mngt 5590 organizational behavior week 8: chapters 13, 14, 15 dr. george reid 1
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MNGT 5590Organizational Behavior
Week 8: Chapters 13, 14, 15
Dr. George Reid
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2-2
• Chapter 13: Designing Organizational Structures
• Chapter 14: Organizational Culture
• Chapter 15: Leadership
13
Designing Organizational Structures
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13-4
Valve Corporation has a flat, organic organizational structure to leverage the creative and entrepreneurial potential of its 300 employees
Valve Corporation’s Organizational Structure
13-5
Organizational Structure Defined
Division of labor and patterns of coordination, communication, workflow, and formal power that direct organizational activities
Relates to many OB topics (job design, teams, power)
13-6
Division of Labor and CoordinationDivision of labor
Results in specialization, separate jobs for different people
Improves work efficiency
Coordination of workValue of division of labor is limited to ability to coordinate
that work
Coordinating work can be costly
Three coordinating mechanisms informal communication
formal hierarchy
standardization
13-7
Coordination Through Informal CommunicationInformal communication coordinates work in
all firms
Vital in nonroutine and ambiguous situations
Easiest in small firms, but technology extends its use in large firms
Larger firms also apply informal communication throughLiaison rolesIntegrator rolesTemporary teams
13-8
Other Coordinating MechanismsFormal hierarchy
Direct supervisionAssigns legitimate power to manage others Necessary in most firms, but has problems
Standardization – create routine behavior/outputStandardized processes (e.g., job descriptions)Standardized outputs (e.g., sales targets)Standardized skills (e.g., training)
13-9
Elements ofOrganizational
Structure
Span of Control
Centralization
Department-alization
Formalization
Elements of Organizational Structure
13-10
KenGen’s Flatter Structure
KenGen, Kenya’s leading electricity generation company, reduced its hierarchy from 15 layers to just 6 layers. “This flatter structure has reduced bureaucracy and it has also improved teamwork,” explains KenGen executive Simon Ngure.
13-11
Span of ControlNumber of people directly
reporting to the next level
Wider span of control possible when:Other coordinating mechanisms are
presentRoutine tasksLow employee interdependence
13-12
Tall vs Flat StructuresAs companies grow, they:
Build a taller hierarchyWiden span, or both
Problems with tall hierarchiesPoorer upward informationOverhead costsFocus power around managers, so
staff feel less empowered
13-13
Centralization/DecentralizationCentralization – Formal
decision making authority is held by a few people, usually at the top
Decentralization increases as companies grow
Varying degrees of centralization in different areas of the companyExample: sales
decentralized; info systems centralized
Upper Mgt
Middle Mgt
Front line
Supervisory
Upper Mgt
Middle Mgt
Front line
Supervisory
Upper Mgt
Middle Mgt
Front line
Supervisory
Production SalesInformation
Systems
= locus of decision making authority
13-14
FormalizationStandardizing behavior through rules,
procedures, training, etc
Increases as firms get older, larger, regulated
Problems with formalizationLess organizational flexibilityDiscourages organizational learning/creativityLess work efficiencyIncreases job dissatisfaction and work stressRules/procedures become focus of attention
13-15
Mechanistic vs. Organic Structures
Mechanistic StructureNarrow span of controlHigh centralizationHigh formalization
Organic StructureWide span of controlDecentralized decisionsLow formalization
13-16
CEO
Finance Production Marketing
Organizes employees around specific knowledge or other resources (e.g., marketing, production)
Functional Organizational Structure
13-17
Evaluating Functional StructuresBenefits
Economies of scaleSupports professional identity and career pathsEasier supervision
LimitationsEmphasizes subunit more than organizational
goals Higher dysfunctional conflictPoorer coordination – requires more controls
13-18
Organizes employees around outputs,clients, or geographic areas
Divisional Structure
CEO
HealthcareLightingProducts
Consumer Lifestyle
13-19
Divisional Structure
Best type of divisional structure depends on environmental diversity or uncertainty
Geographic structures becoming less common because:Less need for local representation
Reduced geographic variation
More global clients
13-20
Evaluating Divisional StructuresBenefits
Building block structure – accommodates growthFocuses on markets/products/clients
LimitationsDuplication, inefficient use of resourcesSilos of knowledge – expertise isolated across
divisionsExecutive power affected by shifting divisional
structure – common with complex environment
13-21
Self-directed work teams organized around work processes
Typically organic structureUsually found within divisionalized structure
Team-Based Structure
13-22
Evaluating Team-Based StructuresBenefits
Responsive, flexibleLower admin costsQuicker, more informed decisions
LimitationsInterpersonal training costsSlower coordination during team developmentRole ambiguity increases stressTeam leader issues – less power, ambiguous
roles/careerDuplication of resources
13-23
North America
South America
EuropeMiddle East, Africa/ India
AsiaPacific
Power Products
Power Systems
Discrete Automation and
Motion
Product leader in that region
Product Groups
Regional Groups
Low VoltageProducts
ProcessAutomation
ABB’s* Geographic-Product Matrix Structure
*Simplification of ABB’s actual structure
13-24
Audio DeptLeader
SoftwareDept Leader
Art DeptLeader
Game1Project Leader
Game2Project Leader
Game3Project Leader
Project-based Matrix Structure
CEO
Employees ( ) are temporarily assigned to a specificproject team and have a permanent functional unit
13-25
Evaluating Matrix StructuresBenefits
Uses resources and expertise effectivelyPotentially better communication, flexibility,
innovation Focuses specialists on clients and productsSupports knowledge sharing within specialtySolution when two divisions have equal importance
LimitationsMore conflict among managers who share powerTwo bosses dilutes accountabilityMore conflict, organizational politics, and stress
13-26
External Environment & Structure
Dynamic
• High rate of change• Use team-based, network, or
other organic structure
Stable
• Steady conditions, predictable change
• Use mechanistic structure
Complex
• Many elements (such as stakeholders)
• Decentralize
Simple
• Few environmental elements• Less need to decentralize
13-27
Effects of Organizational SizeAs organizations grow, they:
1. Increase division of labor (job specialization)
2. Increase standardizationand formal hierarchy as coordinating mechanisms
3. Become more decentralized
13-28
Organizational StrategyStructure follows strategy
Strategy points to the environments in which the organization will operate
Leaders decide which structure to apply
Innovation strategyProviding unique products or
attracting clients who want customization
Cost leadership strategyMaximize productivity in order to
offer competitive pricing
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Designing Organizational Structures
13-29
14
Organizational Culture
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
14-31
Zappos’ Organizational Culture
Zappos, the world’s largest online shoe retailer, relies on recruitment, selection, socialization, and other practices to maintain a strong organizational culture
14-32
Organizational Culture Defined
The values/assumptions shared within an organization
Defines what is important
Provides direction toward the “right way” of doing things
Company’s DNA – invisible to the eye, yet a powerful template that shapes employee behavior
14-33
Elements ofOrganizationalCulture
Organizational culture
Artifacts of organizational culture
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14-34
Content ofOrganizational CultureThe relative ordering of values.
A few dominant valuesExample: Facebook – creative, proactive, risk-oriented
Problems with measuring org cultureOversimplifies diversity of possible valuesIgnore shared assumptionsAdopts an “integration” perspective
An organization’s culture is fuzzy:Diverse subcultures (“fragmentation”)Values exist within individuals, not work units
14-35
Organizational Culture Profile
Org Culture Dimensions Dimension Characteristics
InnovationExperimenting, opportunity seeking, risk taking, few rules, low cautiousness
Stability Predictability, security, rule-orientedRespect for people Fairness, tolerance
Outcome orientation
Action oriented, high expectations, results oriented
Attention to detail Precise, analytic
Team orientation Collaboration, people-oriented
AggressivenessCompetitive, low emphasis on social responsibility
Source: O’Reilly et al (1991)
14-36
Organizational Subcultures Dominant culture – most widely shared
values and assumptions
SubculturesLocated throughout the organizationCan enhance or oppose (countercultures) firm’s
dominant culture
Two functions of countercultures:provide surveillance and critique, ethicssource of emerging values
14-37
Cultural Artifacts atGoldman Sachs
The language of Goldman Sachs employees may be artifacts of underlying cultural values. “Elephant trades” and “muppet” clients suggest that the investment firm values profitability and individual performance more than customer service.
14-38
Organizational Culture Artifacts
Observable symbols and signs of culture
Physical structures, ceremonies, language, stories
Maintain and transmit organization’s culture
Need many artifacts to accurately decipher a company’s culture
14-39
Artifacts: Stories and LegendsSocial prescriptions of desired (or
dysfunctional) behavior
Realistic human side to expectations
Most effective stories and legends:Describe real people Assumed to be trueKnown throughout the organizationAre prescriptive
14-40
Artifacts: Rituals, Ceremonies, LanguageRituals
programmed routines (e.g., how visitors are greeted)
CeremoniesPlanned activities for an audiencee.g., award ceremonies
LanguageHow employees address each other and outsiders,
express emotions, describe stakeholders, etc.
Leaders use language to anchor or change culture
Language also differentiates subcultures
14-41
Artifacts: Physical Structures/Symbols
Building structure – may shape and reflect culture
Office design conveys cultural meaningFurniture, office size, wall hangings, art deco
14-42
Organizational Culture StrengthHow widely and deeply employees hold
the company’s dominant values and assumptionsMost employees understand/embrace the cultureInstitutionalized through artifactsLong-lasting – possibly back to founder(s)
Three functions of strong cultures :Control systemSocial glueSense-making
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Organizational Cultureand Effectiveness
Functions ofStrong Cultures
• Control system• Social glue• Sense-making
OrganizationalOutcomes
• Org performance• Employee well-being
Culture strength advantages depend on:
• Environment fit• Moderate strength• Adaptive culture
14-44
Merging Cultures:Bicultural AuditPart of due diligence in merger
Minimizes cultural collision by diagnosing companies
Three steps in bicultural audit:1. Identify cultural artifacts2. Analyze data for cultural conflict/compatibility3. Identify strategies and action plans to bridge
cultures
14-45
Merging Organizational Cultures
Assimilation
Deculturation
Acquired company embraces acquiring firm’s cultural values
Acquiring firm imposes its culture on unwilling acquired firm
IntegrationCultures combined into a new composite culture
SeparationMerging companies remain separate with their own culture
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Changing/Strengthening Organizational Culture
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Changing/Strengthening Organizational Culture
1. Actions of founders/leadersFounder’s values/personalityTransformational leaders can reshape culture –
organizational change practices
2. Aligning artifactsArtifacts keep culture in place
14-48
Changing/Strengthening Organizational Culture
3. Introducing culturally consistent rewardsRewards are powerful artifacts
4. Support workforce stability and communication
High turnover weakens org cultureStrong culture depends on frequent,
open communication
5. Attracting, selecting, andsocialization of employees
Attraction-selection-attrition theorySocialization practices
14-49
Attraction-Selection-Attrition TheoryOrganizations become more homogeneous
(stronger culture) through:
Attraction – applicants self-select and weed out companies based on compatible values
Selection – applicants selected based on values congruent with organization’s culture
Attrition – employees quit or are forced out when their values oppose company values
14-50
Organizational SocializationThe process by which individuals learn the values,
expected behaviors, and social knowledge necessary to assume their roles in the organization
Learning ProcessNewcomers make sense of the organization’s
physical, social, and strategic/cultural dynamics
Adjustment ProcessNewcomers adapt to new work roles, team norms,
etc.
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Stages of Socialization
Role Management
• Insider
• Changing roles and behavior
• Resolving conflicts
EncounterStage
• Newcomer
• Testingexpectations
Pre-EmploymentStage
• Outsider
• Gathering information
• Forming psychological contract
14-52
Improving Organizational Socialization
Realistic job preview (RJP)A balance of positive and negative information
about the job and work context
Socialization agentsSupervisors – technical information, performance
feedback, job dutiesCo-workers – ideal when accessible, role models,
tolerant, and supportive
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Organizational Culture
14-53
15
Organizational Change
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
15-55
Organizational Changeat LG Group
LG Group chairman Koo Bon-moo (shown) is creating an urgency to change Korea’s second largest conglomerate into a more proactive, marketplace leader rather than a follower of Samsung
15-56
Force Field Analysis ModelDriving forces
Push organizations toward changeExternal forces or leader’s vision
Restraining forcesResistance to change – employee
behaviors that block the change process
DrivingForces
RestrainingForces
15-57
DesiredConditions
CurrentConditions
BeforeChange
AfterChange
Force Field Analysis Model
DuringChange
DrivingForces
RestrainingForces Driving
Forces
RestrainingForces
DrivingForces
RestrainingForces
15-58
Restraining Forces(Resistance to Change)
Many forms of resistancecomplaints, absenteeism, passive noncompliance
View resistance as a resource1. Symptoms of deeper problems in the change process
2. A form of task conflict – may improve change decisions
3. Form of voice – procedural justice
15-59
Why People Resist Change
1.Negative valence of changeNegative cost-benefit analysis
2.Fear of the unknownPeople assume worst when future unknownPerceive lack of control
3. Not-invented-here-syndromeStaff oppose the change to prove their ideas
were bettersuccessful change threatens self-esteem
15-60
Why People Resist Change
4.Breaking routinesCost of moving away from our “comfort zones”
Time/effort to learn new routines
5.Incongruent team dynamicsNorms contrary to desired change
6.Incongruent organizational systemsSystems/structures reinforce status quo
rewards, information systems, patterns of authority, career paths, selection criteria
15-61
Creating an Urgency for ChangeInform employees about driving forces
Most difficult when organization is doing well
Customer-driven changeHuman element energizes employeesReveals problems and consequences of inaction
Sometimes need to create urgency to change without external driversRequires persuasive influenceUse positive vision rather than threats
15-62
Reducing the Restraining Forces
1. CommunicationHighest priority and first strategy for changeGenerates urgency to changeReduces uncertainty (fear of unknown)Problems: time consuming and costly
2. LearningProvides new knowledge/skillsIncludes coaching and other forms of learningHelps break old routines and adopt new rolesProblems: potentially time consuming and costly
15-63
Reducing the Restraining Forces
3. InvolvementEmployees participate in change processHelps saving face and reducing fear of unknownIncludes task forces, future search eventsProblems: time-consuming, potential conflict
4. Stress managementWhen previous strategies do not minimize stress
enoughPotential benefits
More motivation to change Less fear of unknown Fewer direct costs
Problems: time-consuming, costly, doesn’t help all
15-64
Reducing the Restraining Forces
5. Negotiation Influence by exchange – reduces direct costsMay be necessary when people clearly lose something and
won’t otherwise support changeProblems: expensive, gains compliance, not commitment
6. CoercionWhen all else failsAssertive influenceRadical form of “unlearning”Problems
Reduces trust May create more subtle resistance Encourage politics to protect job
15-65
Alan Mulally: Change Agent
Alan Mulally’s “One Ford” vision and his transformational leadership were key factors in the successful turnaround of Ford Motor Company.
15-66
Change AgentsChange agent – possesses knowledge and
power to guide and facilitate the change effort
Involves transformational leadership
Strategic visions and changeProvides a sense of direction
Identifies critical success factors to valuate change
Links employee values to the change
Minimizes employee fear of the unknown
Clarifies role perceptions
15-67
Coalitions, Social Networks andViral Change
Guiding coalitionRepresentative across the firmInfluence leaders – respected
Viral changeInformation seeded to a few people, then transmitted
through social networksSocial networks influence others due to:
high trust
referent power
behavior observation
15-68
Diffusion of ChangeBegin change as pilot projects
Effective diffusion applies the MARS modelMotivation
Pilot project employees rewarded; motivate others to adopt pilot project
AbilityTrain employees to adopt pilot project
Role perceptionsTranslate pilot project to new situations
Situational factorsProvide resources to implement pilot project elsewhere
15-69
Action Research ApproachAction orientation and research orientation
Action – to achieve the goal of changeResearch – testing application of concepts
Action research principles1. Open systems perspective2. Highly participative process3. Data-driven, problem-oriented process
15-70
Formclient-
consultantrelations
Disengageconsultant’s
services
Action Research Process
Diagnoseneed forchange
Introduceintervention
Evaluate/stabilizechange
15-71
Appreciative Inquiry Approach
Frames change around positive and possible future, not problems.
1.Positive principle focus on positive, not problems
2.Constructionist principle conversations shape reality
3.Simultaneity principle inquiry and change are simultaneous
4.Poetic principle we can choose how to perceive situations (glass half full)
5.Anticipatory principle people are motivated by desirable visions
15-72
Four-D Model ofAppreciative Inquiry
Designing
Engaging in dialogue about “what should be”
Dreaming
Forming ideas about “what might be”
Discovery
Discovering the best of “what is
Delivering
Developing objectives about “what will be”
15-73
Large Group InterventionsFuture search, open space, and other
interventions that involve “the whole system” Large group sessionsMay last a few daysHigh involvement with minimal structure
Limitations of large group interventionsLimited opportunity to contributeRisk that a few people will dominateFocus on common ground may hide differencesGenerates high expectations about ideal future
15-74
Parallel Learning Structure ApproachHighly participative social structures
Members representative across the formal hierarchy
Sufficiently free from firm’s constraints
Develop change solutions – then applied back into the larger organization
15-75
Cross-Cultural and Ethical Concerns with Managing Change
Cross-Cultural ConcernsLinear and open conflict assumptions different
from values in some cultures
Ethical ConcernsPrivacy rights of individualsManagement powerIndividuals’ self-esteem
15-76
Organizations are About People
“Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.”
Andrew Carnegie (1835-1919)
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Organizational Change
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