THE CONTRIBUTION OF CHARLES HANDY: ORGANIZATIONAL THEORY, MANAGEMENT AND ADMINISTRATION
Charles Handy’s Contribution to
Organizational Theory, Management and Administration
Themes in Charles Handy’s Works
Reading Charles Handy’s works in the area of organizational theory, management and administration shows that his approach to the general topic revolves around a number of major themes. Perhaps this is because of his Irish upbringing or experiences in the corporate world or even a combination of both that influenced his perspectives. Regardless of the factors that influenced him, many recognize his perspectives as a great influence or better yet an eye-opener for organizations by urging them to value lessons derived from its experiences and use these to support change in the organization towards improvement in structures, processes and relationships. However, he prefers to be considered as a social philosopher instead of an organizational guru. Again, this is consistent with his stand of empowering organizations to help themselves instead of prescribing solutions for organizational dilemmas.
First theme revolves around Handy’s position of urging organizations to utilize, consciously and with awareness, learning from organizational experiences and treat the organization as a constantly evolving entity decisively responsive to change in its internal and external environment. Instead of introducing outright models for application by organizations, Handy offers a guide for analytical processes for organizations.
The key analytical foundation that Handy proposed is the non-prescriptive view of organizations. In his work ‘Gods of Management’ which came out in 1995, Handy propounds that there can never be prescriptions for the ills or organizations because there is no single solution or answer even for similar issues arising in different organizations. However, this does not mean that organizations are totally in the dark with regard to what they should do in case they encounter management and administrative problems. Another related analytical tool is the recognition that every organization can draw lessons from generalizations but it should always consider its unique experiences in actual implementation (, 1984).
This means that organizations initially look upon the best practices of similar organizations in determining its options, understanding the possible consequences of these options, and forecasting the future effects of these options to the business characteristics, experiences and environments of the organization but it should also consider the appropriateness of these options to its actual operations. This further means decisive output for business organizations.
Second theme revolves around the holistic approach of Handy to business organizations. This is in response to existing organizational theories that either focus only on specific aspects of the organization or centre on one organizational component over the others. Although (1985) recognizes that these organizational concerns are important in management and administration, he also drew attention to an organizational component that is given little attention, socio-political component of organizations.
(1984) mentions that in modern organizations, the common perspectives arising from the functioning of these entities cover the individual, organization including its form, and organizational systems and interactions. The underlying concept behind these perspectives is the organization as a structure governed by standards on processes and relationships. Limited works also exist that provide a link between these perceptions in order to provide a complete understanding of organizational functioning.
Handy proposes two alternative perceptions useful to organizations. One perception considers the organization as a collective of individuals. This is based on the recognition that the organization is made of up of individuals with differing personalities and competencies. Instead of looking at the individual as a core unit of the organization, Handy proposes the perspective of different individuals working collectively. The individual becomes not only a core element of the organization but also as a social being capable of influencing the organization as well as being influenced by the organization. The other perspective looks at the organizational functioning as composed of complex intertwined political systems. This means that the organization is a social body that involve defined boundaries or the extent of membership of the organization is known; common values and goals for the members of the organization that define the power relations; administrative mechanisms that define roles, functional links, and collaboration relationships; and power hierarchies that defines the structure, management and administration of the organization (, 1984; 1985).
Handy’s proposed perceptions constitute a holistic approach because it reminds modern organizations that the socio-political aspect of the organization remains at the back of management and administrative activities when this should not be so. Organizations are comprised of vibrant individuals existing within the organization not only as individual contributors but also as social beings interacting with other members to collaborate in deriving output.
The third theme is the recognition of context. (1984) provides that “every organization is different” (). Due to the uniqueness of every organization, it is incumbent upon managers and administrators to rely upon its ability to understand the workings of the organization, master its potentials and capabilities, and build upon this information to define the strategies of the company on functions, roles and output expectations.
Context pertains to the unique characteristics and functions derived from the facts and situations where the organization is operating. The design for the organization and its management depends upon context. In conjunction with context, (1984) also mentioned the concept of ‘organizational cultures’ encompassing the “total of the inherited ideas, beliefs, values and knowledge, which constitute the shared bases of social action” () as well as “the total range of ideas and activities of a group of people with shared traditions which are transmitted and reinforced by members of group” (). Due to the unique context of the organization, it also develops a unique form of management and administration.
The consideration of context is necessary in all endeavours of the organization. This means that the organization cannot truly understand its workings including both strengths and weaknesses without first mastering its context. This is also a necessary consideration for organizational change. Organization cannot understand their problems, define options and select from the range of options without first dwelling on context.
However, as mentioned earlier, (1984) also recognize the value of generalizations on best practices to understand issues, available options and the consequences of options. However, the determination of actual solutions and the implementation should largely depend on context.
Analytical Thinking for Organizations
Charles Handy contributed to general management and administration as well as particularly in the case of educational organizations. True to his holistic perception, (1995) considered various organizational aspects covering motivation of people in the workplace, roles and interactions between and among members of the organization, leadership, power and influence, working group dynamics, organizational cultures, and politics of differences and the management of differences arising within the organization.
In the case of motivation, (1995) looked into various theories and classified these into theories focusing on satisfaction, incentives and intrinsic values. Although, these provide explanations for the factors that motivate people to contribute to the organization, not one of these theories applies universally. The basis for this is that motivation depends upon the consistency of the psychological contract expected by the organization and individual. If there is a match, regardless of the nature of contractual relationship, then motivation emerges on the part of the individual and the organization in general. This implies that there is no universal theory for motivation because this depends entirely upon whether consistency arises within the activities, processes and relationships of the organizations.
On one hand, Handy’s perception seems overly simplistic especially with the consideration of motivation as highly dependent upon the emergence of consistency in the psychological constructs and the organization and individual members. If there is no consistency, then the organization cannot expect to have motivated employees but with consistency, motivation develops and organizations have a lesser problem to consider. On the other hand, Handy’s view on motivation highlights a clear explanation of the complexities of human relations in organizations. This is because arriving at a meeting point for organizational and individual psychological constructs requires the consideration of a number of factors such as understanding of basic human conditions, wants and needs.
(1995) suggests that apart from the common consideration of money, job satisfaction, and job security as causes for motivation, an important tying factor for all these considerations is equity. This means that even if the company increase the compensation of their employees, offer regularization options, and provide benefits for members of the organization, this may not necessarily result to motivation or the desired levels of motivation without equity. Equity then in the context of matching psychological constructs such as compensation mean that the employee agrees with the organization that the compensation provided by the organization is commensurate with the performance of the individual and his contributions to the organization.
Handy was able to provide a factor that ties the different theories on motivation through equity. Regardless of whether the organization prefers one motivation theory over another, equity should always be considered as an important factor. It is through equity that individuals and the organizations reach a meeting point for psychological constructs.
Apart from motivation theories, Handy also applies a similar analytical process for the other organizational topics to come up with a classification of the different theories and a reading of their implications to organizations. With this system of thought, organization do not only depend on what commonly applies but explore options that work best for the organization based on its unique features. Thus, the process of learning matters equally relative to the learning itself. Vibrant and successful organizations optimize their output when they engage in analytical thinking, have a holistic approach, and consider their particular context.
Change & Adaptability to Change of Organizations
Apart from urging organizations to apply an analytical approach in management and administration, (2004) also advocates the necessity of organizational change amidst changing conditions. In particular, Handy covers the current trend of outsourcing. He does not explicitly promote or decry outsourcing as an organizational management approach but provides an explanation for this phenomenon.
According to (2004), the core idea of outsourcing is that organisations pay for the output delivered by employees instead of paying for the time invested by employees in the workplace. This provides flexible conditions because organizations only demand for an output equivalent to an agreed upon compensation and the individual or group can work for as long as they please or wherever venue they want as long as they come up with the output at the time agreed upon.
(2004) provides that this organizational relationship means a change in the working relations of managers and individual employees from manager-worker to client-provider relationship. Moreover, the arrangement also fosters independence, creativity and innovativeness since the provider has to meet output expectations by depending upon his competencies. In addition, the organization stands to save on paying for output instead of working time. In this sense, outsourcing is a rational choice for organizations.
However, (2004) also recognize that shifting organizational relationships from office-based to outsourcing is not simple or easy. It is not simple because individuals shifting from worker to provider pose a number of challenges especially in developing creativity. People who have gotten used to the level of dependence in the office setting may find it difficult to become independent providers. It is not easy becomes this would likely be faced with resistance. Individuals secured in their office position may not be willing to take the risk of solely making their compensation dependent upon output. Apart from risk, the shift would also involve the investment of individuals on their competencies and skills, which may constitute a too big change for some employees.
Nonetheless, since outsourcing has become a trend, organizations and employees need to recognize that this system is here to stay. Handy meets two concerns arising from organizations and employees regarding outsourcing.
Organizational issues revolve around the concern that engagement in outsourcing may lead to hollow organizations. This means that organizations may only be made up of managers and supervisors. With this change in organizational structure, the organization may crumble especially since the providers are accountable only to themselves and the fulfilment of tasks depends greatly upon a fiduciary relationship between the organization and its providers. (2004) answers this by providing that there could be a good way for organizations to trust the interdependency with providers. He proposes the doughnut model to explain this. The model contends that the organization is like an inverted donut with the middle portion filled and the outer portion hollow. The solid portion in the middle represents the salient job requirements and the tasks that need to be fulfilled. The hollow space surrounding the middle area expresses opportunities for innovativeness and creativity. However, the hollow portion has limits for creativity and innovativeness.
Previously, organizations were not very keen on providing their employees with space for creativity and innovativeness. The result is that employees become stuck-up with what they have to do, the desired output determined by the company, and the processes that need to be fulfilled without necessarily adding value to their work through the enhancement of work processes and output creation. In applying the doughnut model, the organization opens its providers with the freedom to explore creative and innovative ideas in order to replace effectiveness with efficiency. (2004) provides that effectiveness is concerned with output improvement so that this may require cost while efficiency seeks to lower the cost involved in creating an outcome. To achieve efficiency, the organization need to consider insiders as outsiders—which means engaging in outsourcing—but managers should be able to successfully negotiate with providers on various terms of output delivery such as the quantity, quality, period for delivery, and other concerns.
’s doughnut theory (reverse doughnut theory) provides organizations with an understanding of outsourcing so that they do not merely engage in this arrangement juts for the sake of keeping-up with the trend but because they are in control of the situation or refuse to engage in outsourcing because of fear based on the lack of understanding of what this is all about.
However, although Handy was able to provide a thorough explanation of outsourcing, he was not able to consider some factors arising in actual organization-employee relations, particularly the innate inequality in the relationship between organizations as employers and employees based on the Marxian perspective. The Marxist view on labour relations provides that there is an innate inequality in the employer-employee relationship to the disadvantage of employees (, 2002). This strongly applies in instances when there greater labour supply relative to demand. Although the special skills of employees determine their bargaining power relative to the employee, there are only a limited number of people with the power to negotiate on equal footing with the employer and take the role of providers.
Schools as Organizations
(1984) also focused on schools as organizations so that schools design the organization and implement management decisions based on the particular culture of the school organization. The author provided as basic guide, four types of organizational that may be adhered to by school organizations singly or in combination based on their contextual needs and objectives. First is club culture expressed by a web of relations focused on the centre of the web so that the school leader controls various relationships. Second is the role culture represented by a Greek temple that operates through standards, with the fulfilment controlled by the top management. Third is the task culture represented by a net and involves small but networked organizations making the group flexible to the assumption of tasks. Fourth is the person culture that focuses on the individuals and the relationships that arise solely depend on its necessity for accomplishing tasks. Although these may be applied singly, these rarely work if not applied in combination.
In this sense, Handy urges school organizations to look at their context to determine their organizational culture. Contextual considerations include size, workflow, environment and history (, 1984) as well as the quality of relationships arising among the parties such as teachers and administrators, teachers and students, school and parents, and school and the community ( and , 1986). These factors assist the school in organizational design and management.
Handy contributes a number of lessons to organizational theory, management and administration. First, organizations are vibrant and dynamics entities able to decide its own direction, move towards this direction, and shift direction as needed. Second, organizations need to be analytical in managing and administering itself because there is no single explanation or solution even for common problems faced by different organizations. There would always be a unique explanation for the experiences of an organization. Third, context is the key to understanding the organization and determining its needs because this allows the organization to fully understand how it functions to determine how to manage the organizations. Fourth, change is inevitable since organizations are living entities that constantly change so that organizations should be flexible and ready for change such as in dealing with the trend of outsourcing. Fifth, decisive utilization of best practices and generalizations is required since organizations cannot rely on the experiences of others to understand and improve its functioning. Sixth, holistic approach is necessary for organizational success because the organization cannot move forward without a complete understanding of the organization and what it wants to achieve. Seventh, socio-political underpinnings of organizational relationships are also equally important relative to the concentration of organizations on revenue generation, profitability, cost efficiency, and returns on investment.