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14/12/2015
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Session 11-17
Organizing
Organizing What?
Assemble ongoing interdependent actions into sensible sequences that generate sensible outcomes
Interdependent actions/ interlocked behaviors
What is an Organization?
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Transformation Process
Input
Output
Close systems
Certainty
Open systems
Uncertainty
Environment
Rational systems Natural systems
Uncertainty
Closed SystemCertainty
Open System
Goal Achievement
Survival
Rationality
Bounded Rationality
Maximizing
Satisficing Searching DecidingLearning
Limited capacity
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Managerial Level
Institutional Level
Technology Level
Controls
MeaningLegitimacy
Higher-level support
Uncertainty
Closed SystemCertainty
Open system
Goal Achievement
Survival
Technology Environment
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Technology
The combination of skills, equipments and relevant technical knowledge needed to bring about desired transformations in materials, information or people.
Technical complexity
The extent to which a production process can be programmed so that it can be controlled and made predictable
High Technical Complexity(Automation)
Low Technical Complexity(Depends primarily on KSA of
people)
Theory of Joan Woodward
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• Production of single pieces to customerorder
• Production of technically complex units oneby one
• Fabrication of large equipment in stages• Production of pieces in small batches• Production of components in large batches
subsequently assembled diversely• Production of large batches, assembly line
type• Mass Production• Continuous Process Production• Continuous flow production of liquids,
gases and solid shapes
Low
High
Technical Complexity
Small Batch
Mass Production
Continuous Processing
J. D. Thompson
Long-linked Technology(Sequential interdependence)
Mediating Technology (Pooled Interdependence)
Intensive Technology(Reciprocal Interdependence)
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Pooled
Mutual Adjustment
Planning &
Scheduling
HighSpecialism of task
activitiesReciprocal
Sequential MediumSlack Resources/
Vertical Integration
Standardization LowIncrease number
of Customers served
Form of Interdependence
Main type of coordination
Communication Strategy to reduce uncertainty
Task Analyzability
Low
High
Task Variability
HighLow
Routine
Craft Non-Routine
Engineering
Charles Perrow
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To maximize the information available
Technology Analysis
• Technical complexity
• Routineness of work
• Standardization of inputs/outputs
• Standardization of transformation processes
• Task variability
• Task analyzability
International
The Organization
Union
Competitors
Suppliers
Distributors
Customers
Ecological
Cultural
Political
Legal
Demographic
Economic
Technological
General Environment: Specific environment andOrganization’s ability to secure resources
Specific Environment Organization’s ability to secure resources
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Environmental complexity: The strength, number, andinterconnectedness of the specific and general forces that anorganization has to manage
Wider variety of products for different groups of customers
Environmental Complexity
Uncertainty about the environment
Predicting and Controlling flow of
resources
Environmental dynamism: The degree to which forces in thespecific and general environments change over time
– Stable environment
– Unstable (dynamic) environment
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• Environmental richness/ Munificence: Amount ofresources available to support an organization’s domain
– Environments may not be munificence because:
• The organization is located in a poor country or in apoor region of a country
• There is a high level of competition, and organizationsare fighting over available resources
Complexity
Munificence
DynamismEnacted
Environment
Organizational Response
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Organizational Response Domain Defenders
Reluctant Reactors
Anxious Analyzers
Enthusiastic Prospectors
UNCERTAINTY
Content Conditions
Analytical Categories
Complexity Dynamism Munificence
Technological
Legal
Political
Economic
Demographic
Ecological
Cultural
International
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Adapting to Environmental Uncertainty
IntegrationDifferentiation
Number of Positions and Departments
Environmental Complexity
Tasks are broken down into specialized,
separate parts
Tasks are rigidly defined
There is a strict hierarchy of authority
and control, and there are many rules
Knowledge and Control of tasks are
centralized at the top of the organization
Communication is vertical
Dynamism
Employees contribute to the common
tasks of the department
Tasks are adjusted and redefined
Less hierarchy
Knowledge and control of tasks are
located anywhere in the organization
Communication is horizontal
Mechanistic Organic
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Manufacturing Sales R & D
Mechanisticstructure
Organicstructure
Manufacturing Sales R & D
Tallorganization
Flatorganization
Manufacturing Sales R & DCentralized
decision making
Decentralizeddecisionmaking
Manufacturing Sales R & D
Standardization Mutualadjustment
External Environment and Uncertainty
Number of Factors in Organization Environment
HighUncertainty
LowUncertainty
HighLowLow
High
Rate ofChange inFactors in
Environment
High-ModerateUncertainty
Low-ModerateUncertainty
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ComplexSimple
Stable
Unstable
Low Uncertainty
Mechanistic Structure: Formal, Centralized
Few Departments
No integrating Roles
Current operations orientation: low-speed response
High Uncertainty
Organic Structure, teamwork: participative, decentralized
Many Deptts differentiated, extensive boundary spanning
Many Integrating roles
Extensive Planning, forecasting; high-speed response
High-Moderate Uncertainty
Organic Structure, teamwork: participative, decentralized
Few Deptts, much boundary spanning
Few integrating roles
Planning Orientation; fast response
Low-Moderate Uncertainty
Mechanistic Structure: Formal, Centralized
Many Deptts, some boundary spanning
Few integrating roles
Some planning: moderate-speed response
Complex
Dynamic
High Uncertainty
Organic Structure(Low Centralization,
formalization, and low standardization)
Greater Differentiation and More Integration
Environment
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Strategies for Managing Resource Dependencies
Two basic types of interdependencies cause uncertainty
– Symbiotic interdependencies: Interdependencies thatexist between an organization and its suppliers anddistributors
– Competitive interdependencies: Interdependencies thatexist among organizations that compete for scarce inputsand outputs
Establish Interorganizational Linkages(Symbiotic Interdependency)
ReputationCo-
optationStrategic Alliance
Merger & Takeover
Informal Formal
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Establish Interorganizational Linkages(Competitive Interdependency)
Cartel CollusionStrategic Alliance
Merger & Takeover
Controlling the Environmental Domain
• Change the Domain
• Political Activity, Regulation (Influence Govt. Legislation and Regulation)
• Trade Associations
• Illegitimate Activities
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Environmental Hostility
Industry conditions characterized by a general lack of opportunities and resources available in the
external environment (Rosenbusch et al., 2013).
Complex
Munificence
Dynamic
Resource Dependence
High Uncertainty
Control of environmental domain
Establishment of favorable linkage
Organic Structure(Low Centralization,
formalization, and low standardization)
Greater Differentiation and More Integration
Environment
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Approaches to Measure Organizational Effectiveness
External Resource Approach
– How effectively an organization manages andcontrols its external environment
Internal System Approach
– How effectively an organization functions andoperates
Approaches to Measure Organizational Effectiveness
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Measuring Effectiveness
Goal Approach:
• When output goals can easily measured
• Ex: Business organizations (Profitability, Growth, Marketshare, ROI)
Resource Based Approach:
• When other indicators of performance is difficult to obtain.Ex: Not-for-profit organizations, Social welfare organizations
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Integrated effectiveness Model
External
Control
Flexible
InternalRational Goal Emphasis
Primary goal: productivity, efficiency, profit
Sub goals: planning, goal setting
Internal Process Emphasis
Primary goal: Stability, Equilibrium
Sub goals: Information Management, Communication
Open Systems Emphasis
Primary goal: Growth & Resource Acquisition
Sub goals: flexibility, readiness
Human Relations Emphasis
Primary goal: HR DevelopmentSub goal: cohesion, morals,
training
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The WOLCI is an organization established to promote learning, particularly about employment generation and
welfare
The WOLCIA well-known Organization in Central India
In-group and out-group dynamics
• How difficult it is to create effective communication and
decisions even with best of intentions.
• Experience of dilemmas and conflicts of power
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Appreciation for structural injustice and its effect onindividuals
• Individual efforts and goodwill can be distorted andwasted in the absence of a social system that permits theirexpression
• Our understanding of power and authority
Complex interplay between structure and the individuals
• Regardless of individual beliefs and make-up, being on the top is very different from being on the bottom
• Life generally seems good for high-power persons
• Usually hard to move towards cooperation, conciliation,and compromise.
• Protect their superior power
• High-power members tend to be more angered by lowpower member’s insult than when the position is reversed
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• Like it or not, power differences between peopledetermine their relationships.
• As long as you have the power to appraise theirperformance and to advance or retard their careers, youcannot be friends in the normal sense.
• Invoke positional power only when absolutely necessary.
• Understand the boundaries of your positional power.
• Defend your position power from encroachment byothers.
Sources of Power
Source: Mcginn, K. L., & Lingo, E. L. (2007). Power & Influence. Harvard Business School Publication
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Unique personal attributes and skills
Your relationship with others
Formal roles in your organization
Personal Power
Relational Power
Position Power
Bosses offer subordinates
• A link to the rest of the organization
• Necessary resources
• Fair rewards
Subordinates offer bosses
• Knowledge that s/he will deliver
• A source of information, especially from below
• A sounding board
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• Subordinates often have difficulty recognizing the manyways in which their bosses are dependent on them.
• They tend to be much more aware of the ways in whichthey are dependent on their bosses.
• My Workplace Dependencies
I depend on …A.B.C.D.E.
For …A.B.C.D.E.
… depends on meA. B.C.D.E.
For …A.B.C.D.E.
Power rubbing
dependencies
Power enhancing
dependencies
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Coercive
Reward
Legitimate Informational
Referent
ExpertBases
of Power
Dynamics of Power
• Change in one power base affects other power bases
• Change in one person’s power affects other’s Power
• Power accumulates and erodes over time
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Ability to endure and succeedin competitive situations
Ability to obtain other’s social support
Ability to encourage other’s cooperation by building trust and understanding
Personal Power
Charisma
Communication Skills
Track Record
Energy & Stamina
Focus
Tolerance for Conflict
Sensitivity Submerging ego Flexibility
Expertise & Self-confidence
Position Power
Formal Hierarchical Position
Controlling Strategic Resources
Control over entry
Legitimate Power
Control over values andterms of Legitimacy
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Relational Power
Direct Ties
Mutual Intimacy
Tie Strength
Frequency of Interaction
Duration
Multiplexity
Reciprocity
Tie Content
Information
Money Emotions
Social Support
Exchanged Based Trust Based
Relational Power
Networking
Density
Centrality
Coalition
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Unique personal attributes and skills
Your relationship with others
Formal roles in your organization
Personal Power
Relational Power
Position Power
Formal Hierarchical Position
Controlling Strategic Resources
Legitimate Power
Ability to encourage other’s cooperation
Ability to endure and succeed
Ability to obtain other’s social support Networking
Maintaining Ties
How to be more Influential
• Increasing your power: either positional, relational or personal
• Finding ways to project your power into areas that arestrategically important to you
• Creating deeper or more broad-based dependencies by others
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Basic Dimensions of Organization Structure
• Division of Labor
• Coordination Mechanisms
• Distribution of Decision rights
• Organizational Boundaries
• Informal Organization
• Political Alignments
• Legitimate basis of Authority
The Parkinson’s law problem
•The officials want to multiply subordinates and not rivalry
•The officials make work for one another
British Navy1914-1928: No of ships in operation decreased by 68%
No of dockyard officials responsible for maintaining the fleet increased by 40%
No of top brass responsible for managing the fleet increasedby 79%
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Divisional structure: To solve some of the control problems
– Create smaller, more manageable subunits
• Product structure
• Geographic structure
• Market structure
Product Structure
Multi Divisional Structure
Product Division Structure
Product Team Structure
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SalesEngineering Marketing Finance R & D
CEO
PTManager
PT Manager
PT Manager
Product Division
Product Division
Product Division
Product Teams
Functions
Functional specialists
Product Team Structure
Division C
Division B
Division A
VPR&D
VP Marketing
VPFinance
CEO
VPMM
Corporate Headquarter Staff
Division D
Support Functions
Corporate Managers
Divisional Managers
Functional Managers
Multi Divisional Structure
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VPFinance
CEO
VPMaterials
Management
VP R & D
VPSales &
Marketing
PDM
Product Division Structure
PDM PDM PDM
Frozen Entrees Division
Canned Soups
Division
Frozen Veg.
Division
Baked Goods
Division
Product Team
VPPurchasing
CEO
VP Engineering
ManagerProduct A
ManagerProduct D
ManagerProduct C
ManagerProduct B
VPMarketing
VP Finance
VPR & D
Matrix Structure
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Network Structure
• A cluster of different organizations whose actions arecoordinated by contracts and agreements rather than through aformal hierarchy of authority
• Very complex as companies form agreements with manysuppliers, manufacturers, and distributors
Resource Efficiency
Functional Divisional Matrix Network
Excellent Poor Moderate Good
Adaptability
Responsiveness
Time Efficiency
Suited Environment
Accountability
Poor Good Moderate Excellent
Poor Moderate Good Excellent
Poor Good Moderate Excellent
Good Excellent Poor Moderate
StableHeterogen
eousComplex Volatile
Relative Advantage and Disadvantage of Different Structures
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Functional
Division of Labor
By Inputs
Coordination Hierarchy, Supervision,
plans
Decision Rights Highly Centralized
Boundaries Core/Periphery
Importance of Informal Structure
Low
Network
By Knowledge
CFT
Highly decentralized
Porous and Changing
High
Matrix
By Both
Dual Reporting Relationships
Shared
Multiple interfaces
Considerable
Divisional
By Outputs
Division manager and
Corporate staff
Separation of Strategy and
execution
Internal/External Markets
Modest
Comparison among Different Structures
• Product Structure
• Customer Structure
• Geographic Structure
• Divisional Structure
• Matrix Structure
• Amorphous Structure
• Hybrid Structure
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Key Forces in Organizational Development
• Age of the Organization
• Size of the Organization
• Stages of Evolution
• Stages of Revolution
• Growth rate of the Industry
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Age
Siz
e of
Org
aniz
atio
n
The set of shared values and norms that have been internalized (to a greater or lesser extent) by the
organization’s members
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Artifacts
Observed behaviors, structures, systems, procedures, rules …
Non-confrontableand non-debatable
Norms
Guides how members should behave
What is important in the organizations and what deserves their attention
Components of Organizational Culture
Values
Basic Assumptions
Observed behaviors, structures, systems, procedures, rules …
• Members agree about what is important for theirorganization but they do not care and unwilling to goextra mile.
• Vacuous culture
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Energize PeopleShaping and coordinating
employee behavior
Why Google is Doing what it is doing?
Well-formulated and hard to imitate strategy
Strategy may be merely reasonable but were
executed fully could be the most successful
Culture is all about Strategy
How clearly employees understand the culture and how intensely they feel about it
Strategy Culture
• An effective culture is related to business strategy
• It must be strategically relevant
• Culture is a leadership tool
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Clarity
Consistency
Comprehensiveness
ENCOURAGES
To care intensely about executing strategic objective
What does it take to execute this Strategy?
• Critical task
– Keep time down, productivity up
– Consistency
– High utilization
• People
– Energetic
– Positive
– Committed
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• Culture
– Initiative
– Fun
– Teamwork
• Formal organization
– Flat structure
– Compensation
• Leadership
What does it take to execute this Strategy?
1. Recruitment andSelection
2. Socialization, Orientationand Training
3. Reward and Leadership
Forming, strengthening and changing Culture
How does G get its competitive advantage
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Extern
al Focu
sInte
rnal
Foc
us
Flexibility and Discretion(Interest in Making Changes)
Stability and Control(Interest in Keeping things the same)
Clan Culture
(Collaborate)
Adhocracy Culture(Create)
Market Structure(Compete)
Hierarchy Culture
(Control)
A very friendlyplace to workwhere peopleshare a lot ofthemselves. It islike an extendedfamily.
Major concern is with getting the
job done. People are competitive
and goal-oriented
A dynamic entrepreneurial, and creative place to work. People stick their necks out and take risks.
“A learning organization is an organization skilled atcreating, acquiring, and transferring knowledge, and atmodifying its behavior to reflect new knowledge andinsights”
“New ideas are essential if learning is to take place”
“Without accompanying changes in the way that work getsdone, only the potential for improvements exist”
What is a Learning Organization
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Find the Leverage Point in the Equation
Organization Interaction Coefficient
Rate of Knowledge Discovery
Rate of Knowledge
Loss
Potential Knowledge Utilization
Innovation & Creativity
Openness & Sharing
Knowledge Decay
Loss of Human Capital
Project Execution
Customer Need Focus
Opportunity & Tools
Inflow of Human
Capital
( )- =
Knowledge Sharing
Knowledge Storing
Knowledge Transfer
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Learning organizations are organizations where peoplecontinually expand their capacity to create the results theytruly desire, where new and expansive patterns of thinkingare nurtured, where collective aspiration is set free, andwhere people are continually learning how to learn together.
Components of Learning Organizations
Each blind man thinks he is right and the others are wrong, even though all three of them are all touching the same elephant.
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Systems thinking: a body of knowledge and tools that hasbeen developed to make full patterns clearer, and to help us seehow to change them effectively. It helps us answer thequestion -- how have we created what we currently have?
Components of Learning Organizations
Components of Learning Organizations
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Contingency Approach to Organizational Design
Design of Structure
Environment
Fit
Effectiveness
Identifying Key Activities
Allocating Activities to
Units
Organization
EnvironmentEnacted
Environment
Response
Ensuring Cross-Unit
Coordination
Ensure that Allocation and Coordination
Works
FIT
GroupingLinkingAligning
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• boundaries of subunits around activities withinthe organization
• building information flows betweeninterdependent units within the organization,and with key external organizations
• ensuring that subunits and people have theresources and motivation to carry out theactivities assigned them in linking and grouping
Grouping
Linking
Aligning
Common Grouping Options
Options:
• Function (Activity)
• Business Unit (Product or technology)
• Customer (Market, geography, or segment)
Hybrid Structures:
• Matrix
• Front end/Back end (Customer interface/R&D, Manufacturing…Support Staffs)
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Key Linking Mechanisms
• Through guidelines, procedures and policies
• Cross-unit groups: (Permanent vs. Temporary)
• Regular meetings
• Information technology systems (shared data bases)
• Planning processes (e.g. scenario building)
• Co-location (moving marketing into the same building asR&D)
• Temporary cross-unit postings of people
Key Aligning Mechanisms
• Performance evaluation
• Rewards and incentives
• Resource allocation
• Human Resource Development (recruitment, training, tracking, planning)
• Informal systems and processes—personal networks
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Galbraith’s Star Model
Performance Culture
• No External Environment
• Input/ throughput/output
• No feedback loops
• No performance variables
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Nadler and Tushman’s Model
Understanding organizational goals and
strategies as well as fitting design to various
contingencies is the first step towards
understanding organizational effectiveness
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To determine the levels of vertical and horizontal differentiation to reach organizational goals
CEO
Vertical Differentiation
Horizontal Differentiation
Improve Coordination among subunits
To facilitate specialization
Organizational Design
Challenges
How to Link and Coordinate organizational activities
Higher the differentiation the more complex the
integration mechanisms
Integration
Differentiation
Organizational Design
Challenges
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Who will make Decisions
Makes Planning and Coordination Difficult
Lose control of decision making
Risk Averse Decision making process
Slow
Centralization
Decentralization
Organizational Design
Challenges
To decide Mechanisms to control specific employee tasks and roles
Standardization
Mutual Adjustment Organizational Design
Challenges
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Broad based Communication and
Story Telling
Building a Performance Oriented Culture
Finding a Way for the Senior Management to
Role Model for the Juniors
Win back the Indian Middle
Class ConsumerEfficient Branch
Network
Rebuild Profitable
Wholesale Bank
Own Rural India
Build Global Treasury
Dominate SMEs
Business Initiatives
Enabling Initiatives
Develop Consistent Customer
Service
Integrated Risk Systems
Winning IT platform CBS++
People Initiatives
Lewin’s Model
Implementing and sustaining the change
Creating a climate for change
Engaging & enabling the organization
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Ref: Beer & Nohria (2000) Breaking the Code of Change
Theory E Theory O
Purpose Maximize Economic Value
Develop Organizational
Capabilities
Leadership Top downParticipative
Focus Structure & Systems Culture & Values
Planning Programmatic Emergent
Motivation Incentives lead (Extrinsic)
Incentives lag (Intrinsic)
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Weitzel and Jonsson’s Model of Organizational Decline
Managing Change
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Forces for Change
• Competitive Forces
• Economic Forces
• Political Forces
• Global Forces
• Demographic Forces
• Social Forces
• Ethical Forces
Resistance to Change
Individual level
Group Level
Functional Level
Organizational Level Structure, Culture, Strategy
Power and Conflict
Difference in Orientation
Norms, Cohesiveness
Habit
Selective perception and RetentionUncertainty and InsecurityCognitive biases
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Dealing with Resistance to Change… Some Strategies
Participation and Involvement
Communication
Empathy and Support
Lack of adequate information fuels gossip and adds to the anxiety
Uncertain about the consequences of Change
Management is genuinely interested in their feelings and
perceptions …
Learn how people are experiencing change
Mode of communication
Change Agents
Give members emotional support
Maintain ‘psychological distance’ from others to gainperspective needed to lead the change process
Considerable Tension and Isolation
Support
They often Must…
SurvivorsThank You
