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Management of Complexities in the Organization

• satyendra
• May 5, 2016
• 0 Comments
• ambiguity, complexities, employees, human behaviour, orgainzation, stakeholder, system behaviour,

Management of Complexities in the Organization

All the organizations are usually complex in nature since they are to pursue complex goals and, as a consequence, are likely to face complex issues. It is the responsibility of the organizational management to navigate, manage, and solve the different kinds of complexity existing in the organization to ensure that the organization fulfills its objectives and delivers the intended results. The management is not to be daunted by the challenges and is to recognize that operational, outcome-based, and environmental challenges are inherent to the organization and cannot be avoided. In fact, the management is to be always ready to meet the challenge of managing the intrinsic complexities present in the organization. There are, however, other kinds of complexities that must also be managed. These are those complexities which are seemingly extrinsic to the organization. These are complexities which are needed to be navigated for the internal organizational governance and for the implementation of the organizational strategies and plans.

The understanding of the impact of complexities on the organization can be a complex attempt unto itself since complexities by nature are normally complicated or intricate as to be hard to understand or deal with. However, it is easier to navigate a complexity. To better understand complexities and how to navigate them requires that the management makes them more understandable. It requires that the management is able to appreciate and explain their root causes, so that the organization can better recognizes and controls their emergence. It requires that the organization develops the right tools to manage them. Complexity management frameworks are useful for this purpose.

Primary sources of complexities

Normally organizations encounter three major categories of complexities. These complexities are based on human behaviour, system behaviour, and ambiguity. The complexities faced by the organization during its operations are as a consequence of one or more of these three types of complexities.

• Complexities based on ‘human behaviour’ result from the interplay of conducts, behaviours, and attitudes of the employees. Human behaviours that are varied, unpredictable, and uncontrollable make the management of the organization more difficult. They lead to complex issues because stakeholders sometimes misunderstand or disagree, which leads them to express views or take actions that are unexpected.
• Complexities based on ‘system behaviour’ result from the need for the organizational operations, or their components, to interact dynamically with ‘systems’ that exist within their environment. Such systems might include management levels, management committees, functional departments, procedures, operational environment, or even social pressure groups and regulatory authorities. When the organization is connected to/or dependent upon such systems, their interactions can produce unexpected results. They can lead to complex issues that need to be managed by the management for the sooth running of the organization.
• Complexities based on ‘ambiguity’ result from ‘not knowing what to expect or how to comprehend a situation’. It results from uncertainty about what can happen and how one need to respond to it. Ambiguity may lead to complex issues which may lead to preventing the organizational programs from delivering their intended benefits, and it can make the identification of ‘appropriate next steps’ much more difficult.

Normally it is necessary for the management to recognize that in the complex organizational settings, it has to navigate all the three kinds of complexities.

The five complexities framework

The five complexities framework (Fig 1) is a framework which has been useful for improving the management of the organizational complexities. This framework seeks to associate complexities with their tangible causes (things, events, or people) to facilitate the assignment of professional responsibilities for managing them. The five complexities framework recognizes the following sources of complexities.

• Operational complexity – It is associated with defining, scheduling, and completing activities in a plan. Managing operational complexity is a primary responsibility of the managers who are to be trained in the principles, practices, tools, and techniques of professional management. Operational complexity increases with the number of tasks that must be completed within a plan.
• Outcome complexity – It arises when an organizational plan depends on activities which do not have predictable results. Managing outcome complexity may be the primary responsibility of the managers handling execution of the plan. It is necessary for the managers to have subject matter knowledge specific to the outcome being pursued. Outcome complexity increases when plans are made with more novel, unprecedented activities and goals.
• Environmental complexity – It arises from an environment which is unstable over the time period for which a certain plan is being pursued. Because it originates from external sources, it usually cannot be controlled by the managers executing the plan. Organizational management need to handle environmental complexity, since they are best positioned to monitor and influence the environment external to the organization, and to enable managers executing the plans to function properly in light of it.
• Stakeholder complexity – It arises from a plan’s reliance on stakeholders for support and the uncertainty that the plan can have due to it. Here both the organizational management and the managers executing the plan are to manage the stakeholder complexity, since every individual who is important to the endeavor is a stakeholder who has the potential to influence other stakeholders. However, managing stakeholder complexity is often considered to be a principal responsibility of the managers executing the plan since they are highly sensitive to the competing interests of those who interact with their teams.
• Organizational complexity – It is associated with trying to align the views and secure the endorsements of organizational employees with distinct roles, responsibilities, perspectives, and priorities. It is the complexity that arises when plans must obtain the agreement of several departments and review committees as part of an organization’s decision-making process. It can be influenced and managed by many stakeholders. However, it is different from stakeholder complexity because it emerges from associations of stakeholders who gather intermittently, make potentially significant but often unpredictable decisions, and then disperse. It must, therefore, be managed differently than stakeholder complexity.

Fig 1 Five complexities framework

The five complexities framework is unlike other frameworks because it encourages the independent study of how organizational complexity is created, its impact on decision making, and methods for managing it. Organizational complexity engenders all three of the complexities identified initially in the article. It results from ambiguity associated with human behaviours that determine system behaviours within an organization. The intersection of three complexities with the five-complexities framework aids in understanding the origins and growth of organizational complexity and its potential impact on an organization’s decision-making processes.

Placing organizational complexity in its place

Not all types of complexity are bad for the organizational operation. But the management does not always know which kind of complexity the organization has. The management is to understand what creates a complexity for most employees, remove what does not add value, and channel the rest to the employees who can handle it effectively. Organizational complexity creates big problems by making it hard to get things done. The management often does not have a realistic understanding of how complexity actually affects the organization.  It normally thinks that the institutional manifestations of complexity they personally experience like the number of locations the organization operates in, for instance, or the number of brands or employees the management has to manage. By contrast, the management often does not consider the forms of individual complexity that the vast majority of the employees face such as poor processes, confusing role definitions, or unclear accountabilities.

The organizational management is to know about the complexities faced by the organization. It has to know what kind of complexity is most harmful to the organizational performance, why the senior executives in the organization are often unconscious of it, and how it can be addressed. This is not a trivial difference in perception. It is generally seen that such a disconnect highlights a blind spot many executives in the organization have when it comes to managing complexity effectively. A focus on organizational complexity at the expense of the individual kind can lead to wasted effort or even organizational damage. Further, failing to tackle complexity experienced by the organization can be financially costly.

Once the management recognizes that the employees typically see complexity very differently than it does then it can begin to take straightforward steps to pinpoint where in the organizational complexity hinders productivity and why. The goal is to be to identify where the organizational complexity is an issue, where complexity caused by factors such as a lack of role clarity or poor processes is a problem, and what is responsible for the complexity in each area. Management can then boost organizational effectiveness through a combination of two things namely (i) removing complexity that does not add value and channeling what is left to the employees who can either handle it naturally or be trained to cope with it. By applying this approach the management can reduce the time it needed to make decisions in critical processes. This, in turn, helped it bring operational efficiencies. Such payoffs are not unusual. Management of complexity more effectively helps remove unnecessary costs and organizational friction and can even lead to new sources of profit and competitive advantage by boosting the organizational resilience and its ability to adapt quickly.

Comparison of organizational and individual complexity

Management often has a problem with complexity. Rapid growth of the organization usually need significant management attention and time and, consequently, makes it difficult for the management to manage effectively the organizational issues.  For most employees, however, such organizational complexity does not matter. They struggle instead with forms of individual complexity such as processes that had initially been effective but over time had become increasingly bureaucratic. Many employees, for instance, are frustrated both with how long it takes for decisions to filter through to the front line and the amount of work required to implement them.  Duplicated roles and unclear role definitions frequently aggravates the problems. The result is that management has to spend too much time on managing internal processes and do not have enough time to tackle other important organizational issues which also need management attention.

For management to take stock of the situation with regards to complexities in organization, it frequently conduct employees survey which asks employees about the clarity of roles and accountabilities across the organization, whether systems and processes are linked effectively, how much coordination is required for individual jobs and how predictable these coordination are, and, very simply, how hard it is for the employees to get things done and to make decisions. These surveys management resorts to for gathering quantitative data about the intensity of complexity and qualitative information on what drives it. These surveys also helps management to uncover hidden pockets of complexity and to understand the key activities, data, and handoffs involved in various operational processes. The surveys help management to construct complexity charts in the organization. These charts help management to pinpoint where, and why, complexity is causing problems for the employees. They show a particular breakdown (a region or function for example) and how much complexity of various kinds is occurring there, as well as the level of coping skills possessed by the employees. These surveys help identify several problems that management was previously being unaware of.

Reduction of complexity

Once the management has a clear picture of where complexity hampers effectiveness, it start action to remove any complexity that does not add value and channel what is left to the employees who can handle it. Management is to know that not all complexity is equally manageable, and proceed accordingly. It is to know the types of complexity as en below.

• Imposed complexity – This type of complexity includes laws, industry regulations, and interventions by nongovernmental organizations. This type of complexity is the most difficult to manage by the organization and most cases It is unmanageable.
• Inherent complexity – It is intrinsic to the organizational area of operation, and can only be discarded by exiting a portion of the organizational area of operation.
• Designed complexity – It results from choices about where the organization operates, what it sells, to whom, and how. Organization can remove it, but this can mean simplifying valuable wrinkles in their operational model.
• Unnecessary complexity – It arises from growing misalignment between the needs of the organization and the processes supporting it. It is easily managed once identified.

Many a times to simplify the complexities for tackling confusion in the organization due to the complexities, management is to redraw the functional boundaries so that there is no overlapping of roles between various departments of the organization. This simplifies the jobs of the majority of employees and guides the necessary interactions needed between the departments.

While finding solutions for various complexities in the organization, it is necessary for the management to change those procedures which leads to decision making in the organization so as to improve planning activities in the organization and to provide more regularity and clarity around the timing of decisions. While these actions can add complexity for some employees, the overall level of complexity of most of the employees’ drops thus reduces wasted time and frustration.

Strengthen skills where needed

Management of the organization is to focus on the complexity management in the organization. Increase in the complexity in the organization makes the organizational processes sub optimal which has adverse effect of the organizational profit.  However, it is important to know that there can be some complexity in the organization which is not bad. Such complexity creates value additions to the organizational processes in place of value destroying.  Management quite often consciously introduces the value addition complexity into organizational processes.  They often design in new elements that create added complexity to take advantage of the value addition. Whenever such thing takes place, management is to ensure that the employees in the positions affected are prepared. In such cases, management is to see that the key capabilities of the employees are improved in their functional areas and their skill gaps are closed. The employees are to be coached so that they can master and handle the new processes effectively and efficiently.

Also whenever management is tackling complexity, it may find that some employees seem to have more trouble facing complexity than other employees. This is not surprising. People are different. Some freeze like deer in the headlights in the face of ambiguity, uncertainty, complex roles, and unclear accountabilities while others are able to get their work done regardless. Management is required to locate the pockets of individual strength and weakness of individual employees in order to respond intelligently. Although some people can deal with complexity innately, others can be trained to develop the ‘ambidextrous’ capabilities which is the ability to tolerate ambiguity and actively manage complexity. Such skills enable employees to create and use networks within organizations to build relationships and help overcome poor processes, bridge organizational silos, or manage whatever value-creating pockets of complexity the management decides to maintain.