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Warwick Business School

Assessed Essay What actions can leader take when trying to improve productivity in their organizations? Specifically, what are the elements of organizational behavior that might be controllable? Pick two elements you see as most important to discuss

Organizational Behaviour IB96V0

MA Management and Organizational Analysis

Student Id 1161780 Words 2638

For us students, who learn organizational studies, our fundamentals in these studies start with a sole aim i.e. survival and sustainability of every organization. This objective rests with leaders within those organizations, who can clearly identify key areas where increasing productivity is essential to meet the set goals and keep the organization afloat. There appears to be almost universal agreement that the pace of change is accelerating as never before and that organizations have to chart their way through an increasingly complex environment. (Burnes et al., 2003, p.452) The above quote provides an overview of understanding the environment that the organization operates in, responding to this how leaders can influence change to bring in operational excellence i.e. productivity.

Defining productivity:
Many authors have defined productivity as the relationship between output of organizations in terms of products and services and the inputs used to achieve these outputs. Higher productivity means that fewer resources are used to create same volume of output thus more efficient is the production process is. (Prokopenko, 1987, p.3) outlines that, regardless the type of production and type of industry the definition of productivity remains the same. For the purpose of this essay, I would term productivity interchangeable to labour productivity; here the later talks about productivity of human capital in organization. Furthermore, (Giampietro et al., 1993, p.230) Defined and measured through their empirical studies, the ratio between what amount of work has been done and the cost (wages paid, man hours) involved in getting that work done.

Outline for the Essay

For the purpose of this essay and an attempt to answer the question briefly, I have taken an unconventional approach by broadly naming micro (individual), and at macro (organizational) levels of an organization, where elements of organizational behavior such as technology and structure play important roles in enhancing productivity. Here, the protagonist is the leader in gathering these factors to start improving productivity. This can be better understood by the illustration given below -


Controllable elements and their influence on Productivity:

As mentioned in the outline, we have identified technology, specifically, information technology as one of the key drivers which can induce and improve productivity. Many authors including (Torkzadeha & Doll, 1999, p.329) have identified impact dimensions. These dimensions namely are task productivity, task innovation, customer satisfaction and management control where application of technology within these dimensions resulted in improvement of productivity. Information technology is what (Brynjolfsson & Hitt, 2000, p.24) explains helps in reducing costs of communication, co-ordination and information processing. When we look at an employee and organizational level of labour productivity, we come across McKinseys (Manyika et al., 2009) paper; their analysis shows us that employees and groups waste up to 50 percent of resources in collaborating efforts; for instance, set up meetings, travelling and redundant communications. To mitigate these wastes, we have identified different technological aspects that a leader can induce to bring in improved productivity. To elaborate further on this notion of technology, we have used different examples (within industry) to provide an insight how information technology has helped certain organizations improve upon their productivity. Case Analysis Cisco Systems, for an example provided many of its clienteles with tools of collaboration such as video conferencing systems that enable organizations to reach more customers and suppliers, where as(Manyika et al., 2009) says this helped in shifting large number of in-person meets to virtual interactions. The results were as below over an 18-month period, the initiative saved Cisco more than $100 million in travel and business expenses., Internal surveys showed that 78 percent of the targeted employees reported increased productivity and improved lifestyles without diminishing customer or partner satisfaction. (Manyika et al., 2009) Moving further, we acknowledged one more company to make our argument for technology stronger, of that was Procter & Gamble, where (Huston & Sakkab, 2006, p.5) held that, they developed and adopted a web based IT platforms, in which the company could forge better links with their suppliers and customers at large. InnoCentive was one of those platforms that were adopted, it networked with thousands of contract scientists across the globe to tackle defined scientific problems. Their use of collaboration tools in specific Enterprise 2.0 contributed towards increase in involvement of employees in managing data. (Panduwawala et al., 2009, p.6), (Hines, 2007) indicated that this collaboration was done through allowing employees to add and personalize RSS feeds of news and business information. The results of these were as below


Besides the savings P&G realized from nearly a thousand fewer business trips each month, the company met its goals of shorter product cycle times and greater product innovation from external sources. (Manyika et al., 2009) (Huston & Sakkab, 2006, p.2) Within both, the above mentioned examples we saw that majority of the technological changes were brought in by the change agents that are the managers and directors. For example, in P&G CEO A.G. Lafley, we could clearly see, that he went against the might of company culture (Cheese et al., 2008, p.7) and battled an internal resistance to introduce using technologies to collaborate with suppliers and external partners. The results were seen as below Lafleys leadership has driven impressive results: 6 percent organic growth in an industry thats growing in general only at 2 percent to 3 percent. (Cheese et al., 2008, p.7) While A.G Lafleys, P&G model implemented technology to integrate supply chain systems to improve productivity and lower production costs, Michael Dells, Dell Direct model infused IT and web based technologies to generate sales, by involving customers to personalize and further, to eliminate intermediaries by direct retailing models. In (Rangan & Bell, 2002) article, Michael Dells leadership highlight was that he was able identify key growth markets outside USA, implement virtual integration by having the best suppliers and to diversify Dells products towards more consumer centric products. Michael Dell was quoted saying Picking our spots to focus our engines, and driving the organization behind them. (McWilliams, 2000) In his interview with (Woodward, 2009), Michael Dell knew exactly what the customer wanted when they wanted it". Furthermore, Dell was quoted I wouldn't say I'm big on command control.. I am more inclined to provide frameworks and guidelines. Here, we come to know Michael Dell emphasized a lot on collaboration and delegation of work. Dell is one organization where technology has played an important role in improving organizational and labour productivity. Here, what we see and what (Rangan & Bell, 2002) saw was a Dell Direct model of operating this model gave unprecedented customization options to end customers who wanted to buy Dell computers. This was done interactively through an online environment of Dells website. The results were as below. The model strengthened Dells efficiencies on both transaction and relationship sides of business. On the transaction side, the productivity of average dell sales rep increased as much as 50%.....On the relationship side spent 60% of their time with customers and 40% doing administrative works. (Rangan & Bell, 2002, p.7) As (Brynjolfsson & Hitt, 2000, p.29) said, commercialization of internet has led to significant decrease in cost in relation to production. Furthermore, they say that with the use of Web 2.0 tools such as social networks, video, cloud based services has helped organizations see sizeable improvements in productivity
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by bringing together convenience and innovation in terms of product variety right to customers as seen in Dell. The reason why we have chosen Technology over all other factors is what (Hostyn, 2011) has clearly defined in his article You flip a switch or program a piece of technology to do something, and it does it. Technology is rational, predictable, and controllable. As a final adieu to technology, we agree on the same lines as (Coombs et al., 1992, p.62) who have said that technology has always been interpreted towards competitive pressures, hereby, which it insures improved capital productivity, production quality and reducing excessive wastes, but to our understanding, it also has an effect on labour processes and organizations employees also. We concur with (Garson, 1999, p.54) by providing the above examples that computing (IT) can be managed in organizations by the fact that many organizations, at-least to some extent, do get the results they desire form information technology in terms of productivity. While in the first part, we branded technology as one of the influential elements in improving productivity and the bottom line of the organization, we have also recognized organizational structure as one of the protagonist in improving and influencing productivity. According to (Mullins, 1999, p.520) organizational structure is a pattern of relationships between members of the organization and the positions held by those members within organization. We agree with Mullins and (Sinclair-Hunt & Simms, 2005, p.4) that organizational structure provides an overarching framework where all organizational activities can be planned, controlled and coordinated. Within these organizational activities, we see an opportunity to improve productivity to ensure that organizations meet objectives and to finally fit in the ever-changing business environment. In popular literature, we found (Burns & Stalker, 1961) talking to us about mechanistic and organic structures of organizations to suit business environments. (Weber, 1947) texts on bureaucratic structures that defined roles that had hierarchical order of authority, and finally towards more contemporary structures, like (Heckscher & Donnellon, 1994) book on post bureaucracies namely teams, networks and virtual organizations. Case Analysis Here, we chose IBM and their virtual teams to see how those teams have an effect on organizational performance. Furthermore, to see the actual impact on labour productivity, as said by (Lipnack & Stamps, 1997, p.7) virtual teams is a group of people who interact through interdependent tasks guided by common purpose and work across space, time and organizational boundaries with links strengthened by webs of communication technologies. In IBM, they called it globally integrated teams, as one of the employees (Diab, 2011) said, he was part of a team which spanned across 20 cities 10 countries and 4 continents. These IBM teams worked on sales projects, having to interact with customers in delivering IBM consulting services. Each team member was given $8000 worth of equipment like laptops and mobiles to virtualize their sales. This, according to (Fisher, 2000, p.296), led to increased customer satisfaction, meaning customers felt that these IBM teams were working for them, rather just representing the vendor the resultant here, was increased sales figures and customer loyalty.


According to (Cascio, 2000, p.81), IBM financially saved 40-50 percent on real estate expenses and doubled revenue per sales person after moving them into virtual environment. Lastly, in terms of productivity, (Cascio, 2000, p.81) mentions that IBMs internal studies saw 15 to 40 percent productivity improvements in employees. Coming back to what we said earlier, we concur with (Hartoga et al., 2007, p.55) those virtual teams intend towards being more flexible, adaptive and/or project based organizational structure that in other words are organic. Following through the books of (Fisher, 2000, p.52) we understood, that even though virtual teams could be departmentalized for example, sales or finance teams, we understood that these teams could specifically be self-managed teams working, for example, on one such project and having member chosen specifically for this project. The highlight of virtual teams in organization structure was highlighted by (Rayner, 1997, p.3) that these teams allowed greatest organizational flexibility, where employees could work from wherever they chose, and work at times that they find convenient, thus leading to greater employee participation and improved levels of labour productivity. Here, better insight into leadership concerns in virtual teams was given by (Symons & Stenzel, 2007, p.4) where they converse about leaders in virtual teams having three different roles namely, initiator, scheduler and integrator, we also grasped from the above readings was that since there is no face to face communication involved in these virtual teams, leader had to be more dominant, influential and needed to have facilitation skills. Moving forward, we choose Swedens Hennes Mauritz/H&M, to establish our argument that using the outsourcing model, outsourcing key business processes could lead to lower operating costs and improved productivity. What we understood and to what we agree with what (Derose, 1999, p.1) has said, is outsourcing is the idea of using external resources to meet needs and further, to adapt to todays fast changing, and competitive world. Here, H&M specifically took advantage of low cost labour (LCL) countries like Bangladesh and China, where according to (Kumar & Arbi, 2008, p.74) H&M could take advantage of low labour costs and tax benefits. In 1982, H&M opened its first production office in Dhaka capital of Bangladesh. This office, according to studies undertaken by (Hasan & Alim, 2010, p.62), was a dual internal-external function office, where employees used to co-ordinate orders between the head- office in Stockholm and individual suppliers in Dhaka. The second function was to assign contracts to individual contractors by using vendor analysis. This kept in check quality and costs of orders. Furthermore, H&M employed 100 designers to interact with more than 700 networks of suppliers all over East Asia. The results of outsourcing were as belowOperating profits for the year ended Nov. 30, 2007, were up more than 20%, to $2.8 billion, on sales of $11.9 billion, up 14.5% from the previous year. In 2008 operating profits will grow by nearly 15%, to $3.2 billion, and sales will rise 12.6%, to $13.4 billion. (Capell, 2008) As seen in IBM, we saw immense potential in structuring the organization by the application of globally virtualized teams to work on projects. Besides, in Hennes Mauritz, we saw the organization in order to capitalize and be have competitive advantage in costs of production, the application of outsourcing model was needed and to structure the company.


To conclude, our essay showed two controllable factors namely Technology/IT and Organizational structure, we cited numerous examples of cases where both these factors were deployed in order to improve productivity and further, how leaders within those cases influenced change and directed and implemented those to factors effectively. While productivity is not merely the relationship between output and the input, we understood that productivity could also be increment of sales, rise in customer satisfaction levels or even improvement in quality of product/service that has to be delivered. Following this, we encounter that productivity is a key enabler to profit maximization goal of any company. For Technology/IT, we believe that it is the primary enabler of innovation that enables exceptional productivity and growth. We believe now that this is the time to invest in technology that will position organizations competitively for decades to come. After reading lots of papers, we see three transformational trends that are globalization, virtualization and collaboration. While globalization is about cost and labour arbitrage, organizations look at globalization as a source of growth, talent and innovation. IT is driving these companies to globalize. Here effective globalization strategy requires robust virtualization strategy, for example, optimizing resources through reuse. Connecting people and information, collaboration technology are enabling a whole new business models by providing a platform for communication that gives employees customers partners and vendors access to information anytime anywhere . These transformations are truly changing the nature of our work, opportunity in improved productivity and operational excellence lies here. For organizational structure, we observe that the markets are ever- growing and becoming increasingly fragmented and dynamic and the pace of change in almost all them is exponential, we need to find an organizational structure that allows and where people can respond to it quickly and effectively to those challenges whilst having an sense of organizational size, strategy and goals. There are no simply guidelines to choosing the best structure since there are tensions and resistance in all these changes. Lastly, for the leaders of organizations, the greatest skill is to have a sense of how to manage these competing tensions and the creed of understanding these tensions that creates successful organizations.


Works Cited
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