Stages of Organizational Life Cycle
Watching the growth of an organization is just like watching a baby grow up. From the time when the baby is born, it undergoes different phases of development. There are certain milestones that a baby must achieve at every stage. Eventually, the baby attains all the milestones and enters the adult phase. The same analogy applies to organizations. Just like some babies achieve certain milestones faster than others, some organizations scale heights of organizational development quicker than others. On the flip side, there are certain organizations that lag behind and may wither away, if they are not nourished on time. This nourishment may come in the form of HR and OD consulting that can help the organization achieve development within a predefined time frame.
Five Stages of Organizational Life Cycle:
Organizational life cycle can be roughly divided into five stages. Most organizations go through these stages during their life cycle.
As the name suggests, this is the stage during which an organization is formed. It often starts with a couple of founder members and then goes on expanding as more members come on board. This is the phase during which an organization receives its future leaders. The HR and OD processes are yet to be formulated and the organization is largely dependent on external factors for its development. This is a learning phase for all members who hone their skills for future leadership.
If we continue with our analogy of human growth for organizational growth, then this phase can be termed as teenage years of human life. During this process, the HR and OD processes are formed, but there is no adherence to them. The employees are well intentioned but often lack motivation. Ideas and innovations are floating, but there is no will to execute them. There is fair amount of disagreement and conflict amongst various internal departments. The roles and responsibilities of teams are not defined, thereby leading to chaos and confusion. It is only through this chaos than an organization finds its vision, mission and moves to the next stage.
This is a stage during which the turbulence settles down. The organization attains fair amount of stability in terms of processes and practices. Roles and responsibilities are defined and employees are encouraged to fulfill their goals. The internal departments learn to coordinate and work as a single unit. However, the organization is yet to formulate its mission, vision and long term goals. Everything is focused on short term goals and the emphasis is more on conducting daily tasks without glitches. Innovation takes a back seat during this time. If an organization stays in this stage for a longer time, then it risks a slow death. In the absence of innovation, there will be no way to cope with the changing trends.
This is the most gratifying stage for the organization. The employees are highly motivated and often willing to go beyond their scope of work. This leads to innovation. They learn to take ownership for their success and failures. The daily tasks are aligned with the mission and vision of the company and the entire focus is to achieve higher goals. The organization scales maximum heights during this period.
This is a final stage during which an organization may cease to work or changes hands. The leaders retire with a sense of achievement and pride, while giving way to new ownership.
While most organizations complete their journey with more or less success, few others may die an untimely death at any of the four stages. To avoid this, remedial procedures in form of reformation are required before things go out of hand.