The celebrity-humorist-theoretician of bureaucracy offered some insight into the relationship between scale and sustainability in organizations.
For some time I have been looking on the Internet for a quote from C. Northcote Parkinson, the author of Parkinson's Law, to the effect that organizations with staff of 1,000 or more are self-sustaining. I tried the usual sources (that is to say, Google) and I tried asking about on academic mailing lists devoted to the study of nonprofit organizations (Arnova-L). But I finally found the answer by cleaning out my basement.
The reference was in a book called The Official Rules by Paul Dickson, published in 1978 (and boxed up since at least 1987). I have a hardbound copy, but the softcover version is still available (used) for under a dollar. There's a special section in the book with a number of rule-like observations of Mr. Parkinson, including Parkinson's Law of 1,000, which Mr. Dickson relates as follows:
An enterprise employing more than 1,000 people becomes a self-perpetuating empire, creating so much internal work that it no longer needs any contact with the outside world.
Even better, Mr. Dickson provides a citation to an article, "Relationships between Organization Size and Efficiency" by F. P. Adler that appeared in Management Science, Vol. 7, No. 1 (Oct., 1960), pp. 80-84. Fat chance of finding a journal article that old on the Internet for free. But lo and behold, it's available through JSTOR—even though JSTOR articles are only available through participating libraries, the first page of the article is available to all, and Mr. Adler had the foresight to put the relevant quote from Mr. Parkinson right on page one, footnote one:
[Writing to Mr. Adler] Your findings are similar to those of a German scholar who has told me that his conclusion, in pre-war Germany, was that a purely administrative organization becomes self-sufficient as soon as its staff numbers one thousand. From then onwards it generates sufficient internal correspondence to keep itself busy without any incoming mail or external contact of any kind. With a research establishment the same point is reached but only after the staff is double that size.
Like many of Mr. Parkinson's observations, this one enjoys the ring of genuine insight with the tongue planted firmly in cheek. But I think it is very relevant for charity organizations, though not quite in the way Mr. Parkinson explains.
The reason the organization of that size is self-sustaining is not because everybody is busy responding to co-worker emails (the current technology for internal correspondence), even though that is how many people in the organization spend their days. The real reason is that an organization of that size can sustain itself entirely with ordinary individuals putting in average levels of work effort:
- There is enough differentiation of duties that people don't have to be experts in everything, and
- There are enough checks and balances (or redundancies, if you like) in the system that very few really have to be expert at anything (in fact, the real experts are often hired on an ad hoc basis from outside the organization, such as auditors or attorneys).
And these very facts are why everyone spends their day reading emails: coordinating and cross-checking each other's work. And fixing the errors that arise because the staff is just average. This one principle explains why these organizations appear so inept and yet are able to accomplish so much and survive so long.
Once this level of stability is achieved, where the organization survives despite the failings of individuals, all the other characteristics of large organizations follow (such as the basic observation of the original Parkinson's Law essay that the staff will grow at a rate of 5% per year from the desire of the staff to have more staff reporting to them).
Two related observations:
- In these large organizations, the chief executive is nothing but the head of another staff department with its own role to play. There is no particular reason why this staff department should be entitled to unusually high levels of compensation. There is no reason why the head of a university should earn more than a winning football coach, or the head of a hospital should earn more than a surgeon.
- On the flip side, I wonder whether the preference for smaller charity organizations doesn't owe something to the fact that in the small scale organization (with staff levels of, say, ten to a few hundred) it is possible for a single individual to understand everything that is going on. For the person at the top it's fun and interesting while it lasts, but the organization fails at the point of leadership transition due to a lack of institutional memory. So in a small scale organization, what is good for the individual in these cases is bad for the organization in the long term, which makes them inherently unstable and unsustainable.