Категории: Все - challenges - globalization - organizations - non-profit

по Tusshar Vashisht 2 лет назад

124

Organizational Behaviour II

Organizations can be classified into for-profit and non-profit categories. For-profit organizations focus on generating revenue through the sale of goods and services, with managers aiming to improve products and services to boost sales.

Organizational Behaviour II

Organizational Behaviour II

Organizational Structure

Information Linkages
Types of Linkages

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

More than the organization chart
Information linkages help to coordinate tasks and control organizational output
Departmentation
Hybrid

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

Virtual

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

Horizontal

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.”

Matrix

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

Gepgraphical

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

Divisional

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

Functional

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.

Components of Structure
Systems for Communication, Coordination, and Integration
Reporting Relationships
Departments

Designing Organizations with Societal/Environmental Missions

Organizational Forms
Unique Goals/Purpose

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

Cooperative

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

Partnership
Sole Proprietorship
Relationship between Business, Society, and Nature
Three Views

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

Designing Ethical Organizations

Ethics & Culture
Ethics

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

Designing International Organizations

Global Organizational Structures
Transnational Model of 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

Global Matrix Structure

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

Global Geographic Structure

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

Global Product Structure

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

International Division

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

International Evolution
4 Stages of International Evolution

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

Globalization Issues
Consistent Protests against Globalization

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

Controversial Strategy
Globalization Drivers
Factors of Production

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

Economies of Scope

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

Economies of Scale

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

Designing Organizations for Innovation and Change

Techniques for Implementation
7. Foster Idea Champions
6. Create Change Teams
5. Develop plans to overcome resistance
4. Find an idea that fits the need
3. Create a vision and strategy for change
2. Establish a coalition to guide the change
1. Establish a sense of urgency for change
Fear of Loss
Uncertainty Avoidance
Lack of Coordination and Cooperation
Failure to perceive benefits
Excessive Focus on Cost
Elements for Successful Change

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

Implementation

Most difficult part of change

Without it, previous steps are to no avail

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

Adoption

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

When a decision maker chooses to proceed with a proposed idea

Needs

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

Ideas

Creativity

Ideas can come from within or outside

A new way of doing things

Can not remain competitive without new ideas

Leading Change
Foster idea champions
Create change teams
Develop plans to overcome resistance to change
Find an idea that fits the need
Create a vision /strategy for change
Establish a coalition to guide change
Establish sense of urgency
Barriers to Change
Fear of loss (Power, status, positions)
Uncertainty avoidance
lack of coordination + cooperation
failure to percieve benefits
excessive focus on cost

Highlight return on investment

Can't see past numbers

Role of Change
Radical Change

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

Incremental Change

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,

Strategic Type of Change

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

Designing Organizations for Growth

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

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

Growth Design Methods

Mission & Bureaucracy

Adaptability or Clan Culture

Designing Scalable Processes

Balance Mechanistic and Organic Processes

Bureaucracy
Clan Control

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

Market Control

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

Bureaucratic Control

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.

Size & Control

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

rules and standard procedures enable organizational activities to be performed in a predictable, routine manner
Written Communication and Records
Separate Position from Position Holder
Technically Qualified Personnel
Rules & Procedures
Growth = Change
Sometimes organizations can grow by having some mechanistic & some are not more organic
Change can be risky & new processes are usually not efficient at first
Structure will become formalized
Changes in leadership are necessary
Organizations hit stages where what worked before is holding them back now
Organizational Life Cycle
Elaboration Stage

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.

Formalization Stage

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.

Collectivity Stage

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

Entrepreneurial Stage

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.

Designing Organizations

For Ethical Organizations
For Innovation & Change
For Growth
With Social/Environmental Missons
For Uncertain Environments
International Organizations

Assessing Fit Among Organizational Design Elements

Interorganizational Relationships

Population Ecology
Process of Ecological Change

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

Organizational Form & Niche

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

the changing environment determines which organizations survive or fail.
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.
A population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcome
Focuses on organizational diversity and adaptation within a population of organizations.
Collaborative Network
Consulting firms, investment companies, and accounting firms may join in an alliance to meet customer demands for expanded services
Companies join together to become more competitive and to share scarce resources
Organizational Ecosystems
An organizational ecosystem is a system formed by the interaction of a community of organizations and their environment

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

Competition Vs. Cooperation
Institutionalism

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

Cooperation

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

Competition

Short-term contracts

minimal involvement & up-front investment

Limited Information & Feedback

Price, efficiency

Suspicion

Environment Sectors
Resource Dependence

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

Environmental Uncertainty

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.

General Enviornment

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

Task Environment

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

Strategy, Organizational Design, and Effectiveness

Organizational Effectiveness
Approaches to measuring effectiveness

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.

Difficult to measure in organizations
Effciency

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.

Organizational effectiveness is the degree to which an organization realizes its goal
Planning for achieving goals

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

Three Types of Goals

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

`Purpose of Business

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.

Design Basics

Structure
Goals & Strategy & Culture

Organizations/Organization Theory

Current Challenges
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

Digital Workplace

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

Speed of Responsiveness

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

Ethics & Social Responsibility

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

Globalization

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

Historical Perspective
Classical perspective

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

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

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

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.

Dimensions of Organizational Design
falls into two dimension types

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

Organizational Configuration (Mintzberg's 5 Org. Parts)
Technical Support Staff

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.

Administrative Support Staff

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

Middle Management

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

Top Management

provides

policies

goals

direction

Technical Core

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.

Perspective on Organizations
Systems Thinking

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

Importance of Organizations
7 reasons why organizations are important

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.

development of large organizations transformed all of society

all around us and shape our lives in many ways

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

Types of Organizations
For Profit or Non-Profit

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

Some Examples are

Could offer a physical product or a serivce

Family Owned Shops

Small

Large

Multi-National Corporatios

Organization Theory
Theory objectives to better achieve their goals through

design

manage

diagnose

Subtopic

describe

understand

identify

Definitions

change

survival

adaption

control

strategy

ethics

competition

growth

technology

structure

effectiveness

way of thinking about an organization

Ideas about the what the organizations are

What is an Organization?
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.

Linked to the environment
Deliberately Structured & Coordinated
Goal Directed
Social Entity