Doreen Managing Organizations | Readings and Cases DAVID A. NADLER MICHAEL L. TUSHMAN NINA G. HATVANY Little, Brown and Company Boston TorontoLB Frameworks for Organizational Behavior David A. Nadler and Michael L. Tushman 3 A model for diagnosing organizational behavior: Applying a congruence perspective Management's primary job is to make organiza- tions operate effectively. Society's work gets done through organizations and management's func- tion is to get organizations to perform that work. Getting organizations to operate effectively is dif- ficult, however. Understanding one individual's behavior is challenging in and of itself; under- standing a group that’s made up of different individuals and comprehending the many re- lationships among those individuals is even more complex. Imagine, then, the mind-boggling complexity of a large organization made up of thousands of individuals and hundreds of groups with myriad relationships among these individ- uals and groups. But organizational behavior must be managed jn spite of this overwhelming complexity; ulei- mately the organization's work gets done through people, individually or collectively, on their own Source: Reprinted, by permision of the publisher, from Orgenitasonal Dynamics, Autumn 1980, © 1960 by AMA (COM, a division of American Management Associations. All rights reserved. or in collaboration with technology. Therefore, the management of organizational behavior is central to the management task—a task that ine volves the capacity to understand the behavior patterns of individuals, groups, and organiza- tions, to predict what behavioral responses will be elicited by various managerial actions, and finally to use this understanding and these predictions to achieve control. How can one achieve understanding and lean how to predict and control organizational behav- ior? Given its inherent complexity and enigmatic nature, one needs tools to unravel the mysteries, paradoxes, and apparent contradictions that pre- sent themselves in the everyday life of organiza- tions. One tool is conceptual framework or model. A model is a theory that indicates which factors (in an organization, for example) are most critical or important. It also shows how these fac- tors are related—that is, which factors or com- bination of factors cause other factors to change. In a sense then, a model is a roadmap that can be used to make sense of the terrain of organiza- tional behavior. 3536 David A. Nadler and Michael L. Tushman The models we use are critical because they guide our analysis and action. In any organiza- tional situation, problem solving involves the collection of information about the problem, the interpretation of that information to determine specific problem types and causes, and the devel- ‘opment of action plans accordingly. The models that individuals use influence the kind of data they collect and the kind they ignore; models guide people's approach to analyzing or interpret- ing the data they have; finally, models help people choose their course of action. Indeed, anyone who has been exposed to an organization already has some sort of implicit model. People develop these roadmaps over time, building on their own experiences. These implicit models (they usually are not explicitly written down or stated) guide behavior; they vary in qual- ity, validity, and sophistication depending on the nature and extent of the experiences .of the model builder, his or her perceptiveness, his or her abil- ity to conceptualize and generalize from experi- ences, and so on. ‘We are not solely dependent, however, on the implicit and experience-based models that i viduals develop. Since there has been extensive research and theory development on the subject of organizational behavior over the last four de- cades, it is possible to use scientifically developed explicit models for analyzing organizational be- havior and solving organizational problems. We plan to discuss one particular model, a general model of organizations. Instead of de- scribing a specific phenomenon or aspect of or- ganizational life (such as a model of motivation or a model of organizational design), the general model of organization attempts to provide a framework for thinking about the organization as a total system. The model’s major premise is that for organizations to be effective, their subparts or components must be consistently structured and managed—they must approach a state of congru- ence. Tn the first section of this article, we will dis- cuss the basic view of organizations that underlies the model—that is, systems theory. In the second section, we will present and discuss the model itself. In the third section, we will present an approach to using the model for organizational problem analysis. Finally, we will discuss sorne of the model's implications for thinking about or- ganizations. A BASIC VIEW OF ORGANIZATIONS There are many different ways of thinking about organizations. When a manager is asked to “draw a picture of an organization,” he ot she typically draws some version of a pyramidal organizational chart. This is a model that views the stable, for- mal relationships among the jobs and formal work units as the most critical factors of fhe organiza- tion. Although this clearly is one way to think about organizations, it is a very limited view. It excludes such factors as leadership behavior, the impact of the environment, informal relations, power distribution, and so on. Such a model can capture only a small part of what goes on in or- ganizations. Its perspective is narrow and static. The past two decades have seen a growing con- sensus that a viable alternative to the static classic models of organizations is to envision the orga- nization as a social system. This approach stems from the observation that social phenomena dis- play many of the characteristics of natural or me- chanical systems. In particular, as Daniel Katz and Robert L. Kahn have argued, organizations can be better understood if they are considered as dynamic and open social systems. ‘What is a systern? Most simply, a system is a set of interrelated elements—that is, a change in ‘one element affects other elements. An open sys- tem is one that interacts with its environment; it is more than just a set of interrelated elements. Rather, these elements make up a mechanism that takes input from the environment, subjects it to some form of transformation process, and produces output. At the most general level, it should be easy to visualize organizations as sys- tems. Let's consider a manufacturing plant, for example. It is made up of different related com- ponents (a number of departments, jobs tech- nologies, and so on). It receives inputs from the environment—that is, labor, raw material, pro-duction orders, and so on—and transforms these inputs into products. ‘As systems, organizations display a number of basic systems characteristics. Some of the most critical are these: Internal interdependence. Changes in one component or subpart of an organization fre- quently have repercussions for other parts; the pieces are interconnected. Again, as in the man- ufacturing plant example, changes made in one element (for example, the skill levels of those hired to do jobs) wiil affect other elements (the productiveness of equipment used, the speed or quality of production activities, the nature of su- pervision needed, and so on). Capacity for feedback—that is, information about the output that can be used to control the system. Organizations can correct errors and even change themselves because of this characteristic. If in our plant example plant management re- ceives information that the quality of its product is declining, it can use this information to iden- tify factors in the system itself chat contribute to this problem. However, it is important to note that, unlike mechanized systems, feedback infor- mation does not always lead to correction. Or- ganizations have the potential to use feedback to become self-correcting systems, but they do not always realize this potential. Equilibrium—that is, a state of balance. When an event puts the system out of balance the system reacts and moves to bring itself back into balance. Ifone work group in our plant example were sud- denly to increase its performance dramatically, it would throw the system out of balance. This group would be making increasing demands on the groups that supply it with the information or materials it needs; groups that work with the high-performing group’s output would feel the pressure of work-in-process inventory piling up in front of them. If some type of incentive is in ‘effect, other groups might perceive inequity as this one group begins te eam more. We would predict that some actions would be taken to put the system back into balance. Either the rest of the plane would be changed to increase produc- FN runes JUN Lrmagrnaing Sigurmquonstias arurmewmss ee tion and thus be back in balance with the single group, or (more likely) there would be pressure to get this group to modify its behavior in line with the performance levels of the rest of the sys- tem (by removing workers, limiting supplies, and so on). The point is that somehow the system ‘would develop energy to move back toward a state’ of equilibrium or balance. Equifinlity. This characteristic of open sys- tems means that different system configurations can lead to the same end or to the same type of, input-output conversion. Thus there's no univer- sal or “one best way” to organize. ‘Adaptation. For a system to survive, it must maintain a favorable balance of input or output transactions with the environment or it will run down. If our plant produces a product for which there are fewer applications, it must adapt to new demands and develop new products; otherwise, the plant will ultimately have to close its doors. ‘Any system, therefore, must adapt by changing as environmental conditions change. The con- sequences of not adapting are evident when once- prosperous organizations decay (for example, the eastern railroads) because they fail to respond to environmental changes. Thus systems theory provides a way of thinking about the organization in more complex and dy- namic terms. But although the theory provides a valuable basic perspective on organizations, it is limited as a problem-solving tool. This is be- cause as a model, systems theory is too abstract for use in day-to-day analysis of organizational behavior problems. Because of the level of ab- straction of systems theory, we need to develop a more specific and pragmatic model based on the concepts of the open systems paradigm. A CONGRUENCE MODEL OF ORGANIZATIONAL BEHAVIOR Given the level of abstraction of open theory, our job is to develop a model that reflects the basic systems concepts and characteristics, but that is38 David A. Nadler and Michael L. Tushman more specific and thus more usable as an analytic tool. We will describe a model that specifies the critical inputs, the major ourputs, and the trans- formation processes that characterize organiza- tional functioning. The model puts its greatest emphasis on the transformation process and specifically retlects the critical system property of interdependence. It views organizations as made up of components or parts that interact with each other. These com- ponents exist in states of relative balance, con- sistency, or “ft” witn each other. The different parts of an organization can fit well together and function effectively, or fit poorly and lead to prob- lems, dysfunctions, or performance below pocen- tial, Our congruence model of organizational behavior is based on how well components fit together— that is, the congruence among the components; the effectiveness of this model is based on the quality of these “hts” or congruence. The concept of congruence is not a new one. George Homans in his pioneering work on social processes in organizations emphasized the inter- action and consistency among key elements of organizational behavior. Harold Leavitt, for example, identified four major components of or- ganization as being people, tasks, technology, and structure. The model we will present here builds on these views and also draws from fit models developed and used by James Seiler, Paul Law- rence and Jay Lorsch, and Jay Lorsch and Alan Sheldon. Ic is important co remember that we are con- cerned about creating a model for behavioral sys- tems of the organization—the system of elements that ultimately produce behavior patterns and, in tum, organizational performance. Put simply, we need to deal with questions of the inputs the sys- tem has to work with, the ourputs it must pro- duce, the major components of the transformation process, and the ways in which these components interact. Inputs Inputs are factors that, at any one point in time, make up the “givens” facing the organization. ‘They're the material that the organization has to work with. There are several different types of inputs, each of which presents a different set of “givens” to the organization (see Figure 1 for an overview of inputs). ‘The first input is the environment, or all factors outside the organization being examined. Every organization exists within the context of a larger environment that includes individuals, groups, other organizations, and even larger social forces— all of which have a potentially powerful impact ‘on how the rganization performs. Specifically, the environment includes markets (clients or cus- tomers), suppliers, governmental and regulatory bodies, labor unions, competitors, financial in- stitutions, special interest groups, and so on. As research by Jeffrey Pfeffer and Gerald Salancik has suggested, the environment is critical to or- ganizational functioning. The environment has three critical features that affect organizational analysis. First, the en- vironment makes demands on the organization. For example, it may require certain products or services at certain levels of quality or quantity. Market pressures are particularly important here. Second, the environment may place constraints ‘on organizational action. It may limit the activ- ities in which an organization may engage. These constraints range from limitations imposed by scarce capital to prohibitions set by government regulations. Third, the environment provides op- portunities that the organization can explore. ‘When we analyze an organization, we need to consider the factors in the organization's environ- ment and determine how those factors, singly or collectively, create demands, constraints, or op- portunities ‘The second input is the organization's re- sources. Any organization has a range of different assets to which it has access. These include em- ployees, technology, capital, information, and so ‘on. Resources can also include less tangible as- sets, such as the perception of the organization in the marketplace or a positive organizational climate. A set of resources can be shaped, de- ployed, or configured in different ways by an or- ganization. For analysis purposes, two features are of primary interest. One concems the relative quality of those resources or their value in light ‘of the environment. The second concems the extent to which resources can be reshaped or how fixed or flexible different resources are.A Model for Diagnosing Organizational Behavior 39. Figure 1. Key Organizational Inputs Input Environment Resources History ‘Strategy Definition All factors, including Various assets to The pattems of past The stream of deci- institutions, groups, which the organiza- behavior, activity, and_ sions about how orga- individuals, events, tion has access, effectiveness of the _nizational resources * and so on, that are including human organization that may _will be co © ‘outside the organiza- resources, technology, affect current organi meet the demands, tion being analyzed, capital, information, rational functioning. constraints, and ‘but that have a poren- and so on, as well as ‘opportunities within tial impact on that less tangible resources the context of the organization. (recognition in the organization's history. . market, and so forth). Critical 1. Whatdemands 1. What is the rela 1. What have been 1. How has the onga- features does the environ- tive quality of che the major stages or nization defined its foe analysis ment make on the different resources phases of the orga core mission, organization? 2. How does the envi- ronment put con- access? straints on organi 2. To what extent are resources fixed rather than flexible in their configura- rational action? tion(s)? The third input is the organization's history. There's growing evidence that the way organiza- tions function today is greatly influenced by past events. It is particularly important to understand the major stages or phases of an organization's development over a period of time, as well as the current impact of past events—for example, key strategic decisions, the acts or behavior of key leaders, the nature of past crises and the organi- zation’s responses to them, and the evolution of core values and norms of the organization. ‘The final input is somewhat different from the others because in some ways it reflects some of the factors in the organization's environment, re- sources, and history. The fourth input is strategy. to which the orga- nization has nization's develop- including the mar- ‘ment! kkets i serves and 2, What is the cure = the products/ser- rent impact of such _vices it provides to historical factors as __these markets? strategic decisions, 2. On what basis does acts of key leaders, it compete? crises, and core 3, What supporting values and norms? strategies has the organization employed to achieve the core ‘mission? 4. Whar specific objectives have been set for organi- tational output? We use this term in its broadest context to de- scribe the whole set of decisions that are made about how the organization will configure its re- sources against the demands, constraints, and opportunities of the environment within the con- text of its history. Strategy refers to the issue of matching the organization's resources to its en- vironment, or making the fundamental decision of “What business are we in?” For analysis pur- poses, several aspects of strategy are important t0 identify. First, what is the core mission of the organization, or how has the organization defined its basic purpose or function within the larger system or environment? The core mission in- cludes decisions about what markets the organi-40 David A. Nadler and Michael L. Tushman zation will serve, what products or services it will provide to those markets, and how it will compete in those markets. Second, strategy includes the specific supporting strategies (or tactics) the or- ganization will employ or is employing to achieve its core mission. Third, it includes the specific performance or output objectives that have been established. Strategy may be the most important single in- put for the organization. On one hand, strategic decisions implicitly determine the nature of the work the organization should be doing or the tasks it should perform. On the other hand, strategic decisions, and particularly decisions about objec- tives determine the system's outputs. In surnmary, there are three basic inputs—en- vironment, resources, and history—and a fourth derivative input, strategy, which determines how the organization responds to or deals with the basic inputs. Strategy is critical because it deter- mines the work to be performed by the organi- zation and it defines desired organizational outputs. Outputs ‘Ourputs are what the organization produces, how it performs, and how effective it is. There has been a lot of discussion about the components of an effective organization. For our purposes, how- ever, it is possible to identify several key indica- tors of organizational output. First, we need to think about system output at different levels. In addition to the system's basic ourput—that is, the product—we need to think about other outputs that contribute to organizational performance, such as the functioning of groups or units within the organization or the functioning of individual organization members. At the organizational level, three factors must be kept in mind when evaluating organizational performance: (1) goal attainment, or how well the organization meets its objectives (usually de- termined by strategy), (2) resource utilization, or how well the organization makes use of available resources (not just whether the organization meets its goals, but whether it realizes all of its potential performance and whether it achieves its goals by building resources or by “burning them up”), and (3) adaptability, or whether the orga- nization continues to position itself in a favorable position vis-a-vis {ts environment—that 1s, whether it is capable of changing and adapting to environmental changes. Obviously, the functioning of groups or units (departments, divisions, or other subunits within the organization) contribute to these organiza- tional-level ourputs. Organizational ourput is also influenced by individual behavior, and certain in- dividual-level outputs (affective reactions such as satisfaction, stress, or experienced quality of working life) may be desired ourputs in and of themselves. The Organization as a Transformation Process . So far, we've defined the nature of inputs and ‘outputs of the organizational system. This leads us to the transformation process. Given an en- vironment, a set of resources, and history, “How do I take a strategy and implement it to produce effective performance in the organization, in the group/unit, and among individual employees?” In our framework, the organization and its major component parts are the fundamental means for transforming energy and information from inputs into outputs. On this basis, we must determine the key components of the organiza- tion and the critical dynamic that shows how those components interact to perform the trans- formation function. Organizational Components There are many different ways of thinking about what makes up an organization. At this point in the development of a science of organizations, we probably do not know the one right or best way to describe the different components of an orga- nization. The task is to find useful approaches for describing organizations, for simplifying complex phenomena, and for identifying patterns in what may at first blush seem to be random sets of ac- tivity. Our particular approach views organiza- tions as composed of four major components: (I)the task, (2) the individuals, (3) the formal organizational arrangements, and (4) the infor-mal organization. We will discuss each of these individually (see Figure 2 for overviews of these components). The first component is the organization’ task—that is, the basic or inherent work to be done by the organization and its subunits or the activity the organization is engaged in, particu- larly in light of its strategy. The emphasis is on the specific work activities or functions that need to be done and their inherent characteristics (as, ‘opposed to characteristics of the work created by how the work is organized or structured in this particular organization at this particular time). Analysis of che task would include a description of the basic work flows and functions with atten- tion to the characteristics of those work flows— for example, the knowledge or skills demanded by the work, the kinds of rewards provided by the ‘A Model for Diagnosing Organizational Behavior 41. work, the degree of uncertainty associated with the work, and the specific constraints inherent in the work (such as critical time demands, cost con- straints, and so on). Since it's assumed that a primary (although not the only) reason for the organization's existence is to perform the task consistent with strategy, the task is the starting point for the analysis. As we will see, the assess- ment of the adequacy of other components de- pends to a large degree on an understanding of the nature of the tasks to be performed. A second component of organizations involves the individuals who perform organizational tasks. The issue here is identifying the nature and char- acteristics of the orgat members). The most include the nature of individual knowledge and skills, the different needs or preferences that Figure 2. Key Organizational Components Formal organizational Component Task Individual arrangements Informal organization Definition The basic and inher- The characteristics of The various scrucrures, ‘The emerging arrange- ent work tobe done individuals in the processes, methods, ments, including by the organization organization, and 0 on that are for- structures, processes, and its pars. mally created co yet celationships, and so . individuals to perform forth. 7 casks Critical 1. The eypes of skill 1. Knowledge and 1. Organization _—_‘1, Leader behavior. features and knowledge Skills individvals design, including 2, Intragroup rela- foranalysis demands the work have. grouping of fine tions Poses. 2. Individual needs tions, structure of 7 2. The types of and preferences, subunit and coor 3 Ineergroup rela rewards the work 3, Perceptions and ination and con- ; ‘can provide. eens trol mechanisms. * ee 3. The degree of 4, Background 2. Job design. g grou 5. Communication uncertainty astoci- factors 3, Work environ- tee ated with the ment patterns. work, including 4. Human resource such factors as management interdependence, systems. routineness, and soon. The constraints on performance demands inherent in the work (given. a strategy).42° David A. Nadler and Michael L. Tushman individuals have, the perceptions or expectancies that they develop, and other background factors (such as demographics) that may potentially in- fluence individual behavior. The third component is the formal organiza- tional arrangements. These include the range of structures, processes, methods, procedures, and so forth that are explicitly and formally developed to get individuals to perform tasks consistent with organizational strategy. The broad term, organi- zational arrangements, encompasses a number of different factors. One factor is organization de- sign—that is, the way jobs are grouped together into units, the internal structure of those units, and the coordination and control mechanisms used to link those units together. A second factor is the way jobs are designed within the context of organizational designs. A third factor is the work environment, which includes a number of factors that characterize the immediate enyiron- ment in which work is done, such as the physical working environment, the available work re- sources, and so on. A final factor includes the organization's formal systems for attracting, plac- ing, developing, and evaluating human resources. ‘Together, these factors create the set of formal organizational arrangements—that is, they are ex- plicitly designed and specified, usually in writing. The final component is the informal orguniza- tion. Despite the set of formal organizational ar- rangements that exists in any organization, another set of arrangements tends to develop or emerge over a period of time. These arrangements are usually implicit and unwritten, but they in- fluence a good deal of behavior. For lack of a better term, such arrangements are frequently re- ferred to as the informal organization and they include the different structures, processes, and arrangements that emerge while the organization is operating. These arrangements sometimes complement formal organizational arrangements by providing structures to aid work where none exist. In other situations they may arise in reac- tion to the formal structure, to protect individuals from it. They may therefore either ad or hinder the organization's performance. Because a number of aspects of the informal organization have a particularly critical effect on behavior, they need to be considered. The be- havior of leaders (as opposed to the formal crea- tion of leader positions) is an important feature of the informal organization, as are the pattems of relationships that develop both within and be- tween groups. In addition, different types of in- formal working arrangements (including rules, procedures, methods, and so on) develop. Finally, there are the various communication and influ- ence patterns that combine to create the informal organization design. Organizations can therefore be thought of as. a set of components—the task, the individuals, the organizational arrangements, and the infor- mal organization. In any system, however, the critical question is not what the components are, bur what the nature of their interaction is. This model raises the question: What are the dynamics of the relationships among the componengs? To deal with this issue, we must return co the concept of congruence or fit. The Concept of Congruence A relative degree of congruence, consistency, or “fic” exists between each pair of organizational inputs. The congruence between two compo- nents is defined as “the degree to which the needs, demands, goals, objectives, and/or struc- tures of.one component are consistent with the needs, demands, goals, objectives, and/or struc- tures of another component” Congruence, therefore, is a measure of how well pairs of components fit together. Consider, for example, two components—the task and the individual. Ac the simplest level, the task pre- sents some demands on individuals who would perform it (that is, skill/knowledge demands). At the same time, the set of individuals available to do the tasks have certain characteristics (their levels of skill and knowledge). Obviously, if the individual's knowledge and skill match the knowledge and skill demanded by the task, per- formance will be more effective. Obviously, too, the individual-task congru- ence relationship encompasses more factors than just knowledge and skill. Similarly, each congru- ence relationship in the model has its own spe- cific characteristics. Research and theory can guide the assessment of fit in each relationship. For an overview of the critical elements of each congruence relationship, see Figure 3.‘A Model for Diagnosing Organizational Behavior 43 Figure 3. Definitions of Fits Fit Individual/Organization ments? Do individuals hold clear or distorted perceptions of 5 organizational structures? Is there a convergence of individual and organizational goals? Individual/ Task How are individual needs met by the tasks? Do individuals have skills and abilities to meet task demands? Individual/Informal How are individual needs met by the informal organization? organization How does che informal organization make use of individual resources consistent with informal goals? Task/Organization ‘Are organizational arrangements adequate to meet the demands of the cask? Do organizational arrangements motivate behavior that’s consistent with task demands? Task/Informal Does the informal organization structure facilitate task perfor- organization mance or not? Does it hinder or help meet the demands of the task? Organization/Informal “Are the, goals, rewards, and structures of the informal organi- ‘organization zation consistent with those of the formal organization? The Congruence Hypothesis (or diagnosis) involves description of the system, The aggregate model, or whole organization, dis- plays a relatively high or low degree of system congruence in the same way that each pair of components has a high or low degree of congru- ence. The basic hypothesis of the model, which builds on this total state of congruence, is as fol- lows: “Other things being equal, the greater the total degree of congruence or fit between the var- ious components, the more effective will be the organization—effectiveness being defined as the degree to which actual organization outputs at in- dividual, group, and organizational levels are sim- ilar to expected outputs, as specified by strategy.” The basic dynamic of congruence sees the or- ganization as most effective when its pieces fit together. If we also consider strategy, this view expands to include the fit between the organiza- tion and its larger environment—that is, an or- ganization is most effective when its strategy is consistent with its environment (in light of or- ganizational resources and history) and when the organizational components ate congruent with the tasks necessary to implement that strategy. ‘One important implication of the congruence hypothesis is that organizational problem analysis identification of problems, and analysis of fits to determine the causes of problems. The model also implies that different configurations of the key components can be used to gain outputs (consis- tent with the systems characteristic of equifinal- ity). Therefore the question is not how to find the “one best way” of managing, but how to find effective combinations of components that will lead to congruent fits among them. The process of diagnosing fits and identifying combinations of components to produce congru- ence is not necessarily intuitive. A number of situations that lead to congruence have been de- fined in the research literature. Thus in many cases fit is something that can be defined, mea- sured, and even quantified; there other words, an empirical and theoretical basis for as- sessing fit. The theory provides considerable guid- ance about what leads to congruent relationships (although in some areas the research is more de- finitive and helpful than others). The implication is that the manager who wants to diagnose be- havior must become familiar with critical aspects of relevant organizational behavior models or the- ries so that he or she can evaluate the nature of fits in a particular system.44 David A. Nadler and Michael L. Tushman Transformation process Inputs Strategy Informal organization Outputs \ Task _ Resources > History Formal organizational arrangements Individual Feedback Figure 4. A Congruence Model for Organization Analysis The congruence model provides a general or- ganizing framework. The organizational analyst will need other, more specific “submodels” to de- fine high and low congruence. Examples of such submodels that might be used in the context of this general diagnostic model include the follow- ing: (1) the job characteristics model to assess and explain the fit between individuals and tasks as well as the fit between individuals and orga- nizational arrangements (job design), (2) expec- tancy theory models of motivation to explain the fit between individuals and the other three com- ponents, (3) the information processing model of organizational design to explain the task-formal organization and task-informal organization fits, or (4) an organizational climate model to explain the fit between the informal organization and the other components. These models and theories are listed as illustrations of how more specific models can be used in the conte:xt of the general model. Obviously, those mentioned above are just a sam- pling of possible tools that could be used. In summary, then, we have described a general model for the analysis of organizations (see Figure 4). The organization is seen as a system or trans- formation process that takes inputs and trans- forms them into ousputs—a process that is composed of four basic components. The critical dynamic is the ft or congruence among the com- ponents. We now tum our attention to the prag- matic question of how to use this model for analyzing organizational problems. A PROCESS FOR ORGANIZATIONAL PROBLEM ANALYSIS The conditions that face organizations frequently change; consequently, managers are required to continually engage in problem-identification and problem-solving activities. Therefore, managers must gather data on organizational performance, compare the data with desired performance lev- els, identify the causes of problems, develop and choose action plans and, finally, implement and evaluate these action plans. These phases can be viewed as a generic problem-solving process. For long-term organizational viability, some type of44 ~~ David A. Nadler and Michael L. Tushman Transformation process Inputs Outputs Informal organization Strategy Environment Resources History Fwuback Figure 4. A Congruence Model for Organization Analysis‘A Model for Diagnosing Organizational Behavior Figure 5. Basic Problem Analysis Steps Using the Congruence Model Step 1. Identify sympcoms. 2. Specify inputs. 3. Identify ourputs. 4, Identify problems. 5. Describe components of Explanation List data indicating possible existence of problems. Identify the system. Determine nature of environment, resources, and history. Identify critical aspects of strategy. Identify data that define the nature of outputs at various levels (individual, group/unit, organizational). This should include desired ourputs (from strategy), and actual out- puts being obtained. Identify areas where there are significant and meaningful differences between desired and actual ourputs. To the extent possible, identify penalties; chat is, specific costs (actual and opportunity costs) associated with each, problem. Describe basic nature of each of the four components with s the organization. 6. Assess congruence (fits) emphasis on their critical features. ‘Conduct analysis to determine relative congruence among components (draw on submodels as needed). 7. Generate and identify causes. 8. Identify action steps. Analyze (0 associate fit with specific problems. Indicate the possible actions to deal with problem causes. problem-solving process must operate—and op- erate continuously. - Experience with using the congruence model for problem analysis in actual organizational set- tings has led to an approach to using the model that’s based on these generic problem-solving processes (see Figure 5). In this section, we will “walk through” this process, describing each step in the process and discussing how the model can ‘be used at each stage. Here are the steps in the problem-analysis process: 1. Identify symptoms. In any situation initial information (symptomatic data) may indicate that there are problems, but not what the prob- lems are or what the causes are. Symptomatic data are important because the symptoms of prob- lems may indicate where to look for more com- plere daca. 2. Specify inputs. Once the symptoms are identified, the starting point for analysis is to identify the system and the environment in which it functions. This means collecting data about the nature of environment, the type of re- sources the organization has, and the critical as- pects of its history. Input analysis also involves identifying the overall strategy of the organiza- tion—that is, its core mission, supporting strat- egies, and objectives. 3. Identify outputs. ‘The third step is an anal- ysis of the organization's outputs at the individ- ual, group, and organizational levels. Output analysis actually involves two elements: (1) de- fining the desired or planned output through an analysis of strategy that explicitly or implicitly defines what the organization wants to achieve in terms of output or performance indicators, and (2) collecting data that indicate the type of out- put the organization is actually achieving. 4. Identify problems. Symptoms may indi- cate problems—in this case, significant differ- ence between desired or planned output and actual output. Such problems might be descre- pancies (actual vs. expected) in organizational performance, group functioning, individual be-46 David A. Nadler and Michael L. Tushman havior, or affective reactions. These data tell us what problems exist, but they still don’t tell us the causes. (Note: Where data are available, it's frequently also useful to identify the costs asso- ciated with the problems or the penalties the or- ganization incurs by not fixing the problem. Penalties might be actual costs—increased ex- penses, and so on—ot opportunity costs, such as revenue lost because of the problem.) 5. Describe organizational components. At this step the analysis to determine the causes of prob- lems begins. Dara are collected about the nature of each of the four major organizational compo- ents, including information about the compo- nent and its critical features in this organization. 6. Assess congruence (fits). Using the data collected in step 5 as well as applicable submodels of theories, an assessment is made of the positive cor negative fit between each pair of components. 7. Generate hypotheses about problem causes. Once the components are described and their congruence assessed, the next step is to link to- gether the congruence analysis with the prob- Tem identification (step 4). After analyzing to determine which are the poor fits that seem to be associated with, or account for, the output prob- lems that have been identified, the patterns of congruence and incongruence that appear to cause the patterns of problems are determined. 8 Identify action steps. The final step in problem analysis is to identify possible action steps. These steps might range from specific changes to deal with relatively obvious problem ‘causes to a more extensive data collection de- signed to test hypotheses about relatively more complex problems and causes. In addition to these eight steps, some further steps need to be kept in mind. After possible ac- tions are identified, problem solving involves pre- dicting the consequence of various actions, choosing the course of action, and implementing and evaluating the impact of the chosen course of action. It is, of course, important to have a general diagnostic framework to monitor the ef- fects of various courses of action. The congruence model and this problem- analysis process outline are tools for structuring and dealing with the complex reality of organi- zations. Given the indeterminate nature of social systems, there is no one best way of handling a particular situation. The model and the process could, however, help the manager in making a number of decisions and in evaluating the con- sequences of those decisions. If these tools have merit, it is up to the manager to use them along with his or her intuitive sense (based on experi- tence) to make the appropriate set of diagnostic, evaluative, and action decisions. FUTURE DIRECTIONS . The model we've presented here reflects a partic- ular way of thinking about organizations. If that perspective is significant, the model might be used as a tool for handling more complex prob- lems of for structuring more complex situations. Some directions for further thought, research, and theory development could include these: 1. Organizational change. The issue of orga nizational change has received a good deal of at- tention from both managers and academics. The question is how to effectively implement organi- zational change. The problem seems to center on the lack of a general model of organizational change. It is hard to think sbout a general model of organizational change witiout a general model of organizations. The congruence perspective outlined here may provide some guidance and direction toward the development of a more in- tegrated perspective on the processes of organi- zational change. Initial work in applying the congruence model to the change isstte is encour- aging. 2. Organizational development over time. There has been a growing realization that organizations grow and develop over time, and that they face different types of crises, evolve through different stages, and develop along some predictable lines. A model of organizations such as the one pre- sented here might be a tool for developing a typol- ogy of growth patterns by indicating the different configurations of tasks, individuals, organiza-tional arrangements, and informal organizations that might be most appropriate for organizations in different environments and at different stages of development. 3. Organizational pathology. Organizational problem solving ultimately requires some sense of the types of problems that may be encountered and the kinds of patterns of causes one might expect. It is reasonable to assume that most prob- lems encountered by organizations are not wholly ‘uniqc2, but are predictable. The often expressed view that “our problems are unique” reflects in part the lack of a framework of organizational pa- thology. The question is: Are there basic “ill- nesses” that organizations suffer? Can a frame- work of organizational pathology, similar to the physician's framework of medical pathology, be developed? The lack of a pathology framework, in tum, reflects the lack of a basic functional model of organizations. Again, development of a congruence perspective might provide a com- mon language to use for the identification of gen- eral pathological patterns of organizational functioning. 4, Organizational solution types. Closely linked to the problem of pathology is the problem of treatment, intervention, or solutions to organi- ational problems. Again, there’s a lack of a gen- eral framework in which to consider the nature of organizational interventions. In this case, t00, the congruence mode! might be a means for con- ceptualizing and ultimately describing the differ- ent intervention options available in response to problems. SUMMARY This article has presented a general approach for thinking about organizational functioning and a process for using a model to analyze organiza- tional problems. This particular model is only one way of thinking about organizations; it’s clearly not the only model, nor can we claim it’s defin- itively the best model. It is one tool, however, that may be useful for structuring the complexity A Model for Diagnosing Organizational Behavior 47 of organizational life and helping managers cre- ate, maintain, and develop effective organiza- tions. SELECTED BIBLIOGRAPHY For a comprehensive review and synthesis of re- search in organizational behavior, see Marvin Dunnette’s Handbook of Industrial and Organiza- tional Psychology (Rand-McNally, 1976). Daniel Katz and Robert Kahn's seminal work on orga- nizations as systems, The Social Psychology of Or- ganizations (John Wiley & Sons, 1966), has been revised, updated, and extended in their 1978 edition. See their new book for an extensive dis- cussion of organizations as open systems and for ‘a unique synthesis of the literature in terms of systems ideas. For a broad analysis of organizational behavior, see David Nadler, J. Richard Hackman, and Ed- ward E. Lawler’s Managing Organizational Behavior (Little, Brown, 1979) and see Charles Hofer and Daniel Schendel’s Strategy Formulation: Analytical Concepts (West, 1978) for a discussion of strategy. For an extensive discussion of output and ef- fectiveness, see Paul Goodman and Johannes Pennings’s New Perspectives on Organizational Ef- fectiveness (Jossey-Bass, 1977) and Andrew Van de Ven and Diane Ferry’s Organizational Assess- ment (Wiley Interscience, 1980). For more detail on organizational arragements, see Jay R. Galbraith’s Designing Complex Organi- zations (Addison-Wesley, 1973); on job design and motivation, see J. Richard Hackman and Greg Oldham’s Work Redesign (Addison-Wesley, 1979); and on informal organizations, see Mi- chael Tushman’s “A Political Approach to Or- ganizations: A Review and Rationale” (Academy of Management Review, April 1977) and Jeffrey Pfeffer’s new book, Power and Politics in Organi- zations (Pitman Publisher, 1980). ‘Submodels corresponding to the various com- ponents of our congruence model would inclu J. Richard Hackman and Greg Oldham's job sign model; Victor Vroom and Edward Lawler’s work on expectancy theory of motivation and de- cision making—see Vroom’s Work and Morivation (Wiley, 1964) and Lawler’s Motivation in Work48 Richard M. Steers Organizations (Wadsworth Publishing Co., 1973); Jay R. Galbraith, Michael Tushman, and David Nadler’s work on information processing models of organizational design; and George Litwin and Robert Stringer's work on organization climate— see Litwin and Stringers Motivation and Organi- ational Climate (Harvard University Graduate School of Business Administration, 1968). David Nadler’s “An Integrative Theory of Or- ganizational Change,” to appear in the Journal of Applied Behavioral Science in 1981, uses the con- gruence model to think about the general prob- Jems of organizational change and dynamics. Several distinct levers for change are developed and discussed. Other pertinent books of interest include: Jay R. Galbraich’s Organization Design (Addison-Wesley, 1979), Jay R. Galbraith and Daniel A. Nathanson’s Strategy Implementation: The Role of Structure and Process (West, 1978), George C. Homans’ The Human Group (Har- court Brace Jovanovich, Inc., 1950), Paul R. Lawrence and Jay W. Lorsch’s Developing Orga- nizations: Diagnasis and Action (Addison-Wesley, 1969), Harold J. Leavitt's “Applied Organization Change in Industry” in J. G. March's (ed.) Handbook of Organizations (Rand-McNally, 1965), Harry Levinson’s Organizational Diagnosis (Har- vard University Press, 1972), Harry Levinson’s Psychological Man (Levinson Institute, 1976), Jay W. Lorsch and Alan Sheldon's “The Individual in the Organization: A Systems View" in J. W. Lorsch and P. R. Lawrence's (eds.) Managing Group and Intergroup Relations (Irwin-Dorsey, 1972), David A. Nadler and Noel M. Tichy's “The Limitations of Traditional Intervention Technology in Health Care Organizations” in N. Margulies and J. A. Adams's (eds.) Organization Development in Health Care Organizations (Addi- son-Wesley, 1980), Edgar H. Schetn’s Organiza- tional (Prentice-Hall, 1970), and James Organizational Be- A. Seiler’s Systems Analysis in havior (Irwin-Dorsey, 1967).