By Did you know that more than 50% of businesses fail within the first 5 years, with more than 20% fail inside the first 2 years?
Most of the firms start their businesses and reach their height. And at a certain point, once they grow, they will eventually face a massive loss.
This cycle is similar to a person’s life cycle, where he or she passes through a lot of stages from birth to death.
When companies go over lot of stages, it is called the organizational life cycle. There are 4 stages of the life cycle of an organization: start-up, growth, maturity, and decline.
So, in the next guide, I will walk through in detail the different stages of the organization’s life cycle.
What is Organizational Life Cycle?
In simple words, an organizational life cycle defines the different stages of growth of a firm for the duration of its life. From the start to its final decline.
Think of it this way, when the person is born, he or she will grow, go to school, become an adult, earning the money. After that, at a certain point, the person is retired. It means the person lived his or her life.
While the aim of the life cycle of an organization is to theorize how the firm might grow, change, and adapt in response to a lot of factors.
Moreover, there are both internal and external factors that assist HR leaders well for these expected changes.
An organizational life cycle describes the stages of development of an organization throughout its life, from its inception to its eventual decline.
The purpose of an organizational life cycle is to conceptualize how it may grow, evolve, and adapt in response to different factors, both internal and external, which can help organizational leaders better prepare for these expected changes.
Organizational Life Cycle Theory
The theory was created by Ichak Adizes and wrote by the book name ‘’corporate lifecycle.’’ The role and interaction of management and markets.
Further, the theory has been implemented by tons of firms to assist them plan for the future.
The idea of the life cycle of an organization was designed based on three assumptions. Like.
- Each system presents inside a bigger setting
- Every system has a boundary that make them separate from other environments
- All systems should take materials from their environment
Whereas this theory is heavily engage to the CIPD principles. In universities, tutors apply this theory to practical life examples and explain to students how the life cycle theory connects to the CIPD life cycle.
The theory offers a framework for HR experts in order to adopt people management strategies, recruitment, development, and reward.
Connecting to OLC to CIPD Employee Lifecycle Stages
| OLC Stage | CIPD Employee Life Cycle | Main HR Actions |
| Birth /Start-up | Attraction and recruitment | Aim for hiring for passion, flexibility, and fit for the culture. With high speed and easy hiring |
| Growth | Onboarding and development | It usually has fast growth. Also, it aim on training, define roles, and develop leadership skills in employees. |
| Maturity | Retention and Engagement | At the maturity level, it emphasize on keeping culture, career growth, rewards, and performance management. |
| Decline/ Renewal | Separation & Reboarding | In the final stage, it involves handling (separation), or restructure upskilling in order to avoid failure. |
4 Stages of Organizational Life Cycle
Plenty of different frameworks are usually presented in order to grasp the life cycle of organizational like.
- Adizes Organizational Lifecycle
- Lifecycle framework by Miller and Friesen
- Greiner Growth Model
Every one of these models can have various stages and features that activate phases to start or end. On the other hand, in many cases, a few core phases can serve as a basic outline for the organization’s life cycle.
Here are the different stages of the organizational life cycle defined in the next section.
1. Start Up Stage
The initial stage of the organizational life cycle is the startup stage. For the duration of this stage, the firm is like a newborn baby.
Because the firm is in its startup stage might be created or established. They have plenty of ideas; however, they have little or lack a structure in place as a means to put those ideas.
Moreover, in this start-up stage, the firm will create many business ideas, focus on the target market, and then establish basic operations.
Though in the startup stage, the firm may face early challenges.
For instance,
A new tech startup runs out of a garage with seed funding. Also, they might have a hard to create up a customer or client base as they lack resources.
Below are some actions the firm needs to take for the startup phase.
- First of all, the firm needs to develop a strategic business plan with having a long term aims, success, and timeliness.
- Create operation basics- Since the start-up stage firms usually lack resources, they have to make sure that they will be scalable in the future.
- Secure funding- In order to grow and generate revenues in the long run, firms need to go through ways such as loans, grants, or investors.
2. Growth Stage
In the second stage of the lifecycle, an organization really starts to grow and develop. For the duration of this stage, firms may expand their headcount, earn more revenue, and as well increase their customer base.
In the growth stage, a lot of firms start creating a more detailed organizational and strategic plan.
During this stage, companies also spend a lot of money on sales and marketing efforts, or they also hire extra employees.
However, the firms may face many issues, such as being unable to handle fast change and growth. Also, they are unable to keep the quality as the demand grows.
Here are some action suggestions for the growth stage.
- The company must invest in technology in order to handle organizational growth
- Firms should adjust systems and procedures to assist scaled operations
- Finally, they must create organizational resiliency as a means to organize and prepare for forthcoming stages.
3. Maturity Stage
In the third stage of the organization life cycle, the firm starts to mature. Because they grow fast and the growth slows to a workable rate, they start to focus their energy on enhancing operations.
Example:
A newly launched tech firm during the maturity stage hires hundreds of employees and pays higher salaries.
Throughout the stage of maturity, the firms might face a lot of problems, such as
- They face issues with market saturation
- Unable to keep up with the innovation
- Finally, handing cost structures
In the next section, I am here to suggest the action tips to firms for the maturity stage.
- Firms need to provide diversity in order to remain competitive
- They must adopt new innovations and remain updated on the newest trends of CIPD
- Finally, they need to create and keep solid connections with clients or customers.
4. Decline / Renewal
The final stage of a cycle theory is the decline or renewal stage. For the duration of this stage, the firms might suffer a decline in profit or face market issues.
On top of that, the firms might face a decrease in sales and margins of profit. Whereas in the stage of renewal, firms might hinge and create strategic changes such as.
- They quickly adapt to operations
- They update and innovate on present products
- Finally, they try to improve their culture
Throughout the life cycle of an organization, the firm might face resistance to change from employees, and identify the root cause of the slow growth. And then they classify new growth chances.
Below are some effective and action tips for the decline or renewal stage.
- First of all, firms need to find the root cause of stagnation, meaning a lack of productivity, before they start to tackle it. Plenty of employees are usually fired at this stage.
- Analyze in detail where the future of the firm is going. Then they have to cut needless resources based on their aims.
- Finally, they must find ways to revive and improve the culture of the firm to relight connection and motivate employees.
Organizational life cycle models are referred to in CIPD/HR literature
Here are the most famous organizational life cycle models usually used in the CIPD or HR framework.
- Adizes Organizational lifestyle- This model shows how leadership styles and the behavior of organizational change. Also, it tells the management growth from business to systematic methods.
- Miller and Friesen’s Lifecycle framework- Well, this Life cycle of an organization spots the main key points among all 4 stages. It as well display in what way the firms need to adopt the decision-making once the firm grows.
- Greiner’s Growth Model- The Greiner’s growth model emphasize at crises as active changes among the growth phases. It also provides valuable insights into overcoming and solving certain challenges.
The role of HR in Lifecycle Management
The role of HR is to make sure the firm becomes fully grown, its people practices and structure change as per the trends and adapt to them. Moreover, it helps firms change from informal, flexible setups in the startup stage to more organized, strategic, and as well data driven methods in the phase of maturity.
Employee life cycle CIPD section
Here are the key stages of the employee life cycle.
- Attraction – The first stage employer create a brand in order to gain more talent.
- Recruitment – The employer now chooses and hires the right applicants for the job.
- Onboarding- Onboarding combines new hires into the company role and culture.
- Development – This stage of the organizational life cycle model offers training and progress chances for skills growth.
- Retention/ Engagement – Increase and create a good environment in order maintain employees connected.
- Separation/ Exit – Handling the practice of the departure, such as interviews and knowledge handover.
- Continued support – In the final stage, emphasize the boss and the employee after the exits of the firm.
Exam-style questions or assignment relevance
Assignment Relevance (3COO4 & 5COO1)
Once you are writing CIPD assignments, you should showcase how people professionals contribute to every stage of the organizational life cycle.
- Level 3 CIPD Foundation- If you are studying a level 3, write a foundation assignment that focuses on every day delivery of these assignments, such as legal and compliance. And as well as the instant effect on the employee.
- Level 5 associate diploma- For the level 5 associate diploma, write an assignment examine how these stages are handled, analyzes their efficiency, and then suggests progress in order to increase engagement and retention.
Final Note
In this detailed guide, we have explored the different stages of the organizational life cycle. From the start-up stage to maturity.
Always remember the organizations is like a baby, they grow, matures, and declines. Firms need to keep learning, evolving, and moving.
To avoid potential losses, firms need to make a contingency plan before they move to the decline stage.
FAQs
1. What is an organizational life cycle?
Ans: The life cycle of a firm defines a lot of stages for the duration of its life, from start to maturity to decline.
2. Organizational life cycle stages
Ans: There are 4 stages of the life cycle of an organization: startup, maturity, decline, and renewal.
3. Organizational Life Cycle Theory
Ans: The theory was proposed by Ichak Adizes, who was famously recognized as a bestselling author. The book name was Corporate Lifecycle.
4. What is a CIPD employee life cycle?
Ans: The lifecycle of a CIPD is a 7-stage strategic framework; it maps the journey of an employee, such as attraction, recruitment, onboarding, development, retention, separation, and advocacy.
5. What are organizational life cycle assignment questions?
Ans: The life cycle of organizational assignments usually explores the different stages of birth, growth, maturity, and decline/ revival. These assignments focus on how structure, leadership, and strategies should change to survive.
