Critical Organization Theory: Marxist Approach
Category : Employee Empowerment, Marxist, Organisation Theory and Design
Critical Organization Theory: Marxist Approach
Critical Theory is based on the claim of its supporters that social science can and should contribute to the liberation of people from unnecessarily restrictive traditions, ideologies, assumptions, power relations, identity formations, and so forth, that inhibit or distort opportunities for autonomy, clarification of genuine needs and wants, and thus greater and lasting satisfaction (Alvesson and Willmott 1992, cited in Pfeffer 1997, p. 178).
Critical Organization theories are widely based on Marx’s ideologies regarding work and organization structure and design. The Marxist approach began essentially as a critique of the dominant rationalist views. Supporters of Marx argue that organizational structures are not rational systems designed to maximize control and profits. Work is divided not to improve efficiency but to ‘deskill’ workers, to displace discretion from workers to managers, and to create artificial divisions among the workforce. Hierarchy develops as an instrument of control and a means of accumulating capital through the appropriation of surplus value. Human relations reforms are misguided because they do not challenge the fundamental exploitative nature of organizations (Scott 1992 cited in Pfeffer 1997, p. 179). Equality, reflexive questioning and democratic process are central concerns in the writings of critical organizational theorists.
Marxist Critical Perspective of Employment Relation
Most approaches to understanding the structuring of the employment relation proceed from an efficiency rationale – focusing on minimizing both transaction and production costs. The presumed objective of control, whether achieved through the use of incentives or through socialization and inculturation, is enhanced organizational performance. Contingency theories of organizations asserts that organizations must be designed and managed in accordance to the environmental factors that organizations face such as competition and technology in order for them to survive. Thus employee relation are designed to improve performance in the face of changing environmental factors.
Marxist analysis challenges these arguments in two ways. First, it asserts that control, not efficiency, is the objective of organizing arrangement and that when there are trade-offs involved, efficiency concerns are often out-shadowed by achievement of control over the labor process. Second, a critical Marxist perspective argues that many of the prescribed mechanisms for achieving control of the work process are not benign and achieve their results at some substantial cost to the individuals working in organizations.
From the Marxist perspective of employment relations, organizations employing labor do so only in order to exploit it. The purpose of capitalism according to Marxists is to make surplus value/profit from the employment of resources in the labor process, and it is in this sense that it is argued that labor is exploited. This perspective views industrial organizations as microcosms of the wider society and the frictions in that wider society are likely to be reflected and present in the organization. Underlying the Marxist perspective is an assumption that power in capital society is weighted in favor of the owners of capital (employers), the means of production and not with the owners and sellers of the labor resource (employees). This is a perspective that uncompromisingly predicts a fundamental and continuing conflict of interest between employees and employers and the conflict is likely to be about who should control the labor process as well as about the price of labor.
Understanding Organizations through Marxist Perspective
Marxists argue that organizations in a capitalist society employ people not in order to use their skills and abilities to the full extent. The reason for employing workers is not to provide their needs and wants but to exploit them. Marxists argue that employment relations are oftentimes one-way, with the organization benefiting from its workers.
Marxist perspective called for the abolishment of capitalism and to the birth of a modern society (modern organization). The modern organization according to Marx must become the realization of principle of individualism, the individual existence is the final goal; activity, work, content, etc. are mere means. In modern society (organization), ties of personal dependence, distinctions of birth, education, etc. are broken, abolished. The individuals appear to be independent. They appear to collide with one another freely, and to exchange with one another in this freedom (Seyer 1991).
Marxist perspective provides a critical view of organizations that if seen through the right lenses and with open mind can offer guidance for modern organizations, managers, and governments to protect the modern-day workers. The Marxist perspective of organizations is critical of those organizational policies, procedures and strategies that alienate or hinder employees to realize their full potential, aspirations and satisfy their needs and wants. For me, Marxist perspective of organization provides a picture of what modern organizations must not avoid. It helps organizations to create policies and procedures that will benefit the workers.
Marxist View of Organizations: Personal Experiences
I believe that Marxism is primarily concern with equality. Marx believes that a modern society is a society where there are no class divisions and no inequalities and alienation. A modern society, is where individuals are free to labor in accordance with their potentialities, and their skills, abilities, talents and interests. Man labors in order to achieve self-actualization. One implication of Marx’s view of the modern society is equality – equal access to services and equal access to labor.
In our organization, Equality is valued. The management makes sure that everyone are given equal opportunities regardless of their cultural background, gender, social status, and religion. Our organization adheres to Equal Employment Opportunity set by the government. Equal employment opportunity (EEO) refers to policies aimed at preventing employment discrimination. EEO policies and laws were developed in response to discriminatory practices against persons based on race, color, gender, religion, national origin, disability, age and so forth. Equal employment opportunity laws are one group of laws that affect Human Resources issues. Equal Employment Opportunity is a group of policies that aims to ensure that all individuals are given equal opportunities to work regardless of the race, color, religion, gender or national origin (Sims 2002).
Another implication of the Marxist perspective is the development of employee empowerment strategies of many organizations today. Marxists argue that organizations aim to control the employment process. By doing this, employees lose their ability to influence their work and to take part in organizational decision-making. In order to avoid this, our company has employee empowerment schemes. According to Sims (2002) empowering employees is a popular approach to work organizations. It means giving employees the authority, tools, and information they need to do their jobs with greater autonomy, as well as the self-confidence required to perform the new jobs effectively. Empowering is inherently a motivational approach. It boosts employees’ feeling of self-efficacy and enables them to more fully their potential, satisfying high-level needs for achievement, recognition, and self-actualization. Empowerment results in changes in employees’ effectiveness. The result is that people take more initiative and persevere in achieving their goals and their leader’s vision even in the face of obstacles.
Postmodern Organization: Contingency Approach
Postmodernity or the search for the postmodern organization, analyzes the changes occurring in organizational forms and focuses on what agents actually do in organizations. Stressed, in particular, is the move away from the dominant organizational form described by Weber. The latter’s ideal typical model of a hierarchical, bureaucratic organizational form was based on a division of labor from which was derived several characteristics which typified modern organizations. Briefly, division of labor underscores task discontinuity, specialization and functional separation, with the result that organizational forms are characterized by stratification, hierarchization and coordination through an impersonalized formalization of rules. Emphasis is placed on standardization and coordination is centralized. Organized for mass markets, these ways of organizing no longer appear relevant for today’s market conditions. Postmodernity rejects these central beliefs of organizing and is identified in many cases by their polar opposites. The postmodern organization is characterized by flexibility. It purports to empower employees. Supervision stresses the importance of trust and the internalized recognition of and adherence to the organization’s missions and goals (Clegg et al 1996).
Postmodern organization theories, essentially focus on the postmodern changes that organizations are undergoing. Many postmodern theorists argue that the traditional ways of creating and managing organizations are not applicable to the postmodern business environment anymore. One of the popular postmodern approaches to organization structure and management is contingency approach.
Contingency Approach in Action
Postmodern theorists argue that there are different factors that affect the decision concerning organizational design. Organizational structure is no longer dictated by the desire to control but by the desire to create a flexible organization that will benefit all the shareholders. There are four factors that managers assess before designing an organization. These factors are the organization’s strategy, its external environment, its technical process, and its size. Each factor alone can affect design decisions, or they can collectively constrain or drive design choices.
Many of top management’s strategic choices affect organization design decisions. An organization’s strategy describes the organization’s long-term goals and the way it plans to reach those goals. Strategies also specifies how managers should allocate resources to reach the long-term goals of their organization (Sims 2002). There are three basic strategies that are available to an organization. These are cost leadership, differentiation, and focused. Under cost leadership, an organization provides the same services or products as its competitors, but produces them at a lower cost. An organization that chooses this strategy seeks to gain a significant cost advantage over other competitors and pass the savings on to consumers in order to gain a large market chare. Such a strategy aims at selling a standardized product that appeals to an ‘average’ customer in a broad market. Organizations that use this strategy earn a better return on their investment in capital and human resources and attain significant economies of scale in key business activities. In a differentiation strategy, an organization seeks to be unique in its industry along dimensions that are widely valued or preferred by buyers. An organization that chooses a differentiation strategy typically uses a product organization design whereby each product has its own manufacturing, marketing, and research and development (R&D) departments. A focused strategy is designed to help an organization target a specific niche within an industry, unlike both the cost leadership and differentiation strategies, which are designed to target industry-wide markets. An organization that chooses a focused strategy may utilize any of a variety of organization designs, ranging from functional to product to matrix, to satisfy their customers’ preferences (Sims 2002). Augier and Teece (2006) argue that know-how, internal structure and human behavior affect the capability of the organization. Organizational capabilities affect strategies which in turn have implications on organizational structure.
2. External Environment
An organization’s environment is composed of those institutions or forces that are outside the organization and potentially affect the organization’s performance. These typically include suppliers, customers, competitors, government regulatory agencies, public pressure groups, and the like. The condition of the external environment has implications on the design and structure of the organization. Managers must deal with the changes in the external environment by adjusting the organizational structure (Sims 2002). External environment has implications on the organization.
3. Organization Size
The size of the organization also has implications on the design and structure of the organization. As organizations increase in size, the rules and procedures become formal. Large organization have more management levels and more structured work activities than small organizations and used decentralized form. Small organizations usually have more informal decision process and the organizational design tends to be simpler. Small organizations also have fewer diverse activities, fewer formal written procedures, and narrower spans of control (Sims 2002).
Technology influences organization design in terms of job design and the creation of teams and departments, the delegation of authority and responsibility, and the need for formal integrating mechanisms. Technology refers to how an organization transfers the inputs into outputs. Every organization has at least one technology for converting financial, human, and physical resources into products or services (Sims 2002).
In terms of organizational forms, the ‘organic system’ is popular in the postmodern environment. An organic system is characterized by low to moderate use of formal rules and regulations, decentralized and shared decision making, broadly defined job responsibilities, and a flexible authority structure with fewer levels in the hierarchy. Top management typically makes decisions that determine the extent to which an organization will operate as a mechanistic system or an organic system.
Fred Fiedler: Contingency Theory in Leadership
Fred Edward Fielder is a globally recognized guru in the fields of psychology and leadership. Fiedler presented one of the most intuitive leadership models, which is known as the Contingency Theory. Fiedler proposed that effective leadership is a function of a proper match between the leader’s style of interacting with followers and the degree to which the situation gives control and influence to the leader. According to Fiedler, a leader’s style could be identified based on how the leader describes an individual he or she last enjoyed working with. When a leader describes this person in favorable terms, this indicates that the leader is interested in good relationships. Accordingly, that leader’s style would tend to be more people-centered. On the other hand, describing the least-preferred individual in unfavorable terms indicates more of a task-centered style. Fiedler felt that one’s style is fixed. Using three situational factors (degree of respect for employees; structured jobs; and influence over the employment process) he identified eight situations where either the task-centered or people-centered styles would work best. The situational factors according to Fiedler dictate which leadership style would be more effective (Sims 2002).
Fiedler developed the Least-Preferred Coworker (LPC) questionnaire, which claims to measure whether a person is task-oriented or relationship-oriented. Leader-member relations refers to the degree of employee confidence, loyalty, respect, and trust in the leader. Acceptance leads to commitment and loyalty, a rating of unacceptable leads to friction and tension. This dimension is measured on a continuum ranging from good to poor. Obviously, the better the relationship, the easier it is to lead people. When the relationship is characterized as poor, the leader is at a great disadvantage. Leader position power refers to the authority that is granted based on coercive, reward, and legitimate power. According to Fiedler, the more position power possessed, the easier it is to lead others. Fiedler classifies leadership styles into task-oriented and relationship-oriented categories using the LPC. Respondents describe the person they are least able to work with in either favorable or unfavorable terms. The leadership style of the person is judged relationship-oriented if the person is favorably evaluated, and task-oriented if unfavorably judged. To determine whether task or relationship is appropriate, the user answers three questions pertaining to situational favorableness, using the Fiedler model. After a leader’s style is determined through the LPC, a match can be determined through the other major contingency variables: leader-member relations, task structure, and position power. Organizations, Fiedler claims, should match tasks and work environments with an individual’s leadership style to ensure high group performance (Sims 2002).
Fiedler argued that because leadership is primarily the exercise of social influence, the ease with which a leader is able to influence his or her followers should make a big difference on how favorable the leadership situation is for the leader. The most important consideration according to Fiedler is the quality of interpersonal relations between parties. If the leader is respected and liked by the followers, the leader can influence them with ease. Another consideration is the nature of the task assigned to the group, particularly the degree of clarity and structure in the task. Task clarity can increase authority and influence. The third consideration is the amount of authority that the leader held by virtue of a formal position or designation of leadership (Chemers 1997).
Strengths of the Contingency Theory
Fiedler’ model is considered as the first highly visible theory to present the contingency approach. It emphasized the importance of both the situation and the leader’s characteristics in determining leader effectiveness. It stimulated a great deal of research, including tests of its predilections and attempts to improve the model and inspired the formulation of alternative contingency theory (Sims 2002).
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