decided to “make its pages whatever users wanted them to be.” At the time, the environment was highly equivocal, and MySpace “wasn’t sure what would make a social network click. So it let its members figure it out, offering them to design their own pages with widgets, songs, videos, and whatever design they pleased. The result was a wasteland of cluttered and annoying pages.” (Kelleher, 2010). And, in the end, it wasn’t what people really wanted. On the other hand, Facebook’s research led it to believe, in the words of Guardian writer Jenna McWilliams, that people “don’t need new stuff to do, they need new technologies to support doing the stuff that already matters to them.” Such a feedback loop told Facebook that users didn’t want to create an art project or build a personal museum—they wanted a way to connect with others. This lesson served Facebook well in terms of selection and retention. One of Facebook’s early hires, Karel Baloun, put it this way: “Mark [Zuckerberg] had a clear vision for the company. The vision was to be a communication platform, not an art project.” (McWilliams, 2009) In the world of social media, MySpace’s loss morphed into Facebook’s gain. Critical Thinking Questions 1. If you were the CEO of MySpace, what approach would you take now to increase the popularity of your product? Or is MySpace a “lost cause”? 2. In the turbulent world of cyberspace, what factors might still make it difficult for Facebook to prosper? 3. Some believe that MySpace has struggled partly because it hired too many “conventional” managers with MBAs. With Weick’s theories in mind, is there any merit to that idea? Sources Kelleher, K. (2010, November 19). How Facebook learned from MySpace’s mistakes. CNN Money. Retrieved from http://tech.fortune.cnn.com/2010/11/19/how-facebook-learned-from-myspaces -mistakes/ Why did Facebook succeed? An early hire speaks. The Karel Baloun interview. (2008, September 10.) Mixergy. Retrieved from http://mixergy.com/inside-facebook/ McWilliams, J. (2009, June 23). How Facebook beats MySpace. The Guardian. Retrieved from http:// www.guardian.co.uk/commentisfree/cifamerica/2009/jun/23/facebook-myspace-social-networks Gathering Organizational Intelligence Organizational intelligence is often distributed throughout the organization and is typically held by particularly experienced and accomplished organization members who have developed specialized knowledge about how to effectively handle organizational activities. To make knowledgeable decisions about organizational practice, participants must rely on obtaining information from these savvy organizational representatives (such as key coworkers or supervisors). However, it is not always easy to access organizational intelligence in organizations. It is therefore critical for organizations to preserve organizational intelligence and make it available to provide guidance in equivocal situations. Moreover, in highly equivocal situations, organizational participants may find it useful to interact with external experts from outside of the organization—scientists, government Kre66464_09_ch09_p197-220.indd 209 11/3/11 2:45 PM Section 9.3 Communication and the Process of Organizational Development CHAPTER 9 officials, consumer advocates, lawyers, accountants, consultants, and such—to process the equivocal information to an understandable level through the performance of communication behavior cycles. Sometimes organizational intelligence can also be derived from relevant media, such as reference books or websites. Increasingly, organizational participants gather information online, often using search engines such as Google or Bing to find relevant information. How is organizational intelligence gathered in Proactive organizational participants can your organization? keep on top of changes in the organization’s information environment by paying particular attention to organizational intelligence gathered by boundary-spanning personnel. As we will discuss in the next chapter, boundary-spanning personnel are organizational participants who are often concentrated at the top and the bottom of the organizational hierarchy in positions where they interact with key representatives from relevant organizational publics. These boundary spanners—executives, receptionists, salespeople, consumer relations personnel, and so on—have opportunities to gather information from key constituents from outside the organization who have unique insights about organizational activities. These boundary spanners can help gather, evaluate, and share relevant information from the organization’s environment that can help guide appropriate responses to different emergent issues. 9.3 Communication and the Process of Organizational Development T he primary goal of organizational development is to enhance organizational effectiveness (Schein, 1969). Communication is central to organizational development efforts because the effectiveness of organizing activities is largely dependent on how well organization members are able to communicate with one another and use relevant information. Careful analysis of organizational communication patterns is a key part of organizational development efforts to • • • help identify organizational difficulties, inform the development of evidence-based organizational intervention strategies to reduce problems, and guide the implementation of organizational development activities to promote organizational effectiveness (Kreps, 1985). The ability to communicate effectively both internally and externally in organizational life enables organizational participants to create and maintain an ongoing state of organization, balancing the interdependent yet often contradictory organizational needs for stability and innovation. In effective organizations, members use internal channels of Kre66464_09_ch09_p197-220.indd 210 11/3/11 2:45 PM Section 9.3 Communication and the Process of Organizational Development CHAPTER 9 communication to elicit cooperation from other members to coordinate the daily accomplishment of organizational activities, promoting organizational stability. Members of effective organizations also use external channels of communication to adapt to and influence their organization’s relevant environment, promoting organizational innovation. Information sent through external channels can be used to influence the activities of individuals and groups in the relevant environment. Public relations activities, for example, can help organization members identify environmental risks and opportunities within the interorganizational field, inform organization leaders about the need for innovations to meet these risks and opportunities, and motivate support and action on behalf of the organization from the environment. Organizational development efforts are used to help maintain the balance between internal and external communication in organizations, as well as to promote a balance between innovation and stability (Kreps, 1988). We will discuss these channels of communication in more detail in the next chapter. The Nature of Organizational Development Organizational development has been described as an applied leadership strategy for developing evidence-based organizational interventions for directing change and enhancing organizational effectiveness (Kreps, 1985, 1989, 1995). Beckhard (1969) defined organizational development as a renewal and change effort that is • • • • • planned, organization-wide, and managed from the top of the organization to increase organizational effectiveness through planned interventions in organizational activities. Organizational development efforts involve systematic processes for gathering data to diagnose the problems and constraints facing organizations. It is the process of identifying relevant organizational issues, as well as developing strategies for addressing these problems that fuels organizational development. Organizational development efforts begin with a systematic diagnosis of organizational problems, leading to the development of strategic plans for directing change within organizations (interventions), and the mobilization of resources to carry out innovation efforts. Organizational development experts help to develop strategic plans for helping the organization rectify the problems diagnosed and mobilize resources to carry out intervention strategies. Strategic use of organizational communication is a critical part of gathering information about organizational problems and for implementing interventions to address these problems. Organizational development involves collecting relevant information from organizational participants about impending organizational constraints and opportunities. Organizational Reflexivity As already noted, organizational leaders need feedback about internal and external organizational activities to direct successful innovation within their organizations. External Kre66464_09_ch09_p197-220.indd 211 11/3/11 2:45 PM Section 9.3 Communication and the Process of Organizational Development CHAPTER 9 organizational communication enables leaders to recognize emerging external constraints on organizational activities. Many external communication activities, such as public relations, lobbying, government relations, as well as market and public opinion research, are designed to seek relevant feedback and gather key information from organizations’ relevant environments. Organizational audits and survey research can also provide important information for guiding organizational development efforts. Information from these external sources can also increase organizational reflexivity, helping organization members see their organization as representatives from the relevant environment see the organization. Such feedback is essential for assessing the adequacy of organizing activities and directing the course for organizational innovation. Information gathered through external communication can also be used to direct organizational activities to coordinate with the activities of others within the organization’s relevant environment. External communication is also used to provide persuasive information to environmental representatives about the activities, products, and/or services of the organization (Kreps, 1988). In addition to interpreting information about environmental changes and constraints to guide organizational innovation, leaders also need information about the state of internal organizational conditions to guide innovation. Internal feedback—gathered from discussions with organization members, organizational audits, or through observations—enables leaders to see clearly the internal state of the organization from the perspectives of organizational members, increasing organizational reflexivity (Kreps, 1995). Internal sources of feedback help leaders identify emerging problems and issues with organizational operations that may need to be addressed in organizational development efforts. Performance Gaps and Slack Resources Increased reflexivity enables organization members to recognize important performance gaps—discrepancies between expected and actual organizational performance. Performance gaps occur whenever organizational goals are not fully accomplished. There are many kinds of performance gaps that occur in organizational life. The further the organization is from the accomplishment of key goals, the wider the performance gap is. Organizational communication can help organization members gather relevant information about the nature and seriousness of organizational performance gaps. When leaders are well informed about performance gaps, they are able to make informed decisions about the needs for organizational development. Yet merely having information about needed organizational changes and improvements does not mean that relevant innovation can be developed and implemented. Slack resources, resources that are not already committed to other purposes within organizations, are needed to energize organizational interventions. Slack resources can include personnel who may be available to help develop and implement organizational innovation interventions. Slack resources can also include equipment or computer time that is available or money that is not earmarked for other purposes. It is imperative to identify available slack resources to support the development and implementation of organizational innovations. Kre66464_09_ch09_p197-220.indd 212 11/3/11 2:45 PM Section 9.4 Organizational Development and Organizational Effectiveness CHAPTER 9 Being Proactive The better organization leaders are at gathering relevant information from internal and external information sources, the better they will be at recognizing important performance gaps, diagnosing current and potential organizational problems, and planning innovative organizational development strategies for addressing these problems. Proactive organizational leaders do not just wait to react to serious internal and external issues. They gather regular information from internal and external sources to identify emerging problems. They direct innovative activities to meet upcoming organizational problems before they hit. They try to stay one step ahead of performance gaps. Being proactive also means trying to influence internal and external organizational environments to promote effective organizing and limit exposure to unexpected events. To develop proactive organization, leaders must establish effective communication relationships with knowledgeable individuals both internal and external to the organization. By seeking relevant information and feedback from key sources, leaders can stay on top of changing organizational conditions. With relevant organizational information in hand, leaders can proactively plan innovative courses for ongoing organizational development. 9.4 Organizational Development and Organizational Effectiveness A s we have noted, the primary goal of organizational development efforts is to promote and maintain organizational effectiveness. The term effectiveness has been used by many organizational scholars, but what is organizational effectiveness? How does communication relate to the development of effective organizations? When is an organization effective? There are two common strategies for determining effectiveness: output and process measures of effectiveness. Organizational effectiveness is a combination of high quality process and output. There are important differences between effectiveness and efficiency. Whereas efficiency refers to doing things correctly (doing them “right”) and minimizing organizational effort expended, effectiveness refers to doing what is best for the organization (doing the right thing) to achieve organizational goals. Whereas efficient behavior might lead to organizational effectiveness if the right behaviors are performed correctly, efficient performance of outdated or inappropriate organizational activities (doing the wrong thing correctly) will not help the organization, inevitably reducing organizational effectiveness. Output Measures of Effectiveness An output measure of organizational effectiveness is an examination of the quantity and quality of raw material outcomes from organizational activities. Output measures of organizational effectiveness have been extremely popular in evaluating organizational performance. The most common output measures are of organizational productivity and profit, evaluating the organization’s “bottom line.” Kre66464_09_ch09_p197-220.indd 213 11/3/11 2:45 PM Section 9.4 Organizational Development and Organizational Effectiveness Output measures are popular because they are eminently sensible and logical. They follow the ordered scientific, programmatic orientations of classical organizational theory that envision productivity as a primary goal of organizing. If an organization fails to produce the products and outputs it is designed to produce, how can it be effective? If a for-profit company continually loses money, how can it be effective? Certainly, organizations that lose money and fail to accomplish goals cannot last long in competitive interorganizational environments. They are doomed to move toward entropy because they fail to achieve the primary production-related purposes for which they were developed. CHAPTER 9 Why are output measures popular in organizations? Output measures are also popular because they are relatively straightforward to assess. Organizational output is amenable to direct observation and quantification. Accounting techniques, performance measures, and inventory control methods are used to evaluate organizational profitability and productivity, and quality control measures are used to assess the competence of material organizational outputs. There is a strong positive relationship between the effectiveness of human communication and the effectiveness of organizational outputs. The more coordinated organizational processes are, the better organization members are at achieving organizational goals. Effective communication is essential for promoting the coordination needed to demonstrate productivity. However, although the raw output measure of organizational effectiveness is logical and measurable, it is not sufficient alone for assessing the overall effectiveness of organizing. Evaluation of raw outputs fails to assess many important qualitative issues about the effectiveness of organizational life. For example, organizations can demonstrate high productivity and profitability while also being inhumane, coercive, and oppressive to organization members and to representatives within the relevant environment. Ruthless management techniques can sometimes result in increased profits, at least in the short run. Yet these insensitive organizational activities do not lead to the development of effective organizational relationships. Eventually, poor organizational relationships are likely to harm organizational performance by jeopardizing cooperation between organizational participants. Organizational effectiveness is much more than raw output. Process Measures of Effectiveness In addition to the raw output measure, organizational effectiveness can be assessed by the quality of organizational communication processes (or by process measures). This criterion for organizational effectiveness is far more illusory, subjective, and multifaceted than material output measures, making it more difficult to operationalize, or put into practice. The quality of organizational processes cannot be effectively measured by counting tangible products. The quality of organizational processes is best evaluated by assessing Kre66464_09_ch09_p197-220.indd 214 11/3/11 2:45 PM Section 9.4 Organizational Development and Organizational Effectiveness CHAPTER 9 organizational participants’ interpretations of organizational life. Process outcomes such as member and customer satisfaction, commitment, cohesiveness, loyalty, and cultural integration are useful measures of the effectiveness of the organizational process (Kreps, 1985). One of the most common measures of the quality of organizational process is organizational satisfaction. High-quality organizational communication can enhance organizational satisfaction for organizational participants. Organizations with strong supportive cultures that nurture their members and customers, integrating them comfortably into the communication activities of the organization, typically demonstrate the process aspects of organizational effectiveness. These organizations help their constituents make sense of the complexities of organizational life and provide them with meaningful social support networks. These organizational cultures promote supportive communication climates and high levels of cooperation and participation in organizational activities (Brown & Kreps, 2001). Combining Productivity and Process Organizational effectiveness is therefore a product of both the quantity and quality of organizational outputs and the quality of organizational processes. Organizational effectiveness should be conceived as the convergence of rational raw output criteria with communication process criteria. Both productivity and effective communication relationships are desired goals in modern organizational life. Effective organizations maintain a balance between the achievement of task and relationship goals. Organizational effectiveness is also accomplished through the balance of stability and innovation. This productive balance is achieved by effectively utilizing internal and external channels of organizational communication. Innovation enables organizations to resolve internally and externally generated performance gaps. Stability enables organizational participants to establish predictable roles and relationships. Additionally, effective organizations present participants with strong, supportive, and nurturing organizational cultures (Brown & Kreps, 2001; Kreps, 1990). Organizations where participants can continually accomplish organizational tasks and goals through effective coordination and innovation, as well as establish meaningful and satisfying internal and external organizational relationships, truly demonstrate organizational effectiveness. Case Study Alleviating Nurse Turnover in an Urban Hospital County General Hospital was the major public health care center in Cincinnati, Ohio. The large and busy hospital served a large, poor, and diverse population of health care consumers. Over the past several years, the hospital had been making increasing efforts to recruit new nurses to the hospital to replace the large number of nurses who were leaving. The hospital established a nurse recruitment department that placed advertisements in newspapers, magazines, journals, and websites to recruit new nurses. It was sending recruiters to nursing colleges and nursing conferences to interview candidates for nursing positions. It even began offering recruitment bonuses and higher pay for new nurses who would come to County General. The expense to the hospital for recruiting new nurses continued to grow, while the numbers of nurses leaving County General continued to (continued) Kre66464_09_ch09_p197-220.indd 215 11/3/11 2:45 PM Section 9.4 Organizational Development and Organizational Effectiveness CHAPTER 9 Case Study (continued) mount. Eventually, the director of nursing at County General, Helene Higglebottom, decided to bring in a communication consultant, Elmer Fox, to help them design more efficient and cost-effective strategies for recruiting nurses. Helene explained the situation to Elmer, urging him to design recruitment strategies for improving nurse recruitment while helping to cut recruitment costs. Elmer decided to hold some preliminary meetings with some of the nursing staff to determine the nature and scope of the nurse turnover and recruitment problems before suggesting new recruitment strategies. In his meetings with nurses, he quickly learned that they had many concerns about working at County General. He also discovered that there were a lot of frustrations among the nurses about the nurse recruitment program. The nurses he spoke to complained that the more new nurses the hospital recruited, the worse the problem with nurse turnover was becoming. The nurses were not happy with the bonuses and higher pay provided to the new nurses and not to the loyal nurses that stayed at Country General. In addition, they were frustrated with the time and energy it took to train the new nurses to work effectively at the hospital. They complained that the new nurses were making a lot of mistakes on the job that they, the continuing nurses, had to rectify. A lot of those nurses were becoming so frustrated that they were quitting their jobs at County General. Elmer decided that the answer to the nurse turnover problem at County General was not only to recruit new nurses, even if they could be recruited less expensively and more efficiently. In a subsequent meeting with Helene, he proposed a new course of action for County General. Instead of hiring him to help them improve their nurse recruitment activities, he suggested that they hire him to help them examine the nurse turnover problem and develop new strategies for addressing this organizational issue. Helene found Elmer’s conclusions about the issue to be very revealing and agreed with his recommendation to develop a more comprehensive solution to the problem of nurse turnover. She hired Elmer to conduct a nurse turnover study that would result in evidence-based recommendations for addressing this problem. Elmer began by conducting a survey with all of the nurses at County General to determine their levels of organizational satisfaction and intentions to continue working at the hospital. The survey indicated there were serious problems with job satisfaction among the nurses, and a large percentage of nurses were considering leaving their jobs. To follow up on the survey results, Elmer conducted in-depth personal interviews with a representative sample of nurses from across different areas of the hospital. He asked these nurses about their specific concerns with working at the hospital and encouraged them to provide general suggestions for improving the work life of nurses at County General. He compiled a long list of issues and their potential solutions based on the interviews. Then he conducted focus group meetings with eight different groups of nurses to refine specific intervention strategies for addressing the nurses’ top job concerns. He compiled the results of this research effort in a report that he presented during a meeting with Helene and her supervisor, the hospital administrator, Dr. Archibald Griffin. Elmer suggested changing the Nurse Recruitment Department at the hospital into the Nurse Retention Program. His argument was that the hospital needed to do a better job retaining current nurses to cut turnover rates. They could continue to recruit new nurses, but that was not a good long-term solution to the problem. He recommended appointing a nurse retention committee composed of key members of the nursing staff representing different departments from across the hospital. Many of these influential nurses on the committee were participants in the in-depth interviews who had made recommendations about improving the work life for nurses at the hospital. The committee would serve as a sounding board for examining recommendations for making changes at the hospital, eliciting suggestions from nurses in their areas of the hospital, discussing the suggestions for change, and providing the director of the nurse retention department with specific strategies for changing hospital policies, practices, and equipment to address nurse concerns and improve nurse retention. (continued) Kre66464_09_ch09_p197-220.indd 216 11/3/11 2:45 PM Section 9.4 Organizational Development and Organizational Effectiveness CHAPTER 9 Case Study (continued) The committee made many specific recommendations for improving hospital operations, including improving career development, child care services, security, computer support, and nurse coordination with the medical and administrative staff at the hospital. Over the next several months after establishing the new Nurse Retention Department and Nurse Retention Committee, a number of changes were made at the hospital. Many of the changes made had minimal costs to the hospital and were based on reallocation of existing resources and changes in hospital policies and practices. The organizational culture at the hospital began to change. Nurses began to feel more respected by the hospital administration. They liked the changes being made by the Nurse Retention Department. Nurse turnover began to decline at the hospital. A follow-up job satisfaction survey was conducted six months after the implementation of the nurse retention program at the hospital. Results indicated that job satisfaction had increased significantly, and many fewer nurses were considering leaving their jobs at the hospital. The nurse turnover rates at the hospital were tracked for two years before and two years after the implementation of the nurse retention program. The turnover rates at County General decreased dramatically after the implementation of the nurse retention program. Comparisons in nurse turnover rates between County General and three other urban hospitals in Cincinnati also showed that County General had significantly higher levels of nurse retention than these other health care systems. There were other benefits accrued from the nurse retention program for County General, including reduced costs for recruiting nurses, greater efficiency in the delivery of care by nurses and other health care personnel, and improved morale at the hospital. Critical Thinking Questions 1. What organizational issues facing County General Hospital needed to be addressed to promote organizational effectiveness and survival? 2. How did Elmer use communication strategies for identifying current and emerging performance gaps in the organizing process at County General Hospital? How was the identification of performance gaps at the hospital turned into evidence-based strategies for organizational renewal? 3. How can Weick’s model of organizing be applied to evaluating the issue of nurse turnover addressed in this case? For example, to hospital administrative leaders, how equivocal was the problem of nurse turnover compared to Elmer Fox’s view of the situation? 4. Was the hospital administration violating the principle of requisite variety? (Hint: Were they using rules and cycles appropriately to respond to nurse turnover?) For example, how did Elmer’s research and evaluation plan comply with the principle of requisite variety? 5. Identify how organizational intelligence was developed and stored in the hospital. How well was organizational intelligence used for guiding organizational activities before the nurse retention program was implemented? How well was organizational intelligence used in the nurse retention program? 6. Why were the strategies used in this case for developing, implementing, and evaluating interventions for promoting nurse retention and ongoing organizational development effective? 7. What strategies were developed in this case for promoting the balance between innovation and stability within the hospital through continual organizational development processes? 8. What were the slack resources used in this case to energize organizational development activities? 9. What criteria could be used for assessing both outcome and process organizational effectiveness at the hospital? Assess the levels of output and process effectiveness before and after the nurse retention program was implemented. 10. What communication policies, processes, and systems for promoting ongoing organizational assessment, evaluation, intervention, and organizational development were developed in this case? How effective were these OD interventions? Kre66464_09_ch09_p197-220.indd 217 11/3/11 2:45 PM Summary CHAPTER 9 Summary S ince all organizations must confront entropy, organizational development is a way to provide for organizational renewal. Organizational development needs to address two contradictory and competing goals in organizational life: the promotion of stability and the promotion of innovation. The systems concept of equifinality proposes that there are multiple ways to deal with such organizational tensions. Organizations also face what Karl Weick would call equivocality—the uncertainty, ambiguity, and unpredictability inherent in many complex situations. To try to mange equivocality, organizations will adopt assembly rules. In the process, they will go through continual stages of enactment, selection, and retention, using requisite variety to manage the more complex problems. Gathering organizational intelligence—getting the “right” information from a variety of people within and outside the organization—becomes a key aspect of organizational development. Such development must be planned, organization-wide, and managed from the top by means of planned interventions. While attempting to enact change, organizations must find ways to measure the impact of such interventions, and to be mindful of the distinction between efficiency and effectiveness. Discussion Questions 1. If entropy—the natural degradation of systems—is indeed a universal characteristic of systems, what signs of entropy do you see in organizations with which you are familiar? 2. In his text on persuasion, Herbert Simons relates the story of three umpires disagreeing about the task of calling balls and strikes. The first umpire says, “I calls them as they is.” The second one says, “I calls them as I sees them.” The third and cleverest umpire says, “They ain’t nothin’ till I calls them.” What do you suppose this story has to do with Weick’s notions of enactment, selection, and retention? 3. The systems concept of equifinality proposes that there are many ways to achieve system goals and “get to the same place.” If, for example, members of an organization lack motivation to work, how would this concept apply? What different options might be considered as a way to address the problem? 4. The principle of “requisite variety” suggests that the more equivocal an organizational problem is for organizational participants, the more they need to develop correspondingly complex processes to cope with the issue. Do you agree with this idea—or might it be possible that a rather complex and uncertain situation could be managed by a very “simple” strategy? 5. The concepts of “efficiency” (doing things right) and “effectiveness” (doing the right things) might seem rather abstract. Can you think of specific situations where organizations have done something very efficiently, but not very effectively? 6. This chapter stresses the value of proactive, reflexive, and fairly deep and systematic thinking about organizations. Yet organizational theorists such as Peters and Waterman, in their classic book In Search of Excellence, argue that businesses often spend too much time and energy analyzing everything, and that excellent firms have a “bias for action.” Do you think it is possible to “overstudy” a problem facing an organization? Kre66464_09_ch09_p197-220.indd 218 11/3/11 2:45 PM Summary CHAPTER 9 7. One of the late Steve Jobs’s famous quotations is, “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” How does such a statement challenge what we assume about the value that organizations have traditionally placed on gathering information to deal with equivocality? 8. As discussed in this chapter, the most common “output” measure used by many organizations is profit. What in your view are the limits to a profit-focused orientation? What other measures of organizational performance may be as or more important? Key Terms Communication cycles A series of interlocked message exchanges between organizational actors that allow them to more easily process difficult situations. Communication phases Cycles of communication that facilitate organizing and adaptation: enactment, selection, and retention. In each phase of organizing, information is processed by organizational participants through the appropriate use of relevant rules and communication cycles. Double interact An exchange of conditionally related messages with three components: act, response, and adjustment. Effectiveness In an organization, effectiveness refers to doing what is best for the organization (doing the right thing) to achieve organizational goals. Enactment phase of organizing When organizational participants attempt to make sense of the different situations and demands confronting the organization. Equifinality The adaptability of social systems to find different ways to achieve system goals depending on the unique and changing constraints confronting the systems. Equivocal information inputs Uncertain situations that organizational actors confront. Kre66464_09_ch09_p197-220.indd 219 Feedback loops Message systems connecting the phases, enabling coordination. Interventions Strategic plans for directing change within organizations. Negative feedback loops Used to stop the flow of information from retention to enactment and selection, halting the performance of new behaviors; negative feedback loops are also used to check the flow of information about enactment and selection activities to the retention phase. Organizational development The process of organizational renewal that helps organizations resist entropy and promote ongoing organization. Organizational intelligence A repertoire of rules is developed and stored in the retention phase that can be used to guide future organizational actions. Organizational reflexivity The ability of organization members to see their organization in the same way the representatives from the relevant environment see the organization. Organizational satisfaction Achieved through an organization’s strong supportive culture that nurtures their members and customers, integrating them comfortably into the communication activities of the organization. 11/3/11 2:45 PM Summary CHAPTER 9 Output measure A sensible and logical examination of the quantity and quality of raw material outcomes from organizational activities. Rules Guidelines for interpreting and responding to situations that are established through interaction experiences between organizational participants. Positive feedback loops Used to gather information from past experiences (retention) to guide interpretation (enactment) and response (selection) to confront new organizational issues. Selection phase of organizing When decisions are made after the enactment process is completed about whether there are rules available to guide effective responses to different situations, or whether communication cycles need to be enacted to guide response strategies. Process measures How communication processes are assessed; a criterion for organizational effectiveness that is far more illusory, subjective, and multifaceted than material output measures. Requisite variety The appropriate use of rules and cycles in organizational life. Requisite variety suggests that the more equivocal an organizational problem is for organizational participants, the more they need to develop correspondingly complex processes to cope with the issue. Retention phase of organizing Information about the ways organization members have responded to different inputs during the enactment and selection phases is gathered and stored. Kre66464_09_ch09_p197-220.indd 220 Slack resources Resources that are not already committed to other purposes within organizations. Weick’s model of organizing Describes the organizing process in terms of the communication of relevant information to promote a balance between organizational stability and innovation. Weick’s model explains that social organization is developed through the use of interconnected communication processes that help organizational participants make sense of the complex situations they confront. These interconnected communication processes promote problem solving, adaptation, and growth in organizational life. 11/3/11 2:45 PM Chapter 10 Communicating within Interorganizational Fields Learning Objectives What We Will Be Investigating: • Examine the interdependent roles of internal and external channels of communication in modern organizational life. • Identify the variety of relevant external information sources that typically influence organizational activities. • Examine how open systems theory describes the need for external organizational communication and illustrates how exchanges between organizations and environments enable achievement of key goals at multiple levels of organizing. • Examine the systems transformation process used to develop organizational inputs into desired outputs. • Identify the key components of the interorganizational field and typical members of relevant organizational environments. • Identify strategies for building effective cooperative relationships with representatives of interdependent external organizations, including examination of boundary-spanning organizational roles. • Understand how strategic organizational communication activities such as marketing, public relations, advertising, and lobbying are used to promote effective external organizational communication. • Examine the ethical dimensions of interorganizational communication. Kre66464_10_ch10_p221-244.indd 221 11/3/11 2:45 PM CHAPTER 10 Introduction Chapter Outline 10.1 The Interorganizational Field The ability to express an idea is well nigh as important as the idea itself. —Bernard Baruch Information-Gathering Activities Information-Giving Activities 10.2 E xternal Organizational Communication Activities Public Relations Lobbying Marketing and Advertising 10.3 The Small-World Phenomenon 10.4 The Relevant Environment 10.5 T he Interorganizational Field and Systems Hierarchy 10.6 Boundary-Spanning Activities 10.7 R  elationship Development and Interorganizational Communication 10.8 E thical Dimensions of External Organizational Communication Introduction The primary focus of organizational communication study is on internal communication. In fact, most of the chapters in this book have focused on internal organizational communication, such as ways in which members of work groups coordinate efforts, ways in which communication is used to develop meaningful relationships within organizations, and ways in which leaders interact with workers. However, there is another side to organizational communication that bridges the organization to its external environment: external organizational communication. Internal and external channels of communication are tightly connected and interdependent. In Chapter 9 we described how internal and external channels of communication are used to help promote a balance between innovation and stability in organizations. We also described how internal and external channels of communication are used to inform organizational development efforts. But there is much more to external communication in modern organizational life and the interdependence between internal and external channels of organizational communication, which we will examine in this chapter. External organizational communication targets a varied group of external constituents (including suppliers, buyers, shareholders, community members, and so on) and involves a broad range of interrelated organizational activities such as the following: • Kre66464_10_ch10_p221-244.indd 222 Public relations professionals emphasize the importance of external organizational communication with a focus on developing communication activities and programs that promote a positive, externally recognized organizational identity and building strong external relations between organizational stakeholders. 11/3/11 2:45 PM Section 10.1 The Interorganizational Field • • • CHAPTER 10 Lobbyists endeavor to build relationships and provide information to promote cooperation with and influence the activities and legislative efforts of key policy makers. Marketers develop organizational strategies for communicating about and positioning organizations and their products and services with key external audiences. Advertisers develop specific communication campaigns and programs for promoting organizational products and services with customers. Often, these external communication activities are grouped together within an organization, sometimes along with internal organizational communication functions, under the broad title of strategic organizational communication. This chapter examines the importance of coordinating activities with other relevant organizations within the larger interorganizational field. We describe typical constituent members of interorganizational fields, including supplying organizations, regulating organizations, competing organizations, as well as organizational customers and other stakeholders. We also examine strategies for establishing effective cooperative relationships with representatives of these interdependent organizations, including boundaryspanning organizational activities (communication exchanges between organization members and relevant others from outside the organization), and the use of marketing, public relations, advertising, and advocacy campaigns. The chapter closes with a case study that illustrates the strategic use of communication to establish and maintain effective interorganizational relations. 10.1 The Interorganizational Field E very organization operates within a larger environment of organizations. This organizational environment is often referred to at the interorganizational field. The interorganizational field includes all the organizations that are relevant to a particular organization. This can include, among others: • • • • • • organizations that supply raw materials to the organization, government agencies and professional associations that regulate organizational activities, consumer groups, competing organizations, unions, and organizational partners. It is important for organizational representatives to coordinate organizational activities with these members of the interorganizational field. Just as organizational members must use communication to establish cooperation with one another, members of interorganizational fields also use communication to elicit interorganizational cooperation. Two primary organizational communication activities are essential to coordinating efforts between organizations within the interorganizational field: information-gathering activities and information-giving activities. Let’s examine each. Kre66464_10_ch10_p221-244.indd 223 11/3/11 2:45 PM Section 10.1 The Interorganizational Field CHAPTER 10 Information-Gathering Activities Information-gathering activities (sometimes referred to as intelligence gathering, research, or due-diligence functions) occur when boundary-spanning organizational actors use their interorganizational connections to keep up with changes within the environment that are relevant to their organizations. For example, advance-planning representatives for the Olympic Games Site Selection Committee are sent out to collect information about potential Olympic Game sites to help determine whether the sites have the requisite qualities, resources, and venues needed to adequately host the Olympic games. These advanceplanning representatives interact with local government officials, financial backers, facility managers, and others to gather the information needed to make an informed recommendation about whether to award the Olympic games to a particular site. There are many times in organizational life when information is needed from the external organizational environment to guide planning and decision making. Additionally, information from external sources can alert organization members about emerging organizational constraints and opportunities. For example, information about new competing products can alert the organization to the need to innovate its own product line to maintain its market share. Information about new technologies might let organizational leaders know about the opportunity to develop new strategies for increasing organizational efficiency and productivity. Information-Giving Activities Information-giving activities (sometimes referred to as publicity, lobbying, or sales functions) occur when boundary-spanning organizational actors provide strategic information to key representatives of external organizations within the environment to elicit support and coordination for their own organizations. For example, call center specialists at the Cancer Information Service (CIS), operated by the National Cancer Institute, answer questions from callers on their toll-free telephone hotline (1-800-For-Cancer) about cancer diagnoses, treatments, clinical research, and how to cope with side effects from cancers and cancer treatments. The goal of the CIS is to reduce the national cancer burden by providing members of the public who are confronting cancer with relevant information about early detection, diagnosis, treatment of cancers, as well as about successful cancer survivorship so these individuals can make informed decisions about the best health care and quality of life choices. It is imperative for the CIS specialists to provide callers with timely, accurate, and relevant information to help callers cope with the many uncertainties and challenges of dealing with cancer. The specialists are carefully trained to communicate effectively over the phone with callers from different backgrounds, education levels, and levels of health literacy. The specialists are provided with computer databases with cancer information, as well as scripts they can recite to callers to help answer common questions. The specialists can also mail or email relevant text to callers to provide them with written transcripts of the health information they need. The information-giving functions of the CIS help the National Cancer Institute achieve its goal of reducing the national cancer burden by providing evidence-based health information to individuals coping with cancers so these callers can make good decisions about managing the disease. Relevant cancer information from the CIS can help callers make good decisions about effective cancer prevention, Kre66464_10_ch10_p221-244.indd 224 11/3/11 2:45 PM Section 10.2 External Organizational Communication Activities CHAPTER 10 early detection, treatment, and survivorship, helping to reduce cancer incidence, morbidity, and mortality. Information-giving activities serve a similar role in for-profit organizations where consumers call in for product information and assistance. 10.2 External Organizational Communication Activities A s already noted, external organizational communication encompasses a broad range of activities including public relations, lobbying, marketing, advertising, and more. Such strategic communication includes the broad range of internal and external communication functions in modern organizational life. Although many of the external communication activities tend to overlap, we will examine some of the major avenues for external organizational communication in this section to give you a flavor for the ways that external channels of communication are used. We’ll start with public relations. What does the Nike logo communicate to its external environment? Public Relations Public relations (PR), sometimes referred to as public affairs communication, is a term used to cover an integral area of organizational communication. PR is used to coordinate interactions between organizations and key audiences (publics). Although the primary focus of public relations activities is typically on coordinating organizational activities with external audiences (such as with customers, regulators, and competitors), there is also an internal communication dimension to public relations. That is, PR professionals also focus on communicating effectively with organizational members, who comprise a key internal public for organizational communication. For example, PR professionals often conduct employee surveys to identify internal organizational issues and produce company newsletters to keep organization members informed about and involved with organizational activities. Public relations has been used to describe many different important organizational communication activities including corporate publicity, shareholder relations, financial relations, environmental and consumer affairs, internal communications, labor relations, community affairs, media relations, government relations, issues management, advertising, branding, corporate identification, and corporate advocacy (Grunig & Hunt, 1984). Public relations activities are often quite complex and involve careful planning and research. For example, crisis-management activities designed to minimize harm to an organization and to its publics during emergencies, such as oil spills or chemical contamination, generally involve coordination of many individuals representing media outlets, government agencies, contractors, consumer groups, first-responder groups, and members of scientific communities. It is important for crisis-management communicators to provide relevant, accurate, and timely information that enables those affected in emergencies to respond effectively to the Kre66464_10_ch10_p221-244.indd 225 11/3/11 2:45 PM Section 10.2 External Organizational Communication Activities CHAPTER 10 situation, as well as to demonstrate the responsibility of the organization in addressing the crisis situation. Poorly handled crises can destroy organizational reputations, while wellhandled crisis communication can enhance public respect and loyalty to organizations. Organizations in Action A Study in Crisis Management Today, every time you open up a bottle of aspirin, or a jar of mustard, or a jug of pancake syrup, what you’re doing—and how you are doing it—is directly connected to one of the most famous examples of crisis management in U.S. history: Johnson & Johnson’s handling of the Tylenol scare in 1982. As noted in this chapter, crisis management activities are designed to minimize harm to an organization and its publics, and the handling of the Tylenol scare is quite literally a textbook example of how firms need to proceed in such an emergency. In October 1982, seven people in the Chicago area were reported dead shortly after taking extrastrength Tylenol capsules. Initially, it was unclear who was responsible for these deaths, although it was clear that the Tylenol capsules were tainted with lethal doses of cyanide. Needless to say, Johnson & Johnson was on the hot seat: consumer confidence in Tylenol and the company was shaky, and the whole situation could deteriorate into a corporate disaster. Indeed, Tylenol’s market share during this period plummeted from 37 percent of the market to only 7 percent. But McNeil Consumer Products, the relevant subsidiary of Johnson & Johnson, embarked on a crisis-management program that has often been used as a model for such efforts. What did they do? First, they took a strong moral and ethical stand: As far as the company was concerned, it was “people first and property second.” Period. And to walk the talk, Johnson & Johnson pulled 31 million bottles of Tylenol off the shelves, at a loss of more than $100 million. The firm also halted all advertising for the product. After determining that the cyanide did not get into the capsules at any Tylenol plant, Johnson & Johnson nonetheless reintroduced the product with triple-seal tamper resistant packaging, becoming the first company to comply with a Food and Drug Administration mandate of such packaging. Further, to motivate consumers to start buying Tylenol again, they offered a $2.50 coupon on future purchases. And to restore confidence in the product, the company made over 2,250 presentations to the medical community about their efforts (Effective Crisis Management). Johnson & Johnson also offered a $100,000 reward for information leading to the arrest and conviction of the Tylenol killer, but no one was ever charged with the crime (“A Bitter Pill,” 2000). But as far as the public was concerned, Tylenol was not to blame for these deaths, and given the company’s aggressive Why does Johnson & Johnson’s hanstrategy to investigate and deal with the problem, dling of the Tylenol crisis make it a consumer confidence was eventually restored. good example of crisis management? Although in the short run, Johnson & Johnson’s reaction may have seemed excessive, unnecessary, or risky, it demonstrated a type of corporate responsibility that could and did restore public trust. And as a result of that tragic incident in 1982, virtually every firm that markets food and drugs today makes use of the same packaging safeguards—safeguards that were simply nonexistent in most consumer products prior to this unfortunate incident. (continued) Kre66464_10_ch10_p221-244.indd 226 11/3/11 2:45 PM Section 10.2 External Organizational Communication Activities CHAPTER 10 Organizations in Action (continued) Critical Thinking Questions 1. In a crisis situation such as the Tylenol scare, what various “publics” must a company like Johnson & Johnson be concerned about? 2. Why might restoring trust in a company after a crisis be difficult? 3. What is the value of long-term thinking in such a crisis situation? Sources Effective Crisis Management. (n.d.). The Tylenol crisis, 1982. Retrieved from http://iml.jou.ufl.edu/ projects/fall02/susi/tylenol.htm Bergman, J. (2000, November 2). A bitter pill. The Chicago Reader. Retrieved from http://www .chicagoreader.com/chicago/a-bitter-pill/Content?oid=903786 Lobbying Lobbying activities involve the development of influential relationships between organizations and relevant policy makers, such as representatives from legislative bodies, regulating agencies, accrediting organizations, consumer groups, media outlets, and government organizations. Lobbyists build their credibility with policy makers and media representatives by providing these influential individuals with relevant, accurate, and timely information concerning complex issues of interest to organizations. Briefing documents are often written by lobbyists to provide key decision makers with relevant background information about important issues. The best briefing documents are succinct, informative, and persuasive, motivating policy makers to favor the interests of the lobbyists’ organizations. Press releases are specialized briefing documents that lobbyists use to influence press coverage concerning important organizational issues. To be effective, lobbyists need to make sure their press releases have news value, provide the right kind of information needed by media representatives, and are responsive to media constraints concerning messages’ content and structure. Strategic lobbyists target the right media outlets for covering organizational issues that are most likely to reach and influence relevant audiences. Marketing and Advertising Marketing and advertising activities are designed to communicate organizational products and services to key audiences. Marketing professionals develop communication strategies for positioning organizational products and services to meet audience demands. A critical part of effective marketing is to gather data through market research about the needs, attitudes, and preferences of key audiences for organizational products and services. Who are these audiences? What are their key beliefs, values, and attitudes concerning organizational products and services? How receptive are they likely to be to paying attention to and accepting organizational messages? Marketing efforts involve making strategic external communication decisions based on the marketing mix, popularly known as the 5 Ps (product, price, place, promotion, and positioning) (see Figure 10.1). This marketing mix involves the following: Kre66464_10_ch10_p221-244.indd 227 11/3/11 2:45 PM CHAPTER 10 Section 10.2 External Organizational Communication Activities 1. Developing communication strategies to increase understanding about organizational products. 2. Pricing those products so they are attractive to key audiences. (This means not only the financial price of products but also the psychological costs and rewards connected to organizational products or services.) 3. Placing messages about organizational products and services on communication channels that will capture audience attention. 4. Promoting products with motivating messages. 5. Positioning products and services as attractive options for audiences within the marketplace of similar and competing products and services. Figure 10.1: The Five Ps of Marketing Product Positioning Price Marketing Mix Promotion Place The promotion of a product can include a number of different promotional tools being used, including advertising, direct marketing, sales promotions, personal selling, and public relations. Advertising activities involve the development and implementation of creative communication strategies to promote organizational products and services. Advertising professionals design communication campaigns to create audience awareness about organizational products and services, as well as to persuade audiences to purchase those products and services. Advertising campaigns use a range of different media, such as television, radio, newspapers, magazines, billboards, messages delivered via the Internet and through social media, and even through word-of-mouth interpersonal communication channels. There is a strong focus in advertising on developing targeted persuasive messages that capture audience attention and influence audience behaviors. However, those creative messages are not just Kre66464_10_ch10_p221-244.indd 228 11/3/11 2:45 PM Section 10.2 External Organizational Communication Activities CH...
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