Coordination Without Hierarchy: Informal Structures in Multiorganizational Systems - Softcover

Chisholm, Donald

Softcover

ISBN 10: 0520080378 ISBN 13: 9780520080379

Publisher: University of California Press, 1992

Synopsis

The organizational history of American government during the past 100 years has been written principally in terms of the creation of larger and larger public organizations. Beginning with the Progressive movement, no matter the goal, the reflexive response has been to consolidate and centralize into formal hierarchies. That efficiency, effectiveness, and accountability, and the coordination necessary to achieve them, are promoted by such reorganizations has become widely accepted.

Borrowing from social psychology, sociology, political science, and public administration, and using the public transit system of the San Francisco Bay area for illustrative purposes, Donald Chisholm directly challenges this received wisdom. He argues that, contrary to contemporary canons of public administration, we should actively resist the temptation to consolidate and centralize our public organizations. Rather, we should carefully match organizational design with observed types and levels of interdependence, since organizational systems that on the surface appear to be tightly linked webs of interdependence on closer examination often prove decomposable into relatively simpler subsystems that may be coordinated through decentralized, informal organizational arrangements.

Chisholm finds that informal channels between actors at different organizations prove remarkably effective and durable as instruments of coordination. Developed and maintained as needed rather than according to a single preconceived design, informal channels, along with informal conventions and contracts, tend to match interorganization interdependence closely and to facilitate coordination. Relying on such measures reduces the cognitive demands and obviates the necessity for broadscale political agreement typical of coordination by centralized, formal organizations. They also advance other important values that are frequently absent in formally consolidated organizations, such as reliability, flexibility, and the representation of varied interests.

Coordination Without Hierarchy is an incisive, penetrating work whose conclusions apply to a wide range of public organizations at all levels of government. It will be of interest to a broad array of social scientists and policymakers.

In an earlier version, Coordination Without Hierarchy received the American Political Science Association 1985 Leonard D. White Award for the best doctoral dissertation in the field of public administration, including broadly related problems of policy formation and administrative theory.

About this title

About the Author

Donald Chisholm is Assistant Professor of Political Science at the University of California, Los Angeles.

Excerpt. © Reprinted by permission. All rights reserved.

Coordination Without Hierarchy: Informal Structures in Multiorganizational Systems

By Donald Chisholm

University of California Press

Copyright 1992 Donald Chisholm
All right reserved.
ISBN: 0520080378
1
Multiorganizational Systems

In ancient times alchemists believed implicitly in a philosopher's stone which would provide the key to the universe and, in effect, solve all of the problems of mankind. The quest for coordination is in many respects the twentieth century equivalent of the medieval search for the philosopher's stone. If only we can find the right formula for coordination, we can reconcile the irreconcilable, harmonize competing and wholly divergent interests, overcome irrationalities in our government structures, and make hard policy choices to which no one will dissent.
Harold Seidman, Politics, Position, and Power

I begin with a problem. Not long ago the (then) general manager of the San Francisco Public Utilities Commission, referring to the public transit system of the Bay Area, declared that "decisionmaking should be centralized, the different properties can't get together on the simplest things."1 Commenting on the same transit system, transportation engineer David Jones observed that project-by-project development has produced an extensive but ill-coordinated network of services and facilities, that the area's transit networks display significant gaps where controversies have stalled development

and where competing interests of independent jurisdictions frustrate coordination and connectivity, and that the rivalry of these jurisdictions has resulted in a diffusion of transportation responsibilities to the point where the Bay Area "is an extreme case of jurisdictional fragmentation."2

In a similar vein, a recent San Francisco Chronicle article commented on the great gap between the promise of Bay Area transit and the reality:

The idea was brilliant: The Bay Area would build the best transit network in America, a system good enough to compete with the private automobile.

Twenty years and more than $3 billion later, public transit is big businessand it is in big trouble.

Instead of the best network in America, the region has 17 separate transit baronies that war with each other over passengers and waste money on a huge scale.3

Put bluntly, the system is uncoordinated and in disarray. The result is inefficient use of resources, lost opportunities, and useless conflict. The cause is faulty organization.

As this was being written, California State Senator Quentin Kopp, a former San Francisco Supervisor, was drafting legislation to force the Bay Area's seventeen transit systems to merge into three or four superagencies, in an effort to eliminate costly duplication and competition. All of the East Bay systems would be consolidated into one organization; Santa Clara and San Mateo would merge with the San Francisco system; a North Bay transport agency would also be created; and the Bay Area Rapid Transit District would remain an independent entity.4

Elsewhere, the California State Assembly was holding hearings on proposals to reorganize and consolidate public transportation for Los Angeles County. Southern California Rapid Transit District (SCRTD) currently operates the major bus system for the county and is building a subway line in downtown Los Angeles, while the Los Angeles County Transportation Commission (LACTC) is building a trolley line from Long Beach to downtown; twelve smaller cities operate bus systems of their own.

The problem is described by the chief administrative officer for Los Angeles County:

The absence of a specific hierarchy or reporting relationship between SCRTD and the LACTC, the similar composition of each agency's governing board and the responsibility of SCRTD for Metro Rail planning and construction and LACTC for light-rail project planning and construction create the impression they are parallel, independent entities. . . . These give the appearance of a lack of accountability to the public and to other officials.5

The statement by State Assemblyman Richard Katz, chairman of the Assembly Transportation Committee, and sponsor of the consolidation bill, is a classic justification for reorganizations of this sort:

Having two competing Los Angeles transportation bodies has resulted in a lack of coordinated planning, duplication of efforts, overlapping jurisdiction, and a lack of accountability.6

The Transportation Committee passed the bill by a 22-to-0 vote to send it to the assembly floor where it passed with little debate and with a 65-to-0 vote.7

Referring to urban politics more generally, Douglas Yates makes a claim with which Henry Bruere would have been more than sympathetic: "Policy making takes place in a political and administrative system that is fragmented to the point of chaos."8 Too often the policies that result are incomplete, contradictory, and ineffective. Problems surpass the ability of any one agency or governmental entity to solve. "Municipal officials in cities like San Clemente, Kingburg, Galt, Delano, and Watsonville say poverty, crime, and community blight are problems that spill over into their communities from developments just beyond their jurisdictions."9

In this view, the components of the organizational system impinge on each other in significant ways that preclude treating them as independent units. They are composed of interdependent parts that must be coordinated on a comprehensive basis. The need for coordination is a function of the interdependence of the parts of an organizational system: existing formal coordinative arrangements are unable to manage interdependencies effectively. In the face of this inadequacy, coordination fails to occur, and irrational, chaotic public policy results. The problem is in no way limited to public transportation or local government; it occurs at all levels of government, in virtually all policy areas, and in all countries and cultures. San Francisco Bay

Area and Los Angeles public transit merely exemplify the problem in its more extreme forms.

In response to the perceived need to do something concrete to improve the organization of the San Francisco Bay Area public transit system, the Urban Mass Transportation Administration (UMTA) commissioned the study Redundancy in Public Transit .10 In this study, of which I was a coauthor, we introduced that transit system in the following way:

It may be the most generously endowed with public transport services of any metropolitan area anywhere. It has cable cars, trolley cars, subway cars, both modern-light and modern-heavy rail. It has traditional local buses, luxury express buses, and specialized subscription buses. Besides all this, there are governmentally sponsored car and van pools; there are taxis and a rare but viable jitney service; there are high-speed ferries, an old-fashioned suburban railroad and soon even a local helicopter. That smorgasbord is offered by some thirty-five organizations, not counting the numerous taxi, jitney and specialized van and bus operators. All but four of those outfits are now governmental agencies, most of them operating autonomously, almost as though they were private firms openly competing with each other in an unregulated market.11

The roles of these organizational actors vary widely, as do their organizational structures, scopes of authority, and sources of funding. Some have only a single transit mode, others are multimodal. Some are strictly operators. Others regulate and coordinate. Some are part of municipal or county governments; some exist independently as special-purpose districts. Some rely on property taxes, others on sales taxes and bridge tolls, while all of them depend on state and federal assistance for operating and capital funds. When viewed as a whole, they appear to be a collection of distinct entities that overlap in jurisdictions and duplicate services, with little overall shape or form. "Bay Area transit appears to be a far cry from the integrated transit system sought by Jones: it is 'chaotic and irrational.'"12 It makes the Los Angeles system, with only a few major actors, look well ordered and highly efficient.

The assertion that the Bay Area transit is an egregious example of a fragmented organizational system, however, is self-contradictory. "Fragmented" suggests a fracture of something that was once whole, while "system" implies an interrelatedness of parts such that each

can only be comprehended in terms of the others. Fortunately, we can readily make sense of this apparent paradox. Those, such as Jones, who describe Bay Area transit as a "fragmented system" refer to fragmentation of the formal organizational arrangementsto the fact of many different independent operating entities in a single geographic area. On the other hand, "system" implies that the agencies are functionally related: the alteration of one aspect will affect the others to a significant degree. Evidently, there is a disjuncture between the organizational character and the functional properties of the system.

But it is a great leap from finding a degree of interdependence among the components of an organizational system to the conclusion that such a system, if it has no formal unified authority, is uncoordinated. That is, however, precisely the leap made by those who see multiorganization as evidence of a serious weakness: because each organization pursues its own goals, such a system permits the coexistence of incompatible goals, encourages the avoidance of responsibility, and involves costly duplication and overlap. The technical expression of this state is "multiorganizational suboptimality." Lack of coordination is its principal characteristic.13 Although not often made explicit, the source of comparison for this criticism of the multiorganizational system is a model of organization characterized by a high degree of internal order and interconnection of parts, high levels of efficiency, and an absence of redundancy. When examined against the backdrop of this model, any multiorganizational system inevitably proves problematic and inadequate.14

Ironically, this concept of multiorganizational suboptimality is applied almost exclusively to the public sector. What is recommended as the prescription for this malady is nothing less than complete monopoly, involving central control and vertical integration. Thus put, the key to problems of coordination is hierarchical organization.15

Yet in the private sector, tendencies toward consolidation and merger are not only considered an anathema on an ideological basis, but are judged in restraint of trade and in violation of law; they have been in particular disfavor during the past decade. We need look no further than the efforts of the Carter and Reagan administrations to deregulate and promote competition in a range of private markets, a process that included the dismantling of AT&T. Withal, the canons of classic economic theory that resound the virtues of the coordinat-

ing and regulating properties of the market system are rarely applied to the realm of public organizations. Those who view natural market forces as operating as a profound coordinating mechanism abandon this view when it comes to the public administration, arguing that, because public organizations specialize in necessary services that cannot be sold for dollars at a per unit rate, market rules do not apply.16 Therefore, the public arena requires regulation and control in the form of a single center of authority and responsibility.

Reorganization and Coordination

Even if the distinction between public and private organizations as regards types of products and services and the nature of profits and grants is accepted, it is not a necessary conclusion that only hierarchical schemes can ensure effective performance. The assumed virtues and economies of vertical integration schemes and of efforts to streamline multiorganizational sectors by eliminating duplication and overlap are exaggerated. In fact, they have more to do with bureaucratic politics than with effective performance.17 Even where such reorganizations are genuinely intended to improve performance, the record indicates the failures; in some cases they have caused considerable damage and brought few benefits.

Large-scale efforts to reorganize and reform public agencies at all levels are by no means new. Since the dawn of the twentieth century there have been seemingly endless waves of consolidation and integration of public organization for the sake of efficiency and effectiveness, beginning with the Keep Commission (190409) on through the President's Reorganization Project (197780); the most famous and influential was Roosevelt's Committee on Administrative Management (193337), chaired by Louis Brownlow.18 Throughout, the reorganizers have been hunting for the system that, in the words of the 1949 reorganization statute, would reduce expenditures and promote economy, better execution of the laws, and the expeditious administration of the public business.19 All the proposed programs, however, involved tremendous financial cost, not to mention disruption caused by reorganization.

"Hunting" stands out in sharp relief from "learning." The record does not indicate steady and continuous adaptations in organizational

structures as responses to experience or careful experimentation. Instead we find the propensity for organizations to "oscillate from one form to another" even in the face of "generally stable environmental conditions."20 Persistence in the face of apparent failure and indifference to careful evaluation of the consequences of action are, of course, often observed in human behaviorparticularly in domains of strong beliefs and ambiguous experience.21 Our administrative history is rife with radical reorganizations that shuffle and combine agencies, redistribute authority, and incorporate comprehensive coordinating arrangements ranging from direct consolidation to managementcontrol systems such as Planning, Programming, Budgeting (PPB) and Program Evaluation Review Technique (PERT) and now strategic planning.

In public transit, formal reconstructions of organizational arrangements on occasion have included tariff associations, transit communities, and transit federations;22 but, as elsewhere, mergers and consolidations have been proposed most frequently, and they continue to dominate other approaches to problems of coordination. Witness, for example, the creation of the Metropolitan Transportation Authority in New York, which in 1967 took jurisdiction over the subways, the commuter rail services, the city's bus lines, and the Triboro Bridge and Tunnel Authority. The underlying assumption (rarely put to the empirical test) common to these reorganizations is that problems of coordination can be solved and difficulties removed by structural reform.

However, despite our history of organizational reform, some problems are unrelated to structural defects and will likely remain irrespective of the organizational design. Genuine differences in interest among groups, asymmetrical distributions of costs and benefits in issues of coordination, and thorny technical problems are not susceptible to resolution through structural reform. Or, as Harold Seidman has noted,

Where conflicts result from clashes in statutory missions or differences in legislative mandates, they cannot be reconciled through the magic of coordination. Too often organic disease is diagnosed as a simple case of inadequate coordination.23

Certainly, not all government reorganizations have been directed toward formal integration and consolidation. From time to time there

have been countermoves toward decentralization. Usually, however, these countermoves have been of short duration and less than monumental consequence, in part because pressures for integration and consolidation have resulted from enduring orthodox administrative philosophy, whereas moves toward decentralization have come as a result of practical necessity. Observe, for example, the U.S. Civil Service Commission:

Decentralization of authority was one of the effects of World War II on administrative development. The change, for the most part, was made not because of any change in the philosophy of the men who led the (Civil Service) Commission, but was rather the result of necessity.24

In this case, decentralization resulted from the need for "speed of operations" and the greatly expanded activities of the war effort. As soon as the war ended, the president ordered the commission to return to its prewar rules.25 However, where decentralization has been defended on more general grounds, the justifications have been sensible: it increases innovation, encourages public participation, strengthens local governing capacities, and places responsibility for decision making at the level where spillover effects are at a minimum.26

Inevitably, however, the cry of fragmentation is heard once again, the trend toward decentralization is reversed, and another drive toward integration and consolidation is begun. A once-decomposable set of components is now considered a complex, tightly interdependent system where decisions affecting one component affect all, directly or indirectly. In such a situation it becomes imperative to eliminate fragmentary and disjointed approaches and to seek an agenda of "purposive and coordinative action."27 Land use planning provides a prime example:

Planners have been introducing a greater degree of flexibility into land use decisions through the use of flexible zoning techniques as a means of improving the traditional system of land use regulation. But this has been a cause for concern and planners are also calling for the preparation of rules to limit discretion.28

Reorganizations in the direction of consolidation and merger, which concentrate authority at the top, have not provided the advances in coordination or significant improvements in performance

expected from them. The same academics and policy makers who wring their hands at the presence of the multiorganizational system also bewail the inherent inflexibility, slowness to change, and inability to contend with anomaly that characterize large bureaucratic organizations.29 Such large bureaucracies are rigid and do not learn easily or quickly. Nor are they especially powerful coordinating agents. Do we forget that many of our bureaucracies were created to coordinate the smaller agencies that now compose them? Though intended to produce an integrated set of policies, consistent and well coordinated, these large bureaucracies remain little more than holding companies for elements that remain largely independent. Huge agencies such as the departments of Health and Human Services, Education, and Transportation have yet to display the positive attributes of vertical integration while continuing to exhibit all the deficiencies of large bureaucracies. The old problems of coordination have not been solved, and new problems have been created. Under the Carter administration the organization of a Department of Energy merely transformed into discrete subunits several previously independent agencies. Like the other superagencies, it is nothing more than a holding company.30

Decomposability and Organizational Structure

Irrespective of the general coordinative capacities of large bureaucratic forms of organization, in particular situations overcentralization can occur. Referring to the relationship of a brain to its environment, Ashby queried: "Is it not good that a brain should have its parts in rich functional connection?"31 Answering his own question, he replied:

Nonot in general; only when the environment itself is richly connected. When the environment's pans are not richly connected (when it is highly reducible, in other words), adaptation will go on faster if the brain is also highly reducible, i.e., if its connectivity is small. Thus the degree of organization can be too high as well as too low.32

Thus, an analogy is posited between the brain and organizations; we will expect the formal structure for a given organizational system to be more effective if the extent of its connectivity matches the level

of connectivity (interdependence) in that system. Higher levels of interdependence may require higher levels of connectivity in the formal structure. But one cannot simply assume high levels of interdependence for a system. The extent of interdependence is an empirical question that can be resolved only by careful examination of the particular domain.

If one must make any assumptions at all about interdependence, one might do well to assume lower levels rather than higher, because, as Simon has observed:

Hierarchic systems are . . . often nearly decomposable. Hence only aggregative properties of their pans enter into the descriptions of the interactions of these pans. A generalization of the notion of near decomposability might be called the "empty world hypothesis"most things are only weakly connected with most other things; for a tolerable description of reality only a tiny fraction of all possible interactions needs be taken into account.33

Simon thus contradicts the conventional tendency to impute on an a priori basis high levels of interdependence to the parts of a system by arguing that even most complex systems are nearly decomposable: "Intracomponent linkages are generally stronger than intercomponent linkages."34

Central coordinating schemes do work effectively under conditions where the task environment is known and unchanging, where it can be treated as a closed system. In such a situation, coordination can be programmed, but the tendency has been (and continues to be) to apply such coordinating schemes to situations marked instead by variability and conflict. More than twenty-five years ago, Burton Klein noted that military research and development was "suffering from too much direction and control." He found it remarkable that "many people who otherwise deplore a high degree of centralized planning regard it as a panacea when it comes to the conduct of R. and D."35 The rigid character of standardized procedures inherent in formal centralized structures precludes adaptive responses to surprise, and the organizational system suffers accordingly. This crucial point is still not well understood: in a discussion of fostering innovation in urban transportation systems, Martin Wachs, for example, urges that "fragmentation of decision-making, finance, and administrative control must be reduced as an obstacle to innovation."36

Formal routines tend to take on a life of their own, commonly undergoing a conversion from purely instrumental devices to intrinsically valuable entities, leading to "displacement of goals." Goal orientation is lost and adherence to rules becomes the prime motivation for behavior.37

Additionally, formal systems often create a gap between the formal authority to make decisions and the capacity to make them, owing to a failure to recognize the necessity for a great deal of technical information for effective coordination. Ad hoc coordinating committees staffed by personnel with the requisite professional skills appear far more effective than permanent central coordinating committees run by professional coordinators.38 Assuming that coordination can occur through formal mechanisms only, or that in some cases it can occur through them at all, is a mistake. I return to Harold Seidman: "Formal coordinating processes are time consuming and the results are generally inconclusive. True coordination is sometimes obtained only by going outside the formal processes."39

Informal Organization and Loosely Coupled Systems

Although the contention that higher levels of interdependence in a system demand more coordination is empirically strong, the argument that only formal schemes of a centralized character can provide that coordination remains weak. Because that position has been held so tenaciously, other highly effective devices for coordination have been ignored, and their latent utility wasted.

One of the principal mechanisms for coordinating transit activities in the San Francisco Bay Area fails to appear on any organization chart or in newspaper accounts of transit events. It has no board of directors, no employees of its own, and it cannot raise taxes. In fact, this mechanism has no legal standing. Some classical theorists of public administration might consider it extralegal, if not illegal.40 Yet the importance and influence of this mechanism is pervasive and persistent. This shadowy, elusive mechanism is a system of informal channels, behavioral norms, and agreements.

These informal organizational features develop on the basis of need. They derive from the everyday processes of mutual adjustment

that are exhibited by all large-scale systems, public and private.41 Informal channels of communication, informal bargains and agreements, and norms of reciprocity all contribute directly and indirectly to processes of coordination. They also form the foundation for formal schemes of coordination, especially by promoting consensus in situations initially characterized by conflict and dissension.

In this sense, Jones's criticism of Bay Area transit for producing "consensus instead of policy" is misplaced.42 In an informal organization, as opposed to the situation in a formal hierarchy, roles and definitions of tasks are set not by any single authority but by the components themselves. Roles are continuously redefined on the basis of experience, and specific tasks are determined by negotiation. The parties to the bargain are determined not by an organization chart but by the character of the issues at hand.43

Informal systems of coordination have many virtues. They tend to be flexible and adaptive. The disruptive effects of innovation in a formal hierarchy, because of its tightly coupled interdependencies, are avoided in the more loosely coupled, flat, informal system of coordination. Such informal systems are problem oriented and pragmatic. They are self-organizing in the sense that they respond to the effects of experience rather than to the a priori demands of organizational designers.44 Against the canons of classical management theory, they appear to be uncoordinated; but, to use Seidman's words, this is a false impression. Because they are flat, they cannot and do not coordinate by hierarchy. But they are marked by extensive lateral coordination, which occurs at virtually every level of activityproducing an overall system that is quite resistant to serious disruption.45

Nonetheless, academics and policy makers regularly ignore or underestimate the potential of informal mechanisms for coordinating different organizations operating in the same domain. In part, this attitude is accounted for by the attractiveness of formal, centralized approaches to coordination and the certainty they promise. But why the unattractiveness of informal organization? Why discount, ignore, or decry such mechanisms when they already exist and when they can provide effective coordination?

Suppose an ostensibly "fragmented" group of organizations shows a surprising capacity for coordination in the absence of any kind of formal consolidation or centralization. Would the automatic response to such "fragmentation" still be a demand for formal centralization

and hierarchy? Several factors intrude to prevent a negative answer to this query. As I have already noted, there appears to be a process of transmutation whereby coordination and centralization have become virtually synonymous. Where a need for coordination is perceived, the reflexive response is centralization.

But to coordinate means to place or arrange things in proper position relative to each other and to the system of which they form partsto bring into proper combined order as parts of a whole.46 It means, in essence, to bring about some kind of order, not to provide a hierarchical, unified structure. Coordination may consist of a number of things of equal rank or of a number of actions or processes properly combined. But although things may be ordered without reference to hierarchy, the connection between coordination and centralization, if not immutable, is made all too frequently. Look no further than arguments in favor of comprehensive transportation planning:

This acceptance [of comprehensive planning] has come about through federal pressures and incentives and through recognition at the local level that certain pressing problems of physical and economic development and of environmental deterioration do, in fact, transcend municipal corporate lines and require for sound resolution the cooperative efforts of all the levels, units, and agencies of government concerned.47

Or arguments for centralized coordinating agencies:

If the [Los Angeles County Transportation] Commission chooses to select a strong centralized approach, it would . . . give Los Angeles County every opportunity to provide, for the first time, a coordinated and integrated transit service.48

While I do not quarrel with the contention that interdependence requires coordination, I strongly dispute the reflexive assumption that coordination is inexorably tied to centralized arrangements such as comprehensive plans and consolidated agencies.

In part this is a problem of language, which stems from the use of such terms as "fragmented" to characterize multiorganizational systems. The subjective connotation of the term can easily lead to judgments that are not only incorrect but preclude seeing the real issues. Although "fragmented" may be presented as a neutral descriptive term, its normative associations are negative. "Fragmented" implies

breakage, disconnection, incompleteness, and disjointedness, terms that presuppose that an entity once whole has since been broken up.49 To seek "integration" is the "natural" solution. "It brings together the broken pieces, the disconnected and disjointed parts, and renders them entireone symmetrical and harmonious whole."50 Thus, "fragmented" organizational arrangements are something to be fixed.

But suppose one were to characterize a multiorganizational system such as Bay Area public transit using different language, language that carries with it different connotations? Suppose one described the transit system as a loosely coupled organizational domain, with flat instead of hierarchical structure, with horizontal instead of vertical linkages tying the components of the system together. Without the pejorative connotations of "fragmented," the reflexive assumption that the organizational system is in need of remedy is absent. To be sure, if the system did suffer breakdowns of one sort or another, we would see them, but it would not be a necessary conclusion that a solution involved formal integration and consolidation.51

The bias against multiorganizational systems stems not only from the transmutation of coordination and centralization, but also from a misapprehension of the character of informal organization, as to both the nature of its origins and its potential for coordination. Although informal organization is by no means unknown to students of public organization, its positive role in solving problems of coordination is far from universally apprehended either by academics or policy makers. Nor, more generally, is the nature of informal organization well understood.

Theoretical Perspectives on Organization

The view one adopts on the character and utility of informal mechanisms depends on larger perspectives on the nature of organization.52 Students of organization, such as Weber, Taylor, and Fayol, who emphasize rationally designed formal structures and tend to consider the organization as separable from its environment (a "closed system") are apt simply to ignore entirely the existence of informal aspects of organization. If the researcher adopts the view, as Roethlisberger and Dickson did, that organizations can be considered apart from their environments, yet allow for organic processes, for-

mal structures will be considered the creations of rational design processes of the managers, and informal features, the aggregation of the personal interests of the organization members. Or one may embrace the perspective, as did Barnard, that though essentially closed systems, organizations are the result of both rational decisions and spontaneous and basically unplanned processes that serve an array of goals, including communication within the organizations. In this case, one may admit to the utility of informal organization but may still fail to recognize the planned, intentional character of many informal mechanisms, especially as they pertain to coordination.53

Compounding cloudy perceptions of (and misapprehensions about) the utility of informal organization for the problem of coordination are other failings common to social science research. Empirical work on informal organization has remained largely descriptive in character. Generalizations from this body of research have been narrow in focus, or more concerned with other issues.54 Conversely, research containing more general and theoretical statements about informal organization has not been well grounded empirically. At the worst, these statements have been offered as virtual proverbs whose empirical warrant is unquestioned.55

Our best understanding of informal organization has resulted from the work of sociologists such as Robert Merton, Alvin Gouldner, and Philip Seiznick.56 However, even Merton's oft-quoted work on the political machine is only part of a chapter on manifest and latent functions; it is not, overtly at least, about informal organization. In Gouldner's study of the gypsum factory, important information emerges about informal organization, but only in the context of an attempt to understand the growth or contraction of processes of bureaucratization.

Problems resulting from the disjuncture between empirical research and theoretical claims are magnified by difficulties of definition. Insufficient attention has been devoted to providing an accepted, useful definition of the element that gives clear and fixed meaning to the term informal organization. The supposition has been, apparently, that common usage is sufficiently precise"informal" somehow denotes all aspects of organizations that are not formal:

There is a noteworthy ambiguity in the natural-system model concerning the meaning of "informal organization." In other words, al-

though it is clear that the natural-system model directs attention beyond and away from the formally constituted organizational system, there remains a question concerning what it is that the model directs attention towards. The notion of informal organization is a residual or cafeteria concept of diverse and sprawling contents.57

However, we have descriptions of informal organization. It is spontaneous in character and omnipresent within formal organizations. It is composed of group behavior and personal relationships. Occasionally it performs functions for the formal organization in which it develops. More often it serves personal or group ends that are either tangential to the ends of the formal organization or are in conflict with them:

There will develop an informal structure within the organization which will reflect the spontaneous efforts of individuals and subgroups to control the conditions of their existence. There will also develop informal lines of communication and control to and from other organizations in the environment.58

Ambiguity does not exhaust the definitional problems attendant to informal organization. The term has not enjoyed a neutral cast. Because of its general theoretical perspective, the pioneering work of Roethlisberger and Dickson loaded the term with pejorative connotations. By focusing on practices that violated the assumption that the worker's role is a strict devotion to duty, they directed their attention to how the informal organization of the workers interfered with the goals of the formal organization:

It has been shown that the members of the bank wiring room possessed an intricate social organization in terms of which much of their contact was determined. Restriction of output was the chief outer manifestation of this complex of human relations. . . . There is no doubt that the most pronounced overall characteristic of the inter-human activities described was their peculiarly protective or resistive quality .59

In fact, concern for the formal design of organizations, combined with a virtual blindness to informal mechanisms on the one hand and an overt hostility to informal mechanisms on the other, is evidence of a theory that constitutes not a descriptive or explanatory analysis of an empirical phenomenon, but a set of prescriptive rules that identify

which organizational features are good and which are bad. This bears more than a vague similarity to the Moral Newtonianism of the nineteenth century:

When scientific models are transferred from their domains of literal meaning, they frequently give rise to sets of moral principles which determine the goals to be sought. The powerful theory of mechanics became, in the secondary domain, Moral Newtonianism, while the theory of evolution became Social Darwinism.60

March and Olson go so far as to link the prescriptive orientation of "administrative orthodoxy" to religious and moral movements, a conclusion that should make us question the "rational" character of such orthodoxy.61

Thus, one finds on the one hand an overconfidence in the capacity of formal centralized organization to provide the coordination required by multiorganizational systems and, on the other, a misconception and underevaluation of informal, flat organization for the provision of the same. There are multiple causes for this orientation, but its single most important result is an overemphasis on formal reorganization that does not solve the problems it is intended to solve but creates new problems, while alternative means of coordination are ignored.

The argument made in this essay is a straightforward one. In situations where the components of an organizational system are functionally interdependent, the resulting uncertainty creates pressures for coordination. The parts cannot behave without affecting each other; they cannot be understood without reference to each other and to the whole. Historically, the modal response to such pressures for coordination has been to consolidate and integrate formally the separate organizations of the system into a unitary whole, typified by a hierarchical structure of authority and vertical lines of communication.

However, where formal organizational arrangements are absent, insufficient, or inappropriate for providing the requisite coordination (and I argue that they frequently are), informal adaptations develop to satisfy that need. The informal organization thus realized may be quite stable and effective, more so perhaps than formal hierarchical arrangements. Furthermore, because informal organization permits the continued existence of formally autonomous organizations in the

face of mutual interdependence, it can achieve other values, such as reliability, flexibility, and representativeness, that would otherwise be precluded or substantially diminished under formal consolidation.

The public transit system of the San Francisco Bay Area clearly evidences both a complex set of functional interdependencies and a set of formally autonomous public agencies. Duplication and overlap of jurisdictions and services as well as competition characterize Bay Area transit. The transit system of the Washington, D.C., metropolitan area also possesses many of these characteristics, yet has a substantially different set of organizational arrangements: the Bay Area transit has a decentralized system of multiple independent organizations whereas Washington possesses a much more consolidated, unitary, hierarchical system. Some comparisons of the two systems permit an understanding of the informal organization and its utility for coordination.

The research reported here differs in a number of ways from previous research involving informal organization. It focuses not on the general properties of informal organization, but on informal mechanisms as they relate directly and indirectly to problems of coordination in a multiorganizational domain. Interest in informal organization stems from its capacity to resolve problems of coordination and its potential as an alternative to the orthodox views of public administration on coordination. I am not concerned with whatever personal or group functions informal features may perform, except as they relate to problems of coordination. Furthermore, whereas most research on informal mechanisms has centered on those found within individual organizations (for example, the formal structure provides a context or environment within which informal features develop), the research reported here examines a stable informal organization that exists in an interagency context apart from any single formal organization.

The research reported here also differs significantly from contemporary studies in its treatment of the problem of coordination. Where recent formal modeling and game theory approaches have largely cast coordination as a problem of finding solutions that maximize the self-interest of the parties involved, employing microeconomic techniques of analysis and often making assumptions about perfect knowledge and the rational calculation of costs and benefits in the absence

of behavioral norms,62 this study emphasizes the development and maintenance of mechanisms through which coordination may take place and the norms that bound the behavior of the actors involved. In this sense, it complements rather than competes with formal modeling and game theory approaches to coordination.

Although the empirical portion of this study is grounded in a case study, my specific intent is to develop general propositions that transcend those cases and that will help both theorists and practitioners rethink their ideas about possible and appropriate devices for solving coordination problems at all levels of government and across a wide range of policy areas. At the same time, I would like to think that there are some specific lessons here that are applicable to public transit.

Continues...

Excerpted from Coordination Without Hierarchy: Informal Structures in Multiorganizational Systems by Donald Chisholm Copyright 1992 by Donald Chisholm. Excerpted by permission.
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Edition details

• Publisher: University of California Press
• Publication date: 1992
• Language: English
• ISBN 10: 0520080378
• ISBN 13: 9780520080379
• Binding: Paperback
• Number of pages: 292