Transcript Document 7433937

Bu 604 Session 2
Organizational Structure and
Change
Agenda
• Introduction – Organizational Structure
–
Design variables & factors
–
How are your firms structured
• Club Ed
• Organizational Change
• Case: Jessica Casserra’s Task Force: Hospital
Integration in the Region of Erie
Bu 604 Evaluation
• The 30% for Bu604 will be made up of the
following components:
– Participation @ 10%
– Analytic memo re: Wal-Mart case @ 10% (3
pages + 1 page of exhibits) Due Oct 3 (in
class). Submission format is 12 font with
normal margins.
– Alternatives & Action plan memo re: Electronic
Data Interchange case @ 10% (3 pages + 1
page of exhibits) Due Oct 24 (in class). Same
submission format as above
Why Do Structures Differ?
• Vision, Mission and Strategy
• Organization Size, Breadth of Offerings, Geographic
Reach
• Technology
• Environment
• Culture (Internal to the Firm and External)
• Employees
• Nature of the Customer
Environmental Uncertainty
• Capacity – from scarcity to abundance
• Volatility – from stability to dynamic
• Complexity – from simple to complex
• In the end, environment drives strategy and then
structure as organizations seek alignment
Three-Dimensional Model of the
Environment
Environmental Analysis
Static
Simple
Dynamic
Traditional
Systems
Network and
Complex
Cellular
Systems
Organizational Evolution
Historical Era
Standardization Customization
Innovation
Organization
Form
Hierarchy
Network
Cell
Key Asset
Capital Goods
Information
Knowledge
Influential
Manager
Chief Operating
Officer
Chief Information Chief
Officer
Knowledge
Officer
Key
Capability
Specialization & Flexibility &
Design
Segmentation
Responsiveness Creativity
Co-evolution of Economic Era
& Organizational Form
Era of Standardization
Product &
Mass
Services
Production
Specialization
Era of Customization
Market
Prototypical
Segmentation Production
Era of Innovation
Continuous, Efficient
Innovation
Functional
Form
1850
1900
Divisional
Form
Matrix
Form
1950
Network
Form
Cellular
Form
2000
2050
Location of Managerial Know-how in
Alternative Organizational Forms
Operational
Know-how
Investment
Know-how
Adaptation
Know-how
Functional
Top, Middle,
Lower
Top
Top
Divisional
Top, Middle,
Lower
Top, Middle
Top
Matrix
Top, Middle,
Lower
Top, Middle
Top, Middle
Network
Top, Middle,
Lower
Top, Middle
Top, Middle,
Lower
Cellular
Top, Middle,
Lower
Top, Middle,
Lower
Top, Middle,
Lower
The Strategy-Structure Thesis
Strategy
Structural Option
Innovation
Organic: A loose structure; low specialization, low
formalization, decentralized
Cost
Mechanistic: Tight control; extensive work
Minimization specialization, high formalization, high
centralization
Imitation
Mechanistic and organic: Mix of loose with tight
properties; tight controls over current activities and
looser controls for new undertakings
Miles and Snow’s Organization Typology
Prospectors:
Design and Distribute
Defenders:
Purchase and Produce
Analyzers:
Prospect and Defend
Reactors:
Respond and React
High
Prospector
Opportunity
Focus
Analyzer
Reactor
Defender
Low
High
Low
Efficiency Focus
Galbraith: Organization Design
Strategies for Dealing with Uncertainty
1. Rules and Policies
2. Hierarchies
Mechanistic Methods
3. Goals and Visions
4. Slack
Resources
5. SelfContained
Tasks
6. Vertical
Information
Systems
7. Lateral
Relations
Lessen the Need to
Increase the Capacity to
Process Information
Process Information
Organization’s informationprocessing requirements
Information-processing
Capacity of Structural Design
Choices
Vertical Information Linkage
Strategies
1. Rules, Policies and
Plans, including Vision
and Goals
Horizontal Information Linkage
Strategies
1. Increase the Horizontal
Communication Capacity of the
Information System
2. Hierarchical Referral
3. Increase the Vertical
Communication Capacity
of the Information
Systems
Strategies to Ease
Information Processing
Linkage Needs
1.
2.
2. Create Lateral Relations:
Fit
Addition of Slack
Resources
Creation of Self
Contained Tasks
Organizational
Effectiveness
•
Direct Contact
•
Liaison Role
•
Task Force
•
Formal Teams
•
Formal Integrating Roles
•
Managerial Linking Roles
•
Dual-Authority
Relationships
Contrasting Spans of Control
Centralization and Decentralization
• Are decisions concentrated at top (centralization)
or pushed to lower levels (decentralization)?
• There is a marked trend toward decentralization
Formalization
• How standardized are the jobs?
– high formalization means employees have little
discretion
– low formalization means employees have more
freedom
Mechanistic versus Organic Models
The Mechanistic Model
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•
•
•
•
•
High specialization
Rigid departmentalization
Clear chain of command
Narrow spans of control
Centralization
High formalization
The Organic Model
•
•
•
•
•
•
Cross-functional teams
Cross-hierarchical teams
Free flow of information
Wide spans of control
Decentralization
Low formalization
Simple Structure
• Strengths
– simplicity: fast, flexible, inexpensive
• Weakness
– works best in small organizations
– can slow down decision-making in larger
organization
– can be risky as it relies on one person to make
all decisions
Bureaucracy
• Strengths
– standardizes activities in an efficient manner
• economies of scale, minimum duplication of
personnel and equipment
• lower quality employees are acceptable,
which reduces employment costs
• Weaknesses
– creates subunit conflicts
– there is an obsessive concern with following
rules
Pyramidal Organizational Structure
Flat Organizational Structure
Departmentalization by Function
Production
Marketing &
Sales
Accounting
& I. T.
Human
Resources
Departmentalization by Product
Northern Telecom
Public Carrier
Networks
Broadband
Networks
Enterprise
Networks
Wireless
Networks
Departmentalization by Geography
Royal Bank
Canada
Asia
Europe
U.S.A.
Departmentalization by Customer
Dell Canada
Individual
Users
Educational
Users
Federal
Government
Users
Large
Small/Medium
Business
Business
Users
Users
Matrix Structure for a Faculty of
Business Administration
Programs
Academic
departments
Accounting
Administrative
studies
Finance
Information and
decision sciences
Marketing
Organizational
behaviour
Quantitative
methods
Under
graduate
Master’s
Ph.D..
Research
Executive
Development
Community
Service
New Design Options
• Breaking the Boundaries Internally
– Team Structures, Self Managed Work Teams, Self
Organizing Work Teams, Cellular Structures
• Breaking the Boundaries Externally
– Modular and Patched Organization
– Virtual Organization
– Networks (from informal to formal; s-term to l-term)
• Breaking the Boundaries Externally and Internally
– The Boundaryless Org. and Federal Org.
Network Organizations
Designers
Producers
Integrators
Brokers
Purchasers
Distributors
Building Blocks of Cellular Structures
• Entrepreneurship - Each cell will have entrepreneurial
responsibility to the rest of the organization. The cell’s
customers may be inside or outside the cell
• Self-Organization- Each cell must be able to
continually reorganize & will need the technical skills to
perform its function & the collaborative skills to forge
appropriate linkages
• Member Ownership - Cells must be rewarded for
desired activities. The ultimate solution is member
ownership of the cell assets & resources
Implementing the Cellular Organization
• Must be willing to invest in human capability that
goes beyond today and builds the capabilities
needed for tomorrow
• Must be willing to risk allowing the levels of selfgovernance necessary to fully utilize the
competencies
• Must be committed to long-term sharing with
organizational members
Club Ed
Determined to never shovel snow again, you are
establishing a new resort business on a small Caribbean
Island. There will be 100 - 200 rooms (maximum capacity
200 - 400 people).
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•
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What will be the nature of the resort?
What services will you provide?
What jobs need to be covered?
What tasks do you need to be done?
How will you structure and organize it?
Draw your organization chart and be prepared to clarify
what it includes and why it should look like this.
Why Hierarchies Thrive
• Fulfill our need for order and security and they get
things done
• Nature organizes complexity through systems and
subsystems – we use it to process complexity and
aid decision making
• They provide markers of success, dominance &
identity
• The challenge is how to deal with their less desirable
qualities of authoritarianism, distrust, dishonesty,
territoriality, toadying, fear, and message distortion
• When we’re on the subordinate end, its about our
sensitivity to the aspects of dealing with hierarchy
Organizational Change
The Evolutionary Cycle
L
a
r
g
e
Renewal
Conservation
S
C
A
L
E
S
m
a
l
l
Exploitation
Loose
CONNECTEDNESS
Holling, 1987, p.145
Creative
Destruction
Tight
Life Cycle Curve and Point of Change
S
u
c
c
e
s
s
A
C
Time
Lewin’s Change Model
Unfreeze
CHANGE
Refreeze
Organizational Congruence Model
TRANFORMATION PROCESS
OUTPUT
INPUT
ENVIRONMENT
(P.E.S.T.)
RESOURCES
HISTORY/
CULTURE
Strategic Leadership
Program
S
T
R
A
T
E
G
Y
INFORMAL
STRUCTURE
& PROCESS
FORMAL
STRUCTURE
WORK
PEOPLE
Nadler, 1987
SYSTEMS
LEVEL
UNIT/GROUP
LEVEL
INDIVIDUAL
LEVEL
Types of Organizational Change
Anticipatory
Incremental
Strategic
Tuning
Reorientation
Reactive
Adaptation
Nadler & Tushman, 1989
Re-creation
Types Of Change Management
I
N
T
E
N
S
I
T
Y
MANAGEMENT OF STRATEGIC
ORGANIZATIONAL CHANGE
HIGH
Difficulty
of Change &
Transition
Management
O
F
C
H
A
N
G
E
LOW
CHANGE THROUGH NORMAL
MANAGEMENT PROCESSES
LOW
ORGANIZATIONAL COMPLEXITY
HIGH
Steps to the Creation of Organization Change
• Understand the Need for Change
– Real / perceived
– Initial diagnosis of environment & organization
• Do your gap analysis
– Document in detail the organization, its components
and issues
– Use the Nadler & other models to assess the org.
– In particular, examine key systems and structures,
informal systems, Stakeholders, and key individuals
(change players: leaders & recipients)
– Document the key incongruencies & congruencies
– Create Vision through identifying desired future state
Steps to the Creation of Organization Change
• Develop your action plan
– Sequence of steps: who will do what, etc
– Points of resisitance
– Communications plan
• Identify transition structures and issues
Beckhard & Harris’ Change Management Process
Why Change?
Determining the Need for Change
Determining the Degree of Choice about
Whether to change
Define the Desired
Future State
Describe the
Present State
Getting From Here to There:
Assessing the Present in terms of the
Future to Determine the Work to be Done
Managing During the
Transition State
CHANGE MANAGEMENT
• VISIONING AND THE NEED FOR CHANGE
• STAKEHOLDER ANALYSIS AND
UNDERSTANDING THE POWER BASE
• ACTION PLANNING AND CONTINGENCIES
CHANGE OCCURS WHEN:
PERCEIVED BENEFITS OF CHANGE
> PERCEIVED COSTS OF CHANGE
(Dissatisfaction X Benefits X Probability
of Success) > Cost of Change
FIEL: change.ppt
Determining Steps
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•
•
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Why?
What?
What!
How?
– Who
– What
– Where
– When
– How
• And again….
Harvey’s Monosyllabic Model 
Lewin’s Force-Field
Analysis
Desired
State
Restraining
Forces
Current
State
Change Forces
Time
New Equilibrium
Force Field Analysis
1. What are the forces for change? Include external
forces as well as a consideration of key individuals
or groups.
2. Who is championing the change?
How strong and committed are these forces (Who
will let it happen; will help it happen; who will make
it happen?)
3. How could these forces be augmented or
increased? What forces could be added to those
that exist?
4. What are the forces that oppose change? Include in
this structural forces such as reward systems or
formal processes in the organization. Consider as
well, the effect of informal processes, groups or
the culture of the organization.
5. How could these forces be weakened or removed?
What actions might create major resentment?
Types of Commitment to Change
1. Opposed to the Change
2. Let it Happen
3. Help it Happen
4. Make it Happen
Stages in the Change Process
Initial Awareness
Interested in the Change
Wanting the Change to Happen
Ready to Take Action
Jessica Casserra
• What is your assessment of the key problem(s) in
this case and what is driving them?
• What structural options would you consider and
which would you recommend and why?
• How would you manage the change process?
Next Session
• We will shift our focus from the Macro to the
Micro in the next class, putting the spot light on
the Individual