Diagnosing the structure of De Gouden Leeuw: A qualitative study

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Joris Bloem

S4061616

Masterthesis ODD

Business Administration

Supervisor

:

Drs

.

L. Gulpers

Second examiner: Dr. Ir. L.J.

Lekkerkerk

Date: 15-02-2018

Diagnosing the structure of De Gouden Leeuw: A

qualitative study

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Preface

Before you lies the thesis “Diagnosing the structure of De Gouden Leeuw: A qualitative study”. This thesis has been written to fulfill the graduation requirements of the master

Organizational Design and Development at the Radboud University Nijmegen. I was engaged in researching and writing this thesis from February 2016 to February 2018.

This research was undertaken at the request of Mr. Horstik, the general director of De Gouden Leeuw. In consultation with Mr. Horstik and my supervisor Drs. Gulpers, the

research question was formulated. Although my research took a long time, it has allowed me to answer the research question.

I want to use this opportunity to express my gratitude to those that helped me

throughout this period. First of all, I would like to thank my supervisors Drs. Gulpers and Dr. Ir. Lekkerkerk for their guidance and feedback during this process. In particular Drs. Gulpers supported me during the process. The conversations we had and the support she gave me, made it possible for me to finish this thesis. I could not have done it without her help. In addition, I express my gratitude to Mr. Horstik. Together we developed the idea to diagnose the structure of De Gouden Leeuw, and he served as a gatekeeper in the organization.

Moreover, he allowed me to use his office for over a year. This gave me additional insight in the organization. He was always willing to help me out, and to think along. Furthermore, I want to thank my family and in particular my parents. The last two years were not always easy for me, but with their emotional and financial support it was possible to finish this research. Without them, this accomplishment would not have been possible . Finally, I want to thank my friend Jordy Nijholt for his support in the last stages of my research.

I hope you enjoy your reading.

Joris Bloem

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Abstract

De Gouden Leeuw is a Dutch health institution that has been facing organizational problems as a result of its growth. In particular, the managers have been facing problems. This research diagnoses to what extent the problems of the managers are caused by the organizational structure. To this end, the research question is as follows: How do the structural parameters of De Gouden Leeuw cause problems for the organization’s managers with regard to the quality of work and the quality of working relations, and to what extent can De Gouden Leeuw adjust these parameters to reduce these problems?

To answer this question, the integral renewal theory of De Sitter (2000) is used to assess the managerial problems and the structural parameters of De Gouden Leeuw. This study has entailed practice-oriented research of a qualitative nature. This study is a diagnostic research, and offer De Gouden leeuw insight into relevant problems and their causes.

Document analysis, participative observations and semi- structured interviews are executed, to gather data on the structure of De Gouden Leeuw.

The results indicate that the problems of the managers are related to the quality of work and the quality of working relations. These problems are at least partially caused by the organizational structure. The values of the production structure were low, but the values of the control structure of De Gouden Leeuw were high, indicating that the managerial problems are caused by the control structure. On this basis, it is recommended that the De Gouden leeuw should amplify the regulatory potential of the managers.

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Chapter 1: Introduction

De Gouden Leeuw is an organization that provides health care for the elderly. This family business was founded in 2002 by three siblings and their spouses. The organization initially had only one nursing home, which these six persons managed. However, it grew over the years and now has four venues, two of which are nursing homes that engage in permanent and temporary care, including day care, for the elderly. The third venue is primarily used for care during weekdays, and the fourth venue is the company headquarters, which houses the staff, director, administration, and human resources (HR) managers and mainly directs home care. Currently, the board of directors consists of the three siblings. The management team has grown from the original six members to a group of 12 members, consisting of the (staff-) managers and the board of directors. Presently, De Gouden Leeuw does not want to expand in terms of venues or employees, but it is searching for opportunities to meet customer demands (I-1). The nursing homes, venue Zelhem and venue Laag Keppel, both have 40 fte of

employees, which equals approximately 90 employees because of part-timers. On weekdays there are about 40 people working per venue (Doc. 2b).

The Dutch health care system has differed from those of other countries since the introduction of a market-based system in 2006. Nowadays, the Dutch health sector is based on free choice of provider, which enables price competition (Van de Bovenkamp, De Mul, Quartiz, Weggelaar, & Bal, 2013). Health institutions, including De Gouden Leeuw, have recently encountered difficulties resulting from two external developments. First, demand for health care has increased in the past couple of years due to the country’s aging population. Second, the government has reduced collective expenses, especially for health care (De Gier, 2010). As a result, health institutions are under high pressure to deliver good quality, and the workload of employees in this sector has intensified. Furthermore, the quality of nursing homes for the elderly has become particularly insufficient (Bakker, 2016). Bakker (2016) has concluded that care in nursing homes is more complex than ever, and this trend will continue. One-third of nursing home employees have had to make an extra effort to perform such complex tasks.

De Gouden Leeuw has also contended with organizational problems as a result of its growth. In the last decade, it has expanded its domain, including to distinct venues and a diverse supply of health care. These developments have led to a greater number of employees and externally recruited managers. Lately, the board of directors of De Gouden Leeuw has been tasked with addressing complaints from the management team that were raised during a management meeting (MT) (Doc. 1). In order to provide insight into these complaints, two

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initial and open interviews were held: one with the general director (I-1) and one with the HR manager (I-2). One complaint was that the cooperation within the management team is not efficient. Specifically, the correct people do not carry out the work, and managers ignore tasks because of their workload. This has fostered tension between the board of directors and the managers. In the aforementioned management meeting, the managers argued that people are overly nice to each other within the family company; there is an informal way of

communicating and allocating tasks, and employees are not held accountable for their actions. As a result, the precise responsibilities of managers are not always clear, designated tasks are not or only partially performed, tasks are not addressed in the most efficient way, and

managers and employees are not held accountable for their performance. These problems pose consequences for the whole organization. The two initial interviews revealed that the current working conditions hinder managers in their actions as well as in efficient decision-making (I-1 & I-2).

The problems stated above could be due to the structure of the organization since, according to the managers and directors, the problems that occur in this company are not related to the capabilities of the people who work within it but rather to the way in which work is allocated (I-2). In view of this possibility, this research analyzes the structure of De Gouden Leeuw through the lens of De Sitter’s theory. De Sitter (2000) has claimed that any organization seeking to be viable should strive for viable distributions of work, and he has formulated infrastructural conditions for organizations in order to achieve such viability. The first condition was to identify the relevant variables. De Sitter came up with variables to which an organization must comply and called them the functional requirements. These requirements were appointed to measure the viability. The initial interviews have evidenced that “the quality of work” and “the quality of working relations” are the functional

requirements with the strongest relevance to the problems of De Gouden Leeuw. The quality of work is associated with “the meaningfulness of jobs and the possibility to deal with work related stress” (Achterbergh & Vriens, 2010, p. 241), whereas the quality of working relations refers to “the effectiveness of communication in organizations” (Achterbergh & Vriens, 2010, p.242). As a second condition, De Sitter has introduced seven structural parameters that represent characteristics of the structure that, given a certain value, can affect the functional requirements and, therefore, the relevant problems. Third, De Sitter’s theory offers insight into the relation between structural parameters and functional requirements. An understanding of this relation is necessary to make adjustments toward an adequate structure (De Sitter, 2000). Bakker (2016) has argued that the increasing complexity in the health sector has led to

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insufficient knowledge among most organizations and their employees with regard to structural improvements. This seems to be the case for De Gouden Leeuw. According to the general director (I-1), neither the management team nor the board of directors is specialized in designing structures, and they thus lack theoretical knowledge about organizational structures. In the management meeting (Doc. 1), the HR manager (I-2; 173-177) addressed the need for an external person in order to answer the following question: “Which mechanisms drive our current way of working, and why are we not making any progress?” (Doc. 1). For this reason, the board of directors of De Gouden Leeuw wants to better understand its current

organizational structure.

In order to assist the De Gouden Leeuw, this research assesses the organization’s structural parameters. Based on De Sitter’s theory, this diagnosis offers insight into problems associated with three functional requirements, namely the quality of organization, the quality of work, and the quality of working relations. Furthermore, this diagnosis illuminates the causal relation between the structural parameters and the relevant problems. Based on the data, the relevant problems concern the two functional requirements of the quality of work and the quality of working relations. After the diagnosis, this paper presents recommendations for adjustments to the organizational structure that can reduce the problems related to both the quality of work and the quality of working relations that the managers of De Gouden Leeuw must address. To avoid a misunderstanding, this thesis makes a distinction between the management team and the managers. In this thesis, the term “managers” refers to three operational managers: the care manager, Zelhem; the care manager, Laag Keppel; and the manager facilities and technical services. The term “management team,” which De Gouden Leeuw employs, encompasses a group of 12 managers, which includes not only operational managers but also staff managers and the board of directors. However, this research focuses on the three operational managers.

The goal of this research is to provide a diagnostic analysis of the current structure of De Gouden Leeuw by listing the relevant problems and specifying how the values of the structural parameters cause such problems. This analysis then informs recommendations for structural adjustments for De Gouden Leeuw. To achieve its goal, this research must answer the following research question:

How are the problems of the managers of De Gouden Leeuw, belonging to the quality of work and the quality of working relations, caused by the structural parameters and to what extent can these parameters be adjusted in order to reduce these problems?

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In order to answer this research question, the following diagnostic sub-questions must be addressed:

• What are the desired values, belonging to the quality of work and the quality of working relations, of the managers of De Gouden Leeuw?

• What are the actual values, belonging to the quality of work and the quality of working relations, of the managers of De Gouden Leeuw?

• What are the desired values of the structural parameters?

• What are the actual values of the structural parameters of De Gouden Leeuw? • To what extent are the problems of the managers of De Gouden Leeuw a result of the

values of the structural parameters of De Gouden Leeuw?

• To what extent is it possible to change the values of the structural parameters, in order to improve the values of both the quality of work and the quality of working relations for the managers of De Gouden Leeuw?

This research employs a qualitative approach to answer these questions. Furthermore, it comprises a case study, as its research domain is a single organization. This case study represents practice-oriented research because it diagnoses the structure of De Gouden Leeuw. It accomplishes this through a deductive approach that uses the integral organization renewal theory of De Sitter (2000) as a theoretical framework to analyze the structure. The qualitative data were obtained via interviews, documents, and observations. This study is also practice-oriented research in that it provides practical implementations that are relevant for De Gouden Leeuw. However, this research has theoretical relevance as well, as it relates De Sitter’s theory to characteristics of family businesses. Consequently, this paper offers a more relevant theoretical framework for family businesses.

The first section of Chapter 2 elaborates on structure-related difficulties that are common among growing family businesses. Sections 2.2. through 2.6. then discuss the integral organization renewal theory of De Sitter. Chapter 3 concerns the methodology of this study, and Chapter 4 presents the findings of the research. It also identifies the most relevant problems and considers how they could be caused by the organization’s structure. In addition, Chapter 4 provides a solution space, which indicates the extent to which the structural

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Chapter 2: Theory

In diagnostic research, it is necessary to establish a theoretical framework. The aim of diagnostic research is to offer insight into a problem situation, and it should accordingly assess the actual situation and the desired scenario. A theoretical framework is an

instrumental tool that specifies norms and values that are related to the problems (Van Strien, 1997). Diagnostic research can use these norms and values to reflect on causes of the problem situation. In order to develop a suitable theoretical framework, this chapter discusses theories regarding family businesses and organizational design. De Sitter’s theory provides norms for essential variables as well as structural characteristics. The actual situation of De Gouden Leeuw can be assessed against these norm values.

2.1. Growing family businesses

This thesis acknowledges that growth in family businesses has consequences for several organizational developments, such as strategy, collaboration, finance, and internal resources (Greiner, 1998). Nevertheless, it specifically focuses on the allocation of work within organizations. The growth of family business in recent years has affected the allocation of work. This section briefly explains common problems among growing family businesses as well as how to adjust such businesses to contend with these additional problems.

In a family business, the organization is owned – and often run – by relatives. This is the case for De Gouden Leeuw. According to Gimeno, Baulenas, and Coma-Cros (2010), a family business differs from other organizations in that it must navigate not only business complexity but also family complexity. Growth of a family business results in such a high level of complexity that it necessitates adjustments. According to Gimeno et al. (2010), expanding family businesses require further professionalization of management practices. The authors have stated that professionalizing is “a discipline and a form of management that deals with different aspects of content (what professional managers do with the tools they use and their contingency), i.e., with the aspects that affect their decision” (p. 153). In order to create this professionalism, Gimeno et al. (2010) have argued that two developments are significant. The first development, “creating deliberate strategies,” implies that the company must define and verbalize its strategy in order to communicate it clearly. If this is achieved, managers can make independent decisions as long as they are in line with the company’s strategy. A deliberate strategy is an advantage because a larger group of capable employees can identify opportunities for the company. A decentralized structure allows employees at lower levels to make, implement, and control decisions that are aligned with the overall

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strategy. Gimeno et al. (2010) have further stated that family businesses should reduce their dependency on one or more of their founders in order to remain viable. Long-term succession is more likely when there is low dependency on top executives. This would entail a change in the allocation of work to incorporate non-family members into the family business. A

management team of non-family members would be created and authorized to design explicit strategies, coordinate teams, organize internal processes, and so on. These developments require the involvement of managers in the decision-making process as well as the decentralization of decision-making (Gimeno et al., 2010). Miller and Le Breton-Miller (2005) have confirmed that family businesses are more likely to be successful in the long run when “organizational designs were kept as simple as possible, with few levels of hierarchy and lots of authority residing at lower levels” (p. 211).

As this section has explained, it is common for family businesses to encounter difficulties due to growth because growth increases the complexity of an organization. To reduce an organization’s complexity and its dependency on its founding family, adjustments to the organizational structure are necessary. These changes can enable family businesses to be more sustainable in the long term (Gimeno et al., 2010). For example, the creation of deliberate strategies and decentralization of decision-making can give non-family managers the authority to design strategies, coordinate teams, and organize internal processes as well as to participate decision-making. This section has demonstrated that growing family businesses warrant structural adjustments. Appendix 1.1. contains an assessment of the three structural theories and justifies the selection of De Sitter’s theory to assess the organizational structure of De Gouden Leeuw. The following section clarifies De Sitter’s theory.

2.2. Introducing De Sitters’ integral organization renewal theory

This section briefly discusses De Sitter’s theory and its relation to Ashby’s cybernetics. Specifically, it considers De Sitter’s work as a reconfiguration of Ashby’s cybernetics. To this end, Appendix 1.2. elaborates on Ashby’ cybernetics. The goal of the present section is to illustrate how De Sitter translated the logic of Ashby’s cybernetics from a general theory of systems into an organizational context.

Modern Dutch Socio-technology (MST) is a Dutch approach that relates to Ashby’s cybernetics in that it “explicitly and systematically uses cybernetics to formulate rules and principles for designing viable distributions of work” (Achterbergh & Vriens, 2010, p.228). One author associated with this approach is De Sitter. De Sitter has reconfigured Ashby’s

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theory on the regulation of systems’ behavior in such a way that it allows for the analysis of behavior within organizations. De Sitter has named his specific design theory “integral organization renewal” (De Sitter, Den Hertog, & Dankbaar, 1997). According to Kuipers, Amelsvoort, and Kramer (2011), De Sitter’s work was intended for restructuring industrial organizations, but it has also proven useful for organizations that provide services, including health care. The following section outlines De Sitter’s theory, which Section 2.3. describes in further detail.

Instead of examining systems in general, De Sitter (2000) concentrated on

organizations, and more precisely on organizational structures. An organizational structure consists of the production structure and the control structure. The production structure consists of operational tasks that are assigned to employees. These operational tasks can interrelate, which creates a network of tasks. De Sitter has argued that organizations require regulation, through regulatory tasks, in order to survive. Moreover, these regulatory

transformations are assigned to employees as well. The allocation of regulatory tasks to employees forms the control structure (De Sitter, 2000). De Sitter has claimed that a simple organization with complex jobs increases its regulatory potential (De Sitter et al., 1997). This requires the reformulation of fragmented tasks into broader ones as well as the integration of primary and regulatory tasks.

Consistent with Ashby’s theory, De Sitter has provided essential variables, or “external functional requirements,” that comprise three main groups: the quality of

organization, the quality of work, and the quality of working relations (De Sitter, 2000). An organization should meet these requirements in order to be viable. However, disturbances negatively influence these external variables. Disturbances within organizations can be due to the number of interactions in the network or the variability of disturbances (Achterbergh & Vriens, 2010). Reflecting Ashby’s theory, De Sitter (2000) has argued that regulatory actions can address disturbances. Furthermore, he has asserted that a design for the distribution of work should focus on two main points, namely the attenuation of disturbances and the amplification of regulatory potential to contend with disturbances that affect essential variables. In this context, De Sitter has developed the concept of controllability. This ratio measures the potential for regulation divided by the required regulation (De Sitter, 2000). Section 2.4 discusses this concept in more detail.

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2.3. Components of De Sitter’s theory

De Sitter (2000) has argued that an organizational structure is adequate when it can attenuate disturbances and amplify regulatory potential, and he has identified the organizational structure, functional requirements, disturbances, and regulatory potential as the relevant components to achieve such adequacy. This section elaborates on these organizational components and their relations in order to demonstrate how a structure can attenuate disturbances and amplify regulatory potential.

2.3.1. External and internal functional requirements

The first step in De Sitter’s theory is to consider the relevant organization variables, or “functional requirements.” These functional requirements represent criteria that an organization should meet in order for remain viable. De Sitter (2000) makes a distinction between external and internal functional requirements. External functional requirements are variables with which an organization must comply in order to ensure the viability of the organization. However, these external requirements are not measurable. For that reason, De Sitter has identified sub-requirements, which are internal functional requirements that are measurable and related to one of the external functional requirements. These internal functional requirements consist of measurable components that assess the relevant organizational problems (De Sitter, 2000; Achterbergh & Vriens, 2010).

According to De Sitter (2000) there are three categories of external requirements: the quality of organization, the quality of work, and the quality of working relations. These categories can be further divided into external and internal functional requirements (Appendix 2.1). The quality of organization is described as “the organization’s potential to effectively and efficiently realize and adapt its goals” (Achterbergh & Vriens, 2010, p.241). This category consists of three external requirements, namely order flexibility, control over order realization, and potential for innovation. The quality of work concerns motivation,

commitment, and development of employees within an organization as well as with “the meaningfulness of jobs and the possibility to deal with work related stress’’ (Achterbergh & Vriens, 2010, p.241). The quality of working relations refers to the effectiveness of

communication in the organization. This list of external and internal functional requirements can be considered De Sitter’s essential variables. In order to secure the organization’s viability, internal requirements and external requirements should be fulfilled. Therefore, an organizational structure should be designed in such a way that all requirements are satisfied (De Sitter, 2000).

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Although De Sitter has argued that the three external functional requirements are closely related, this research focuses on the two external functional requirements of the quality of work and the quality of working relations. The two initial interviews have revealed that most problems that occur within De Gouden Leeuw can be ascribed to these two external requirements. For that reason, the quality of work and the quality of working relations have been selected as the two most relevant functional requirements for the organization, which necessitates an elaboration of these factors.

2.3.1.1 Components of the quality of work

As one external functional requirement, the quality of work is related to “the meaningfulness of jobs and the possibility to deal with work related stress” (Achterbergh & Vriens, 2010, p.241). According to De Sitter (2000), the quality of work consists of three internal functional requirements: the stress conditions, the opportunities to be involved, and the opportunities to learn and develop. The following section explains these components and provides insight into the potential desired and undesired states of these components.

With regard to stress conditions, De Sitter has used the demand-control model of Karasek (1979). In this model, job demands are stressors that negatively influence the mental capacity of an employee. If a job has high demands, for example a high workload or mental labor, it can lead to physical and mental fatigue and stress. Regulatory capacity, which Karasek has defined as the capacity to regulate one’s own tasks and behavior, is a source of mental energy. Regulatory capacity equips employees to contend with task-related stressors. Especially in the case of high task demands and low regulatory capacity, the mental health of an employee decreases, which results in mental fatigue and stress. Furthermore, low job demands predict little employee motivation and productivity. This suggests the need to achieve a balance between stressors and regulatory capacity in such a way that both job demands and regulatory capacity are high (Karasek, 1979; Bakker, Schaufeli, & Demerouti, 1999). Accomplishing this can improve the mental state of employees and diminish stress, which in turn can reduce personnel turnover and absenteeism (Hofstee, Bredt, & Van der Meulen, 2011).

With respect to opportunities for involvement, De Sitter (2000) has argued that employees are not engaged when they are not involved in social relations. In the worst case, the allocation of work can lead to alienation, which entails “an unenthusiastic outlook toward the world of work that indicates a low level of engagement in the work role which is

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associated with diminished levels of positive psychological activation pertaining to work endeavours and settings” (Hirschfeld & Field, 2000, p.790). This can be due to the regulatory potential of an employee. De Sitter has posited that alienation occurs when employees are only able to regulate internally. Internal regulation does not involve interactions with other tasks, whereas external regulation includes interaction with other actors as well as making selections outside of one’s task. If an employee does not have an influence on social relations, he or she will experience his or her work as meaningless, as an employee who lacks

coordinating activities with his or her environment works alone and in isolation. This

primarily has negative consequences for the employee. Social isolation harms self-esteem and mental health, whereas social support can reduce mental strain in situations of stress (House, Landis, & Umerson, 1998). Furthermore, social interaction with others and bilateral contact with colleagues and executives increases the employability of employees (Hidding et al., 2004) and decreases personnel turnover (Armstrong-Stassen & Ursel, 2009). Besides the negative individual effects, the task environment also suffers from alienation. Employees are less interested and less engaged in developing solutions and avoiding problems (Blood & Hulin, 1967).

The third component of the quality of work is the opportunity to learn and develop. According to De Sitter (2000), employees are more committed to an organization when they have such an opportunity; without it, their work seems meaningless and does not challenge them. It is repetitive, and employees cannot improve their competence levels. De Sitter (2000) has reported that an employee can increase his or her competency through tasks that provide opportunities to learn and develop.

Having discussed the components of the quality of work, this section now addresses the impact of task allocation on the components. Job integration implies the merging of coherent tasks into one task, which results in a broader task (enlargement) and an increase of internal regulatory capacity (enrichment). This can diminish the possibility of stress. Still, it is important to note that job enlargement without extra regulatory capacity can actually result in more stress possibilities. Job integration without external regulatory capacity still leads to alienation. Managing stress and alienation necessitates a balance between potential problems and possibilities to solve them. When both internal and external regulation are high, the chance of stress and alienation are low, although small problems can still occur. The

combination of the workload and regulatory capacity determines the likelihood of stress and alienation. The possibility that employees experience stress is particularly strong in the case of a high workload and low regulatory capacity, and stress conditions are especially low in the

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reverse case. When both the workload and regulatory capacity are low, jobs are simple and mundane. However, this combination often results in isolated jobs because the environment does not appeal to the employee’s work. The final type of job entails a high workload and high regulatory capacity. This combination implies that a high workload requires numerous regulatory actions. Moreover, when employees can implement and monitor multiple

regulatory actions, they can witness the effects on their operational tasks and consequently learn from their actions. Therefore, a combination of a high workload and high regulatory capacity can provide opportunities to learn. In this type of job, demands are high, and the employee is expected to regulate both internally and externally (De Sitter, 2000).

This section has described the three components of the quality of work. It has

additionally suggested that the way in which work is allocated affects these components. The following section details the components related to the quality of working relations.

2.3.1.2. Components of the quality of working relations

The quality of working relations describes the effectiveness of communication within an organization. According to Buchanan and Huczynski (2010), communication is “the transmission of information, and the exchange of meaning between at least two people” (p.204). They have stated that communication is effective when it occurs between the correct people, and when these people understand the content and subject of the communication. According to De Sitter (2000), the effectiveness of communication can be determined through the measurement of two internal functional requirements, namely the level of shared

responsibility and the level of participation in communication.

Participative communication entails not only that managers communicate with each other but also that every employee participates in the communication process. According to Buchanan and Huczynski (2010), this implies that employees are informed about expectations regarding their work and have the opportunity to contribute ideas and solutions. According to Kuipers, Van Amelsvoort, and Kramer (2010), mutual coordination between tasks requires communication. These authors have argued that the network structure largely determines cooperative relations. To be cooperative, a structure should create conditions for mutual coordination and allocate complementary tasks. De Sitter (2000) has noted that allowing each employee to communicate with every other employee can lead to a time consuming and inefficient outcome. He has stressed that, in view of this, organizations should create

autonomous units in which intra-unit relations are high but relations outside the unit are low. By creating parallel order flows and segments, independent autonomous groups are assigned

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to one type of (sub-)transformation. In each group, employees with complementary tasks are coupled and assume responsibility for the necessary activities for that transformation. This ensures that every employee knows his or her role as well as whom to consult for a particular problem. The tasks are highly interdependent within each unit, which requires a high level of communication. This enables effective communication in the sense that complementary activities are closely allocated to one’s task. In each unit, members communicate with their team members.

In addition, shared responsibility is a necessary condition for effective communication. According to Sprenger (1996), shared responsibility is firstly created when employees are able to make their own decisions regarding their work instead of being forced into decisions by others. De Sitter (2000) has acknowledged this in arguing that autonomy stimulates shared responsibility. This responsibility is secondly created when employees feel involved in making decisions regarding the strategy and vision of the organization. Milgrom and Roberts (1988) have added that involvement in daily decision-making also yields higher shared responsibility. Furthermore, De Sitter (2000) has proposed that meaningful work positively affects the level of responsibility. If an employee has a small task, then he or she cannot obtain a more holistic picture of the organization’s transformational process. This hinders the sense of responsibility and prevents the employee from understanding his or her influence on the whole process. In addition, in order to create shared responsibility, it is imperative that employees maintain clear goals and norms about their work so that they understand the expectations of their role. According to Jones, Kalmi, and Kauhanen (2010), this effect is also present among employees with positions that are low in the organizational hierarchy. It is important to enforce accountability of not only managers but also lower-level employees.

This section has explained the external and internal functional requirements. The following section addresses the components of an organizational structure.

2.3.2. Components of an organizational structure

An organizational structure refers to the way in which work is distributed and coordinated. This distribution of work consists of a network of related tasks. A task is defined as “realizing the end state by performing a particular transformation process” (Achterbergh & Vriens, 2010, p.231). This actually implies that a task changes the initial state into the end state through the “transformation process.” A transformation process can be decomposed into sub-transformations in two ways: decomposing into parts and decomposing into aspects. In decomposition into parts, one transformation is decomposed into two or more

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transformations. These sub-transformations are related in the sense that the end state of the first sub-transformation is the beginning state of the second sub-transformation (Achterbergh & Vriens, 2010; Ashby, 1958). Decomposition into aspects indicates a division of various aspects of the entire transformation that results in parallel sub-transformations. This leads to a process in which sub-transformations independently transform the beginning state into an end state of an aspect of the transformation process (Achterbergh & Vriens, 2010; Ashby, 1958). De Sitter (2000) has explained that transformations can be decomposed repeatedly and interchangeably, so a transformation can also be decomposed, which leads to new sub-transformations, and so on.

The example of elderly care can illustrate the two kinds of decomposition. In order to provide care to the elderly, several actions are necessary. These could include dressing them, feeding them, and administering their medication. An example of decomposition into parts is when one nurse dresses everyone, a second nurse feeds them, and a third nurse provides medication. Only once an elderly man is dressed can he eat in the dining room, and only after dining can he receive his medication. In this way, the end state of task one (dressing him) is the initial state of task two (feeding him), and the end state of task two is the beginning state of task three (give him his medication). Decomposition into aspects occurs when one nurse must dress, feed, and administer medication to an elderly individual with mental complaints, a second nurse performs these actions for an elderly person with physical problems, and a third nurse has to do so for an elderly individual without mental or physical complaints. This results in three parallel sub-transformation processes.

Now, a more concrete definition of a task can be established: “A task is a specific grouping of (sub) transformations that can be assigned to an operational unit” (Achterberg & Vriens, 2010, p.233). This operational unit can consist of a person, a team, or a department, so there are various levels of operational units. If a task is ascribed to the lowest level of an operational unit, which is a person, it is called a job. A job is a specific grouping of (sub-)transformations that is assigned to one person. A combination of jobs can be assigned to a higher level of organizational units, for example a team or a department, and the tasks of these units combined reflect the transformation process of the whole organization. Following this line of reasoning, an organizational structure can be visualized as a network of related tasks (Achterbergh & Vriens, 2010; De Sitter, 2000).

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2.3.3. Operational and regulatory transformations

The previous section has demonstrated that tasks can be decomposed into sub-transformations and has provided an example of the decomposition of operational tasks. However, De Sitter (2000) has distinguished between two aspects of transformations, namely an operational aspect and a regulatory aspect. The operational aspect encompasses the operational activities that lead to the desired end state of a transformation, while the regulatory aspect entails the disturbances that hinder operational activities. De Sitter (2000) has referred to the operational aspect as the primary process to realize a desired effect. In order to realize a transformation process, related operational tasks are coupled into a network of tasks. Moreover, most organization have multiple operational transformations that they should carry out. These operational tasks, which are necessary for all transformation processes in an organization, form the production structure. Achterbergh and Vriens (2010) have defined the production structure as “the grouping and coupling of operational transformations into tasks and their relation to orders” (p.240).

However, De Sitter (2000) has posited that disturbances can hinder operational activities. Disturbances are “events that potentially cause the essential variables to change value” (Achterbergh & Vriens, 2010, p.243). These operational tasks therefore warrant regulation, which can be achieved via regulatory tasks. De Sitter (2000) has used the term “regulatory transformation” to discuss activities that concern “the (virtual and actual) disturbances the operational sub-transformation faces in realizing the desired output of the transformation” (De Sitter, 2000, p.10, translated). In order to contend with disturbances in the production structure, a network of regulatory tasks called the “control structure” is

necessary. Achterbergh and Vriens (2010) have defined the control structure as “the grouping and coupling of regulatory transformations into tasks and their relation to the production structure” (p.241). Appendix 1.3. elaborates on regulatory transformations and how to decompose them. In addition, Appendix 1.4. details the structure-related causes of disturbances.

2.4. Attenuation and amplification by organizational structures

Having discussed the essential variables and the components of an organizational structure, the next step is to consider how the structure of an organization relates to the essential variables. De Sitter has argued that the organizational structure can influence essential

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of occurrence and their dispersion. On the other hand, the organizational structure can amplify regulatory potential to actively address (potential) disturbances (Achterbergh & Vriens, 2010). Appendix 2.2 provides a visual representation.

De Sitter has additionally introduced the concept of controllability. He has clearly specified that control “does not refer here to specific goals or interests to be attained, but rather to shaping structural conditions for opportunities to formulate and implements goals” (De Sitter et al., 1997, p.506). De Sitter (1997) has referred to controllability as the generic capacity of a structure to achieve a range of goals and has used a ratio in which controllability is the potential for regulation divided by the required regulation. With this ratio, De Sitter (1997) has claimed that one can either decrease the required regulation (by attenuating disturbances) or increase regulatory potential (by amplifying) in order to optimize the controllability. In fact, this is the core concept of De Sitter’s theory. To optimize

controllability, a structure should be designed in such a way that the required regulation is low. In other words, the possible disturbances are minimized, so less regulation is required. Furthermore, the residual possibility of disturbances should be mitigated by increasing the regulatory potential.

Thus far, this thesis has argued that the organizational structure affects the

controllability and relevant variables. The following section advances this argument further.

2.5. Design parameters

De Sitter (2000) has formulated seven design parameters that relate to the organizational structure. Design parameters “capture relevant characteristics of organizational structures that need to have specific values, so that organizational structures are able to attenuate and

amplify” (Achterbergh & Vriens, 2010, p. 246). Three parameters relate to the production structure and four to the control structure. The next section reviews these control parameters and each of their low and high values. This informs a diagnosis of the optimal values for the parameters.

2.5.1. Parameters describing the production structure

The first three parameters describe the production structure. As Section 2.3.3. has explained, the production structure concerns the allocation of operational transformations. The three parameters are the level of functional concentration, the level of differentiation of operational aspects, and the level of specialization of operational tasks.

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2.5.1.1. Level of functional concentration

The first parameter that De Sitter (2000) has distinguished, namely functional concentration, refers to “the allocation of operations with respect to orders” (Achterbergh & Vriens, 2010, p.248). If this parameter has the maximum value, then all operational tasks of the same type are concentrated in specialized departments. Therefore, all capacities are potentially coupled to all orders. If the value of the functional concentration is low, or “functionally

deconcentrated,” then only operational tasks that are necessary to produce one order are allocated and coupled in flows. The example in Section 2.3.2 can additionally illustrate the level of functional concentration in De Gouden Leeuw. This example involves the three operational tasks of dressing, feeding, and administering medication to the elderly and distinguishes between three groups of elderly people, namely those who have mental

complaints, those with physical problems, and those without mental or physical problems. If the functional concentration is high, all operational tasks (dressing, feeding, and providing medication) can be coupled to every group of elderly individuals, which would result in a high level of variability. However, when the functional concentration is low, then those tasks are coupled in flows that relate to one group of elderly people. In this example, this can be achieved by creating three independent flows: one related to elderly people with mental complaints, one related to those with physical complaints, and one related to those with neither mental nor physical complaints. Consequently, only employees who provide care for one group of clients are allocated and coupled to each other, which is a form of decomposition into aspects (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.5.1.2. Level of differentiation of operational transformations

According to De Sitter (2000), there are three main types of operational sub-transformations: making, preparing, and supporting. Since De Gouden Leeuw is a health institution, it does not make products but instead provides care. Therefore, this thesis substitutes “making” activities for “service” activities to render this parameter useful for analysis of the production structure. Providing care refers to service activities that contribute to the provision of care. Preparation involves functions such as planning, process design, and acquiring the necessary equipment for the service. Support functions are indirectly tied to the realization of service and conduct of activities such as maintenance, technical services, and HR planning. If the level of

differentiation is maximal, then the activities of making, supporting, and preparing are separated and allocated into different tasks, whereas a minimal level of differentiation

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corresponds to the combination of these activities into one operational task (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.5.1.3. Level of specialization of operational transformations

The third parameter is based on decomposition into parts, as described in Section 2.3.2. Following the example in Section 2.3.2. of elderly care, tasks were decomposed into the sub-tasks of dressing, feeding, and providing medication. If every sub-task is assigned to one individual, then there is a high specialization of the operational transformation. Conversely, if the three sub-tasks are viewed as one task and assigned to one individual, then the

specialization is low. This exemplifies the specialization of service (making) activities, although specialization can also occur in support and preparation tasks (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.5.2. Parameters related to control structure

The next four parameters describe the control structure. As Section 2.3.3. has discussed, the control structure relates to the allocation of regulatory transformations. Achterbergh & Vriens (2010), classified the 4th parameter, the level of separation between operational and regulatory transformations, as a parameter that is related to both the production structure and the control structure. For this reason, they used to distinguish this parameter into a third category.

However, this research classifies the 4th parameter as a control parameter, as this system of classification allows for a more structured analysis. The four parameters are the level of separation between operational and regulatory transformations, the level of differentiation of regulatory transformations into aspects, the level of differentiation of regulatory

transformations into parts, and the level of specialization of regulatory transformations. The following section discusses the parameters in this order.

2.5.2.1. Level of separation between operational and regulatory transformations

The level of separation refers to the allocation of both the operational and the regulatory tasks. When this separation is maximal, then operational transformations are grouped into tasks, but these tasks possess no regulatory )transformations. These regulatory

(sub-)transformations, however, are grouped into tasks, but they are allocated to a unit that does not engage with the operational aspect. In this way, the regulator dictates orders, and the operator executes them. At minimal separation, a task possesses both the operational

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transformations and the regulatory transformations that are necessary to regulate the

operational aspects. In the case of substantial separation, the production and control structure are separated, yielding two networks of tasks: one for producing and one for regulating. If there is little separation, then the production and control structure relate to each other and are combined into one network of tasks (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.5.2.2. Level of differentiation of regulatory transformations into aspects

According to De Sitter (2000), there are three fundamental functions with respect to

regulation: operational regulation, regulation by design, and strategic regulation (Appendix 1.3.) This parameter concerns the level at which these three aspects are divided into different tasks. Operational regulation is a form of routine regulation that is both internal and external. This type of regulation is used for daily operations where disturbances are previously

experienced and norms about tasks are determined. For every disturbance, it is clear which interference would be useful, and this can be accomplished without changing the structure. Regulation by design is applicable when there are recurring disturbances that operational regulation cannot resolve. In order to mitigate these disturbances, the way of working must change, which would involve adjustments to the grouping, allocation, and linking of

operational transformations. Regulation by design is a form of non-routine regulation and can be either internal or external. The third form of regulation is strategic regulation, which is relevant when environmental changes prompt disturbances and can include, for example, a change of demands from the outside. Contending with these disturbances requires adjustment of the vision. So, strategic regulation is a form of external non-routine regulation in which norms or essential task variables must be changed (Achterbergh & Vriens, 2010; De Sitter, 2000). This parameter regards the level at which these three aspects are divided into different tasks. If the level of differentiation is high, then every aspect is grouped and allocated to different tasks. This is the case when strategic regulation, regulation by design, and

operational regulation are assigned to separate units. If the level of differentiation is minimal, then the three aspect of regulation are combined into and assigned to one task. In this way, an operational unit also participates in the design process and is involved with strategic decision-making (Achterbergh & Vriens, 2010; De Sitter, 2000).

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2.5.2.3. Level of differentiation of regulatory transformations into parts

Another way to decompose regulatory transformations is by dividing them into parts. According to De Sitter (2000), every regulatory transformation has three parts that conduct the necessary steps to manage disturbances. The first step is monitoring, which measures the actual values of variables that relate to the operational (sub-)transformations. The second step, assessing, entails a comparison of the actual values to the norm value. If the actual value differs from the norm value, then disturbances can occur, and the actual value needs to be changed to reduce this difference. This can be accomplished by the third step: selecting regulatory actions. The goal of such actions is to restrict the actual values of the variables within the limits of their norms. If the level of differentiation into parts is maximal, then these three steps are separated into sub-transformations and assigned to separate regulatory tasks. If the level of differentiation into parts is minimal, then monitoring, assessing, and acting are integrated into one task (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.5.2.4. Level of specialization of regulatory transformations

This last parameter refers to the level of deconstruction of regulatory transformations into distinct aspects. Regulatory tasks that concern support or preparation of the operational aspect can be divided and separated from the operational tasks (De Sitter, 2000). For example, regulatory aspects such as planning, service quality, and personnel are differentiated into distinct tasks. If this occurs for every regulatory aspect of support and preparation, then the level of specialization is high, which results in a sub-transformation in which every regulator has a complex network in relation to the operational process. If the level of specialization is low, then regulatory sub-transformations are integrated into one task (Achterbergh & Vriens, 2010).

2.6. Effects of parameter values

As the previous section has discussed, all seven parameters can have low or high values. In return, these values affect the controllability, and therefore the essential variables (De Sitter, 2000). This section discusses how the values of the parameters affect the controllability and explores how the values of the parameters affect the essential variables, namely the quality of work and the quality of working relations. It first reviews the parameter values of the

production structure, which includes the level of functional concentration, the level of differentiation, and the level of specialization. It then explains the effects of high parameter values of the control structure. This includes the parameters of differentiation of regulatory transformation into parts, differentiation of regulatory transformations into aspects, and the

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level of specialization of regulatory aspects. The parameter of separation between operational and regulatory sub-transformation entails whether the operational and regulatory

transformations are detached (high) or integrated within tasks (Achterbergh & Vriens, 2010).

2.6.1. Effect of high parameter values of the production structure on

the controllability

A high level of functional concentration and differentiation results in an increase of working pressure. According to Achterbergh and Vriens (2010), this occurs because “(1) all

preparation and make transformations are potentially coupled to all-order types, (2) Support transformations are potentially coupled to all make transformations and (3) all transformations of the same type are clustered into separate departments” (p.256). When functional

concentration is high, the level of variability is also high. This results in a higher probability of disturbances. Moreover, extensive differentiation and specialization increases the number of relations within a network. A high number of relations and substantial variability

negatively affect the predictability of a task. Also, dividing transformations into smaller (sub-)transformations can make it more difficult for an employee to have a broader view of orders and processes because he or she contributes only a small part to the operational

transformation. This lack of overview results in low predictability of tasks (Achterbergh & Vriens, 2010; De Sitter, 2000).

2.6.2. Effect of high parameter values of the control structure on the

controllability

A separated control structure increases working pressure and reduces regulatory potential. When separation, differentiation, and specialization of regulatory sub-transformations are high, relations in the network are more numerous (Achterbergh & Vriens, 2010). The result is a complex network in which every employee has a small scope of regulation, which is

insufficient for regulating one’s operational transformation. De Sitter (2000) has proposed that the control parameters relate to the four forms of regulation, which are described in Appendix 1.3.

First of all, a high level of the control parameters reduces internal routine regulation. Because regulatory tasks can be separated, differentiated, and specialized, only a small part of the regulatory task is assigned to the employee. As a result, an employee cannot react

immediately to disturbances that occur because he or she must interact with others before taking any regulatory actions. Furthermore, De Sitter (2000) has argued that an employee has

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fewer possible regulatory actions, which translates to fewer possibilities to combine

regulatory actions. If an employee has several regulatory actions and one is ineffective, he or she can choose to use another regulatory action. However, with high control parameters, a combination of actions is not possible for one employee; therefore, he needs external regulators, which complicate the regulation.

External routine regulation also suffers from high production and control parameter values. Because external regulation requires an overview of the process, communication between tasks is necessary to address disturbances. However, because of high production and control parameter values, individual workers “do not know where it [task input] comes from and where it [task output] goes to” (Achterbergh & Vriens, 2010, p. 260). Furthermore, when specialization and separation of regulatory transformations are high, communication with others is not part of an employee’s task. Even if an employee knows which other task is necessary to address the disturbance externally, that other task would have such a low

regulatory capacity that it cannot be involved in managing the disturbance of the task. So, the required communication and regulation necessary to externally manage it is almost impossible for individual employees to fulfill.

Internal non-routine regulation, which concerns disturbances from changing the task, also suffers from high control parameter values. When a task is small, operational, and regulatory, the effect of the change would be slight, and only a small part of the process would be improved. Furthermore, the effect of the task’s infrastructure can pose consequences for the whole process, but employees cannot comprehend these consequences because they lack overview. This is a perfect example of sub-optimization. In most organizations with high-value parameters, internal routine regulation is detached from the operational task and assigned to others tasks. This can result in detached regulation, wherein the regulators fail to engage in the process and therefore are not “sensitive to the nature of its disturbances or the effects of the proposed improvements” (Achterbergh & Vriens, 2010, p.261).

External non-routine regulation implies a re-determination of the goals of tasks, which can be accomplished by changing either the infrastructure of the task network or the environment of the organization (Achterbergh & Vriens, 2010, p.261). In a structure with high parameter values this is nearly impossible, partly because disturbances often are created by the complexity of the network instead of the task itself, and partly because the complexity of the network of tasks cannot be overseen. External non-routine regulation derives mostly from higher-level workers who are not involved in the processes they want to improve

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2.6.3. Effect of low parameter values of the production structure on

controllability

With regard to the production structure, De Sitter (2000) has identified three parameters: functional concentration, specialization, and differentiation of operational tasks. For the first, De Sitter has argued that a low level of functional concentration decreases the variability by creating parallel flows that are each assigned to an aspect of the broader transformation process. Each parallel flow can operate autonomously and allocate interdependent tasks. The variability decreases in that it is no longer all order combinations that are coupled but rather only those within a parallel flow. So, the variety of interaction in the network decreases dramatically. Moreover, a low level of both specialization and differentiation of operational tasks reduces the amount of relations between tasks. A low level of differentiation yields tasks that integrate preparing, making, and supporting activities, while a low level of specialization results in broad and integrated tasks rather than separated ones. Integration of tasks reduces relations between tasks, which in turn mitigates potential disturbances. Furthermore, integrated tasks offer a vaster overview of the production process. In conclusion, low parameter values of a production structure mainly attenuate disturbances by reducing variability and the number of relations. Furthermore, De Sitter has stated that low values on the production structure can encourage low values on the control structure (De Sitter, 2000).

2.6.4. Effect of low parameter values of control structure on

controllability

Low parameter values of the control structure provide two positive consequences for the controllability. First, the control structure can attenuate disturbances. Low levels of control parameters result in integrated and broader regulatory tasks. This restricts the network of regulatory tasks with less communication between such tasks, which consequently reduces the possibility of disturbances. Second, the control structure can amplify the regulatory potential. To elaborate on this possibility, a distinction is made between routine regulation, internal non-routine, and external non-routine regulation. Moreover, for each form of regulation, the relevant parameters are discussed.

Achterbergh and Vriens (2010) have stated that both internal and external routine regulation are influenced by two parameters, namely the level of separation and the level of specialization of regulatory tasks. A low level of separation, or de-separation, signifies that operational activities and their related regulatory activities are integrated into one task. This results in immediate and effective regulation because the possible disturbances can be

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regulated by the people who address them. As a result of de-separation, less communication is necessary. In addition, a low level of specialization, or de-specialization, positively affects routine regulation because more regulatory activities are assigned to one task. Hence, one task can regulate a broader part of the operational process. This is called internal routine

regulation. To have more variety and flexibility with regard to disturbances, external routine must be included. However, for external regulation to be effective, employees need to have an overview of the process and communicate with relevant employees. According to De Sitter (2000), parallel flows and autonomous units, which are parameters of the production

structure, create conditions in which external routine can be effective. This is firstly because an employee has an understanding of the whole process in that unit, and secondly because communication necessary for regulation occurs among team members in that unit. External regulation outside a unit is also possible as long as the communication is direct, reciprocal, and symmetric.

According to De Sitter (2000), a low level of differentiation positively affects non-routine internal regulation. As stated earlier, there are two forms of differentiation, namely into parts and into aspects. If these levels are low, then non-routine regulatory tasks are included in a task, which makes it possible for an employee to change the infrastructure of his or her task. Integrating non-routine regulation makes infrastructural change more effective and efficient in the sense that a change of task is no longer dependent on other regulators, which saves time and communication. It is also effective in the sense that a change is implemented by the person who carries out the task. However, non-routine regulation could lead to sub-optimization, wherein internal changes negatively impact the entire network. Therefore, external non-routine regulation should also be integrated into a task. This can allow for discussion of potential changes in the task network. According to De Sitter (2000), external regulation should be based on direct, reciprocal, and symmetric communication with other groups. In conclusion, low values of production and control parameters positively affect the controllability, as Appendix 2.3 further indicates.

2.6.5. Effects of low parameter values on the functional requirements

The previous section has demonstrated that low parameter values improve the controllability. The next section elaborates on the effects of low parameter values on the functional

requirements. Appendix 1.5. addresses the effect of high parameter values on the functional requirements. This research selected the quality of work and the quality of working relations as the most relevant variables.

Diagnosing the structure of De Gouden Leeuw: A qualitative study

Joris Bloem

S4061616

Masterthesis ODD

Business Administration

Supervisor

Drs

L. Gulpers

Second examiner: Dr. Ir. L.J.

Lekkerkerk

Date: 15-02-2018

Diagnosing the structure of De Gouden Leeuw: A

qualitative study

Preface

Abstract

Table of Contents

Chapter 1: Introduction

Chapter 2: Theory

2.1. Growing family businesses

2.2. Introducing De Sitters’ integral organization renewal theory

2.3. Components of De Sitter’s theory

2.3.1. External and internal functional requirements

2.3.1.1 Components of the quality of work

2.3.1.2. Components of the quality of working relations

2.3.2. Components of an organizational structure

2.3.3. Operational and regulatory transformations

2.4. Attenuation and amplification by organizational structures

2.5. Design parameters

2.5.1. Parameters describing the production structure

2.5.1.1. Level of functional concentration

2.5.1.2. Level of differentiation of operational transformations

2.5.1.3. Level of specialization of operational transformations

2.5.2. Parameters related to control structure

2.5.2.1. Level of separation between operational and regulatory transformations

2.5.2.2. Level of differentiation of regulatory transformations into aspects

2.5.2.3. Level of differentiation of regulatory transformations into parts

2.5.2.4. Level of specialization of regulatory transformations

2.6. Effects of parameter values

2.6.1. Effect of high parameter values of the production structure on

the controllability

2.6.2. Effect of high parameter values of the control structure on the

controllability

2.6.3. Effect of low parameter values of the production structure on

controllability

2.6.4. Effect of low parameter values of control structure on

controllability

2.6.5. Effects of low parameter values on the functional requirements