Circular organising

I came across an interesting article which attempts to counterbalance the extreme polarities of domination and self determination. In this article, Georges and Romme (1999) describe a concept which they call the circularity of power. Accordingly, they argue that this concept ‘involves the co-existence and integration of hierarchical and self organising control’, pp. 802-814. Georges and Romme (1999) use the following three rules as the structural basis of the circular model, pp. 808-810:

Decision making about policy at all levels is governed by consent.

Every member of the organisation belongs to at least once circle.

Double linking between hierarchically ordered circles.

It is worth noting that several authors have previously attempted to define the issues surrounding organisational democracy and governance. Weber (1968) articulated that in organisations ‘certain persons will act in such a way as to carry out the order governing the organisation’, pp. 48-49. This view posits the need for order and stability in organisations and how power is used to build legitimacy and social order for those who are to be governed in organisations. Coicaud (1997), cited in Courpasson (2000) also supports Weber’s view by arguing that ‘legitimacy is the recognition of the right to govern’, pp. 13-14.

Weber’s framework of domination is contradicted by one adopted by Friedberg (1993), cited in Courpasson (2000) which he calls ‘social entrepreneurship’. This opposing view argues that domination is limited by the concentration of power in the hands of select few. According to Friedberg (1993), domination ignores how organisational governance is produced by a set of local games and not by a political centralisation capable of ruling and imposing people’s stakes and people’s strategies’ (Courpasson 2000, pp. 145-150)

Whilst this latter view seems to be sympathetic to the concept of the circularity of power, I have some reservations about its effectiveness in distributing organisational power. For example Nonaka (1994) argues that ‘while hierarchical formal organization mainly carries out the task of combination and internalization, self-organizing teams perform the task of socialization and externalization. This also improves the ability of an organization to survive, pp. 30-32. This view is however situational on the type of national cultures and appetite for risk. A high uncertainty avoidance and masculinity (Hofstede, 1991) culture like the Japanese may not necessarily take to a system with ambiguous responsibilities and boundaries around the decision making process. There is also the risk of teams developing a groupthink mentality and not necessarily viewing decisions from a variety of perspectives.

The idea of making decisions by consent is bound to create delays and paralysis in the organisation as some decisions will require more discussion to get the full consent of everyone. Admittedly some individuals in the circular unit may struggle to freely make decisions.

The concept of circularity does not tackle potential conflict of interest as defined by Jensen’s et al (1976) agency theory. After all who is to say employees will not be seeking to maximise their own wealth and security at the expense of financial stakeholders. Whilst the article uses a case study based in the Netherlands, which has a strong preference for stakeholder capitalism, it is severely limited by the lack of a similar comparator case study based in a country that espouses shareholder capitalism where the emphasis is on maximising shareholder value.

Overall the concept of circularity is a novel one that counter balances the traditional command and control structure. But the juxtaposition of domination and self determination show that simply putting forward an alternative form of organisation is not enough. There must be a more robust demonstration of its application in a wide variety of sectors and industries before it can be taken seriously.

References

Courpasson, D. ‘Managerial strategies of domination. Power in soft bureaucracies’, Organisation studies, 2000, Volume 21, Issue 1, pp.141-158

Georges, A. Romme, L. (1999), ‘Domination, Self determination and Circular organising’, Organisation studies, 1999, Volume 20, Issue 5, pp. 801-832

Hofstede, G. (1991), ‘Cultures and organisations’, London, McGraw-Hill

Jensen, Michael, and William Meckling (1976),’Theory of the firm: managerial behaviour, agency costs and ownership structure’, Journal of financial economics, Volume 3, pp. 305-360

Nonaka, Ikujiro (1994),’a dynamic theory of organisational knowledge creation’, Organisation science, Volume 5, Issue 1, pp. 14-37

Weber, M. (1968),’Economy and society: an outline of interpretive sociology, edited by G Roth and C Wittich, New York, Bedminster press