Organizational Behaviour II

What is an Organization?

Social Entity

Goal Directed

Deliberately Structured & Coordinated

Linked to the environment

exists when people interact with one another to perform essential functions that help attain goal

Boundaries between departments, as well as those between organizations, are becoming more flexible

Since

Companies need to respond to changes in the external environment more rapidly.

Organization Theory

Definitions

Ideas about the what the organizations are

way of thinking about an organization

effectiveness

structure

technology

growth

competition

ethics

strategy

control

adaption

survival

change

Theory objectives to better achieve their goals through

identify

understand

describe

diagnose

Subtopic

manage

design

Types of Organizations

Some Examples are

Multi-National Corporatios

Large

Small

Family Owned Shops

Could offer a physical product or a serivce

For Profit or Non-Profit

For Profit

managers direct their activities toward earning money for the company

Finances come from the sale of products or services to customers

focus on improving the organization’s products and services
to increase sales revenues

Non Profit

managers direct their efforts toward generating some kind of
social impact.

Financial resources for nonprofits come from government grants and individual and corporate donations

focus on keeping organizational costs as low as possible and demonstrating a highly efficient use of resources

Importance of Organizations

development of large organizations transformed all of society

the modern corporation may be the most significant innovation of the past 120 years

all around us and shape our lives in many ways

7 reasons why organizations are important

1. organizations bring together resources to accomplish specific goals.

2. Produce goods and services that customers want at competitive prices

3. Produce goods and services that customers want at competitive prices

Through

e-business

use of computer-based manufacturing technologies

4. Organizations create a drive for innovation rather than a reliance on standard products and outmoded ways of doing things.

5. Adapt to and influence a rapidly changing environment

6. create value for their owners, customers, and employees.

7. Have to cope with and accommodate today’s challenges
of workforce diversity and growing concerns over ethics and social responsibility

as well as

Find effective ways to motivate employees to work together to accomplish organizational goals.

Perspective on Organizations

Systems Thinking

Closed vs Open Systems

Closed

environment is assumed to be stable

focus on internal efficiency

Managing Closed Systems is simple and predictable

not dependent on its environment

autonomous, enclosed, and sealed off from the outside world

Early management concepts, including scientific management, leadership style, and industrial engineering, were closed-system approaches

Open

Must interact with and adapt to environment

must continuously adapt to the environment

can be enormously complex.

Organizations have to

find and obtain needed resources

Interpret and act on environmental changes

dispose of output

control and coordinate internal activities in the face of environmental disturbances and uncertainty

Systems

defined as

a set of interacting elements that acquires inputs from the environment, transforms them, and discharges outputs to the external environment

need for inputs and outputs reflects dependency on the environment

Inputs

Raw materials and other physical resources, employees, information, and financial resources.

Outputs

specific products and services for customers and clients.

Comprise of many

Subsystems

perform the specific functions required for organizational survival, such as boundary spanning, production, maintenance, adaptation, and management.

Production

produces the product and service outputs of
the organization.

Boundry

responsible for exchanges with the external environment.

Maintenence

maintains the smooth operation and upkeep of the organization’s physical and human elements

Adaptive

responsible for organizational change and adaptation.

Organizational Configuration (Mintzberg's 5 Org. Parts)

Technical Core

includes people who do the basic work of the organization.

performs the production subsystem function and actually produces the product and service outputs of the organization

I.e

production department in a manufacturing firm,

teachers and classes in a university

medical activities in a hospital

Top Management

provides

direction

strategy

goals

policies

Middle Management

responsible for implementation and coordination at the departmental level

responsible for mediating between top management and the technical core

I.e

implementing rules and passing information up and down the hierarchy.

Administrative Support Staff

responsible for the smooth operation and upkeep of the organization, including its physical and human elements.

Including activities such as

human resource activities such as recruiting and hiring, establishing compensation and benefits

employee training and development

Maintenance activities such as cleaning buildings and servicing and repairing machines.

Technical Support Staff

helps the organization adapt to the environment.

employees such as engineers and researchers scan the environment for problems, opportunities, and technological developments.

responsible for creating innovations in the technical core,
helping the organization change and adapt

Dimensions of Organizational Design

falls into two dimension types

Structural Dimension

provide labels to describe the internal characteristics of an organization

Formalization

amount of written documentation in the organization

includes procedures, job descriptions, regulations, and policy manuals

describe behaviour and activities

often measured by simply counting the number of pages of documentation within the organization

I,e

University policies on registration, dropping and adding classes, student associations, residence governance, and financial assistance

Specialization

degree to which organizational tasks are subdivided into separate jobs

if extensive

each employee performs only a narrow range of tasks

if low

employees perform a wide range of tasks in their jobs

Hierarchy of Authority

describes who reports to whom and the span of control for each manager

depicted by the vertical lines on an organizational chart

elated to span of control (the number of employees reporting to a supervisor).

Centralization

the hierarchical level that has authority to make a decision.

When decision making is kept at the top level

organization is centralized.

When decisions are delegated to lower organizational levels

decentralized

Professionalism

level of formal education and training of employees.

High when

employees require long periods of training to hold jobs in the organization

Personnel Ratios

Deployment of people to various functions and departments.

include the administrative ratio, the clerical ratio, the professional staff ratio, and the ratio of indirect to direct labour employees.

measured by dividing the number of employees in a classification by the total number of organizational employees.

Contextual Dimension

characterize the whole organization, including its size, technology, culture, environment, and goals and strategy

Goals & Strategy

define the purpose and competitive techniques that set it apart from other organizations

Strategy

the plan of action that describes resource allocation and activities for dealing with the environment and for reaching the organization’s goals

Goals

often written down as an enduring statement of company intent

Environment

all elements outside the boundary of the organization.

industry

government

customers

suppliers

financial community

Size

Organization’s magnitude as reflected in the number of people in the organization.

measured for the organization as a whole or for specific components, such as a plant or division

Culture

underlying set of key values, beliefs, understandings, and norms shared by employees

may pertain to ethical behaviour, commitment to employees, efficiency, or customer service, and they provide the glue to hold organization members together

Technology

Refers to the tools, techniques, and actions used to transform inputs into outputs.

Concerns how the organization actually produces the products and services it provides for customers and includes things such as flexible manufacturing, advanced information systems, and the Internet

Performance & Effectiveness Outcomes

Managers need to adjust structural and contextual dimensions and organizational subsystems to most efficiently and effectively transform inputs into outputs and provide value

Efficiency

refers to the amount of resources used to achieve the organization’s goals.

based on the quantity of raw materials, money, and employees necessary to produce a given level of output

Effectiveness

degree to which an organization achieves its goals.

is “doing things right” while effectiveness is “doing the right thing.”

Achieving effectiveness

Stakeholder Approach

Managers carefully balance the needs and interests of various stakeholders in setting
goals and striving for effectiveness.

Stakeholder

any group within or outside the organization that has a stake in the organization’s performance.

Historical Perspective

began with the classical management perspective in the late 19th and early 20th century

Emergence of the factory system during the Industrial Revolution posed problems that earlier organizations had not encountered

Classical perspective

which based ideals on

Making organizations run like efficient, well-oiled machines, and is associated with the development of hierarchy and bureaucratic organizations

Scientific Management

managers develop precise, standard procedures for doing each job; select workers with appropriate abilities; train workers in the standard

job design should be based on precise, scientific study of individual situations.

insights helped to establish organizational assumptions that the role of management is to maintain stability and efficiency, with top managers doing the thinking and workers doing what they are told.

Broader Approach

Administrative Principles

Looked at the design and functioning of the organization as a whole.

e.g Henri Fayol proposed 14 principles of management.

Contributed to the development of

Bureaucratic Organizations

which

emphasized designing and managing organizations on an impersonal, rational basis

Hawethorne Studies

concluded

positive treatment of employees improved their
motivation and productivity.

Current Challenges

Globalization

Caused by

rapid advances in technology and communications,
and the time it takes to exert influence around the world from even the most remote locations being reduced from years to only seconds

growing interdependence for NA organizations

means that the environment for companies is becoming extremely complex and competitive

forces

Organizations to how to learn to cross lines of time, culture,
and geography in order to survive

Why?

Companies, large and small, are searching for the right structures and processes that can help them reap the advantages of global interdependence and minimize the disadvantages.

Ethics & Social Responsibility

Ethics and social responsibility have become two of the hottest topics in organizations today

list of executives and major corporations involved in financial and ethical scandals continues to grow.

I.e. Enron Corporation, where managers admitted they inflated earnings and hid debt through a series of complex partnerships

Speed of Responsiveness

Challenge is

to respond quickly and decisively to environmental changes, organizational crises, or shifting customer expectations

In Today's Landscape

globalization and advancing technology have accelerated the pace at which organizations in all industries must roll out new products and services to stay competitive.

customers also want products and services tailored to their exact needs.

financial basis of today’s economy is increasingly information

Companies that relied on mass production and distribution techniques must be prepared with new computer-aided systems that can produce one-of-a-kind variations and streamlined distribution systems

Digital Workplace

Information technology affects how organizations are designed and managed

The world of e-business is booming

more and more business takes place by digital processes over a computer network rather than in physical space.

is fueled by

Disintermediation

which is

eliminating the middleperson

Managers not only

need to be technologically savvy

but also responsible for managing a web of relationships that reaches far beyond the boundaries of the physical organization

Diversity

As organizations increasingly operate on a global playing field, the workforce as well as the customer base is changing dramatically

Which brings the challenges of

maintaining a strong organizational culture while supporting diversity, balancing work and family concerns, and coping with the conflict brought about by varying cultural styles

Goals & Strategy & Culture

Structure

Effectiveness

Environment

Goals

`Purpose of Business

The overall goal for an organization is often called the missio the organization’s reason for existence.

It can have a powerful impact
on an organization.

Organizations are created and continued in order to accomplish something

This purpose may be referred to as the overall goal, or mission.

Different parts of the organization establish their own goals and objectives to help meet the overall goal, mission, or purpose of the organization.

Mission

The mission describes the organization’s vision, its
shared values and beliefs, and its reason for being.

Three Types of Goals

Official

Fit/Allignment

Strategic Planning

Operating Planning

Budgeting Training

Typically define business operations and may focus on values, markets, and customers that distinguish the organization.

Often written in a policy manual or the annual report.

The mission statement communicates to current and prospective employees, customers, investors, suppliers, and competitors what the organization stands for and what it is trying to achieve.

A mission statement communicates legitimacy to internal and external stakeholders

Operative

Specific measurable outcomes

Performance

Profitability reflects the overall performance of for-profit
organizations.

May be expressed in terms of net income, earnings per
share, or return on investment.

Growth and output volume.

Growth pertains to increases in sales or profits over time.

Volume pertains to total sales or the amount of products or services delivered.

Resources

Acquisition of needed material and financial resources from the environment

Involves obtaining financing for the construction of new plants, finding less-expensive sources for raw materials,
or hiring top-quality technology graduates

Market

Market goals relate to the market share or market standing desired by the organization

Market goals are the responsibility of marketing, sales, and advertising
departments.

Innovation & Change

Pertain to internal flexibility and readiness to adapt to unexpected changes in the environment

Innovation goals are often defined in terms of the development of specific new services, products, or production
processes.

Productivity

Concern the amount of output achieved from available
resources.

Describe the amount of resource inputs required to
reach desired outputs and are thus stated in terms of “cost for a unit of production,” “units produced per employee,” or “resource cost per employee.”

Employee Development

Refers to the training, promotion, safety, and growth of employees.

It includes both managers and workers

Designate the end result through the actual operating procedures of the organization and explain what the organization is actually trying to do.

Informal

Organizational Culture

Culture

Observed

Symbols

Ceremonies

Behaviour

Inferred

Assumptions

Beliefs

Attitudes

Organizational Goals

Represent the reason for an organization’s existence
and the outcomes it seeks to achieve

Strategy

Planning for achieving goals

Porter's competitive strategies

Competitive Scope

Competitive Advantage

Focus Strategy

Organization concentrates on a specific market or buyer group

Low-Cost Leadership

Tries to increase market share by emphasizing low cost compared to competitors

Aggressively seeks efficient facilities, pursues cost
reductions, and uses tight controls to produce products or services more efficiently

Concerned primarily with stability rather than taking risks or seeking new opportunities for innovation and growth.

Focused low-cost leadership

Differntiation Strategy

Attempt to distinguish their products or services from others in the industry.

Focused Differentiation

Differentiation

May use advertising, distinctive product features, exceptional service, or new technology to achieve a product perceived as unique

Usually targets customers who are not particularly concerned with price, so it can be quite profitable

Reduce rivalry with competitors and fight off the threat of substitute products because customers are loyal to the company’s brand.

Miles and Snow Strategy Typology

Prospector

Strategy is to innovate, take risks, seek out new opportunities, and grow.

Suited to a dynamic, growing environment,
where creativity is more important than efficiency

Defender

Almost the opposite of the prospector

Rather than taking risks and seeking out new opportunities

Concerned with stability or even retrenchment

Concerned primarily with internal efficiency and control to produce reliable, high-quality products for steady customers

Analyzer

Maintain a stable business while innovating on the periphery

Lies midway between the prospector and the defender

Attempts to balance efficient production for current product lines with the creative development of new product lines

Reactor

Reactors respond to environmental threats and opportunities

Organizational Effectiveness

Organizational effectiveness is the degree to which
an organization realizes its goal

Effciency

Pertains to the internal workings of
the organization.

Amount of resources used to produce a unit of output

Can be measured as the ratio of inputs to outputs

Difficult to measure in organizations

Approaches to measuring effectiveness

Contingency Approach

Focus on different parts of the organization.

Resource-Based Approach

Assesses effectiveness by observing the beginning of the process and evaluating whether the organization effectively obtains resources necessary for high performance.

Indicators

Bargaining Position: ability of the organization to obtain from its environment scarce and valued resources

The abilities of the organization’s decision makers to perceive and correctly interpret the real properties of the external environment

The ability to respond to changes in the environment.

Abilities to use tangible (e.g., supplies, people) and intangible (e.g.,knowledge, organizational culture) resources in day-to-day organizational activities to achieve superior performance

Usefulness

Valuable when other indicators of performance
are difficult to obtain

Shortcoming: only vaguely considers the organization’s link to the needs of customers in the external environment

Assumes organizations must be successful in obtaining and
managing valued resources in order to be effective.

Internal Process Approach

Looks at internal activities and assesses effectiveness by indicators of internal health and efficiency

Indicators

1. Strong organizational culture and positive work climate

2. Team spirit, group loyalty, and teamwork

3. Confidence, trust, and communication between workers and management

4. Decision making near sources of information, regardless of where those sources are on the organizational chart

5. Undistorted horizontal and vertical communication; sharing of relevant facts and feelings

6. Rewards to managers for performance, growth, and development of subordinates and for creating an effective work group

7. Interaction between the organization and its parts, with conflict that occurs over projects resolved in the interest of the organization

Usefulness

Important because the efficient use of resources and harmonious internal functioning are ways to assess organizational effectiveness.

Shortcomings: Total output and the
organization’s relationship with the external environment are not evaluated.

Shortcoming: Another problem is that evaluations of internal health and functioning are often subjective, because many aspects of inputs and internal processes are not quantifiable

Goal Approach

Consists of identifying an organization’s output goals and assessing how well the organization has attained those goals

Indicators

Important goals to consider are operative goals

Although official goals tend to be abstract and difficult to measure, operative goals reflect activities the organization is actually performing

Usefulness

used in business organizations because output goals can be readily measured.

Business firms typically evaluate performance in terms of profitability, growth, market share, and return on investment.

Integrated Effectiveness Model

Tries to balance a concern with various parts of the organization rather than focusing on one part.

Indicators

Organizational focus: which is whether dominant values concern issues that are internal or external to the firm

Organizational structure & whether stability versus flexibility is the dominant structural consideration.

Four Approaches to Effectiveness Values

Human Relations Emphasis

Incorporates the values of an internal focus and
a flexible structure

Management works toward the subgoals of cohesion, morale, and training opportunities

Open-Systems Emphasis

Primary goals are growth and resource acquisition

Rational-Goal Emphasis

Represents management values of structural control
and external focus.

Primary goals are productivity, efficiency, and profit

Subgoals that facilitate these outcomes are planning and goal setting

Internal- Process Emphasis

Reflects the values of internal focus and structural control.

Less concerned with human resources than with other internal processes

Usefulness

Integrates diverse concepts of effectiveness into a single perspective

Calls attention to effectiveness criteria as management values and shows how opposing values exist at the same time.

Based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness

Environment Sectors

Task Environment

Core environment, direct impact

Includes sectors with which the organization interacts directly
and that have a direct impact on the organization’s ability to achieve its goals

Industry Sector

Competitors

Industry Size

Competitiveness

Related Issues

International Sector

Competition from and acquisition by foreign firms

Entry into overseas market

Foreign Customs

Regulations

Exchange Rates

Raw Materials Sector

Suppliers

Manufacturers

Real Estate

Services

Human Resources Sector

Labour Market employment agencies

Universities

Training Schools

Employees in other companies

Unionization

Market Sector

Customers

Clients

Potential Users of Products and Services

General Enviornment

Indirect Impact

Financial Resources Sector

Stock Markets

Banks

Savings

Loans

Private Investors

Technology Sector

Techniques of Production

Science

Computers

Information Technology

Economic Conditions Sectors

Recession

Unemployment rate

Inflation rate

Rate of Investment

Economics

Growth

Government Sectors

City, State, Federal Law

Regulations

Taxes

Services

Court System

Political Processes

Sociocultural Sector

Age

Values

Beliefs

Education

Religion

Work Ethic

Consumer and Green Movement

Environmental Uncertainty

Simple-Complex Dimension

Concerns environmental complexity, which refers to heterogeneity, or the number and dissimilarity of external elements relevant to an organization’s operations.

More external factors that regularly influence the
organization and the greater number of other organizations in an organization’s domain, the greater the complexity

Complex environment is one in which the organization interacts with and is influenced by numerous diverse and different external elements

Simple environment, the organization interacts with and is
influenced by only a few similar external elements.

Stable-Unstable Dimension

Refers to whether elements in the environment are dynamic.

is stable if it remains the same over a period of months or years, or experiences readily predictable change

Under unstable conditions, environmental elements shift abruptly and unexpectedly.

Adapting to Uncertainty

Adding Positions and departments

increases internal complexity

Each sector in the external environment requires an employee or department to deal with it.

human resource department deals with unemployed people who want to work for the company

marketing department finds customers

Procurement employees obtain raw materials from hundreds of suppliers.

Buffering and Boundary-Spanning Roles

buffering roles absorb uncertainty from the environment

The technical core performs the primary production activity
of an organization.

Buffer departments surround the technical core and exchange materials, resources, and money between the environment and the organization.

The purchasing department buffers the technical core by stockpiling supplies and raw materials

Human resource department buffers the technical core by handling the uncertainty associated with finding, hiring, and training production employees.

Boundary-spanning roles link and coordinate an organization with key elements in the external environment.

primarily concerned with the exchange of information to

detect and bring into the organization information about changes in the environment

send information into the environment that presents the organization in a favourable light

Differentiation and integration

The differences in cognitive and emotional orientations among managers in different functional departments, and the difference in formal structure among these departments

Integration is the quality of collaboration among departments

Formal integrators are often required to coordinate departments.

Mechanistic vs Organic Management (Efficiency vs. Learning)

Mechanistic

Centralized, with most decisions made at the top.

Subtopic

Characterized by rules, procedures, and a clear hierarchy of authority

Organic

the internal organization was much looser,
free-flowing, and adaptive

Rules and regulations often were not written down or, if written down, were ignored.

Decision-making authority was decentralized.

Differences between the two

As environmental uncertainty increases, organizations tend to become more organic

Decentralizing authority and responsibility to lower levels,

Encouraging employees to take care of problems by working directly with one another

Planning, Forecasting and Responsiveness

Keep the organization geared for a coordinated, speedy response.

When the environment is stable, the organization can concentrate on current operational problems and day-to-day efficiency.

Long-range planning and forecasting are not needed because environmental demands in the future will be the same as they are today

Planning can soften the adverse impact of external shifts.

Planning can be extensive and may forecast various scenarios for environmental contingencies

Environmental Uncertainty Framework

Low-Uncertainty

Mechanistic structure, formal, centralized

Few Department

No integrating roles

Current operations orientation, low-speed response

Low-Moderate Uncertainty

Mechanistic structure, formal, centralized

Many departments, some boundry spanning

few integrating roles

Some planning, moderate-response speed

High-Moderate Uncertainty

Organix structure, teamwork, participative, decentralized

few departments, much boundry spanning

few integrating roles

High Uncertainty

Organix structure, teamwork, participative, decentralized

many departments differentiated, extensive boundary spanning

Many integrating roles

Extensive planning, forecasting, high-speed response

Applies primarily to those sectors that an organization
deals with on a regular, day-to-day basis

Determining an organization’s environmental uncertainty generally means focusing on sectors of the task environment,
such as how many elements the organization deals with regularly, how rapidly these elements change,

Increases the risk of failure for organizational responses and makes it difficult to compute costs and probabilities associated with decision alternatives

Resource Dependence

Organizations are open systems

Establishing Linkages

Maintain this balance between linkages with other organizations and their own independence through attempts to modify, manipulate, or control other organizations

Ownership

Use ownership to establish linkages when they buy a part
of or a controlling interest in another company

Greater degree of ownership and control is obtained through acquisition or merger.

An acquisition involves the purchase of one organization by another so that the buyer assumes control

A merger is the unification of two or more organizations into a single unit

Strategic Alliances

Contracts come in the form of licence agreements
that involve the purchase of the right to use an asset (such as a new technology) for a specific time and supplier arrangements that contract for the sale of one firm’s output to another.

Joint ventures result in the creation of a new organization that is formally independent of the parents, although the parents will have some control

Cooptation

occurs when leaders from important sectors in the environment are made part of an organization

An interlocking directorate is a formal linkage that occurs when a member of the board of directors of one company sits on the board of directors of another company.

When one individual is the link between two companies,
this is typically referred to as a direct interlock

An indirect interlock occurs when a director of company A and a director of company B are both directors of company C.

Executive Recruitment

Transferring or exchanging executives also offers a method of establishing favourable linkages with external organizations

Having channels of influence and communication between organizations serves to reduce financial uncertainty and dependence for an organization.

Advertising & PR

Advertising is especially important in highly competitive consumer industries and in industries that experience variable demand

Public relations is similar to advertising, except that stories often are free and aimed at public opinion

Public relations people cast an organization in a favourable
light in speeches, in press reports, and on television.

Controlling Resources

Establish favourable linkages with key elements in the environment

Shape the environmental domain.

As a general rule, when organizations sense that valued resources are scarce, they will use such strategies rather than go it alone.

Team up to share scarce resources

Depend on the environment but strive to acquire control over resources to minimize their dependence

When costs and risks are high they also team up to share scarce resources and be more competitive on a global basis.

Dependence on shared resources gives power to other organizations

Competition Vs. Cooperation

Competition

Suspicion

Price, efficiency

Limited Information & Feedback

minimal involvement & up-front investment

Short-term contracts

Cooperation

Trust

Based on Trust

Willingness to be vulnerable

Ability / Competence

Benevolence

Integrity

High Commitment

Equity & Fair dealing

Mechanisms for close coordination

Involvement in partner's product design and production

Long-term contracts

Collaborative Networks

Institutionalism

Organizations strive for legitimacy

Perceived expectations from the environment

Isomorphism Forces

Mimetic

the pressure to copy or model other organizations

Downsizing of the workforce is another trend that can be attributed partly to mimetic forces

Despite some evidence that massive downsizing actually hurts organizations, managers perceive it as a legitimate and effective means of improving performance

Techniques such as outsourcing, reengineering, Six Sigma quality programs, and the balanced scorecard have all been adopted without clear evidence that they will improve efficiency or effectiveness

Coercive

The external pressures exerted on an organization to adopt structures, techniques, or behaviours similar to other organizations

Some pressures may have the force of law, such as government mandates to adopt new pollution-control equipment

Coercive pressures may also occur between organizations where there is a power difference

Normative

pressures to change to achieve standards of professionalism, and to adopt techniques that are considered by the professional community to be up-to-date and effective.

Changes may be in any area, such as information technology, accounting requirements, marketing techniques, or collaborative relationships with other organizations.

Companies accept normative pressures to become like one another through a sense of obligation or duty to high standards of performance

Emergence of a common structure and approach among organizations In the same field

Institutional View

Institutional Similarity

the emergence of a common structure and approach among organizations in the same field.

describes how organizations survive and succeed through congruence between an organization and the expectations from its environment

institutional environment is composed of norms and values from stakeholders (customers, investors, associations, boards, government, and collaborating organizations).

Legitimacy is defined as the general perspective that an organization’s actions are desirable, proper, and appropriate within the environment’s system of norms, values, and beliefs

Organizational Ecosystems

Interorganizational Relationships

relatively enduring resource transactions,
flows, and linkages that occur among two or more organizations

An organizational ecosystem is a system formed by the interaction of a community of organizations and their environment

Collaborative Network

Companies join together to become more competitive and to share scarce resources

Consulting firms, investment companies, and accounting
firms may join in an alliance to meet customer demands for expanded services

Population Ecology

Focuses on organizational diversity and adaptation within a population of organizations.

A population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcome

model is developed from theories of natural selection
in biology, and the terms evolution and selection are used to refer to the underlying behavioural processes.

the changing environment determines which organizations
survive or fail.

Organizational Form & Niche

Organizational form is an organization’s specific technology, structure, products, goals, and personnel, which can be selected or rejected by the environment

niche (a domain of unique environmental resources and needs) sufficient to support it

Process of Ecological Change

Variation

Means the appearance of new, diverse forms in a population of organizations

Initiated by entrepreneurs, established with venture capital by large corporations, or set up by a government seeking to provide new services

Selection

Refers to whether a new organizational form is suited to the environment and can survive

Only a few variations are “selected in” by the environment and
survive over the long term

When there is insufficient demand for a firm’s product and when insufficient resources are available to the organization,

Retention

The preservation and institutionalization of selected organizational forms.

Certain technologies, products, and services are highly valued
by the environment, and the retained organizational form may become a dominant part of the environment

International Organizations

For Uncertain Environments

With Social/Environmental Missons

For Growth

For Innovation & Change

For Ethical Organizations

Organizational Life Cycle

Entrepreneurial Stage

start-up of an organization.

emphasis is on creating a product or service and surviving in the marketplace.

The organization is informal and nimble.

As the organization starts to grow, the larger
number of employees causes problems

At this time of crisis, entrepreneurs must either adjust the structure of the organization to accommodate continued growth or else bring in strong managers who can do so

small, nonbureaucratic, and a one-person show.

Collectivity Stage

organization grows and develops a more elaborate design

Departments are established along with a hierarchy of authority, job assignments, and a beginning division of labour.

employees identify with the mission of the organization and spend long hours helping the organization succeed

Members feel part of a collective, and communication
and control are mostly informal although a few formal systems begin to appear.

The organization needs to find mechanisms to control and coordinate departments without direct supervision from the top

Growth is rapid, and employees are excited and committed to the organization’s mission.

The structure is still mostly informal, although some procedures are emerging

Formalization Stage

involves the installation and use of rules, procedures, and control systems.

Communication is less frequent and more formal.

Engineers, human resource specialists, and other staff may be added

Top management becomes concerned with issues such as strategy and planning, and leaves the operations of the firm to middle management.

When effective, the new coordination and control systems enable the organization to continue growing by establishing linkage mechanisms between top management and field units

Bureaucratic characteristics emerge

organization adds staff support groups, formalizes procedures, and establishes a clear hierarchy and division of labour

Major goals are internal stability and market expansion.

Elaboration Stage

organization becomes more flexible in its design.

managers develop skills for confronting problems and working together

organization may also be split into multiple divisions to maintain a small-company philosophy

large and bureaucratic

extensive reward and control systems, rules, and procedures

Growth = Change

Organizations hit stages where what worked before is holding them back now

Changes in leadership are necessary

Structure will become formalized

Change can be risky & new processes are usually not efficient at first

Sometimes organizations can grow by having some mechanistic & some are not more organic

Bureaucracy

Rules & Procedures

Specialization

Hierarchy of Authority

Technically Qualified Personnel

Separate Position from Position Holder

Written Communication and Records

rules and standard procedures enable organizational activities to be performed in a predictable, routine manner

Size & Control

Formalization

refers to rules, procedures, and written documentation, such as policy manuals and job descriptions, that prescribe the rights and duties of employees

Centralization

refers to the level of hierarchy with authority to make decisions.

in the perfect bureaucracy, all decisions would be made by the top administrator, who would have perfect control

Personnel Ratios

ratio of top administration to total employees is actually smaller in large organizations

concerns clerical and professional support staff ratios

Bureaucratic Control

Thee use of rules, policies, hierarchy of authority, written
documentation, standardization, and other bureaucratic mechanisms to standardize behaviour and assess performance.

managers must have the authority to maintain
control over the organization.

Rational-legal authority

based on employees’ belief in the legality of rules and
the right of those elevated to positions of authority to issue commands

Traditional authority

the belief in traditions and in the legitimacy of the status
of people exercising authority through those traditions

basis for control for monarchies, religious institutions, and some organizations in Latin America and the Middle East

Charismatic authority

based on devotion to the exemplary character or to the heroism of an individual person and the order defined by him or her.

Market Control

occurs when price competition is used to evaluate the output and productivity of an organization

requires that outputs be sufficiently explicit for a price to be assigned and for competition to exist

Clan Control

use of social characteristics, such as organizational culture, shared values, commitment, traditions, and beliefs, to control behaviour

use clan control require shared values and trust among employees

Growth Design Methods

Structure

Balance Mechanistic and Organic Processes

Designing Scalable Processes

Culture

Adaptability or Clan Culture

Mission & Bureaucracy

Decline

a condition in which a substantial, absolute decrease in an organization’s resource base occurs over a period

Organizational Atrophy

occurs when organizations grow older and become inefficient and overly bureaucratized

follows a long period of success

organization takes success for granted

becomes attached to practices and structures that worked in the past

fails to adapt to changes in the environment

Vulnerability

reflects an organization’s strategic inability to prosper
in its environment.

often happens to small organizations that are not yet fully established

Some organizations are vulnerable because they are unable to define the correct strategy to fit the environment

Environmental Decline or Competition

Environmental decline refers to reduced energy and resources available to support an organization

less capacity to support organizations = the organization has to either scale down operations or shift to another domain

Model of Decline Stages

Blinded

internal and external change that threatens long-term survival and may require the organization to tighten up.

leaders often miss the signals of decline at this point

Inaction

denial occurs despite signs of deteriorating performance.

Solution is for leaders to acknowledge decline and take prompt action to realign the organization with the environment

Faulty Action

organization is facing serious problems, and indicators of poor performance cannot be ignored

Failure to adjust to the declining spiral at this point can lead to organizational failure

Leaders should reduce employee uncertainty by clarifying values and providing information

Crisis

the organization still has not been able to deal with decline effectively and is facing a panic

may experience chaos, efforts to go back to basics, sharp changes, and anger

Workforce downsizing may be severe

Dissolution

organization is suffering loss of markets and reputation, the loss of its best personnel, and capital depletion.

only available strategy is to close down the organization in an orderly fashion and reduce the separation trauma of employees.

Paradox of Success

Success led to greater strategic persistence (i.e., they stuck with the status quo) after a radical environmental change, and such persistence induced performance declines

Role of Change

Strategic Type of Change

Technology

Facilitated by

ambidextrous organization

The Ambidextrous Approach

Incorporate structures and management processes that are relevant to both creation and implementation

Changes in an organization’s production process, including
its knowledge and skill base

Designed to make production more efficient or to produce greater volume

Techniques to Encourage Technology Change

Switching Structures

Create an organic structure when needed for initiation of new ideas

Separate Creative Departments

Staff departments create changes for adoption in other departments

Tend to have mechanistic structure

Idea Incubator

A place where ideas from employees throughout the organization can be developed with no interference

Venture Teams

Used to implement creativity

Given a separate location and facilities to limit constraints

Skunkworks

Separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business.

New Venture Fund

Provides financial resources for employees to develop new ideas, products, or businesses.

Corporate Entreprenurship

Involves the use of creative departments and new venture teams, but it also attempts to release the creative energy of all employees in the organization.

Facilitate Idea Champions

Idea champions provide the time and energy to make things happen

Technical Champion

Person who generates or adopts and develops an idea for a technological innovation and is devoted to it

Management Champion

Acts as a supporter and sponsor to shield and promote an idea within the organization

Products & Service

Facilitated by

Horizontal coordination model

Horizontal Coordination Model

Specialization

Each department have their own skills, goals, and attitudes

Boundry Spanning

Each department involved with new products has excellent linkage with relevant sectors in the external environment

Listen to what customers have to say, and they analyze competitor products and suggestions from distributors

Horizontal coordination

Technical, marketing, and production people share ideas and information.

The decision to launch a new product is ultimately a joint decision among all three departments

Increases both the amount and the variety of information for new product development

New products and services are normally designed to increase market share, or develop new markets, customers, or clients

Strategy & Structure

Facilitated by

Mechanistic organization design (dual-core approach)

Compares administrative and technical changes

Administrative

I.e. restructuring, downsizing, teams, control systems,
information systems, and departmental grouping.

Less frequent than technical changes

Occur in response to different environmental sectors and follow a different internal process

Technical

Technical Core

Concerned with the transformation of raw materials into organizational products and services, and involves the environmental sectors of customers and technology.

Bottom Up Change

E.g. Production Technique Changes

Usually Organic

Administrative Core

Top-Down Change

Administrative changes in policy, regulations, or control
systems are more critical than technical changes

E.g. Downsizing

Usually Mechanistic

Involves the supervision and management of the organization.

e.g. strategic management, policies, reward systems, labour relations, coordination devices, management information and control systems, and accounting and budgeting systems.

Culture

Facilitated by

Organization development interventions

Changes in values, beliefs, attitudes, abilities, behaviours of employees

Focus on changes in employee thought-process

Forces for Culture Change

Re-engineering

Involves redesigning a vertical organization along its horizontal workflows.

Requires greater focus on employee empowerment, collaboration, information sharing, and meeting customer needs.

Horizontal Organizing

Managers and front-line workers need to understand
and embrace the concepts of teamwork, empowerment, and cooperation.

Managers shift their thinking to view workers as colleagues

Diversity

Implementing new recruiting, mentoring, and promotion methods; diversity training programs; tough policies regarding sexual harassment and racial discrimination

If the culture does not change to support diversity, it will fail

The Learning Organization

Focused on knowledge sharing and continuous learning

Information is broadly shared rather than being concentrated with top managers

Cannot exist without a culture that supports openness,
equality, adaptability, and employee participation.

Incremental Change

Series of continual progressions that maintain the general equilibrium

Only affect one organizational part

e.g. implementation of sales teams in the marketing department,

occurs mainly through the established structure and management processes

May include technology improvements

Radical Change

Transforms the entire organization

e.g. shifting the entire organization from a vertical to a horizontal structure, with all employees who work on specific core processes brought together in teams rather than being separated into functional departments

Involves the creation of a new structure and new management processes.

The technology is likely to be breakthrough, and new products thereby created will establish new markets.

Barriers to Change

excessive focus on cost

Can't see past numbers

Highlight return on investment

failure to percieve benefits

lack of coordination + cooperation

Uncertainty avoidance

Fear of loss (Power, status, positions)

Leading Change

Establish sense of urgency

Establish a coalition to guide change

Create a vision /strategy for change

Find an idea that fits the need

Develop plans to overcome resistance to change

Create change teams

Foster idea champions

Elements for Successful Change

Ideas

Can not remain competitive without new ideas

A new way of doing things

Ideas can come from within or outside

Creativity

Needs

Occurs when a gap is seen between actual performance and desired performance in the organization

Managers try to establish urgency so that others see a need for change

Managers have to recognize the need and communicate it to others

Adoption

When a decision maker chooses to proceed with a proposed idea

Key managers and employees need to be in agreement to support change

Implementation

When organization members use a new technique, idea, or behaviour

Without it, previous steps are to no avail

Most difficult part of change

Resources

Human energy & Activity are required to bring change

Employees have to provide energy to see both the need and the idea to meet that need.

Someone must develop a proposal and provide the time and effort to implement it.

Barriers to Change

Excessive Focus on Cost

Failure to perceive benefits

Lack of Coordination and Cooperation

Uncertainty Avoidance

Fear of Loss

Techniques for Implementation

1. Establish a sense of urgency for change

2. Establish a coalition to guide the change

3. Create a vision and strategy for change

4. Find an idea that fits the need

5. Develop plans to overcome resistance

6. Create Change Teams

7. Foster Idea Champions

Globalization Drivers

Economies of Scale

Increasing Size, Lowering Costs

Large-volume production

Lowest cost per unit for production

Initially Sparked by Industrial Revolution

Domestic Markets no longer provide high enough sales to maintain scale economies

E.g Chrysler

Forced to become international to survive

Economies of Scope

Number/Variety of Products, Services, Markets, Countries

Provides marketing power & synergy compared to same size firm that has a presence in fewer countries

e.g. Advertising Agency with a presence in several global markets gains competitive advantage serving large companies that span the group

Factors of Production

Requirements for Production of a Product

e.g cost of resources, human labor, raw materials

Organizations have turned overseas to secure raw materials that were scarce or unavailable in their home country

Turn to other countries as a source of cheap labour

Search of lower costs of capital, sources of cheap energy, reduced government restrictions, or other factors that lower the company's total production costs

Globalization Issues

Controversial Strategy

Consistent Protests against Globalization

Worries about Job Losses, environmentalists worried about pollution, and labour groups worried about working conditions

Activists are concerned that organizations are imposing "Western-Style" capitalism on developing countries without regard to its social effects

International Evolution

4 Stages of International Evolution

Domestic

Company is domestically oriented

Consider initial foreign involvement to expand production volume and realize economies of scale

Market potential is limited

Structure is usually functional, divisional

International

Company takes exports seriously and thinks multidomestically

Competitive issues in each country are independent of other countries

International divisions replace export department

Specialists are hired to handle sales, service, and warehousing

Multinational

Extensive experience in a number of international markets

Established marketing, manufacturing, r&d

International operations take off & company has business units scattered across the world, with suppliers, manufacturers, & distributors

Global

Company transcends any single country

Subsidiaries are interlinked to the point where competitive position in one country interlinks activities in other countries

Stateless Corporations

Structure is extremely complex

International matrix or transnational model

Strategic Alliances

Licensing

Joint Venture

Seperate entity created with two or more active dirms as sponsors

popular approach to sharing development and production costs & penetrating new markets

Can be with either customers or competitors

Take advantage of a partner's knowledge of local markets, achieve production cost savings, share tech strengths, or distribute new products and services

Consortia

Groups of Independent companies

Suppliers, customers, and competitors share skills, resources, costs, and access to each other's' markets

e.g. Airbus Industries

Global Organizational Structures

International Division

Organized according to geographic interests

Has its own hierarchy to handle business in various countries, selling the products, and services created by the domestic divisions, opening plants, etc

Usually start with an international department and depending on their strategy, later use product or geographic division structures

Global Product Structure

Product divisions take responsibility for global operations in their specific product area

Most commonly used structure

Managers focus on organizing international operations as they see fit and directing employees' energy

Each division manager is responsible for organizing and controlling all functions for the production and distribution of its products around the world

The global product structure works best when the company has opportunities for worldwide production and sale of standard products for all markets

Global Geographic Structure

Divides the world into geographic regions, with each region reporting to the CEO

Each division has full control of it's activities within the geographic area

Typically used by companies that have mature product lines and stable technologies

Global Matrix Structure

Work best when decision making balances the interests of both product standardization and geographic localization

Many international firms apply a global hybrid or mixed structure

Hybrid structures are typical in highly volatile environments

Transnational Model of Organization

Ultimate in both complexity and coordination

Useful for large, multinational companies with subsidiaries in many companies

Integrated network of individual operations that are linked together to achieve the goals of an organization

A managerial state of mind, set of values, and shared desire to make a worldwide learning system

Assets/resources dispersed worldwide highly specialized operations linked through interdependent relationships

Flexible/ever-changing corporate structure

Subsidiary managers initiate strategy that gets adopted at top corporate level

Coordination achieved primarily through organizational culture, shared vision/values, management style

Ethics & Culture

Culture

Set of norms, guiding beliefs and understandings shared by members of an organization

Two Levels

Observable Behaviours

Symbols

Ceremonies

Slogans

Behaviours

Dress

Physical Settings

Underlying Values

Assumptions

Beliefs

Attitude

Feelings

Thought Process

Functions of Culture

Integrate members to relate to one another

Internal Integration

Develop collective identity

guides day-to-day working relationships, acceptable behaviours, and how power and status are allocated

Help organization adapt to external environment

External Adaption

How organization meets goals and deals with outsiders

Helps organization respond to customer needs or moves of competitor

Guides employee decision making in the absence of written rules or policies

Observable Aspects of Culture

Rites & Ceremonies

Elaborate, planned activities that make up a special event

Passage

Enhancement

Renewal

Integration

Stories

Narratives based on true events that are shared among employees and told to new members

Heroes

Legends

Myths

Symbols

Represents another thing

deeper values of an organization

Physical artifacts

Language

Sayings

Slogan

Metaphor

Readily picked up and repeated

Shape culture

Represents underlying company values and strengthen culture

Types of Cultures

Adaptability

Flexibility and change to meet customers

Encourages entrepreneurial values, norms, and beliefs,

Does not react quickly to environmental changes and actively creates change

Innovation, creativity and risk taking are valued and rewarded

e.g 3M, Sandvine, IBM

Mission

Clear vision of the organization's purpose and goals

Individuals may be responsible for a specified level of performance with rewards in the balance

Managers shape behaviour by envisioning, communicating a desired future state for the organization

Clan

Focuses on the involvement and participation of the organization's members

Focuses on the needs of employees

Important value is taking care of employees and giving them what they need to be sucessful

E.g. Retail & Fashion Industry

Bureaucratic

Internal Focus & Consistency Orientation for a Stable Environment

Methodical approach to doing business

Symbols, heroes, and ceremonies support tradition

High level of consistency, conformity, and collaboration among members

Ethics

Sources of Individual Ethics

These laws, as well as unwritten societal norms and values, shape the local environment within which each individual acts,

Code of Moral Principles and values that governs the behaviours of a person or group

Set standards as to what is good and bad in conduct and decision making

Unique to individuals, although there be some consensus on what defines ethical behaviour

Definition

Code of moral principles and values that governs the behaviours of a person or group with respect to what is right or wrong.

Managerial Ethics

Principles that guide the decisions and behaviours of managers with regard to if they are right or wrong

Social Responsibility

Management’s obligation to make choices and take action so that the organization contributes to the welfare and interest of all organizational stakeholders

Sources of Ethical Values in Organizations

Personal Ethics

beliefs and values

Moral development

ethical framework

Organizational Culture

Rituals, ceremonies, stories, heroes

Language, slogans

Symbols

Founder, History

Organizational Systems

Structure

Policies, Rules

Code of Ethics

Reward Systems

Selection & Training

External Stakeholders

Government Regulations

Customers

Special-Interest Groups

Global Market Forces

How Leaders Shape Ethics

Value-Based Leadership

Relationship between a leader and followers based on a shared set of internalized values

Leader influence ethics through everyday behaviour, rituals, ceremonies, and symbols, as well as through organizational systems and policies

Values-based leaders engender a high level of trust and respect from employees

Formal Structure & Systems

Structure

Assign responsibility for ethical values to a specific position

e.g. ethics committee and chief ethics officer

Disclosure Mechanisms

Organizations can establish policies and procedures to support and protect whistle-blowers.

Whistle-blowing is employee disclosure of illegal, immoral, or illegitimate practices

Code of Ethics

Formal statement of company values concerning ethics and social responsibility

Clarify and formally state the companys values and expected behaviour

Training Programs

Relationship between Business, Society, and Nature

Three Views

Disparate View

Business takes priority

S & N considered if align with B’s interests

Perceive narrow range of issues

Intertwined View