The Relevant Theories in the West— Self-Organization as the Third Governance Mode

What we often refer to as ―modern management‖, which is different from ―traditional Chinese management‖, actually refers to a set of managerial theories and ideas developed in western countries and pioneered by Henri Fayol, Max Weber and Frederick Winslow Taylor. It is characterized primarily by hierarchy and scientific management.

The Principles of Hierarchy-based Governance

Max Weber elaborated on hierarchy as a governance mode, also known as bureaucracy, and summarized its characteristics as follows:

(1) There is clear division of work within the organization, where every member has clearly-defined rights and obligations;

(2) There are positions at multiple levels in a bureaucratic organization, where people are directed by their superiors;

(3) It is specialties that determine whether members of the organization are eligible for particular jobs or not; and there are clear, standardized procedures for every job;

(4) Managers are full-time functionaries rather than business owners; and they are not private ones and cannot work for private objectives;

(5) There are stringent, generally applicable regulations, rules and processes;

(6) Positions are independent of specific individuals; members have nothing among them but working relationships, not to mention personal affection; the relationship between the organization and its members are restricted and protected by provisions;

(7) All the work processes are documented and archived.

For sure, these principles are designed for an ideal-type model. Modern management aims to design a large system and employ various means for hierarchical management, before ultimately realizing efficient collaboration within the organization. Such a system does have advantages over that of traditional organizations. Notwithstanding, it also have great weaknesses since it relies excessively on process designs, regulations and formal organizational structure. A lot of management scholars have long been aware of this problem and criticized hierarchy. Charles Perrow (1986) compiled, in his book Complex Organizations: A Critical Essay, the critical theories and pointed out that there are at least four major problems with hierarchy:

Firstly, stringent regulations result in a lack of flexibility within bureaucratic organizations, where excessive levels and processes are prone to cause slow response and inefficiency. When the external environment is changing rapidly, in particular, bureaucratic organizations find it more difficult to make quick adjustments, are short of innovations and, hence, find it difficult to adapt to the changes.

Secondly, hierarchy takes employees as screws on machines while overlooking their emotions and various needs. Such a practice limits the freedom of employees, makes it difficult for them to obtain a feeling of self-realization at work and ultimately reduces their initiative, spontaneity and creativity.

Thirdly, bureaucratic organizations are accompanied by huge powers. Employees in such organizations only execute directives from their superiors and this ultimately brings about a situation where huge powers are held by a very small number of officials. Process designs, regulations and formal institutions can only regulate repetitive jobs at low levels. With regard to decision making, the decision makers must be given enough freedom. As a result, the leaders of a small number of large organizations control massive resources but are seldom restricted by the principles of hierarchy. In this situation, the abuse of powers by the top management will cause extremely severe consequences.

Fourthly, such abuse of powers is most often manifested by the appointment of nobody but one's relations and the use of powers for private gains; decision makers who hold huge powers and are free from supervision will occupy the organization's resources, legally or illegally, or use them for private benefits.

Many western scholars after Weber have realized problems with hierarchy and proposed remedies from various angles, such as ―The Functions of the Executive‖ from Chester Barnard, the human relations school of management, bounded rationality, the neo-institutional school, social network school and many other managerial thoughts. These thoughts propose various human-oriented management ideas and practices to correct restrictions and harms caused by hierarchy and scientific management to humanity, thereby encouraging employees.

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