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Horizontal Information Linkages
Designed to increase and enhance learning and innovation
Information that flows across departments
Teams
Task Forces
Direct Contact
IT systems
Vertical Information Linkages
Designed for control of the organization
Information that flows along the chain of command
Rules & Plans
Hierarchy
Decide which functions can/should be centralized (e.g., HR, legal), and which groupings (e.g., product, geography, process) will best serve the organization’s goals
Potential Symptoms of Structural Deficiency
Too much Conflict
Employee performance declines and goals are not being met
The organization does not respond innovatively to a changing environment
Decision making is delayed or lacking in quality
Most organizations have hybrid structures
Purpose: to take advantage of the strengths of various structures and to avoid some of the weaknesses
Uses a combination of different structures in different parts of the organization
Limits coordination across functions
Potential for weak loyalty and culture
Dependence on outside orgs
Managerially intensive; potential conflicts
Lack of control over day-to- day work
Reduced Overhead
High Flexability
Immediate scale
Extends capacity for small org’s
Functions such as accounting, marketing, design, manufacturing, distribution, HR, etc. are outsourced to separate companies and coordinated by the central hub
Can limit in-depth skill development
Requires significant training
Traditional managers have to give up power and authority
Requires major org. changes
Determining core processes to organize around is difficult and time-consuming
Improves quality of life for employees
Focus on teamwork and collaboration
Broader view of organizational goals
Customer focused
Enables rapid response to customer needs
Organization is flat, with few vertical levels
Instead of departments, organizations have self-managed teams
Instead of managers, organizations have process owners that coordinate the process
Activities/people are grouped around core processes
A process is an “organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers.”
Complex & Unstable Environment
Environment demands multiple critical outputs
Both in-depth functional specialization and product innovation are needed to succeed
Sharing Resources
people and equipment) across product lines
Requires great effort to maintain power balance
Participants have to understand it and work together rather than simply asserting authority
Time consuming: involves frequent meetings
Requires people to have good interpersonal skills and extensive training
Dual Authority: employees report to two bosses
Allows sharing of resources/knowledge across both functions and products/regions
Pros of the functional and divisional structures
Combines both functional and divisional
integration and standardization across regions
Poor coordination across regions
Limits functional economies of scale
Decentralizes decision-making to people familiar with local market
Adapt to differences in products, regions, clients
High Coordination across functions within a geographical region
Variation of a divisional structure
Grouping all functions required to produce and market products or services in particular region
Of Secondary importance to organization
Standardization across product lines
Strategy execution depends on
Coordination across functional areas
Rapid response to changes in environment
Adaption & change
Integration and standardization across product lines difficult
Limits in-depth expertise and technical specialization
Poor coordination across product lines
Limits economies of scale within functions
Decentralizes decision making
Best with several products
Adapt to differences, in products, regions, clients
High Coordination across functions
Client Satisfaction
Flexibility
Activities (and people) are grouped together by product/organizational output
When is it beneficial?
Of Secondary Importance
Horizontal Coordination
innovation
Strategy Execution Depends on
Vertical control and coordination
In-depth functional expertise
Cons
Restricted view of organizational goals
Less innovation
Poor horizontal coordination
Potential for hierarchy overload
Slow response time
Pros
Best with limited number of products
Efficient – avoids duplication of effort
Economies of scale within functions
Activities (and people) are grouped together by common function
Functions are: HR, accounting, marketing, manufacturing, design, engineering, legal, etc.
Designated as a CIC
Certified Benefit (B) Corp
Becoming a Benefit Corporation
Get certified as a B Corp (Any organization anywhere)
Non-profit organization called “B Lab” sets standards and certifies companies that pass standards
Legally incorporate as a B Corporation (only in certain U.S. states)
Creates additional rights for shareholders to hold directors and officers accountable to these interests
Gives legal permission and protection to officers and directors to consider all stakeholders, not just shareholders
Required to make an annual benefit report available that outlines social and environmental performance
Required to consider the impact of their decisions on shareholders, workers, community & environment
Purpose to create a positive impact on society and environment
Class of corporation that voluntarily meets higher standards of corporate purpose, accountability, and transparency
Social Enterprise
An enterprise whose primary purpose is to solve social and environmental problems
E.g. SOS: Students Offering Support
Principles
concern for community
Co-operation among co-operatives
Education, training, and information
Autonomy and independence
Member economic participation
Democratic member control
Voluntary and open membership
Democratically controlled
One member, one vote, regardless of business done with co-op or investment in co-op
Premise: owned/operated by and for members
Internationally recognized business form
Embedded View
Business is nested within society, which is nested within nature
Nature takes priority, followed by society, business last
Intertwined View
Attend to broad variety of issues
See multiple connected and conflicting issues between B, S & N
B, S & N are equally important & interconnected
Disparate View
Perceive narrow range of issues
S & N considered if align with B’s interests
Business takes priority
How Leaders Shape Ethics
Formal Structure & Systems
Training Programs
Formal statement of company values concerning ethics and social responsibility
Clarify and formally state the companys values and expected behaviour
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
e.g. ethics committee and chief ethics officer
Assign responsibility for ethical values to a specific position
Value-Based Leadership
Values-based leaders engender a high level of trust and respect from employees
Leader influence ethics through everyday behaviour, rituals, ceremonies, and symbols, as well as through organizational systems and policies
Relationship between a leader and followers based on a shared set of internalized values
Sources of Ethical Values in Organizations
External Stakeholders
Global Market Forces
Special-Interest Groups
Government Regulations
Organizational Systems
Selection & Training
Reward Systems
Code of Ethics
Policies, Rules
Founder, History
Language, slogans
Rituals, ceremonies, stories, heroes
Personal Ethics
ethical framework
Moral development
beliefs and values
Managerial Ethics
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
Principles that guide the decisions and behaviours of managers with regard to if they are right or wrong
Definition
Code of moral principles and values that governs the behaviours of a person or group with respect to what is right or wrong.
Sources of Individual Ethics
Unique to individuals, although there be some consensus on what defines ethical behaviour
Set standards as to what is good and bad in conduct and decision making
Code of Moral Principles and values that governs the behaviours of a person or group
These laws, as well as unwritten societal norms and values, shape the local environment within which each individual acts,
Types of Cultures
Bureaucratic
High level of consistency, conformity, and collaboration among members
Symbols, heroes, and ceremonies support tradition
Methodical approach to doing business
Internal Focus & Consistency Orientation for a Stable Environment
Clan
E.g. Retail & Fashion Industry
Important value is taking care of employees and giving them what they need to be sucessful
Focuses on the needs of employees
Focuses on the involvement and participation of the organization's members
Managers shape behaviour by envisioning, communicating a desired future state for the organization
Individuals may be responsible for a specified level of performance with rewards in the balance
Clear vision of the organization's purpose and goals
Adaptability
e.g 3M, Sandvine, IBM
Innovation, creativity and risk taking are valued and rewarded
Does not react quickly to environmental changes and actively creates change
Encourages entrepreneurial values, norms, and beliefs,
Flexibility and change to meet customers
Observable Aspects of Culture
Language
Represents underlying company values and strengthen culture
Shape culture
Readily picked up and repeated
Metaphor
Slogan
Sayings
Physical artifacts
Represents another thing
deeper values of an organization
Stories
Narratives based on true events that are shared among employees and told to new members
Myths
Legends
Heroes
Rites & Ceremonies
Elaborate, planned activities that make up a special event
Integration
Renewal
Enhancement
Passage
Functions of Culture
Integrate members to relate to one another
Help organization adapt to external environment
External Adaption
Guides employee decision making in the absence of written rules or policies
Helps organization respond to customer needs or moves of competitor
How organization meets goals and deals with outsiders
Internal Integration
guides day-to-day working relationships, acceptable behaviours, and how power and status are allocated
Develop collective identity
Two Levels
Underlying Values
Thought Process
Feelings
Attitude
Observable Behaviours
Physical Settings
Dress
Behaviours
Slogans
Set of norms, guiding beliefs and understandings shared by members of an organization
Coordination achieved primarily through organizational culture, shared vision/values, management style
Subsidiary managers initiate strategy that gets adopted at top corporate level
Flexible/ever-changing corporate structure
Assets/resources dispersed worldwide highly specialized operations linked through interdependent relationships
A managerial state of mind, set of values, and shared desire to make a worldwide learning system
Integrated network of individual operations that are linked together to achieve the goals of an organization
Useful for large, multinational companies with subsidiaries in many companies
Ultimate in both complexity and coordination
Hybrid structures are typical in highly volatile environments
Many international firms apply a global hybrid or mixed structure
Work best when decision making balances the interests of both product standardization and geographic localization
Typically used by companies that have mature product lines and stable technologies
Each division has full control of it's activities within the geographic area
Divides the world into geographic regions, with each region reporting to the CEO
The global product structure works best when the company has opportunities for worldwide production and sale of standard products for all markets
Each division manager is responsible for organizing and controlling all functions for the production and distribution of its products around the world
Managers focus on organizing international operations as they see fit and directing employees' energy
Most commonly used structure
Product divisions take responsibility for global operations in their specific product area
Usually start with an international department and depending on their strategy, later use product or geographic division structures
Has its own hierarchy to handle business in various countries, selling the products, and services created by the domestic divisions, opening plants, etc
Organized according to geographic interests
Global
Consortia
Groups of Independent companies
Suppliers, customers, and competitors share skills, resources, costs, and access to each other's' markets
e.g. Airbus Industries
Joint Venture
Take advantage of a partner's knowledge of local markets, achieve production cost savings, share tech strengths, or distribute new products and services
Can be with either customers or competitors
popular approach to sharing development and production costs & penetrating new markets
Seperate entity created with two or more active dirms as sponsors
Licensing
Structure is extremely complex
International matrix or transnational model
Stateless Corporations
Subsidiaries are interlinked to the point where competitive position in one country interlinks activities in other countries
Company transcends any single country
Multinational
International operations take off & company has business units scattered across the world, with suppliers, manufacturers, & distributors
Established marketing, manufacturing, r&d
Extensive experience in a number of international markets
International
Specialists are hired to handle sales, service, and warehousing
International divisions replace export department
Company takes exports seriously and thinks multidomestically
Competitive issues in each country are independent of other countries
Domestic
Structure is usually functional, divisional
Market potential is limited
Consider initial foreign involvement to expand production volume and realize economies of scale
Company is domestically oriented
Activists are concerned that organizations are imposing "Western-Style" capitalism on developing countries without regard to its social effects
Worries about Job Losses, environmentalists worried about pollution, and labour groups worried about working conditions
Requirements for Production of a Product
Organizations have turned overseas to secure raw materials that were scarce or unavailable in their home country
Search of lower costs of capital, sources of cheap energy, reduced government restrictions, or other factors that lower the company's total production costs
Turn to other countries as a source of cheap labour
e.g cost of resources, human labor, raw materials
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
Number/Variety of Products, Services, Markets, Countries
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
Large-volume production
Lowest cost per unit for production
Increasing Size, Lowering Costs
Someone must develop a proposal and provide the time and effort to implement it.
Employees have to provide energy to see both the need and the idea to meet that need.
Human energy & Activity are required to bring change
Most difficult part of change
Without it, previous steps are to no avail
When organization members use a new technique, idea, or behaviour
Key managers and employees need to be in agreement to support change
When a decision maker chooses to proceed with a proposed idea
Managers have to recognize the need and communicate it to others
Managers try to establish urgency so that others see a need for change
Occurs when a gap is seen between actual performance and desired performance in the organization
Creativity
Ideas can come from within or outside
A new way of doing things
Can not remain competitive without new ideas
Highlight return on investment
Can't see past numbers
Transforms the entire organization
The technology is likely to be breakthrough, and new products thereby created will establish new markets.
Involves the creation of a new structure and new management processes.
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
Series of continual progressions that maintain the general equilibrium
May include technology improvements
occurs mainly through the established structure and management processes
Only affect one organizational part
e.g. implementation of sales teams in the marketing department,
Forces for Culture Change
The Learning Organization
Cannot exist without a culture that supports openness, equality, adaptability, and employee participation.
Information is broadly shared rather than being concentrated with top managers
Focused on knowledge sharing and continuous learning
If the culture does not change to support diversity, it will fail
Implementing new recruiting, mentoring, and promotion methods; diversity training programs; tough policies regarding sexual harassment and racial discrimination
Horizontal Organizing
Managers shift their thinking to view workers as colleagues
Managers and front-line workers need to understand and embrace the concepts of teamwork, empowerment, and cooperation.
Re-engineering
Requires greater focus on employee empowerment, collaboration, information sharing, and meeting customer needs.
Involves redesigning a vertical organization along its horizontal workflows.
Focus on changes in employee thought-process
Changes in values, beliefs, attitudes, abilities, behaviours of employees
Organization development interventions
Strategy & Structure
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.
Mechanistic organization design (dual-core approach)
Compares administrative and technical changes
Technical
Administrative Core
Usually Mechanistic
E.g. Downsizing
Administrative changes in policy, regulations, or control systems are more critical than technical changes
Top-Down Change
Usually Organic
E.g. Production Technique Changes
Bottom Up Change
Concerned with the transformation of raw materials into organizational products and services, and involves the environmental sectors of customers and technology.
Administrative
Occur in response to different environmental sectors and follow a different internal process
Less frequent than technical changes
I.e. restructuring, downsizing, teams, control systems, information systems, and departmental grouping.
Products & Service
New products and services are normally designed to increase market share, or develop new markets, customers, or clients
Horizontal Coordination Model
Horizontal coordination
Increases both the amount and the variety of information for new product development
The decision to launch a new product is ultimately a joint decision among all three departments
Technical, marketing, and production people share ideas and information.
Boundry Spanning
Listen to what customers have to say, and they analyze competitor products and suggestions from distributors
Each department involved with new products has excellent linkage with relevant sectors in the external environment
Each department have their own skills, goals, and attitudes
Horizontal coordination model
Techniques to Encourage Technology Change
Corporate Entreprenurship
Facilitate Idea Champions
Idea champions provide the time and energy to make things happen
Management Champion
Acts as a supporter and sponsor to shield and promote an idea within the organization
Technical Champion
Person who generates or adopts and develops an idea for a technological innovation and is devoted to it
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.
Venture Teams
New Venture Fund
Provides financial resources for employees to develop new ideas, products, or businesses.
Skunkworks
Separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business.
Given a separate location and facilities to limit constraints
Used to implement creativity
Separate Creative Departments
Idea Incubator
A place where ideas from employees throughout the organization can be developed with no interference
Tend to have mechanistic structure
Staff departments create changes for adoption in other departments
Switching Structures
Create an organic structure when needed for initiation of new ideas
Designed to make production more efficient or to produce greater volume
Changes in an organization’s production process, including its knowledge and skill base
Facilitated by
ambidextrous organization
The Ambidextrous Approach
Incorporate structures and management processes that are relevant to both creation and implementation
Model of Decline Stages
Dissolution
only available strategy is to close down the organization in an orderly fashion and reduce the separation trauma of employees.
organization is suffering loss of markets and reputation, the loss of its best personnel, and capital depletion.
Crisis
Workforce downsizing may be severe
may experience chaos, efforts to go back to basics, sharp changes, and anger
the organization still has not been able to deal with decline effectively and is facing a panic
Faulty Action
Leaders should reduce employee uncertainty by clarifying values and providing information
Failure to adjust to the declining spiral at this point can lead to organizational failure
organization is facing serious problems, and indicators of poor performance cannot be ignored
Inaction
Solution is for leaders to acknowledge decline and take prompt action to realign the organization with the environment
denial occurs despite signs of deteriorating performance.
Blinded
leaders often miss the signals of decline at this point
internal and external change that threatens long-term survival and may require the organization to tighten up.
Environmental Decline or Competition
less capacity to support organizations = the organization has to either scale down operations or shift to another domain
Environmental decline refers to reduced energy and resources available to support an organization
Vulnerability
Some organizations are vulnerable because they are unable to define the correct strategy to fit the environment
often happens to small organizations that are not yet fully established
reflects an organization’s strategic inability to prosper in its environment.
Organizational Atrophy
follows a long period of success
fails to adapt to changes in the environment
becomes attached to practices and structures that worked in the past
organization takes success for granted
occurs when organizations grow older and become inefficient and overly bureaucratized
Mission & Bureaucracy
Adaptability or Clan Culture
Designing Scalable Processes
Balance Mechanistic and Organic Processes
use clan control require shared values and trust among employees
use of social characteristics, such as organizational culture, shared values, commitment, traditions, and beliefs, to control behaviour
requires that outputs be sufficiently explicit for a price to be assigned and for competition to exist
occurs when price competition is used to evaluate the output and productivity of an organization
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.
Traditional authority
basis for control for monarchies, religious institutions, and some organizations in Latin America and the Middle East
the belief in traditions and in the legitimacy of the status of people exercising authority through those traditions
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
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.
concerns clerical and professional support staff ratios
ratio of top administration to total employees is actually smaller in large organizations
in the perfect bureaucracy, all decisions would be made by the top administrator, who would have perfect control
refers to the level of hierarchy with authority to make decisions.
refers to rules, procedures, and written documentation, such as policy manuals and job descriptions, that prescribe the rights and duties of employees
extensive reward and control systems, rules, and procedures
large and bureaucratic
organization may also be split into multiple divisions to maintain a small-company philosophy
managers develop skills for confronting problems and working together
organization becomes more flexible in its design.
Major goals are internal stability and market expansion.
organization adds staff support groups, formalizes procedures, and establishes a clear hierarchy and division of labour
Bureaucratic characteristics emerge
When effective, the new coordination and control systems enable the organization to continue growing by establishing linkage mechanisms between top management and field units
Top management becomes concerned with issues such as strategy and planning, and leaves the operations of the firm to middle management.
Engineers, human resource specialists, and other staff may be added
Communication is less frequent and more formal.
involves the installation and use of rules, procedures, and control systems.
The structure is still mostly informal, although some procedures are emerging
Growth is rapid, and employees are excited and committed to the organization’s mission.
The organization needs to find mechanisms to control and coordinate departments without direct supervision from the top
Members feel part of a collective, and communication and control are mostly informal although a few formal systems begin to appear.
employees identify with the mission of the organization and spend long hours helping the organization succeed
Departments are established along with a hierarchy of authority, job assignments, and a beginning division of labour.
organization grows and develops a more elaborate design
small, nonbureaucratic, and a one-person show.
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
As the organization starts to grow, the larger number of employees causes problems
The organization is informal and nimble.
emphasis is on creating a product or service and surviving in the marketplace.
start-up of an organization.
Retention
Certain technologies, products, and services are highly valued by the environment, and the retained organizational form may become a dominant part of the environment
The preservation and institutionalization of selected organizational forms.
Selection
When there is insufficient demand for a firm’s product and when insufficient resources are available to the organization,
Only a few variations are “selected in” by the environment and survive over the long term
Refers to whether a new organizational form is suited to the environment and can survive
Variation
Initiated by entrepreneurs, established with venture capital by large corporations, or set up by a government seeking to provide new services
Means the appearance of new, diverse forms in a population of organizations
niche (a domain of unique environmental resources and needs) sufficient to support it
Organizational form is an organization’s specific technology, structure, products, goals, and personnel, which can be selected or rejected by the environment
relatively enduring resource transactions, flows, and linkages that occur among two or more 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
institutional environment is composed of norms and values from stakeholders (customers, investors, associations, boards, government, and collaborating organizations).
describes how organizations survive and succeed through congruence between an organization and the expectations from its environment
Institutional View
Institutional Similarity
the emergence of a common structure and approach among organizations in the same field.
Isomorphism Forces
Emergence of a common structure and approach among organizations In the same field
Normative
Companies accept normative pressures to become like one another through a sense of obligation or duty to high standards of performance
Changes may be in any area, such as information technology, accounting requirements, marketing techniques, or collaborative relationships with other organizations.
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.
Coercive
Coercive pressures may also occur between organizations where there is a power difference
Some pressures may have the force of law, such as government mandates to adopt new pollution-control equipment
The external pressures exerted on an organization to adopt structures, techniques, or behaviours similar to other organizations
Mimetic
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
Despite some evidence that massive downsizing actually hurts organizations, managers perceive it as a legitimate and effective means of improving performance
Downsizing of the workforce is another trend that can be attributed partly to mimetic forces
the pressure to copy or model other organizations
Perceived expectations from the environment
Organizations strive for legitimacy
Collaborative Networks
Long-term contracts
Involvement in partner's product design and production
Mechanisms for close coordination
Equity & Fair dealing
High Commitment
Trust
Based on Trust
Integrity
Benevolence
Ability / Competence
Willingness to be vulnerable
Short-term contracts
minimal involvement & up-front investment
Limited Information & Feedback
Price, efficiency
Suspicion
Dependence on shared resources gives power to other organizations
When costs and risks are high they also team up to share scarce resources and be more competitive on a global basis.
Depend on the environment but strive to acquire control over resources to minimize their dependence
Team up to share scarce resources
Controlling Resources
As a general rule, when organizations sense that valued resources are scarce, they will use such strategies rather than go it alone.
Shape the environmental domain.
Establish favourable linkages with key elements in the environment
Establishing Linkages
Advertising & PR
Public relations people cast an organization in a favourable light in speeches, in press reports, and on television.
Public relations is similar to advertising, except that stories often are free and aimed at public opinion
Advertising is especially important in highly competitive consumer industries and in industries that experience variable demand
Executive Recruitment
Having channels of influence and communication between organizations serves to reduce financial uncertainty and dependence for an organization.
Transferring or exchanging executives also offers a method of establishing favourable linkages with external organizations
Cooptation
An indirect interlock occurs when a director of company A and a director of company B are both directors of company C.
When one individual is the link between two companies, this is typically referred to as a direct interlock
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.
occurs when leaders from important sectors in the environment are made part of an organization
Strategic Alliances
Joint ventures result in the creation of a new organization that is formally independent of the parents, although the parents will have some control
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.
Ownership
A merger is the unification of two or more organizations into a single unit
An acquisition involves the purchase of one organization by another so that the buyer assumes control
Greater degree of ownership and control is obtained through acquisition or merger.
Use ownership to establish linkages when they buy a part of or a controlling interest in another company
Maintain this balance between linkages with other organizations and their own independence through attempts to modify, manipulate, or control other organizations
Organizations are open systems
Increases the risk of failure for organizational responses and makes it difficult to compute costs and probabilities associated with decision alternatives
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,
Applies primarily to those sectors that an organization deals with on a regular, day-to-day basis
Adapting to Uncertainty
Environmental Uncertainty Framework
High Uncertainty
Extensive planning, forecasting, high-speed response
Many integrating roles
many departments differentiated, extensive boundary spanning
High-Moderate Uncertainty
few departments, much boundry spanning
Organix structure, teamwork, participative, decentralized
Low-Moderate Uncertainty
Some planning, moderate-response speed
few integrating roles
Many departments, some boundry spanning
Low-Uncertainty
Current operations orientation, low-speed response
No integrating roles
Few Department
Mechanistic structure, formal, centralized
Planning, Forecasting and Responsiveness
Planning can be extensive and may forecast various scenarios for environmental contingencies
Planning can soften the adverse impact of external shifts.
Long-range planning and forecasting are not needed because environmental demands in the future will be the same as they are today
When the environment is stable, the organization can concentrate on current operational problems and day-to-day efficiency.
Keep the organization geared for a coordinated, speedy response.
Mechanistic vs Organic Management (Efficiency vs. Learning)
Differences between the two
Encouraging employees to take care of problems by working directly with one another
Decentralizing authority and responsibility to lower levels,
As environmental uncertainty increases, organizations tend to become more organic
Organic
Decision-making authority was decentralized.
Rules and regulations often were not written down or, if written down, were ignored.
the internal organization was much looser, free-flowing, and adaptive
Mechanistic
Characterized by rules, procedures, and a clear hierarchy of authority
Centralized, with most decisions made at the top.
Differentiation and integration
Integration is the quality of collaboration among departments
Formal integrators are often required to coordinate departments.
The differences in cognitive and emotional orientations among managers in different functional departments, and the difference in formal structure among these departments
Buffering and Boundary-Spanning Roles
primarily concerned with the exchange of information to
send information into the environment that presents the organization in a favourable light
detect and bring into the organization information about changes in the environment
Boundary-spanning roles link and coordinate an organization with key elements in the external environment.
Human resource department buffers the technical core by handling the uncertainty associated with finding, hiring, and training production employees.
The purchasing department buffers the technical core by stockpiling supplies and raw materials
Buffer departments surround the technical core and exchange materials, resources, and money between the environment and the organization.
The technical core performs the primary production activity of an organization.
buffering roles absorb uncertainty from the environment
Adding Positions and departments
Procurement employees obtain raw materials from hundreds of suppliers.
marketing department finds customers
human resource department deals with unemployed people who want to work for the company
Each sector in the external environment requires an employee or department to deal with it.
increases internal complexity
Stable-Unstable Dimension
Refers to whether elements in the environment are dynamic.
Under unstable conditions, environmental elements shift abruptly and unexpectedly.
is stable if it remains the same over a period of months or years, or experiences readily predictable change
Simple-Complex Dimension
Simple environment, the organization interacts with and is influenced by only a few similar external elements.
Complex environment is one in which the organization interacts with and is influenced by numerous diverse and different external elements
More external factors that regularly influence the organization and the greater number of other organizations in an organization’s domain, the greater the complexity
Concerns environmental complexity, which refers to heterogeneity, or the number and dissimilarity of external elements relevant to an organization’s operations.
Indirect Impact
Sociocultural Sector
Consumer and Green Movement
Work Ethic
Religion
Education
Values
Age
Government Sectors
Political Processes
Court System
Taxes
City, State, Federal Law
Economic Conditions Sectors
Growth
Economics
Rate of Investment
Inflation rate
Unemployment rate
Recession
Technology Sector
Information Technology
Computers
Science
Techniques of Production
Financial Resources Sector
Private Investors
Loans
Savings
Banks
Stock Markets
Includes sectors with which the organization interacts directly and that have a direct impact on the organization’s ability to achieve its goals
Market Sector
Potential Users of Products and Services
Clients
Customers
Human Resources Sector
Unionization
Employees in other companies
Training Schools
Universities
Labour Market employment agencies
Raw Materials Sector
Services
Real Estate
Manufacturers
Suppliers
International Sector
Exchange Rates
Regulations
Foreign Customs
Entry into overseas market
Competition from and acquisition by foreign firms
Industry Sector
Related Issues
Competitiveness
Industry Size
Competitors
Core environment, direct impact
Integrated Effectiveness Model
Based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness
Tries to balance a concern with various parts of the organization rather than focusing on one part.
Calls attention to effectiveness criteria as management values and shows how opposing values exist at the same time.
Integrates diverse concepts of effectiveness into a single perspective
Four Approaches to Effectiveness Values
Internal- Process Emphasis
Less concerned with human resources than with other internal processes
Reflects the values of internal focus and structural control.
Rational-Goal Emphasis
Subgoals that facilitate these outcomes are planning and goal setting
Primary goals are productivity, efficiency, and profit
Represents management values of structural control and external focus.
Open-Systems Emphasis
Primary goals are growth and resource acquisition
Human Relations Emphasis
Management works toward the subgoals of cohesion, morale, and training opportunities
Incorporates the values of an internal focus and a flexible structure
Organizational structure & whether stability versus flexibility is the dominant structural consideration.
Organizational focus: which is whether dominant values concern issues that are internal or external to the firm
Goal Approach
Consists of identifying an organization’s output goals and assessing how well the organization has attained those goals
Business firms typically evaluate performance in terms of profitability, growth, market share, and return on investment.
used in business organizations because output goals can be readily measured.
Although official goals tend to be abstract and difficult to measure, operative goals reflect activities the organization is actually performing
Important goals to consider are operative goals
Internal Process Approach
Looks at internal activities and assesses effectiveness by indicators of internal health and efficiency
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
Shortcomings: Total output and the organization’s relationship with the external environment are not evaluated.
Important because the efficient use of resources and harmonious internal functioning are ways to assess organizational effectiveness.
7. Interaction between the organization and its parts, with conflict that occurs over projects resolved in the interest of the organization
6. Rewards to managers for performance, growth, and development of subordinates and for creating an effective work group
5. Undistorted horizontal and vertical communication; sharing of relevant facts and feelings
4. Decision making near sources of information, regardless of where those sources are on the organizational chart
3. Confidence, trust, and communication between workers and management
2. Team spirit, group loyalty, and teamwork
1. Strong organizational culture and positive work climate
Resource-Based Approach
Assumes organizations must be successful in obtaining and managing valued resources in order to be effective.
Assesses effectiveness by observing the beginning of the process and evaluating whether the organization effectively obtains resources necessary for high performance.
Usefulness
Shortcoming: only vaguely considers the organization’s link to the needs of customers in the external environment
Valuable when other indicators of performance are difficult to obtain
Indicators
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
The ability to respond to changes in the environment.
The abilities of the organization’s decision makers to perceive and correctly interpret the real properties of the external environment
Bargaining Position: ability of the organization to obtain from its environment scarce and valued resources
Contingency Approach
Focus on different parts of the organization.
Can be measured as the ratio of inputs to outputs
Amount of resources used to produce a unit of output
Pertains to the internal workings of the organization.
Miles and Snow Strategy Typology
Reactor
Reactors respond to environmental threats and opportunities
Analyzer
Attempts to balance efficient production for current product lines with the creative development of new product lines
Lies midway between the prospector and the defender
Maintain a stable business while innovating on the periphery
Defender
Concerned primarily with internal efficiency and control to produce reliable, high-quality products for steady customers
Concerned with stability or even retrenchment
Rather than taking risks and seeking out new opportunities
Almost the opposite of the prospector
Prospector
Suited to a dynamic, growing environment, where creativity is more important than efficiency
Strategy is to innovate, take risks, seek out new opportunities, and grow.
Porter's competitive strategies
Differntiation Strategy
Reduce rivalry with competitors and fight off the threat of substitute products because customers are loyal to the company’s brand.
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
Attempt to distinguish their products or services from others in the industry.
Differentiation
Focused Differentiation
Focus Strategy
Organization concentrates on a specific market or buyer group
Focused low-cost leadership
Low-Cost Leadership
Concerned primarily with stability rather than taking risks or seeking new opportunities for innovation and growth.
Aggressively seeks efficient facilities, pursues cost reductions, and uses tight controls to produce products or services more efficiently
Tries to increase market share by emphasizing low cost compared to competitors
Competitive Advantage
Competitive Scope
Informal
Organizational Culture
Organizational Goals
Represent the reason for an organization’s existence and the outcomes it seeks to achieve
Inferred
Attitudes
Beliefs
Assumptions
Observed
Behaviour
Ceremonies
Symbols
Operative
Designate the end result through the actual operating procedures of the organization and explain what the organization is actually trying to do.
Specific measurable outcomes
Employee Development
It includes both managers and workers
Refers to the training, promotion, safety, and growth of employees.
Productivity
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.”
Concern the amount of output achieved from available resources.
Innovation & Change
Innovation goals are often defined in terms of the development of specific new services, products, or production processes.
Pertain to internal flexibility and readiness to adapt to unexpected changes in the environment
Market
Market goals are the responsibility of marketing, sales, and advertising departments.
Market goals relate to the market share or market standing desired by the organization
Resources
Involves obtaining financing for the construction of new plants, finding less-expensive sources for raw materials, or hiring top-quality technology graduates
Acquisition of needed material and financial resources from the environment
Performance
Growth and output volume.
Volume pertains to total sales or the amount of products or services delivered.
Growth pertains to increases in sales or profits over time.
Profitability reflects the overall performance of for-profit organizations.
May be expressed in terms of net income, earnings per share, or return on investment.
Official
A mission statement communicates legitimacy to internal and external stakeholders
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.
Often written in a policy manual or the annual report.
Typically define business operations and may focus on values, markets, and customers that distinguish the organization.
Fit/Allignment
Budgeting Training
Operating Planning
Strategic Planning
Mission
The mission describes the organization’s vision, its shared values and beliefs, and its reason for being.
Organizations are created and continued in order to accomplish something
Different parts of the organization establish their own goals and objectives to help meet the overall goal, mission, or purpose of the organization.
This purpose may be referred to as the overall goal, or mission.
It can have a powerful impact on an organization.
The overall goal for an organization is often called the missio the organization’s reason for existence.
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
Managers not only
but also responsible for managing a web of relationships that reaches far beyond the boundaries of the physical organization
need to be technologically savvy
is fueled by
Disintermediation
which is
eliminating the middleperson
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.
Information technology affects how organizations are designed and managed
In Today's Landscape
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
financial basis of today’s economy is increasingly information
customers also want products and services tailored to their exact needs.
globalization and advancing technology have accelerated the pace at which organizations in all industries must roll out new products and services to stay competitive.
Challenge is
to respond quickly and decisively to environmental changes, organizational crises, or shifting customer expectations
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
Ethics and social responsibility have become two of the hottest topics in organizations today
Caused by
growing interdependence for NA organizations
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.
forces
Organizations to how to learn to cross lines of time, culture, and geography in order to survive
means that the environment for companies is becoming extremely complex and competitive
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
Broader Approach
Administrative Principles
Hawethorne Studies
concluded
positive treatment of employees improved their motivation and productivity.
Contributed to the development of
Bureaucratic Organizations
which
emphasized designing and managing organizations on an impersonal, rational basis
Looked at the design and functioning of the organization as a whole.
e.g Henri Fayol proposed 14 principles of management.
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
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.
job design should be based on precise, scientific study of individual situations.
managers develop precise, standard procedures for doing each job; select workers with appropriate abilities; train workers in the standard
Emergence of the factory system during the Industrial Revolution posed problems that earlier organizations had not encountered
Effectiveness
Achieving effectiveness
Stakeholder Approach
Stakeholder
any group within or outside the organization that has a stake in the organization’s performance.
Managers carefully balance the needs and interests of various stakeholders in setting goals and striving for effectiveness.
is “doing things right” while effectiveness is “doing the right thing.”
degree to which an organization achieves its goals.
Efficiency
based on the quantity of raw materials, money, and employees necessary to produce a given level of output
refers to the amount of resources used to achieve the organization’s goals.
Contextual Dimension
characterize the whole organization, including its size, technology, culture, environment, and goals and strategy
Technology
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
Refers to the tools, techniques, and actions used to transform inputs into outputs.
Culture
may pertain to ethical behaviour, commitment to employees, efficiency, or customer service, and they provide the glue to hold organization members together
underlying set of key values, beliefs, understandings, and norms shared by employees
Size
measured for the organization as a whole or for specific components, such as a plant or division
Organization’s magnitude as reflected in the number of people in the organization.
Environment
all elements outside the boundary of the organization.
financial community
suppliers
customers
government
industry
Goals & Strategy
Goals
often written down as an enduring statement of company intent
Strategy
the plan of action that describes resource allocation and activities for dealing with the environment and for reaching the organization’s goals
define the purpose and competitive techniques that set it apart from other organizations
Structural Dimension
provide labels to describe the internal characteristics of an organization
Personnel Ratios
measured by dividing the number of employees in a classification by the total number of organizational employees.
include the administrative ratio, the clerical ratio, the professional staff ratio, and the ratio of indirect to direct labour employees.
Deployment of people to various functions and departments.
Professionalism
level of formal education and training of employees.
High when
employees require long periods of training to hold jobs in the organization
Centralization
When decisions are delegated to lower organizational levels
decentralized
When decision making is kept at the top level
organization is centralized.
the hierarchical level that has authority to make a decision.
Hierarchy of Authority
elated to span of control (the number of employees reporting to a supervisor).
depicted by the vertical lines on an organizational chart
describes who reports to whom and the span of control for each manager
Specialization
if low
employees perform a wide range of tasks in their jobs
if extensive
each employee performs only a narrow range of tasks
degree to which organizational tasks are subdivided into separate jobs
Formalization
I,e
University policies on registration, dropping and adding classes, student associations, residence governance, and financial assistance
often measured by simply counting the number of pages of documentation within the organization
describe behaviour and activities
amount of written documentation in the organization
includes procedures, job descriptions, regulations, and policy manuals
responsible for creating innovations in the technical core, helping the organization change and adapt
employees such as engineers and researchers scan the environment for problems, opportunities, and technological developments.
helps the organization adapt to the environment.
responsible for the smooth operation and upkeep of the organization, including its physical and human elements.
Including activities such as
Maintenance activities such as cleaning buildings and servicing and repairing machines.
employee training and development
human resource activities such as recruiting and hiring, establishing compensation and benefits
responsible for mediating between top management and the technical core
implementing rules and passing information up and down the hierarchy.
responsible for implementation and coordination at the departmental level
provides
policies
goals
direction
I.e
medical activities in a hospital
teachers and classes in a university
production department in a manufacturing firm,
performs the production subsystem function and actually produces the product and service outputs of the organization
includes people who do the basic work of the organization.
Systems
Comprise of many
Subsystems
perform the specific functions required for organizational survival, such as boundary spanning, production, maintenance, adaptation, and management.
Adaptive
responsible for organizational change and adaptation.
Maintenence
maintains the smooth operation and upkeep of the organization’s physical and human elements
Boundry
responsible for exchanges with the external environment.
Production
produces the product and service outputs of the organization.
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
Outputs
specific products and services for customers and clients.
Inputs
Raw materials and other physical resources, employees, information, and financial resources.
Closed vs Open Systems
Open
can be enormously complex.
Organizations have to
control and coordinate internal activities in the face of environmental disturbances and uncertainty
dispose of output
Interpret and act on environmental changes
find and obtain needed resources
must continuously adapt to the environment
Must interact with and adapt to environment
Closed
Early management concepts, including scientific management, leadership style, and industrial engineering, were closed-system approaches
autonomous, enclosed, and sealed off from the outside world
not dependent on its environment
environment is assumed to be stable
Managing Closed Systems is simple and predictable
focus on internal efficiency
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.
6. create value for their owners, customers, and employees.
5. Adapt to and influence a rapidly changing environment
4. Organizations create a drive for innovation rather than a reliance on standard products and outmoded ways of doing things.
3. Produce goods and services that customers want at competitive prices
Through
use of computer-based manufacturing technologies
e-business
2. Produce goods and services that customers want at competitive prices
1. organizations bring together resources to accomplish specific goals.
all around us and shape our lives in many ways
the modern corporation may be the most significant innovation of the past 120 years
Non Profit
focus on keeping organizational costs as low as possible and demonstrating a highly efficient use of resources
Financial resources for nonprofits come from government grants and individual and corporate donations
managers direct their efforts toward generating some kind of social impact.
For Profit
focus on improving the organization’s products and services to increase sales revenues
Finances come from the sale of products or services to customers
managers direct their activities toward earning money for the company
Could offer a physical product or a serivce
Family Owned Shops
Small
Large
Multi-National Corporatios
design
manage
diagnose
Subtopic
describe
understand
identify
change
survival
adaption
control
strategy
ethics
competition
growth
technology
structure
effectiveness
way of thinking about an organization
Ideas about the what the organizations are
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.
