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• A social relationship which is either closed or limits the admission of outsiders by rules, … so far as its order is enforced by the action of … a head.. (Weber, 1947: 145 – 146) • Hierarchy of authority • Division of labor
deliberate and purposeful coordination. . 1938: 37) • Activity is accomplished through conscious.System of consciously coordinated activities or forces of two or more persons (Chester Barnard. Karl Marx • Focus was on outcomes.
• Organizations are social units (or human groupings) deliberately constructed and reconstructed to seek specific goals (Etzioni. 1964) • Relatively fixed boundaries • A normative order • Authority ranks • A communication system • Incentive system . 1964) • Organizations have distinctive features other than goal specificity and continuity (Scott.
Conscious coordination Hierarchy of Authority Coordination of Effort Division of Labor Common Goal .
Stakeholders Government Customers Competitors Distributors Suppliers Environment .
Increase Specialization and Division of Labor Use Large-scale Technology Use of an Organization allows People Jointly Managing External Environment Economize on Transaction Cost Exert Power and Control Increases Value that an Organization can Create .
Inputs Information Energy People Transformations Social Component Technological Component Outputs Finished Goods Services Ideas Feedback Alignment Environment Equifinality .
Approaches to Measure Organizational Effectiveness External Resource Approach – How effectively an organization manages and controls its external environment Internal System Approach – How effectively an organization functions and operates Technical Approach – How efficiently an organization converts a fixed amount of resources into finished goods and services .
Ex: Not-for-profit organizations.Measuring Effectiveness Goal Approach: • When output goals can easily measured • Ex: Business organizations (Profitability. Market share. ROI) Resource Based Approach: • When other indicators of performance is difficult to obtain. Social welfare organizations . Growth.
Integrated effectiveness Model Flexible Human Relations Emphasis Open Systems Emphasis Primary goal: HR Development Sub goal: cohesion. efficiency. profit Sub goals: planning. morals. goal setting Control . Communication Rational Goal Emphasis External Primary goal: productivity. readiness Internal Internal Process Emphasis Primary goal: Stability. training Primary goal: Growth & Resource Acquisition Sub goals: flexibility. Equilibrium Sub goals: Information Management.
Business Goals and Strategy A Diagnostic Model of Organizational Effectiveness Organization of work Measurement and Reward Systems Personnel Flow Organizational Design Commitment Coordination Competence Human Resource Outcomes GM and TMT Situational Factors Organization’s History Labor Market and Workforce Characteristics Task Technology Business/ Financial Pressure Country culture/ Laws Union Effectiveness in Satisfying Stakeholders .
General Environment: Specific environment and Organization’s ability to secure resources Legal Economic International Cultural Suppliers The Organization Competitors Customers Union Distributors Technological Political Demographic Ecological Specific Environment Organization’s ability to secure resources .
Environmental complexity: The strength. number. and interconnectedness of the specific and general forces that an organization has to manage Wider variety of products for different groups of customers Environmental Complexity Predicting and Controlling flow of resources Uncertainty about the environment .
Environmental dynamism: The degree to which forces in the specific and general environments change over time – – Stable environment Unstable (dynamic) environment .
and organizations are fighting over available resources • .• Environmental richness/ Munificence: Amount resources available to support an organization’s domain – Environments may be munificence because: • of The organization is located in a poor country or in a poor region of a country There is a high level of competition.
Content Conditions Complexity Technological Legal Political Economic Demographic Ecological Cultural International Analytical Categories Dynamism Munificence .
effective organizations increase their level of differentiation and integration .Degree of Uncertainty Level of Differentiation Level of Integration High High High Low Low Low As the level of Uncertainty increases.
Adapting to Environmental Uncertainty Environmental Complexity Number of Positions and Departments Differentiation Integration .
and there are many rules Knowledge and Control of tasks are centralized at the top of the organization Communication is vertical 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 .Dynamism Mechanistic Organic Tasks are broken down into specialized. separate parts Tasks are rigidly defined There is a strict hierarchy of authority and control.
Manufacturing Mechanistic structure Sales R&D Organic structure Manufacturing Tall organization Sales R&D Flat organization Manufacturing Centralized decision making Manufacturing Sales Standardization Sales R&D Decentralized decision making R&D Mutual adjustment .
External Environment and Uncertainty High High-Moderate Uncertainty High Uncertainty Adapt to Environment Rate of Change in Factors in Environment Low Uncertainty Low Low Low-Moderate Uncertainty High Number of Factors in Organization Environment .
forecasting. teamwork: participative. decentralized Many Deptts differentiated. extensive boundary spanning Many Integrating roles Extensive Planning.Simple Low Uncertainty Mechanistic Structure: Formal. decentralized Unstable Few Deptts. Centralized Few Departments Stable No integrating Roles Current operations orientation: low-speed response High-Moderate Uncertainty Organic Structure. fast response Complex Low-Moderate Uncertainty Mechanistic Structure: Formal. teamwork: participative. much boundary spanning Few integrating roles Planning Orientation. high-speed response . some boundary spanning Few integrating roles Some planning: moderate-speed response High Uncertainty Organic Structure. Centralized Many Deptts.
formalization. and low standardization) Environment .Complex High Uncertainty Dynamic Greater Differentiation and More Integration Organic Structure (Low Centralization.
Strategies for Managing Resource Dependencies Two basic types of interdependencies cause uncertainty – Symbiotic interdependencies: Interdependencies that exist between an organization and its suppliers and distributors Competitive interdependencies: Interdependencies that exist among organizations that compete for scarce inputs and outputs – .
Establish Interorganizational Linkages (Symbiotic Interdependency) Informal Formal Reputation Cooptation Strategic Alliance Merger & Takeover .
Establish Interorganizational Linkages (Competitive Interdependency) Cartel Collusion Strategic Alliance Merger & Takeover .
Legislation and Regulation) • Trade Associations • Illegitimate Activities .Controlling the Environmental Domain • Change the Domain • Political Activity. Regulation (Influence Govt.
and low standardization) Environment Establishment of favorable linkage Munificence Resource Dependence Control of environmental domain .Complex High Uncertainty Dynamic Greater Differentiation and More Integration Organic Structure (Low Centralization. formalization.
Theory of Joan Woodward 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) .
• Three types of production technology: – Small-batch and unit technology – Large-batch and mass production technology – Continuous-process technology .
Small-batch and unit technology – Involves making one-of-a-kind. customized products or small quantities of products – Can be adapted to individual orders – Is relatively expensive – Scores ______ on the dimension of technical complexity – _________ structure is the most appropriate structure for this technology .
Large-batch and mass production technology – Involves producing large volumes of standardized products – The conversion process is standardized and highly controllable – Allows an organization to save money on production and charge a lower price for its products – Scores _______ on the technical complexity dimension – ___________ structure is the most appropriate structure for this technology .
Continuous-process technology – Involves producing a steady stream of output Production continues with little variation in output and rarely stops – Individuals are only used to manage exceptions in the work process – Tends to be more technically efficient than mass production – Scores highest on the technical complexity dimension – _________ structure is the most appropriate structure for this technology .
Low Technical Complexity High Structural characteristics Organizational Structure Small-Batch Technology Mass Production Technology Continuous Process Technology .
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Mechanistic Organic .
Entrepreneurial Structure • It facilitates fast innovative responses • Run by self-driven entrepreneurs (expertise. know each other. Company survival) • No formal structure and control system .
authority. (may concern VCs) • Poorly defined division of labor.• Lack of any form of planning and adherence to projected targets. and accountability in Appex’s early structure . responsibility.
The structure of an organization helps in • Division of labor • Defining the Identity within the organization and • How they relate to each other .
Was the functional structure a good way for Appex to solve its earlier problems?
Groups people on the basis of their common skills, expertise, or resources they use
VP Sales & Marketing VP Materials Management
Division of labor for essential activities Defining responsibility Completing the task Define their identity and career path
Limitations of functional structure
• Proliferation of jobs both horizontally and vertically (Communication Problem) • Emergence of organizational politics • Differentiation and integration • Lot of pressure on CEO (Strategic Problem) • Dilutes accountability for the financial performance of the organization (Measurement problem) • Can lead to diminished zeal to produce new and innovative products and services
Do you think the Product and Business team structures were useful ways of addressing the limitations of functional structure? • Strategic focus to the development and performance of various products and services • Reduced integrative role of Shikhar • Greater emphasis on product development • Ambiguity and conflict over who had what decisions right • Resource allocation .
Matrix Structure CEO VP Engineering VP Marketing VP Finance VP R&D VP Purchasing Manager Product A Manager Product B Manager Product C Manager Product D Product Team .
Network Structure • A cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority • Very complex as companies form agreements with many suppliers. and distributors . manufacturers.
Divisional structure: To solve some of the control problems – Create smaller. more manageable subunits • Product structure • Geographic structure • Market structure .
Multi Divisional Structure CEO Corporate Managers Corporate Headquarter Staff VP Finance VP Marketing VP MM VP R&D Divisional Managers Division A Division B Division C Division D Support Functions Functional Managers .
Product Team Structure CEO Functions Engineering Marketing Sales Finance R&D Product Development Teams Functional specialists PT Manager PT Manager PT Manager Product Division Product Division Product Division .
Basic Dimensions of Organization Structure • • • • • • • Division of Labor Coordination Mechanisms Distribution of Decision rights Organizational Boundaries Informal Organization Political Alignments Legitimate basis of Authority .
Interest and Skill Senior Leadership Face2face Persuasion Informal Commitment Entrepreneur Responsive Innovative Fast Short term focus No Accountability No career Path Service suffered May 1988-Feb.1984-May. 1988 Division of Labor Coordination Mechanism Conflict Resolution Distribution of Decision Rights Control Identity and Careers Strengths Projects. 1989 Expertise Not Clear Consensus Not Clear Not specified Experts Fast Egalitarian Weakness Difficult to Understand .
But Ghosh was involved in everything Compliance Actions Functional Experts Focused People in Specific tasks Efficient Pooling Functional Expertise May 1989-Aug. 1989 – Mar.Feb. 1989 Division of Labor Coordination Mechanism Conflict Resolution Distribution of Decision Rights Control Identity and Careers Strengths Partitioned. 1990 (Product Team) Product & Functional Expertise Product Team manager Team Persuasion Product Manager P&L General Management Balanced functional and product focus Weakness .
1991 (Divisional) Division of Labor Coordination Mechanism Conflict resolution Distribution of Decision Rights Control Identity and Careers Strengths Products Authority of Div.Aug. 1990 – Jan. Head Senior Management Division Head Profit and Loss Results General Management Profit Focused Strategic Responsive Walls between Divisions Innovation Lowers Duplication of Resources Weakness .
Functional Division of Labor Coordination By Inputs Hierarchy. plans Highly Centralized Core/Periphery Divisional By Outputs Division manager and Corporate staff Separation of Strategy and execution Internal/ External Markets Modest Matrix By Both Dual Reporting Relationships Shared Network By Knowledge CFT Decision Rights Highly decentralized Porous and Changing Boundaries Multiple interfaces Considerable Importance of Informal Structure Low High Comparison among Different Structures . Supervision.
Relative Advantage and Disadvantage of Different Structures Functional Resource Efficiency Time Efficiency Responsiveness Adaptability Accountability Environment for which Best suited Strategy for which best suited Good Stable Focused/Low Strategies Divisional Poor Good Matrix Moderate Moderate Network Good Excellent Excellent Poor Excellent Heterogeneous Environment Diversified Strategy Poor Complex Environment Responsiveness strategy Moderate Volatile Environment Innovation Strategy .
. etc. materialistic. penguin. No purpose. . etc.• Opinion about Beta culture – Weird. • Opinion about Alpha culture – Close. Insulting. primitive.
Make it legitimate for people in culture A to stereotype and make fun of the people in culture B Tend to discount everything in culture B so no one tries to understand any of it No one in culture A says anything good about the people in culture B for fear of appearing disloyal .
• Some of us are marginalized because we are from different • Gender • Race • Too tall. or behavior . too short • Different age • Different social background etc. It is often difficult to get people value Others who are different from them in looks. dress.
Some traits that characterize culture • • • • • • • • • High territoriality vs. Low Territoriality Respect for elders Respect for authority Individualism vs. Collectivism Monochronic vs. Informal Past. present. Polychronic Work to live vs. Live to work Relationship vs. future emphasis . Deal-focused Formal vs.
Competing Values Framework Flexibility and Discretion (Interest in Making Changes) Clan Culture Internal Focus Adhocracy Culture External Focus Hierarchy Culture Market Structure Stability and Control (Interest in Keeping things the same) .
Contingency Approach to Organizational Design Design of Structure Environment Fit Effectiveness .
• Differences among several units of the organization • Greater the differentiation the more difficult it becomes for employees to communicate across unit boundaries State of collaboration among organizational units .
Aspects of Integration Number and Pattern of units that have to collaborate Form of Interdependence Main type of coordination Communication Strategy to reduce uncertainty Increase number of Customers served Slack Resources/ Vertical Integration Specialism of task activities Pooled Standardization Planning & Scheduling Mutual Adjustment Low Sequential Medium Reciprocal High .
Aspects of Integration • Frequency with which collaboration is necessary • Importance of achieving the objective • Certainty and predictability of the information involved .
Organizational Design Challenges .
To determine the levels of vertical and horizontal differentiation to reach organizational goals CEO Vertical Differentiation Improve Coordination among subunits Horizontal Differentiation To facilitate specialization .
How to Link and Coordinate organizational activities Differentiation Higher the differentiation the more complex the integration mechanisms Integration .
Who will make Decisions Centralization Risk Averse Decision making process Slow Makes Planning and Coordination Difficult Lose control of decision making Decentralization .
To decide Mechanisms to control specific employee tasks and roles Standardization Mutual Adjustment .
Population Ecology Model The factors that affect the rate at which new organizations are born (and die) Population Density Resource Constraints Existing Players .
Organizational Isomorphism (Similarity among organizations in a population) Coercive isomorphism Mimetic isomorphism Normative isomorphism Pressures exerted by other organizations and by society in general Organizations intentionally imitate one another to increase their legitimacy Indirectly adopt the norms and values of other organizations .
Evolution and Revolution Prolonged periods of growth where no major upheaval occurs in organization practices Periods of substantial turmoil in organizational life .
Key Forces in Organizational Development • • • • • Age of the Organization Size of the Organization Stages of Evolution Stages of Revolution Growth rate of the Industry .
Management practices that work well in one phase may bring on a crisis in another .
Company in High-growth industries Large Companies in medium-growth industries Size of Organization Companies in low-growth industries Small Young Age of Organization Mature .
Organizational Practices in Five Phases of Growth Category Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Measurement focus Organizational Structure TopManagement Style Control System Make and Sell Efficiency of Operation Centralized and functional Directive Expansion of Market Decentralized and Geographical Delegative Consolidation of Organization Line staff and Product group Watchdog Problem solving and innovation Matrix of Teams Participative Informal Individualistic and Entrepreneurial Market Results Standards & Cost Centers Salary and Merit increases Reports and Profit Center Individual Bonus Plans and investment centers Profit Sharing and stock options Mutual Goal setting Team Bonus Management Reward Emphasis Ownership .
neutralize.Organizational Decline When the organization fails to Anticipate Recognize Avoid. or adapt to external or internal threats .
Weitzel and Jonsson’s Model of Organizational Decline Blinded P E R F O R M A N C E Good Information Inaction Faulty Action Crisis Dissolution Acceptable Performance Corrective Action Prompt Action Effective Reorganization Decline Begins Time Dissolution .
The Commonwealth Mini-society Promote Learning Top Group Middle Group Bottom Group .
Appreciation for structural injustice and its effect on individuals • Individual efforts and goodwill can be distorted and wasted in the absence of a social system that permits their expression • 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 .
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 .
• Protect their superior power • High-power members tend to be more angered by low power member’s insult than when the position is reversed .• Life generally seems good for high-power persons • Usually hard to move towards cooperation. and compromise. conciliation.
R. A. & Kinicki.. (1995). Organizational Behavior. Cooperation. Chicago: Irwin . and Trust Influence Tactics Organizational Contributors Self-interest Political Tactics Individuals Groups Power Group/ Organizational Interest Conflict Management Source: Kreitner.Tug-of-war Climate of Destructive Competition and Suspicion Climate of Openness.
L. L. E. & Lingo.Sources of Power Source: Mcginn. K.. Power & Influence. (2007). Harvard Business School Publication .
Formal roles in your organization Position Power Personal Power Relational Power Unique personal attributes and skills Your relationship with others .
Ability to encourage other’s cooperation by building trust and understanding
Expertise & Self-confidence Energy & Stamina Focus Tolerance for Conflict
Ability to endure and succeed in competitive situations
Charisma Communication Skills Track Record
Ability to obtain other’s social support
Formal Hierarchical Position
Controlling Strategic Resources
Legitimate Power Control over entry Control over values and terms of Legitimacy
Tie Content Direct Ties Exchanged Based Money Tie Strength Duration Frequency of Interaction Mutual Intimacy Multiplexity Reciprocity Information Trust Based Emotions Social Support
Centrality Networking Coalition Density Relational Power .
Reward Referent Coercive Bases of Power Expert Legitimate Informational .
Influence Tactics • • • • • • • • • Consultation Rational Persuasion Inspirational Appeal Personal Appeal Ingratiation Coalitions Pressure Legitimacy Exchange .
Harvard Management Update. . Listen More Need to be understood. When direct approach backfires. affirmed and appreciated Make them like you Craumer. M. and take initiative on their own Talk Less. try indirect influence. (2006).Indirect Influence Beat Around the bush Let people figure things out for themselves. come to their own conclusions.
Make them laugh Humor can create common bond that melt resistance and encourages cooperation Use stories and metaphors Do a favor – even a small one .
Thank You .