4. Coordination Phase
The crisis of control often results in a return to centralization, but this is now inappropriate and creates resentment and hostility among these who have been given freedom. Thus, instead of centralization, coordination becomes the more effective method for overcoming crisis of control. The coordination phase is characterized by the use of formal systems for achieving greater coordination with top management as the watch dog. The new coordination systems prove useful for achieving growth and more coordinated efforts by line managers, but result into a task conflict between line and staff, between headquarters and field, line becomes resentful of staff, staff complains about uncooperative and uninformed line managers, and everyone gets bogged down in the bureaucratic paper system. Procedure takes precedence over problem solving, organisation becomes too large and complex to be managed through formal programmes and rigid systems. Thus, crisis of red tape begins and to overcome this the organisation must move to the next level evolutionary stage i.e. The Collaboration Phase.
5. Collaboration Phase
This phase involves more flexible and behavioral approaches to the problems of managing a large organisation. Greiner observes that while the coordination stage was managed through formal systems and procedures, the collaboration stage emphasizes greater spontaneity in management action through teams and skillful confrontation of interpersonal difference. Social control and self-discipline take over from formal control. Though Greiner is not certain what will be the new crisis because of collaboration stage, he feels that some problems may emerge as it will center around the psychological saturation of employee who grow emotionally and physically exhausted by the intensity of teamwork and of the heavy pressure for innovative solutions.
Hersey and Blanchard, however feel that to overcome and even to avoid the various crisis, managers could attempt to move through the evolutionary periods more consistently with the sequencing that situational leadership theory would suggest- direction to coordination to collaboration to delegation rather than the ordering depicted by Greiner.