THE BASIC MODEL FOR ORGANISATIONAL DIAGNOSIS
1.
The organisation
2.
Direction and design
3.
The external environment
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I
The organisation
Organisations can be considered input-throughput-output systems seen as (picture 1).
Means which are processed and completed into being final products (product or service),
are withdrawn from the external environment (markets). This end product is subsequently
sold again on the market.
The means that are withdrawn from the market are the input of the organisation, the
processing and completing is called the throughput and the end product the output. The
throughput process is therefore a process in which value is added to the input.
The input of the organisation consists of capital: money and technology; labour: people and
machines; information: knowledge with respect to changes in the environment (contextual
environment) and market developments (transactional environment); and nature: raw
materials and energy.
input
throughput
output
pic 1: Organisations as input-throughput-output systems
Organisaties als input-throughput-output systeem
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The output of the organisation consists of capital: goods or services, depreciation
of
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machines and profit distribution; labour: dismissal, retirement, outflow due to the
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Disablement Insurance Act, early retirement; information: public relations, annual reports
and stock market reports; and nature: waste matter.
In order to be able to carry out the process of input-throughput-output, the organisation has
been built up from a number of aspects. These aspects are the vision and the strategy of the
organisation (the direction of the organisation) and the ‘core process’, the structure and the
culture (the design of the organisation).
These distinguishable aspects of an organisation are displayed schematically in the picture
below (picture 2). In this section, the aspects that are distinguished are briefly explained. In
the next section, the relationships (arrows) between the various aspects will be elaborated.
Vision
Strategy
Core process
Structure
Culture
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pic 2: Aspects of an organisation
The vision
The vision of an organisation is the image that the organisation has of and for itself, now
and in the future, as well as the application of it in concrete terms. These concrete terms
concern the identity of the organisation (who are we?), the competence of the organisation
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(what are we capable of?) and the intention of the organisation (what do we want?). The
vision is finally transformed into the formulation of one or more goals that the organisation
wishes to achieve. These goals are of a non-quantitative nature. Such goals can be: “our
organisation wants to be the largest” or “our organisation wants to be the best”. These goals
will have to be worked out further and be made measurable in the strategy.
The strategy
The strategy of the organisation consists of the plans or acts that must lead to the allocation
of (scarce) means in the organisation. This is a process in time with the purpose of
achieving goals that were set during the formulation of the vision (adapted from Quinn,
1988). Strategy formulation is an iterative process.
The strategic analysis contains an internal and an external analysis, which should result in
an indication of the strengths and weaknesses of the organisation, as well in a listing of the
opportunities and threats for the organisation. Ultimately, this analysis must enable the
organisation to make choices with respect to, among other things, the products or services
and the markets of the organisation (core business). The strategy that was formulated
becomes measurable by setting targets (quantifiable goals) for both the entire organisation
as well as for its parts (departments and individuals).
The core process
The core process of an organisation is the transformation process of the input-throughputoutput of the organisation as they have been formulated in the strategy. These inputthroughput-output processes can be distinguished at both the organisational and the
department and individual levels. At the organisational level, what is going in and what is
going out of the organisation, is considered, as well what the processing of the throughput
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consists of. Apart from that, the input-throughput-output process of the various departments
as part of the throughput process of the entire organisation can be considered.
At the departmental throughput level, the input-throughput-output process of individual
employees can be considered. Finally, the technology used by the organisation for the
transformation process can be considered.
The structure
By structure of the organisation is meant the way in which the organisation is built. The
structure of an organisation can be divided into a macro, meso and micro structure.
The following is meant by macro structure (level of the organisation in its entirety): the
division of responsibilities (organisation chart), the degree of integration (interconnection
and coordination) and the degree of differentiation (division of tasks) within the
organisation.
By meso structure (departmental level) of the organisation is meant: the creation of
departments (functional versus process-oriented departments, market versus productoriented departments, the department size (including the span of control) and the degree of
task specialization (specialization = division of tasks or specialization between/within
positions at both the departmental and individual levels).
By micro structure (individual level) of the organisation is meant: the structure of tasks
(what tasks are there in the organisation and what content do these positions have), as well
as the quality of the labour for the different positions within the organisation. The structure
also includes the set of management and control instruments of the organisation.
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The culture
By the culture of the organisation is meant: the whole of standards, values, views, attitudes
and visions on the reality, which to a large extent control the behaviour, and affect the
decisions within organisations.
Among other things, culture includes the different leadership styles that can be recognized
within the organisation. But also, for example: the formal and informal reality in the
organisation, the communication in general, the psychological contracts that prevail in the
organisation, etc.
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II
Direction and Design
Direction and design influence each other (double arrows). From a rational point of view,
this is a question of hierarchy (direction over design). Recent literature on the formation of
strategy however somewhat refines the traditionally rather emphasized direction of
influencing from direction to design. Mintzberg (1987) for instance states that the ‘going
concern’ (design) may also determine the strategy-formation (direction). Besides, we can
see that both within the direction (vision and strategy) and within the design (core process,
structure and culture), mutual influencing takes place through the different aspects. With
respect to direction there is a hierarchy (vision prevails over strategy), and the design knows
no hierarchy, all three aspects are of equal value. It is important to realize that within the
design of the organisation, the aspects have to be properly geared to one another.
DIRECTION
vision & strategy
DESIGN
Core process & structure & culture
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pic 3: Direction and design of the organisation
When we consider the direction and design of the organisation, the ‘what’ and ‘how’
questions must be answered twice. Concerning the design, the articulation of the vision is
the answer to the question of what the organisation wants.
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The strategy is the way in which the organisation thinks that it will materialize the vision, in
other words: how the organisation thinks of realizing the vision. As soon as vision and
strategy are established, the link between the direction and design must be made. At this
level, the strategy is the answer to the ‘what’ question, and the design of the organisation is
the answer to the ‘how’ question.
The three components, core process-structure-culture have an immediate relationship to one
another. If one component is changed, the other two will also change. Redefinition of the
core process means that tasks, powers, rules and procedures also have to be changed.
If it is desired that the culture of the organisation changes, then the core process and the
structure will have to be changed as well.
Elaboration of the core process
The 'core process' of an organisation is what that organisation actually does; it is the process
that has to realize the primary goal of the organisation.
The word 'process' indicates that a movement, an ongoing stream, is, so to speak, running
through the organisation.
The analysis of the core process is of vital importance to the structure/culture of the
organisation. The core process can be analysed by dividing it into the following three
components: input, throughput and output.
The process cycle begins with 'input'. Something enters the organisation, is processed and
then leaves the organisation again. For example: a hospital's input consists of people who
are unwell and who undergo medical treatment while they are in the hospital. In the end, the
output of a hospital is (or at least should be) healthy people or people who have some
outlook for recovery. In the hospital, certain activities are carried out with respect to these
people, and these events (the process) can be characterized further.
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Throughput activities can be divided into high-routine and low problem-solving, or lowroutine and high problem-solving (process A and B).
According to Keuning and Eppink, the core process of an organisation must be geared to
situational factors. They distinguish three arrangement principles of the core process,
namely: market; product and financial. An example of a market division is the division of a
bank into the private and business markets. An example of product structuring is a
manufacturing company that manufactures audio equipment and home appliances in
different business units. A functional division of departments in a hospital is: surgery,
orthopaedics and the like, or the purchase, sales and manufacturing departments in a
company.
In the diagram below, a clear insight is given into the relationship between situational
factors and the different arrangement principles.
+
Market
External
turbulence
Product
Functional
-
+
Internal complexity
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pic 4: situational factors and arrangement principles for the core process
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Elaboration of structure
Communication, decision-making, control and coordination have both a cultural and a
structural dimension.
The following can be considered when looking at the coordination within an organisation:
-
the manner in which coordination is carried out (mutual attuning, direct supervision,
degree and way of standardization)
-
does the coordination run top-down or actually bottom-up?
-
does coordination occur as centralized or decentralized?
-
is the coordination formal or actually informal?
With respect to decision-making within the organisation, the following can be considered:
-
is the decision making programmed (routine) or non-programmed (ad hoc)?
-
does decision-making occur as centralized or decentralized?
-
is the decision-making formal of informal?
As far as the control within the organisation is concerned, the following can be considered:
-
is the control aimed at input, throughput or output?
With respect to the communication within the organisation we can look at:
-
does communication occur top-down or actually bottom-up (vertical
communication)?
-
the degree of horizontal communication (consultation between management and
staff)
-
is the communication formal or informal?
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The structure of an organisation can be defined as the entirety of different ways in which
the work has been divided into separate tasks, and the way in which these tasks are
subsequently coordinated.1 An effective structure demands that situational factors and the
design parameters are mutually attuned, so that an internal consistency arises. Situational
factors are the degree of external turbulence and the degree of changes in the environment,
as well as the influence of these changes on the organisation. The complexity involves the
extent to which the tasks can be standardized. If there is a high degree of complexity,
varying and sometimes conflicting aspects must be taken into account. These situational
factors largely determine the structure of the organisation. In the following diagram these
configurations of situational and structural characteristics are displayed.
+
Simple structure
(e.g. pioneering
organisation)
Adhocracy
(e.g.
management
consultancy
agency)
Machine
bureaucracy
(e.g.manufacturing
company)
Professional
bureaucracy
(e.g. hospital)
External
turbulence
-
+
Internal complexity
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pic 5 (inter)relationship of structure to situational factors
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If there is a high degree of external turbulence and a limited degree of internal complexity,
then a centralized and organic structure (simple structure) fits best. Characteristic of such a
structure is its convenient arrangement, coordination occurs through direct supervision. An
example of a simple structure is a pioneering organisation.
If there is a high degree of external turbulence and a high degree of internal complexity,
then a decentralized and organic structure (adhocracy) fits best. In an adhocracy,
coordination takes place through mutual attuning. An example of an adhocracy is a
consultancy agency; experts from various disciplines work together in temporary project
groups.
If there is a limited degree of external turbulence and a limited degree of internal
complexity, then a centralized and bureaucratized structure (machine bureaucracy) fits best.
Activities are predominantly of a simple nature and are standardized so that they become
routine actions. Formal procedures increase the predictability of the results. An example of
a machine bureaucracy is a car factory or an insurance company.
If there is a limited degree of external turbulence and a high degree of internal complexity,
then a decentralized and bureaucratized structure (professional bureaucracy) fits best. Since
the activities are relatively complex, the employees need to have authority over the
execution. Standardization of skills is an appropriate co-ordinating mechanism in this
situation. An example of this configuration is a university or hospital.
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+
Centralized
organic
(direct
supervision)
Decentralized
organic
(mutual attuning)
Centralized
bureaucratization
(standardization of
work processes)
Decentral
bureaucratization
(standardization
of skills)
External
turbulence
-
+
Internal complexity
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pic 6: situational factors in relationship to forms of coordination
Elaboration of culture in an organisation1
Harrison distinguishes 4 mainstreams of cultures in organisations:
.
power oriented
.
role oriented
.
task oriented
.
people oriented
The power and role oriented cultures can be considered cultures aimed at control. The
people and task oriented cultures can be characterized as development oriented cultures. In
the diagram below, the different types of culture are displayed.
1
Adapted from Harrison’s Cultural Model
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power
task
people
role
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pic 7: the different types of culture
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The different types of culture can be characterized as follows:
The power oriented organisation

The organisation tries to dominate its environment

Absolute control over staff

Strong emphasis on power and influence based on one’s position

Strong hierarchical structure

Colleagues at same hierarchical level watch one another

Continuous striving to improve one’s position in the organisation

Often an authoritarian management style
The role oriented organisation

Organisation operates in as rational and orderly as possible

Many agreements, rules and procedures

Clear hierarchy and differences in status

Contacts and interaction through ‘correctitude’

Little response to external influences

Little flexibility
The task oriented organisation

Reaching the set goal is the most important thing

The end justifies the means

Everyone is familiar with the goal

Power and influence based on expertise and personality, aimed at the goal to be realized

Emphasis on speed and flexibility, in order to adapt to changing circumstances
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The people oriented organisation

Needs of the employee are at the centre

The organisation is merely an instrument for achieving set personal goals

The work is divided according to personal preferences

Horizontal organisation
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III
The external environment
The external environment of an organisation can be divided into a transactional and a
contextual environment.
The transactional environment is the environment that has an immediate influence on the
functioning of the organisation. In the case of a transactional environment there is
interaction (mutual influencing) between the external environment and the organisation,
often in the shape of negotiation. The transactional environment consists of: owners
(amongst others shareholders, investors and capital providers), competitors (other
organisations), consumers (buyers of products and services), trade partners (amongst others
carriers and suppliers), interest groups (e.g. action groups), (trade) unions and employers’
federations. The contextual environment is the environment that has an indirect influence
on the functioning of an organisation.
In general, the organisation can hardly influence the contextual environment. The
contextual environment consists of: the economic (e.g. interest, inflation), political (e.g.
rules and regulations), technological (e.g. inventions), physical (e.g. infrastructure,
geographical situation), and socio/societal (e.g. demographic) developments. In some cases,
for instance in the case of idealistic organisations, the output is actually aimed at
influencing the contextual environment. Organisations such as Greenpeace are aimed at the
influencing of political and socio/societal developments.
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Contextual environment
ORGANISATION
Transactional environment
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pic 8: The external environment of the organisation
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I Internal organisation
II Transactional environment
Geography
III Contextual environment
PRODUCT/MARKET
Politics
Economy
ALLIANCES
VISION
STRATEGY
STRUCTURE
CULTURE
CORE PROCESS
COMPETITORS
I
SHAREHOLDERS
Demography
II
III
Socio/
societal
SUPPLIERS
Technology
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pic 9: Basic model for organisational diagnosis
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CONTEXTUAL ENVIRONMENT
economy politics technology physical socio/societal
vision
strategy
OUTPUT
INPUT
capital
goods
core process
labour
services
information
capital
nature
labour
structure
culture
P O F I M
information
nature
Owners competitors consumers trade partners interest groups unions employer’s federations
TRANSACTIONAL ENVIRONMENT
pic 10: Basic model for organisational diagnosis
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