The final crisis identified by Greiner is one of red tape. This occurs when the procedure and systems introduced in earlier phases of growth start to become obstacles to its continuation. By this time the organization will be very large, and is likely to be operating on a divisional basis, with some important functions and activities provided by a central headquarters. The tension between divisions and headquarters may eventually result in a mutual lack of trust and harmful political internal conflicts.
Ways have to be found to encourage collaboration and trust to overcome this crisis if the organization is to proceed to phase5, the final one in the model: in reality there may be other phases after this but they will only be relevant to the largest organisations operating on a global scale.
Evaluation of growth models
Knowledge of the processes outlined above should help managers to anticipate problem they are likely to encounter as organisations grow, and be aware of key variables at each stage of growth. However, managers must also be of aware of the limitations of the models.
The organizational life-cycle approach does not explain the underlying process of growth, and is not particularly helpful in providing insights into the points at which transitions from one stage to the next take place. Greiner’s model is more precise in there respect, but still has limitations, such as:
• It implies consistent, linear growth when in practice varying growth rates are likely at each stage
• It is vague about how exactly to measure size, and this means it is difficult to predict when crises are likely to happen in particular instances
• It does not explicitly deal with organizational decline
• It might give the impression that growth is the normal state of affairs for all organisations, when it clearly is not.
Despite these limitations, models of growth, such as the put forward by Greiner, do provide managers with some useful general insights into this complex process.
Decline
Throughout the early 1990s, because of the depressed state of their national economies, many managers in Europe and the USA have been more concerned with the problems of managing decline rather than growth. The problems of managing decline pose particular problems and also place in sharp perspective the ethical dilemmas involved in many aspects of management.
Slatter (1984) has suggested the following eleven factors which individually, or in various combinations, contribute to organizational decline: