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366 THE PSYCHOLOGICAL CONTRACT

Schein and Kanter

The field of Organizational Psychology has grown in the past four decades, as or-
ganizational research has provided more insight into the nature of the organiza-
tion and the people in it. But the nature of human behavior has not changed so
much as to totally nullify earlier findings. Rather, we have to examine these find-
ings in light of our newer understanding of the problems of the enterprise and the
nature of the workforce.

What has changed drastically in the past couple of decades is the unwillingness
of newer people in the workforce to blindly accept leadership solely on the basis
of placement in the hierarchy. This new breed of worker tends to respect knowl-
edge power over position power. This has had an extreme effect on the traditional
system of rewards and punishments.

Even as early as 1965, Schein wrote: “an organization has within it many
groups which generate their own norms of what is right and proper behavior, and
that such norms extend to the amount and type of work to be performed.” Today,
that is more applicable than ever. Schein continues: “the organization is a com-
plex social system which must be studied as a total system if individual behavior
within it is to be totally understood.”

The questions that Schein raises are not unlike those of Rosabeth Moss Kan-
ter. “How can an internal environment be created for members of the organization
which will enable them to grow in their own unique capacities?” “How can orga-
nizations be designed to create optimum relationships between various subgroups
which tend to develop within them?”

So it is that the same questions raised in the 1960s and in the 1980s are still be-
ing addressed today. The fact is, however, that these questions have been an-
swered and that several reasonable and rational solutions have been offered. In
instances in which these proposed solutions have been adopted, there are mea-
surable results (see Kanter, The Change Masters). Yet, in many other areas, the
old, inbred managerial and organizational behavior has resisted change. So we
continue to write about the subject and propose solutions.

Kanter talks about trust as a part of the solution. She also mentions the ten-
dency for older style organizations to be risk-averse. And everyone talks about the
bureaucratic structures as impeding a solution because it segments the organiza-
tion. My experience has been that the degree of centralization or decentralization
is not the issue. There is no evidence that I know of that shows that flatter organi-
zations always perform better than hierarchical organizations. It is reasonable to
expect a correlation between risk taking and innovation. As Kanter says: “a quar-
terly financial statement is not a good measure of economic health.” Again, my ex-
perience shows that by concentrating on umpteen consecutive quarters of