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Organizational therapy is the method by which dysfunctional processes in organizations are deciphered, acknowledged, and corrected. It addresses the hidden rationale behind irrational acts, using tools and processes similar as those used with individuals in various forms of psychotherapy or leadership coaching—but on a bigger, more systemic scale.

Conceptual Overview

The political economist and philosopher Adam Smith believed that people were led, as if by an invisible hand, to promote unintended ends. More recently, research and practice have shown that there is also an invisible hand at work in organizations. Decision making, leadership, the strategy process, structuring, and organizational change are influenced in subtle and complex ways by invisible, out-of-awareness psychological forces. These covert forces often produce extremely irrational and dysfunctional organizational outcomes.

The concept of organizational dysfunction emerged as a management theory in the late 1950s, when scholar-practitioners such as Abraham Zaleznik, Harry Levinson, and colleagues working at the Harvard Business School and the Tavistock Institute began to apply clinical insights to organizational functioning. Inspired by their insights, other scholars began to explore the interface between management and psychotherapy, examining psychological processes hitherto ignored by more traditional management scholars. The knowledge gained from clinical encounters with top executives proved extremely useful in analyzing organizational pathologies and carrying out consulting interventions. These encounters also provided insight into the degree to which the problems and orientations of organizations seemed to mirror the personalities of their top executives.

Areas of Intervention

Typical areas in which the clinically informed consultant can make a contribution include the following:

  • Identifying and changing dysfunctional leadership styles.
  • Creating effective executive role constellations.
  • Resolving interpersonal conflict, intergroup conflict, and various forms of collusive relationships (e.g., folie à deux).
  • Disentangling social defenses.
  • Making sense of organizational cultures.
  • Assessing organizational pathology.
  • Bringing neurotic organizations back to health.
  • Working through the trauma of mergers and acquisitions.
  • Making knowledge management systems work.
  • Creating high-performance teams and high-performance organizations.
  • Planning for orderly leadership succession.
  • Untangling knotty family business problems.
  • Helping create a better work-life balance for leaders and subordinates.

Steps in an Intervention Process

At its heart, organizational therapy is about change. Organizational therapists can steer organizations through change efforts of all kinds, but their training equips them to be especially helpful in creating more effective, humane, and economically viable organizations. Any area of organizational life that has central psychological underpinnings is a likely candidate for organizational therapy.

Although most organizations press for instant answers, the person leading a process of organizational therapy must take time to reflect on the problem. After the initial fact-gathering contact, the organizational therapist typically continues discussions about issues with other key members of the organization to obtain a wide spectrum of perspectives. Complete access to everyone within an organization is essential to the success of such a consultation. Any thwarting of access (whether subtle or direct) provides material for interpretation. Because there is little difference between the diagnostic stage and the intervention stage in organizational therapy, interpretation is both diagnostic and therapeutic. The mere fact of data gathering implies that the intervention has begun.

Using Transference Reactions as a Tool for Change

An important part of the organizational therapist's diagnosis involves the untangling of transferential processes. It is skill in the use of these processes as a diagnostic tool that differentiates organizational therapists from traditional consultants. The ever-present triangle of relationships—in this case, a triangle comprised of the person being interviewed, some significant other from that person's past, and the change agent (the consultant)—provides a conceptual framework for assessing patterns of response and then pointing out the similarity of past relationships to what's going on in the present. Organizational therapists also recognize the importance of projective identification as a mode of communication as well as a type of human relationship. For example, executives in a department may deny or reject an uncomfortable experience by imagining that it belongs to another group of executives, who in their turn are inducted into the situation by subtle pressure from the first group to think, feel, and act in congruence with the received projection.

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