Ideas for Leaders #497

Public Sector Leadership: Managing 'Multirational' Organizations

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Key Concept

Public sector organizations are hybrid organizations that bring together different rationalities (e.g. political, economic, legal) together under one roof. The role of the public-sector manager is to find a way to enable these different rationalities to collaborate effectively. The key, according to social systems theory, is communication: finding the common language.

Idea Summary

Public sector organizations are multirational organizations. They do not fall under a single rationality archetype — for example, they are not uniquely political organizations or economic organizations or legal organizations, but rather all of the above.

Two researchers from St. Gallen University, Ali Asker Guenduez and Kuno Schedler, build on the social systems theory of Niklas Luhmann to dissect the challenges of managing multirational organizations.

Luhmann describes society as an overriding social system. Within society there are different functional social systems, each with its own medium and code of communication based on binary distinctions. For the political function system, for example, the communication medium is power, and the binary distinctions that defines its communication code is government/opposition. For the legal system, the communication medium is jurisdiction and for the economic system is money, and the binary distinctions are legal/non-legal and payment/non-payment respectively.

Thus, according to Luhmann, communication is the fundamental building block of all social systems. Guenduez and Schedler use this insight to define the role of managers in public sector organizations — organizations that must operate in an environment that includes the different systems of society.

In other words, political, legal, and economic systems clearly impact the activities of the public-sector organization, which in turn means that the organization much align itself internally with these disparate systems.

Organizations achieve this alignment by having ‘in-house’ subsystems, with their own structures, processes and operations, which match the environmental subsystems. Thus, for example, an organization will have a legal team that communicates based on the rationalities of the legal function system. Their values and language will be more closely aligned with other legal professionals than, say, with the engineers in the same organization.

This explains why public sector organizations are multirational organizations. They do not fall under a single rationality archetype — for example, they are not uniquely political organizations or economic organizations or legal organizations, but rather all of the above.

According to systems theory, however, rationalities come with their own specific languages — their own “terms, vocabularies and argumentation,” write Guenduez and Schedler. “They use different terminologies and thus speak different ‘languages’ on account of their different rationalities.”

This barrier between a public organization’s “highly autonomous self-referring subsystems, where each subsystem uses a specific type of specialized communication to process subsystem specific rationality and meaning” encapsulates the challenge of management of public organizations. How do you cohesively manage different rationalities that cannot communicate with each other?

Business Application

There are several ways to approach the challenge of managing multirational organizations:

Translate the information into different subsystem languages. In order to successful solve the tensions and conflicts that inevitably arise within a hybrid organization that includes different rationalities that don’t communicate, the manager must find a way to combine and convey information in a way that makes it acceptable to the members of the different rationalities. To achieve this objective, managers must first be translators — helping people who speak different ‘languages’ to understand each other. To this end, managers should:

  • Use judicial, economic, ethical and/or scientific knowledge as resources to explain and justify management decisions. “Skills-and-knowledge-based” communication has a better chance of being accepted across different rationalities.
  • Frame the information so that it has meaning at the subsystem level. This means that a manager must understand the different meanings of information in different subsystems.

Create a collective rationality. In addition to the communication or ‘translation’ task described above, managers of public organization also have the task of creating a collective rationality, one that enables the disparate parts of the organization to collaborate effectively. In other words, in addition to framing information so that it has meaning at the subsystem level, managers must also strive to create a common shared meaning by cultivating a common language. They must enable and encourage the different rationalities to agree on what Guenduez and Schedler call “shared patterns of argumentation and justification without abandoning individual rationalities.” The result: “the establishment of joint norms, values and beliefs, which provides members organization with a shared picture of the organization.”

Use contextual control. The different rationalities of an organizations subsystems act as barriers to direct control by top managers. However, managers can indirectly influence these different rationalities by the way they structure or create the environment of the subsystems. For example, the CEO of a hospital is not going to be able to control the medical decisions taken within the organization. However, there are context factors — budget, infrastructure, personnel, technology, and even output and outcome requirements — over which the CEO does have control. Of course, decisions concerning these contextual factors must be taken carefully, as the response to those decisions will be rationality-specific (while financial personnel might approve of budget cutbacks, for example, the doctors will have a different perspective).  

Translation, finding shared meaning, and influencing through context control will enable public-sector managers to meet the daunting challenge of managing multirational public sector organizations.

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Authors

Institutions

Source

Idea conceived

  • December 2014

Idea posted

  • March 2015

DOI number

10.13007/497

Subject

Real Time Analytics