Bases of Power in Organizations

The HUD official's inability to attain sustained, successful power in the situation described earlier raises the question of how one does so. Social scientists usually refer to French's and Raven's typology of the bases for power in groups (1968): reward power is the power to confer or withhold rewards that others want, such as pay; coercive power comes from the ability to take forceful action against another person; a person has referent power over others if they see him or her as someone they wish to be like, as a standard for them to emulate; expert power derives from the control of knowledge, information, and skills that others need; and a person holds legitimate power if others accept his or her authority to tell them what to do.

These types of power have important implications for managers. One might think of coercive power as the ultimate mode of influence. The capacity to tax, arrest, imprison, and execute individuals is a fundamental attribute of government. These powers justify strong controls on public organizations, which often have a coercive character themselves. As for their own leadership behaviors, however, public managers need to recognize that management theorists have long emphasized the relative clumsiness and costliness of coercive power (Etzioni, 1975). Forcing and threatening people requires costly vigilance and oversight and can make enemies.

Managers may have authority to coerce, but their real challenge lies in finding ways to reward (Barnard, 1938). As Chapter Ten describes, public managers face particular constraints on their power over certain rewards. They may have some legitimate authority because of their rank and position, but they also have to maintain a less formal legitimacy in the eyes of their subordinates and external authorities. Managers must invest heavily in setting a good example and performing well in order to obtain referent power and expert power. For all the politics that surrounds public managers, experienced officials and observers still report that a public administrator's skill, integrity, experience, and expert knowledge can give him or her a positive form of power over both members of the organization and external authorities.

The HUD official described earlier rewarded certain supporters, illustrating the importance of political alliances. Yet her coercive treatment of some agency officials probably contributed to her ultimate troubles. Also, she allegedly abused legitimate power (the secretary's auto-pen), and she lacked sufficient legitimate, expert, and referent power to sustain her position. Later chapters provide examples of more effective approaches that also involve development of constituencies but entail a more effective vision of a contribution to society, a vision sustained by a reputation for expertise and integrity (Chase and Reveal, 1983; Cohen, Eimicke, and Heikkla, 2013; Doig and Hargrove, 1987; Hunt, 1999; IBM Endowment for the Business of Government, 2002).

Dependency and Strategic Contingencies

In analyzing power, organization theorists have also drawn on the concept of dependency – how much a person or group must rely on another person or group for resources. Groups and units that have the most to do with obtaining key resources for their organization gain power. Studies of business firms have found that their members rate the sales and production divisions of their firms as the most powerful units (Kenny and others, 1987; Perrow, 1970a). Businesses depend on these units to produce and sell the products essential to bringing in money. Other people can also depend on a person or unit for information, completed tasks, and services.

Similarly, power accrues to units that manage strategic contingencies, or the factors and events that figure crucially in the operations of the organization and its ability to achieve goals (Hickson and others, 1971; Daft, 2020). Units that handle the biggest problems facing the organization gain power. Earlier chapters discussed the central role of environmental uncertainty in recent analyses of organizations; strategic contingencies include circumstances that impose major uncertainties on an organization, and those who handle these uncertainties become important. Nothing illustrates the influence of a strategic contingency more than the intense national concern with terrorism and homeland security since the attack on the World Trade Center, and the amount of attention the federal government paid to the formation of the Department of Homeland Security to confront this contingency.

Pfeffer and Salancik (1978; also Pfeffer, 1992) applied similar thinking to the analysis of power distributions among subunits. A department or bureau has more power when there is greater dependency on it, when it has more control over financial resources and greater centrality to the important activities of the organization, when there is less substitutability of services (that is, when others have few or no alternatives to dealing with the unit for important needs), and when it has a larger role than other units in coping with important uncertainties facing the organization.

Kenny and his colleagues (1987) also suggested that these concepts apply to public organizations, but with important distinctions. They analyzed major decisions in thirty public and private organizations in Great Britain. The private organizations included manufacturing and service firms. The public group included local governments, health districts, and state-owned enterprises such as a chemical manufacturer and an airline (both nationalized in the United Kingdom). The researchers asked managers of both types of organizations which internal and external units were involved in major decision making and how much influence these units had. The two groups had similar patterns of unit involvement. For example, accounting, auditing, and production units were most frequently involved in making major decisions. In the public organizations, however, external government agencies became involved much more often. Sales, marketing, and production units had a great deal of influence in both groups. In the public organizations, adjudication units – committees or commissions that decide on resources and policies, such as a health services district commission – had the strongest influence rating. Yet this type of unit approached having the lowest rating in the private organizations. Surprisingly, external government agencies were also rated as having little influence in the public organizations, in spite of their frequent involvement, but were rated as being very influential in the private organizations. The authors suggest that this might mean that public sector managers take for granted the influence of external agencies, whereas business managers react more sharply to government interventions.

Overall, the study indicates that units that produce and distribute primary goods and services wield strong influence in both types of organizations. Even in public organizations with a high market or client orientation, such as those in the study – government manufacturers, a health district, and so on – the institutional authority of government affects internal influence patterns, and external agencies often become involved. The strong role of adjudication units in public organizations reflects the authority conferred on them by the institutions of government. In the organizations studied, those units also handle key strategic dependencies by representing external constituencies and making policy decisions. Later we will see that the same researchers also found that the strategic decision-making processes of the public organizations also reflect the effects of their public sector status.

Power at Different Organizational Levels

Management experts also consider how people at different levels and in different units obtain power. Daft (2020) points out that top managers have a variety of sources of power. They have considerable authority by virtue of their formal position, such as authority to control key decisions. They can also influence allocation of resources. In government agencies, in spite of external constraints and politics, the agency heads usually exert considerable influence over funding for subunits and allocation of other key resources, such as personnel. Top managers can control decision premises – fundamental values or principles that guide decision making – and information (Simon, 1948). For example, a new director of the law enforcement department in a large state found a strong emphasis on hierarchical authority in the department. He wanted to develop a climate of more open communication, in which employees could express their opinions and make suggestions. The director made it clear to his managers that the agency would adopt these orientations through open-door policies and improved communications. This position became a guide for decision making by the other managers. The director established guidelines on how to respond when an employee asks to speak to a manager: “You listen!” The basic premise behind the agency's decision-making procedure now guides subsequent, more specific decisions.

Top managers can also take advantage of network centrality. They occupy the center of networks of information, personal loyalty, and resource flows. The HUD official placed loyal associates in key positions to develop an information network. This worked effectively until deficits in other dimensions of her power eroded her position (Maitland, 1989).

Lower-level members of an organization can have substantial power as well. They may serve as experts on key tasks. They can obtain influence through effort, interest, informal coalitions (such as those formed by groups of friends), or formal organizations (such as unions). They can use rules and other organizational norms to their advantage. In his analysis of “street-level” government service providers, Lipsky (1980) points out that they have considerable autonomy. Civil service rules, vague performance measures, and extensive rules governing service delivery constrain higher officials' authority over them.

Middle managers have some of the influence potential of both executives and lower-level employees. Management experts interested in empowerment as a means of making managers more effective have lately focused increased attention on these managers (Block, 1987; Kanter, 1987). These authors often focus on business firms, but empowerment also has important implications for public agencies. Middle managers occupy positions below corporate vice presidents or major division and department heads. In government, this would include those below assistant secretaries or major bureau heads, such as managers in GS 13–15 positions in the federal government.

Employee Empowerment

The concept of employee empowerment as a managerial or leadership approach has become prominent in the field of management. Large American firms began developing employee empowerment programs in the 1980s to increase profitability and customer satisfaction and encourage innovation (Bowen and Lawler, 1992; 1995). Within a decade, employee empowerment had gained currency among policymakers spearheading New Public Management reforms throughout the world, including in the US where employee empowerment became one of four guiding principles of the National Performance Review launched by the Clinton Administration (Fernandez and Moldogaziev, 2010). The intellectual roots of employee empowerment run much deeper, however, to the Human Relations Movement described in Chapter 2, particularly Follett's (1942) writings on supervision and leadership, McGregor's (1960) Theory Y of leadership, and Likert's (1967) classification of managerial styles (Herrenkohl et al., 1999).

Empowerment has developed into such a widely used concept that it has achieved buzzword status and is even referred to satirically in the Dilbert comic strip by Scott Adams. In one, the boss announces that empowerment is the management concept of the era and that he is empowering the employees. Dilbert and a fellow worker immediately start trying to fire one another, while another employee rejoices over never having to work hard again. While obviously meant to be amusing, the cartoon makes a point that many management experts make: empowering people in the workplace requires careful preparation, in such forms as training people and providing resources and organizational conditions to support their new roles (see, e.g., Yukl, 2001, pp. 106–109).

Kanter (1987) argued that middle managers in business firms have so little power that they cannot perform effectively. Many rules and routines govern their work, and there are few rewards for innovation. They rarely participate in important conferences or task forces. They lack resources and support to do useful things, such as rewarding excellent subordinates or pursuing a promising initiative. Higher-level managers must bestow a positive form of power on these middle managers. They must relax rules, increase participation, assign important tasks, and reward innovation (Kanter, 1987). This sharing of power expands power, giving more people in the organization the capacity and incentive to do good work. In a similar vein, Bowen and Lawler (1992, 1995) argued that the sharing of authority of managers with frontline employees is a necessary but insufficient measure to empower them. They defined employee empowerment as a service delivery or managerial approach that entails providing lower-level employees with information about goals and performance, rewarding them based on performance, helping them acquire knowledge and skills to perform their work effectively, and granting them power to make decisions that influence organizational performance (Bowen and Lawler, 1992).

A variety of studies of private sector organizations have identified employee empowerment as a management or leadership approach that can increase performance (Lawler, Mohrman, and Ledford, 1992, 1995; Srivastava, Bartol, and Locke 2006; Neilsen and Pedersen, 2003; Kirkman and Rosen, 1999; Vecchio, Justin, and Pearce 2010), job satisfaction (Lawler, Mohrman, and Ledford, 1995; Kirkman and Rosen, 1999; Vecchio, Justin, and Pearce 2010), and organizational commitment (Lawler, Mohrman, and Ledford, 1995; Guthrie, 2001; Kirkman and Rosen, 1999; Hanaysha 2016), and promote creativity and innovation (Zhang and Bartol, 2010; X Zhang and Zhou, 2014). In addition, a growing number of public management studies reveal the benefits of employee empowerment for public organizations. In a series of articles, Fernandez and Moldogaziev (2011, 2013a, 2013b, 2015) explored the relationship between employee empowerment, performance, job satisfaction, and innovativeness in US federal agencies. Their findings indicate that employee empowerment practices generally have a positive effect on perceived performance. Importantly, they found that employee empowerment leads to higher performance by increasing employee job satisfaction and innovativeness. A related study revealed that employee empowerment helps to reduce voluntary turnover intention (Kim and Fernandez, 2017). A trend uncovered in these studies is that employee empowerment as a managerial approach seems to work when it comes to improving performance and encouraging innovativeness, but that specific empowerment practices vary in their efficacy. Granting employees more discretion and providing them with knowledge and resources needed to perform well are effective empowerment practices in a wide range of situations, but other empowerment practices like rewarding employees based on their performance may have unintended negative consequences for public organizations.

Additional studies by Hassan and co-authors (Hassan, Park, and Raadschelders, 2018; Park and Hassan, 2019; Hassan, DeHart-Davis, and Jiang, 2019) have corroborated some of these findings and revealed other advantages to employee empowerment as a leadership style in the public sector. One study by Hassan, Park, and Raadschelders (2019) found that empowering leadership is positively related to performance of subordinates and work units. Park's and Hassan's (2018) analysis revealed that managers are more likely to empower their subordinates when their own supervisors empower them, suggesting that the benefits of empowering leadership trickle down the chain of command in organizations. Hassan, DeHart-Davis, and Jiang (2019) found that empowering leadership, by promoting trust between leaders and subordinates and causing the latter to feel they have more control at work, encourages employees to speak up more at work and provide vital feedback to leaders.

This supporting evidence notwithstanding, we still need to consider that Kanter's analysis of problems in industry sounds like the complaints about heavy constraints on managers in government. The solution that Kanter proposes, however, contrasts sharply with common approaches in government. Elected officials and top agency executives often impose more rules to try to improve performance and maintain control (Lynn, 1981; Warwick, 1975; Wilson, 1989), as the Senate did in the IRS example at the beginning of this chapter. President Reagan aggressively sought to disempower career federal civil servants (Durant, 1992; Golden, 2000), and political officials have made more recent efforts to exert strong controls over the bureaucracy (Hedge and Johnson, 2002). As these efforts indicate, the accountability pressures in government complicate empowerment approaches. Government officials face a serious challenge in finding ways to allow civil servants sufficient authority and participation to maintain a competent and motivated public service (National Academy of Public Administration, 1986; Volcker Commission, 1989). In addition, officials continue various efforts to build more flexibility into governmental management systems. In 2001, the Bush administration launched such an initiative by advancing Freedom to Manage legislation (Bush, 2001). The legislation stated the objective of providing federal managers with “tools and flexibility” to manage areas such as personnel, budgeting, and property management and disposal.

Getting and Using Power

When they draw practical suggestions from this literature about how to obtain and use power, management writers offer advice such as this (adapted from Daft, 2020, pp. 546–548):

• Move into areas of great uncertainty or strategic contingencies facing the organization and play an important role in managing those areas.
• Increase other departments' dependence on your own by making them depend on you for key resources and information. Incur obligations by doing additional work for others.
• Provide resources for the organization by bringing in money and other resources from external sources.
• Build coalitions and networks with others by building trust and respect through helpfulness and high motivation. Involve many people, including those who disagree with you.
• Influence the premises behind decision-making processes by such means as influencing the flow of information about one's department and shaping the agendas of important meetings.
• Enhance the legitimacy and prestige of your position and department.
• Be reasonably aggressive and assertive, but be quiet and subtle about power issues – do not make loud claims or demands about power.

Suggestions as general as these certainly apply in most management settings. For public management, they need to be interpreted in light of the points made here about legitimate authority and external political authority.

Rational Decision-Making Models

Rationality has various meanings and dimensions, but in the social sciences, a strictly rational decision-making process would involve the following components:

1. Decision makers know all the relevant goals clearly.
2. Decision makers clearly know the values used in assessing those goals and targeting levels of attainment for them, so they also know their preferences among the goals and can rank order them.
3. Decision makers examine all alternative means for achieving the goals.
4. Decision makers choose the most efficient of the alternative means for maximizing the goals.

These strict conditions are seldom met except in the most simple of situations, but we know that simple situations that require decisions come up all the time. A bureau chief receives a careful committee report that demonstrates that three alternative vendors can sell the bureau identical copying machines. The bureau chief chooses the least expensive machine. To do otherwise would invite others to question the chief's competence, ethics, or sanity.

Rational Decision-Making Techniques in Public Organizations. Public agencies apply techniques akin to those of scientific management when they have consultants or in-house experts analyze work processes to design more efficient, effective work procedures. The public service centers of the Social Security Administration, e.g., needed a system for keeping track – to prevent misplacement – of the huge number of client file folders that move around to various employees who process the clients' claims. Consultants working with the agency developed a system for putting bar codes on the file folders so that the codes can be read into the computer with a scanner wand at each work location. This scan records the folder's location and creates a record of the location of each file within the system.

Similarly, management science techniques have wide applications in government (Downs and Larkey, 1986). These techniques involve mathematical models or other highly structured procedures for decision making. Linear programming, e.g., uses mathematical formulas to determine how many units of output can be produced with given levels of inputs and thus the best mix of inputs for a production process. Other mathematical techniques support design of workflows and queuing processes. Many discussions of such techniques emphasize the greater difficulty of achieving successful applications in government because of such factors as vague performance criteria and political interventions (Drake, 1972; Morse and Bacon, 1967). In many technical areas of government work, however, these techniques have applications that are just as useful as those in industry.

Many of the proposals for improving government operations over the past several decades have advocated approaches that involve elements of rational decision making (Downs and Larkey, 1986; Lynn, 1981). Lyndon Johnson issued a presidential directive ordering that the planning and program budgeting system (PPBS) be implemented in the budgeting processes of federal agencies. PPBS involves a systematic process of organizing budget requests according to major programs, with the plans and objectives for those programs specified and justified. Advocates proposed PPBS as a reform of previous budgeting techniques that concentrated on the items or activities to be funded and paid little attention to program objectives. The Department of Defense had used the system with some success prior to President Johnson's order. However, problems in implementing PPBS more widely led to the order's cancellation a few years later.

When Jimmy Carter campaigned for president, he proposed the use of zero-based budgeting techniques as a way of exerting greater control over federal spending. These techniques involve looking at the requests for funding of various activities as if their funding levels were zero. The idea is to force a systematic, rational review of major commitments and possible reallocations rather than simply taking existing programs for granted. The procedure never came into use in any significant way.

Others have proposed that the public sector can use “management by objectives” techniques as well as the private sector does (Rodgers and Hunter, 1992). These techniques involve careful negotiation and specification of primary objectives for individuals and units, with performance evaluations concentrating on whether those objectives have been achieved (Swiss, 1991). As with the techniques discussed previously, debate goes on over prospects for using such a systematic and explicit technique in public organizations (Bowsher, 1990).

Some public organizations use elements of these techniques, but attempts to implement them widely have not been successful. Apparently the public sector conditions of diffuse goals, political complications, and highly complex programs often overwhelm such highly rationalized procedures. The GPRA requires federal agencies to produce strategic plans and performance plans that state their objectives, with reports on their success in accomplishing the objectives. This requirement involves a version of a rational process, and Radin (2000) poses difficult questions about whether such a process can prove successful within the political and institutional context of government in the United States.

Rationality Assumptions and the Behaviors of Public Managers and Officials. Another role that the concept of rationality has played in analyzing public organizations is its use to interpret the behavior of public managers and other government officials. “Public choice” economists have developed a body of theory using approaches typical in economics to analyze how citizens and officials make political decisions. They argue, e.g., that in political contexts, just as in economic ones, individuals rationally maximize utility. Voters vote in their own self-interest, and political officials in essence try to buy votes by providing the government programs and services that voters want. Because no market process ensures that one has to pay directly for the goods and services one receives, groups of voters use the political system to benefit themselves at the expense of others. They demand that their elected officials give them services and subsidies that they need, sometimes shifting to other voters much of the burden of paying for them. When these theorists turn to the public bureaucracy, they suggest similar problems. In some of the most prominent, widely cited academic works on public bureaucracies, they suggest that government organizations strive for ever greater budgets (Niskanen, 1971) and tend toward rigidity (Downs, 1967) and information distortion (Tullock, 1965).

Evidence about these assertions has accumulated, and some of it supports them. Clearly, these assertions refer to serious challenges for public managers and potential shortcomings of public agencies. The evidence and careful assessment of the assertions, however, also indicate that they are oversimplified and, as depictions of many bureaucrats and public bureaucracies, simply inaccurate (Bendor and Moe, 1985; Blais and Dion, 1991). Chapters Six and Fourteen return to questions about the performance of government agencies and their managers. While acknowledging the severe performance problems that public agencies and managers sometimes exhibit, those chapters also present evidence and assertions that public agencies and their managers often perform very well.

The Limits of Rationality. Chapter Two describes how Herbert Simon (1948) advanced his observations about constraints on managers' ability to follow highly rational procedures, especially in complex decision-making settings (see also Jones, 1999). Simon argued that for large-scale decisions, the deluge of relevant information and uncertainties overloads the cognitive capacity of managers to process it. Managers strive for rationality – they are intendedly rational. But cognitive limits, uncertainties, and time limits cause them to decide under conditions of bounded rationality. They do not maximize in accordance with rationality assumptions; they “satisfice.” They undertake a limited search among alternatives and choose the most satisfactory of them after as much consideration as they can manage within the constraints imposed by their situation. Chapters Two and Six also describe how Cyert and March (1963) studied business firms and found that they approached major decisions largely as Simon had suggested. Rather than making decisions in highly rational modes, managers in the firms followed satisficing approaches, as Chapter Six explains. These include “problemistic searches,” “sequential attention to alternatives,” and rules of thumb rather than careful specification of goals.

Contingency Perspectives on Decision Making. Current views of management typically follow the pattern of regarding strictly rational approaches to decision making as applicable within relatively limited domains of managerial activity. As long as tasks and the operating context afford relatively stable, clear, simple conditions, managers find such approaches feasible. As conditions become more complex and dynamic, however, the deluge of information and uncertain conditions overwhelms procedures that require highly explicit statements of goals and painstaking analysis of numerous alternatives. More intuitive and experience-based judgment then comes into play, supplementing or supplanting highly rational procedures.

James Thompson (1967; see also Daft, 2020) suggested a contingency framework to express these variations. Decision-making contexts vary along two major dimensions: the degree to which the decision makers agree on goals, and the degree to which they understand means–ends or cause–effect relationships – that is, the degree to which they have well-developed technical knowledge about how to solve the problems and accomplish the tasks. When both goal agreement and technical knowledge are high, very rational procedures apply. The earlier example about the Social Security Administration's file-tracking system illustrates a situation in which everyone agreed on the goals. Everyone wanted more efficient, effective file-tracking procedures. In addition, the consultants had well-developed ways of analyzing the efficiency and effectiveness of the new file-tracking system. A rational procedure served very well.

The Internal Revenue Service deals each year with the problem of receiving a flood of tax returns and extracting and sorting them correctly. State departments of motor vehicles and the US Social Security Administration process many routine applications and claims every day. In decisions about activities such as these, management science techniques and other forms of highly rationalized analysis have valuable applications (as long as they are properly implemented in a humane and communicative fashion). For example, the US Navy once effectively implemented a planned maintenance system with elaborate scheduling charts that directed when the various pieces of machinery and equipment on a ship should receive maintenance. Instruction cards detailed the maintenance tasks to be performed and included a system for recording the completion of tasks. In effect, the ships followed a strict recipe for maintenance.

At the other end of the scale, when decision makers have no clear consensus on goals and little clarity as to the technical means of achieving them, one can hardly follow a simple blueprint. Measurement, mathematical models and analysis, and strict guidelines for decisions become more tenuous. Under these conditions, managers engage in more bargaining and political maneuvering and more intuitive, judgmental decision making.

Incremental Decision-Making Processes

Scholars have debated whether government decision-making processes follow an incremental pattern (Bendor, 2015; Feitsma, 2020). This perspective on public sector decisions has features similar to those of the bounded rationality perspective and has similar intellectual origins. Incrementalism in decision making means concentrating on increments to existing circumstances or relatively limited changes from existing conditions. Those who regard the policymaking process as having this characteristic argue that major, wrenching changes to federal budget categories seldom receive much consideration. Instead, the officials formulating the budget concentrate on the limited increments, up and down, proposed in any given year. Policymakers restrict the size of the changes they propose. The bigger the change, the more opposition they stir up and the more complex becomes the task of analyzing the change.

Political scientists have debated intensively over whether incrementalism accurately characterizes the policymaking and budgeting processes. In addition, they debate its desirability. Some argue that incremental processes stimulate useful bargaining among active political groups and officials and that they guard against ill-considered radical changes. Others complain that they make the policymaking and budgeting processes too conservative and shortsighted and too supportive of existing coalitions and policies.

The debate has become mired in difficulties about what is meant by an increment: How large does a change have to be in order to be considered large? It has led to the conclusion, however, that policy and budgetary changes tend to be incremental but are not always. Fairly drastic cuts in some portions of the federal budget during the Reagan administration, along with fairly sharp increases in military spending, illustrate that regardless of how one identifies an increment, cuts or increases can greatly affect public managers and their agencies (Rubin, 1985). More generally, however, the decision-making processes of public organizations play out within these larger incremental policymaking processes. Policy changes that agencies initiate or that influence them involve a complex interplay of political actors tugging and hauling over any significant change.

In fact, these aspects of the governmental context lead to prescriptions for using incremental approaches as the most feasible alternative. Charles Lindblom's article “The Science of Muddling Through” (1959) is a classic statement of this perspective. He noted that the requirement for political consensus and compromise results in vague goals for public policies and programs. In addition, public administrators carrying out these policies must maintain political support through public participation and consensus building. They have to remain accountable to elected officials, who usually have less experience than they do. As a result, stated goals and ends for policies provide little clarity, and means become inseparable from ends. Administrators find it difficult or politically unacceptable to state a precise societal impact for which a program aims. They must identify a package of means and ends that can achieve political consensus and support. Far-reaching, original procedures and goals evoke particularly strong opposition and usually must be modified if support is to be maintained. In addition, the need for political support often outweighs such criteria as efficiency and substantive impact. Thus, in formulating their packages of means and ends, administrators must strive for satisfactory decisions – that is, they must satisfice – after examining a relatively limited set of alternatives. Often they rely heavily on past practice. A good deal of intelligence may enter the decision-making process through the involvement of many groups, experts, and officials. Generally, however, the approach involves avoiding major departures and concentrating on relatively limited, politically feasible steps. One can see why critics worry about the implications of such an approach (Rosenbloom, Kravchuck, and Clerkin, 2008). It can lead to unduly conservative decisions, and it can favor politically influential groups over disadvantaged and less organized groups.

Mixed Scanning. Etzioni (1967, 1986) proposed an approach aimed at reaching a compromise between the extreme versions of rational decision making and incrementalism. He argued that administrators and other officials make both decisions that have large-scale, long-term implications and decisions of more limited scope. The latter decisions often follow major directions already selected by the former. Etzioni suggested that decision makers strive, through “mixed scanning,” to recognize the points at which they concentrate on broader, longer-range alternatives and those at which they focus on more specific, incremental decisions that are a part of larger directions. Decision makers need to mix both perspectives, taking the time to conduct broad considerations of many major issues and alternatives to prevent the shortsightedness of incrementalism. Yet such broad scans cannot involve all the comprehensive analysis required by highly rational models; thus, more intensive analysis must follow on decisions within areas of pressing need.

Logical Incrementalism. Quinn (1990) suggested a pattern of logical incrementalism in which long-range strategic decisions set a framework for incremental steps aimed at carrying out the broader objectives. Focused mainly on business organizations, the approach involves careful consideration of long-range, general priorities. Implementing these priorities, however, involves limited, experimental steps. Decision makers must recognize that the priorities need adaptation and that compromise remains important. These suggestions are consistent with some prescriptions for successful large-scale change in organizations discussed in Chapter Thirteen.

An Incremental Model of Decision-Making Processes Within Organizations. Political scientists usually apply the concept of incrementalism to the process of creating broad public policy. Mintzberg, Raisinghani, and Theoret (1976) studied twenty-five major decisions in organizations and formulated an incremental model of decision-making processes. The model depicts decisions, even major ones, as involving numerous small, incremental steps moving through certain general phases. “Decision interrupts” can occur at any of these phases, causing the process to cycle back to an earlier point. The identification phase involves recognizing the problem and diagnosing it through information gathering. Then, in the development phase, a search process that identifies alternatives is followed by design of a particular solution. Finally, in the selection phase, the solution is evaluated, and through an authorization step the organization makes a formal commitment to the decision.

This process seldom flows smoothly. Interruptions at any of the steps make the decision-making process choppy and cyclical rather than smooth and carefully directed. An internal interruption may block diagnosis of a problem. Even when a solution has been designed, a new option may pop up and throw the process back. For example, a new executive may come in and refuse to authorize a decision that is otherwise ready for implementation, or an external interruption such as a government mandate may cause higher-level executives to push a proposal back for further development.

This incremental decision-making model has been used in research comparing private managers with managers from public and nonprofit organizations. Schwenk (1990) used it to analyze managers' perceptions about decision processes in their organizations. He found that compared with private business managers, public and nonprofit managers reported more interruptions, recycling to earlier phases, and conflicts in the decision processes in their organizations. This evidence of differences in decision-making processes between public and private organizations is consistent with the results of other research, such as the study by Hickson and others (1986) discussed later in this chapter.

The Garbage Can Model. The tendency to regard major organizational decisions as complex and dynamic rather than smoothly rational now dominates the management literature. It reaches its apex in the garbage can model. This metaphor comes from the observation that decisions are made in organizations when particular decision-making opportunities or requirements arise. Like garbage cans, these instances have a diverse array of material cast into them in a disorderly fashion. As noted earlier, James March participated in research validating Simon's observations about constrained rationality in organizational decisions (Cyert and March, 1963). March and his colleagues also observed that organizational decisions involve much more internal political activity than is generally supposed, with extensive bargaining and conflict among coalitions (March, 1962; Pfeffer, 1982).

These observations evolved into the garbage can model, which holds that in organizational decision-making processes, participation, preferences, and technology (know-how, techniques, equipment) are ambiguous, uncertain, and rapidly changing. These conditions tend to occur especially in “loosely coupled” organizations such as universities and many government agencies (March and Olsen, 1986; Weick, 1979). The members and units have loose control and communication with one another. It is often unclear who has the authority to decide what and for whom. In addition, people may loosely engage even with very important issues, because other matters preoccupy them. People come and go in the organization and in decision-making settings such as committees. Problems and potential solutions come and go as well as conditions change. Choice opportunities also come up: a committee may look for decisions to make, or a manager may look for work to do. A solution may go looking for a problem: a promising alternative may become available that virtually begs for some type of application, or a person or group may have a pet technique that they want to find a way to use. Thus problems, decision-making participants, solutions, and choice opportunities flow along in time relatively independent of one another.

Decision making occurs when these elements come together in a way that is conducive to making a decision – the right problem arises when the right decision-making participants are receptive to an available solution, all coming together in a choice opportunity. The model emphasizes that the linkages between these elements are more temporal than consequential; that is, they result as much from coincidence as from rational calculation (March and Olsen, 1986).

The model has considerable intuitive appeal; anyone who has worked in a complex organization knows of chaotic or accidental decisions. In addition, a number of studies have found that the model accurately depicts decision-making processes in a variety of organizations. March and Olsen (1986) stressed that they intended the model not as a replacement for other perspectives on decision making but as a supplement to them, thus implying that they did not claim that it perfectly accounts for all decision-making processes and contexts. They did not rule out relatively rational approaches in certain instances. In addition, they pointed out that the model does not imply that all decisions involve unavoidable bedlam and chaos. Dominant values and norms, historical contexts, leaders with a firm sense of mission, and other factors can guide or bias decisions in systematic ways.

The proponents of the model do not state very clearly just where and when it applies. Early on in their theoretical work, they suggested (without explaining) that the model applies mainly to public and educational organizations (Cohen, March, and Olsen, 1972; March and Olsen, 1976). Most of the applications apparently have concentrated on educational and military organizations and courts. Yet at times the proponents also suggested that it applies to business firms and generally to all organizations (March and Olsen, 1986, p. 12). Critics have attacked the garbage can model for remaining too metaphorical, imprecise, and internally contradictory to support scientific progress (Bendor, Moe, and Shotts, 2001), although – not surprisingly – the developers of the perspective disagree (Olsen, 2001). Still, the model has important implications for public management. As discussed shortly, Hickson and his colleagues (1986) found that this type of decision-making process occurs more frequently in public organizations than in private firms.

Prescriptive Frameworks for Strategic Management

Management consultants and experts propose a variety of approaches for developing strategy. Bryson and Roering (1996) provided an excellent summary of eight major approaches to strategic planning that gave more depth and detail on the models mentioned in this discussion. Bryson (1995) concluded that managers can apply virtually all of them in the public sector (although with several provisos, discussed shortly). Some of the models, such as that of the Boston Consulting Group, focus on high-level corporate decisions about the relative priority of the corporation's business activities. The Boston Consulting Group's “portfolio model” exhorts executives to treat the mix of business units in a large corporation as if they represented stocks in an individual's portfolio of assets. Executives assess the business units in the corporation on two dimensions: market growth and size of market share. The units high on both of these dimensions are “stars”; they should receive priority attention and reinvestment of profits. Units with small shares in slow-growing markets – low on both key dimensions – are “dogs” and candidates for divestiture. Mixed situations provide opportunities for strategic shifting of resources. A unit with a high market share in a slowly growing market brings in a lot of money but does not have strong growth prospects. These activities should be treated as “cash cows” and used to provide resources for units that provide growth opportunities. Units that are in a rapidly growing market but not yet in command of a large share of it should be considered for infusions of resources from other units, especially the cash cows. The approach sounds cutthroat, but it actually emphasizes synergy: the effective meshing of all the activities in an organization to produce overall gains beyond what the activities would gain as the sum of their independent operations.

Ring (1988) applied a modified portfolio model to public sector strategy making. He used “tractability of the problem” and “public support” as the key dimensions. When problems are manageable and public support is high, public managers can seek to gain resources that they can then use to deal with more difficult policy problems in settings where public support is high but the problem is very difficult to solve. When public support and tractability are both low, public managers simply seek to shift the priority away from those problems. Similarly, Rubin (1988) suggests that strategic patterns will differ according to whether the time horizon for the policy issue is long or short and whether the policy plays out within a disruptive or an anticipated environment.

Other approaches emphasize different levels and issues (Bryson, 1995). Strategic planning systems propose methods for formulating and implementing strategic decisions and allocating resources to back them up across units and levels of an organization. Stakeholder management approaches analyze how key stakeholders evaluate an organization and form strategies to deal with each stakeholder. (Stakeholders include individuals or groups who have a major interest in an organization, such as unions, customers, suppliers, and regulators.) Competitive analysis approaches analyze major forces acting on an industry, such as the power of buyers and suppliers, the prospects for substitute products, and competition in its markets. The aim is to gain competitive advantage through such strategies as differentiating oneself from competitors and selecting the segments of an industry in which one should compete (Porter, 1998). Strategic issues management focuses on identifying major issues that appear crucial to an organization's ability to achieve its objectives and deciding how a working group in the organization will respond to these issues and resolve them. Process strategies and strategic negotiation approaches treat strategic decision making as a highly political process and prescribe ways of managing the constant bargaining required. Similarly, logical incrementalism, as described earlier, emphasizes the incremental nature of strategic decisions and ways to guide bargaining along a consistent path. (For more detail, see Bryson, 1995, and Bryson and Roering, 1996.)

Applications of Strategic Management in the Public Sector

Numerous frameworks for strategic management in the public sector are available (Bryson, 1995; Bryson and Roering, 1996; Nutt and Backoff, 1992). They tend to involve a version of the Harvard Policy and Stakeholder model of strategic planning (Berry and Wechsler, 1995), which focuses on such procedures as strategic issue management, stakeholder analysis, environmental scanning, and SWOT analysis (described shortly). The procedures prescribed by scholars and consultants usually begin with a planning and organizing phase. A strategic management group (SMG) typically manages the process and must agree on who will be involved, how the strategic analysis will proceed, and what the group expects to achieve. Usually the procedure requires a structured group process and a facilitator – a consultant skilled in helping groups make decisions. The facilitator often asks members of the group to list their views about important points, such as stakeholders, opportunities, and threats. Then the group members follow a procedure for synthesizing their views, such as the nominal group technique described in Chapter Twelve.

The SMG usually begins with a preliminary assessment of the history and current status of the organization to produce a general statement of the organization's mission. Bryson (1995) suggested that for public organizations this step requires a careful review of the organization's mandates – the requirements imposed by external authorities through legislation and regulations. This review can clarify what external authorities dictate and can also provide insights about new approaches. For example, representatives of a public hospital who interpret their mandate as forbidding competition with private health services may find upon review that they have the authority to do so.

Working toward the mission statement, the SMG typically reviews trends in the operating environment, using a framework like those described in Chapter Four. It may also conduct a stakeholder analysis at this point and develop idealized visions of how it wants the organization to be in the future. Ultimately, the mission statement expresses the general purpose of the organization and its major values and commitments.

Next, the SMG members assess the strengths and weaknesses of the organization and look outward to the environment and forward to the future to identify opportunities and threats facing the organization. This assessment of strengths, weaknesses, opportunities, and threats is called a SWOT analysis. The SMG can choose from an array of techniques for this analysis (Nutt and Backoff, 1992). A typical approach involves the nominal group technique mentioned earlier. From the SWOT analysis, the SMG develops a list of strategic issues: conflicts among opposing forces or values that can affect the organization's ability to achieve a desired future (Nutt and Backoff, 1992). Then the group develops plans for managing these issues (Eadie, 1996; Nutt and Backoff, 1992; Ring, 1988). A wide variety of public sector organizations now use this approach to strategic planning (Boschken, 1988; Bryson, 1995; Wechsler and Backoff, 1988).

Analytical Research on Managerial Strategies in the Public Sector

In addition to recommending procedures, researchers have studied the strategies that public organizations actually pursue and how their strategic decisions actually develop. Some of these studies show the effects of government ownership on strategy. In their study of strategic decisions in thirty British organizations, Hickson and his colleagues (1986) found that strategic decision-making processes in publicly owned service and manufacturing organizations differed from those in private service and manufacturing firms. The public organizations followed a “vortex-sporadic” decision-making process. This involves more turbulence, more shifting participation by a greater diversity of internal and external interests, more delays and interruptions, and more formal and informal interaction among participants. The type of decision made a great difference, as did the distinction between service and manufacturing organizations. The results, however, indicate that the public sector context does impose on internal strategic decision making the sorts of interventions and constraints described in earlier chapters. The findings are consistent with other analyses of the distinctive context of strategic planning in the public sector, which observe that strategic planners in the public sector must consider a broader scope of impact and a more diverse and attentive set of stakeholders (Nutt and Backoff, 1992, 1995), and considerations of market volatility and competition that apply in the private sector need to be replaced by considerations of need for governmental action and responsiveness (Nutt and Backoff, 1992, 1995). Nutt (1999) has also identified distinctive patterns of assessing alternatives in the public sector.

Mascarenhas (1989) studied 187 public and private offshore drilling firms in thirty-four countries to analyze their strategic domains (markets served, product type, customer orientation, and technology applied). The government-owned firms operated mainly in domestic markets, with narrow product lines and stable customer bases. Publicly traded private firms (those whose stock is traded on exchanges) were larger, operated in many geographical markets, and offered a wider range of products. Privately held firms were more like the state-owned firms but had less stable customer bases. The nationality and size of the firms also made a big difference, but the ownership distinctions persisted even with controls for those factors. The results support the point, mentioned in Chapter Three, that public organizations tend to have greater constraints on their strategic domains.

Other studies have analyzed important variations in strategy within the public sector. Wechsler and Backoff (1986) studied four state agencies in Ohio and found that they pursued four types of strategies. The Department of Natural Resources followed a developmental strategy. This agency had diverse tasks, constituencies, and independent funding sources. The managers had relative independence to pursue a strategy of enhancing the capabilities, resources, and general performance of the organization. Stronger external forces shaped the transformational strategy of the Department of Mental Retardation. Professional experts and legal rights groups advocated deinstitutionalization of the mentally retarded – getting them out of large hospitals and into normal living conditions. The agency also faced constant budgetary pressures. It responded by transforming itself from a manager of hospitals to a monitor and regulator of client services delivered through community-based programs and contracts. The Department of Public Welfare received intense criticism in the media and from legislators and faced increasing human service needs and potential cutbacks in funding, so its managers followed a protective strategy. They strengthened internal controls, lowered the agency's public profile (“getting the agency out of the newspapers”), mended relations with legislators, and worked to protect funding levels. The Public Utilities Commission, which regulates utility pricing decisions, adopted a political strategy. Nuclear energy issues and increasing fuel prices led to more political activity by consumer advocates. The agency's decisions became more favorable to consumers, reflecting a shift in response to changing configurations of stakeholders.