Sunday, July 6, 2014

Why Human Organizations Fail

All large human organizations are doomed to failure. Think about it—I just said that every large human organization is doomed to fail. How can this be true?

An individual person can accomplish a lot, but only so much. A few people working together can do a lot more—they do this by forming partnerships or small companies. These small organizations do quite well and, in fact, are responsible for hiring many, many people. When they need additional talents that they do not individually have, they typically hire out those functions. For example, they may turn to a professional accounting firm to handle their payroll.

But what happens when a company grows so large, involves so many people, that they can no longer effectively communicate with one another person-to-person? At this point most companies subdivide themselves into departments that handle specialized functions. These may include sales, human relations, manufacturing, and/or transportation. Functions which a smaller company would hire out are now typically done by one of these departments.

Now the communication problems become immense... And people who once would pick up the phone and talk to each other find that they must communicate by other means. This means sending memos, sending e-mails or voicemails, or worst of all—calling a meeting. At some companies before anything important can be done in form must be filled out and the proper number of copies submitted to the various departments involved.

The same tendencies happen even faster in governmental organizations. Primarily, this occurs because of human nature regarding self importance. The relative importance or worth of a manager in government is reflected in the number of people who report to that person. It's not unusual to see a multitude of employees in a government office doing very little, if not nothing. If you don't believe me, visit your local drivers license bureau.

Changing Light Bulbs in the Army

In short, human nature works against the success of large organizations. Years ago, as part of a college business psychology course, we were divided into teams which competed for resources. What we were not told until the game ended is that we represented in our teams different divisions of the same company. Our squabbling over resources led to the demise of the overall company! The same human dynamics exist in companies and other organizations throughout the world.

Of course companies turn to the same solution to their problems each and every time—they build up and establish bureaucracies within their companies. And of course the government excels at this! Once dynamic companies and other organizations lose their focus as the people in each division or department start relying on forms being filled out, committees being formed to solve problems, and policies or procedures being established for every conceivable situation.

In short, success creates the very problems that lead to the demise of once successful companies. To defend themselves from smaller companies, large companies turn to the government to establish laws and agencies to hinder the growth of those smaller companies. They are more than willing to contribute to politicians who help them in their efforts. That is why large corporations fund foundations and issue grants to nongovernmental organizations that lobby for laws that hurt those corporations' industry. If you're big enough you will not be bothered by new laws that hinder your smaller competitors.

Fortunately, eventually smaller companies do manage to overcome the barriers raised by the unholy collusion of large corporations and unethical politicians. It requires hard work, inventiveness, and dedication to serving the customer. Yet when those smaller companies do succeed, almost all of them grow into larger corporations and repeat the sins of the past.

Perhaps someday someone will find something better than the bureaucratic model. I certainly hope so.