Lecture 32.ppt

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Advance Topics in Change Management Lecture 32 Basic Concepts in Change Management

MASS PRODUCTION AND C.I.M

Mass Production C.I.M.

Structure Supervisor spans of control Hierarchical Levels Supervisor Role Tasks Specialization Operator discretion Formalization Human Resources Interactions Training Expertise Wide Many Controller Routine, simple High Low High Narrow Few Facilitator Complex, adaptive Low Considerable Limited Low Narrow, limited Standardized, manual/technical Considerable Broad, frequent Cognitive and social, developing, problem solving Inter-organizational Customer demand Suppliers Stable, predictable Many, arm’s length Changing Few, interdependent

CHARACTERISTICS OF SERVICE AND PRODUCT ORGANIZATIONS SERVICE BOTH PRODUCT Boundary Roles Geographical Dispersion Technical Expertise of Operators Skill Emphasis Few Considerable High Some Some Moderate Many Low Low Centralization Formalization Examples Broad and interpersonal Low Low Airlines, hotels Narrow and broad Medium Medium Fast food, real estate Narrow and technical High High Steel, cars

SERVICE BUSINESSES

CUSTOMER INTERACTION AND CUSTOMIZATION LOW HIGH LOW AIRLINES HOTELS LABOUR INTENSITY ratio of labour cost to plant and equipment HIGH MASS RETAILING FAST FOOD RESTAURANTS HOSPITALS MACHINERY REPAIRS PROFESSIONAL SERVICES ACCOUNTANTS LAWYERS

VARIETY OF TASKS AND PROBLEMS

1. How many of your tasks are the same from day to day?

2. Do you do the same job in the same way most of the time?

3. How different are the problems you have to deal with on a daily basis?

ANALYSABILITY OF TASKS AND PROBLEMS 1. To what extent is there a clearly known way to do your major tasks?

2. To what extent is there a clearly defined body of knowledge that can be followed in your work?

3. How often do you have to deal with unforeseen problems and difficulties?

4. How much can you rely on established procedures and practices to do your job effectively?

DEPARTMENTAL TASKS AND TECHNOLOGIES

An Apprentice Contestant CALL-CENTRE WORKERS

Mechanistic

Technology and Interaction

• Technology can also be thought of as ways in which groups of individuals interact.

Interdependence and Co-ordination Mechanisms

DEPARTMENTAL GROUPING OPTIONS

Functional Structure with Geographical Sub-Divisions

Functional Structure with Functional Sub-Divisions

FUNCTIONAL GROUPING

CONTEXT

• ENVIRONMENT: • TECHNOLOGY: • SIZE: • GOALS: LOW UNCERTAINTY, STABLE ROUTINE, LOW INTERDEPENDENCE SMALL TO MEDIUM INTERNAL EFFICIENCY, TECHNICAL SPECIALISATION AND QUALITY

STRENGTHS

1. ECONOMIES OF SCALE WITHIN FUNCTIONS 2. IN-DEPTH SKILL DEVELOPMENT 3. BEST WHEN ONLY ONE OR A FEW SIMILAR PRODUCTS

WEAKNESSES

1. SLOW RESPONSE TIME TO ENVIRONMENTAL CHANGES 2. DECISIONS MAY PILE ON TOP, HIERARCHY OVERLOAD 3. POOR INTERUNIT CO-ORDINATION 4. LESS INNOVATION 5. RESTRICTED VIEW OF ORGANISATION GOALS.

Divisional Structure

DIVISIONAL GROUPING

• • • •

CONTEXT

ENVIRONMENT: TECHNOLOGY: SIZE: GOALS: MODERATE TO HIGH UNCERTAINTY NON-ROUTINE, HIGH INTERDEPENDENCE LARGE EXTERNAL EFFECTIVENESS, ADAPTATION, CLIENT SATISFACTION

STRENGTHS

1. SUITED TO FAST CHANGE IN UNSTABLE ENVIRONMENT 2. CLIENT SATISFACTION BECAUSE PRODUCT RESPONSIBILITY AND CONTACT POINTS ARE CLEAR 3. HIGH CO-ORDINATION ACROSS FUNCTIONS 4. UNITS ADAPT TO DIFFERENCES IN PRODUCTS, REGIONS, CLIENTS 5. BEST WHEN SEVERAL DIFFERENT KINDS OF PRODUCTS

WEAKNESSES

1. LOSE ECONOMIES OF SCALE IN FUNCTIONAL DEPARTMENTS 2. POOR FUNCTIONAL CO-ORDINATION ACROSS PRODUCT LINES 3. LOSE IN-DEPTH COMPETENCE AND TECHNICAL SPECIALISATION 4. INTEGRATION AND STANDARDISATION ACROSS PRODUCT LINES IS DIFFICULT

DEPARTMENTAL GROUPING OPTIONS Finance Personal Computers Business Computers Business Services HR

MULTI-FOCUSED GROUPING

CONTEXT

• ENVIRONMENT: • TECHNOLOGY: • SIZE: • GOALS: MODERATE TO HIGH UNCERTAINTY, CHANGING CUSTOMER DEMANDS ROUTINE OR NON-ROUTINE, WITH INTERDEPENDENCIES ACROSS BOTH FUNCTIONS AND PRODUCT LINES MEDIUM TO LARGE EXTERNAL EFFECTIVENESS AND ADAPTATION PLUS EFFICIENCY WITHIN SOME FUNCTIONS

STRENGTHS

1. ORGANISATION CAN ACHIEVE ADAPTABILITY AND CO ORDINATION IN SOME AREAS AND EFFICIENCY IN OTHERS 2. BETTER ALIGNMENT BETWEEN CORPORATE LEVEL AND DIVISION LEVEL GOALS 3. ACHIEVES CO-ORDINATION BOTH WITHIN AND BETWEEN PRODUCT LINES

WEAKNESSES

1. POTENTIAL FOR EXCESSIVE ADMINISTRATIVE OVERHEAD 2. CONFLICT BETWEEN DIVISION AND CORPORATE DEPARTMENTS

Matrix: Advantages

According to Bartlett and Ghoshal (1993): • Decrease bureaucracy • Create ‘distributed entrepreneurship’ • Delegation of responsibilities • Thinning out of corporate (HO) staff (<100) • Aligning and supporting initiatives • Integrating resources and capabilities

Matrix: Disadvantages

• Lack of clarity over who is responsible for decisions • Lack of clarity over how much time should be spent on different tasks • In-fighting between two line managers • Decision-making process could be lengthened • Excessive demands placed on senior managers to cope with information

MATRIX STRUCTURES

• • • •

CONTEXT

ENVIRONMENT: TECHNOLOGY: SIZE: GOALS: HIGH UNCERTAINTY NON-ROUTINE, MANY INTERDEPENDENCIES MODERATE, A FEW PRODUCT LINES MULTIPLE, CUSTOMER RESPONSIVENESS, PRODUCT INNOVATION AND TECHNICAL SPECIALISATION

STRENGTHS

1. ACHIEVES CO-ORDINATION NECESSARY TO MEET DUAL DEMANDS FROM ENVIRONMENT 2. FLEXIBLE USE OF HUMAN RESOURCES ACROSS PRODUCTS 3. SUITED TO COMPLEX DECISIONS AND FREQUENT CHANGES IN UNSTABLE ENVIRONMENT 4. PROVIDES OPPORTUNITY FOR FUNCTIONAL AND PRODUCT SKILL DEVELOPMENT

WEAKNESSES

1. PARTICIPANTS EXPERIENCE DUAL AUTHORITY, WHICH CAN BE FRUSTRATING AND CONFUSING 2. PARTICIPANTS NEED GOOD INTERPERSONAL SKILLS; EXTENSIVE TRAINING REQUIRED 3. TIME CONSUMING - FREQUENT MEETINGS AND CONFLICT-RESOLUTION SESSIONS 4. WILL NOT WORK UNLESS PARTICIPANTS UNDERSTAND IT AND ADOPT COLLEGIAL RATHER THAN VERTICAL-TYPE RELATIONSHIPS 5. REQUIRES DUAL PRESSURE FROM ENVIRONMENT TO MAINTAIN POWER BALANCE

THE PROJECT-BASED FIRM

• • •

Advantages Reduces overhead costs Improves speed and efficiency Increases adaptability

• • •

Disadvantages Time-consuming and difficult to identify and manage processes Limited organisational learning Threat to management (downsizing and deskilling)

Applicability Sectors and Firms that meet the following criteria:

– – –

Workforce generally highly skilled and well-motivated Sector undergoing major change (from competition and/or technology change) High level of consensus

Separation and Stability of Work Roles

Types of Project-Based Firms

Low Singularity (‘Uniqueness’) of Goals and Outputs Low Organisational

PBFs producing multiple and varied outputs with different and changeable skills and roles. E.g. strategic consultancy, enterprise software, innovative business services

.

High Precarious

PBFs producing risky, unusual outputs with varied and changeable skills and roles. E.g. some dedicated biotechnology firms, internet software firms, such as Vermeer Technologies, many Silicon Valley companies

High Craft

PBFs producing multiple, incrementally related outputs with distinct and stable roles and skills. E. g. some business and professional services including London advertising firms, Danish furniture and machinery firms, some IT consulting.

Hollow

PBFs producing single outputs and coordinating tasks through standardised, separate and stable roles and skills. E. g. complex construction projects, many feature films in the UK and USA

DEVELOPING ORGANISATIONAL KNOWLEDGE

MANAGERIAL NEEDS AND INFORMATION MEDIA

Formal Management Control Systems

System Content

Budget Statistical Reports Financial data Non-financial data Performance appraisal Standard operating procedures Evaluation on basis of goals Rules, regulations and policies

Organisational Control Strategies

Type of Control Output/ Market-based Bureaucratic Normative Personal and Direct Characteristics of the Control System

Behaviour Control Low Formalisation High Subordinate Involvement Limited Scope and variety of Information Low

Requirements (Features of the Organization/Task)

Standard outputs External benchmark of performance (e.g. price) Yes Yes Process knowledge Employee commitment Stable environment No No No High High Low Medium No No Yes No Yes Unclear Low High High No No No Yes No High Low Low High No No Yes No No

Culture: Two Definitions

Drennan (1992: 3):

Culture is ‘how things are done around here’. It is what is typical of the organization, the habits, the prevailing attitudes,

the [established] pattern of accepted and expected behaviour.

Daft (2007: 239):

Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and is

taught to new members.

Describing Organizational Culture

Brown (1995: 8): • Artefacts • Symbols and symbolic action • Language in the form of jokes, metaphors, stories, myths and legends • Norms of behaviour • Heroes • Ethical codes • Basic assumptions • History – and advertising • Behaviour patterns in the form of rites, rituals, ceremonies and celebrations • Beliefs, values, attitudes

STRENGTH OF ORGANISATIONAL CULTURES

Intensity of Commitment to Organisational Beliefs and Norms

Low High

Proportion of Employees Sharing Organisational Beliefs and Norms

Low High

Weak Diffuse Elitist Strong

Types of Organisational Cultures

Autocracy Task Role Professional

Delegation of discretion and involvement in problem solving Conformity to established rules and procedures Flexibility Sources of innovation and learning Ability to integrate different knowledge and skills Typical control system Low Limited High Limited Low High High Owner manager Limited High Project teams of specialists High Low Managers Limited to managerial hierarchy Personal Normative and output Bureaucratic High Considerable Limited Professionals Limited to professional groups Normative and some bureaucratic

Contrasting Organisational Practices I a) Process-oriented vs.

Results-oriented

Extent of focus on outputs and results

b) Employee-oriented vs.

Job-oriented

Extent to which managers focus on employee development rather than immediate task performance

c) Parochial vs.

Professional

Extent of staff identification with organisational unit and company or occupation and skill

Contrasting Organisational Practices II d) Open system vs.

Closed system

Extent to which organisation is internally focused and separate from environment

e) Loose control vs.

Tight control

Extent to which staff are expected to conform to organisational norms of behaviour

f) Normative vs.

Pragmatic

Extent of commitment to meeting customer needs

An Example of Open vs Closed Systems?

Sanofi chief lays out distinctive strategy

• http://www.ft.com/cms/s/0/1b23c578-d7d0-11de-b578 00144feabdc0.html 03 December 2009 • In a swipe at Gerard Le Fur, his predecessor and former head of research and development, who was appointed chief executive and ousted within months, he said: "We had really a scientific organisation that really lived within its own walls; not a lot of external partnerships, virtually no contact with our commercial organisations." • … • Mr Viehbacher also criticised the "ridiculous" Sanofi Aventis name in China, where he said most company names have just three syllables. It would be shortened to Sanofi, he said. "We have to be much more adapted to our markets and customers and fight globalisation," he said.

Question

• How are organizational cultures created?

Distinctive Organisational Cultures

Depend on: • Selection • Training • Rituals, Symbols and Legends • Reward Systems • Promotion and Career Structures • Top Management Behaviour

MOTHER-DAUGHTER STRUCTURE

MNCs WITH AN INTERNATIONAL DIVISION

WORLDWIDE FUNCTIONAL STRUCTURE

WORLDWIDE FUNCTIONAL STRUCTURE

• Similar advantages and disadvantages to domestic functional structures (economies of scale within functions, skill development, but slow response and decision-making).

• But less effective in many MNCs: inability to adapt readily to the greater local diversity of business environments.

• Typically found in firms with

narrow product ranges

in relatively

stable

technical environments where crucial.

technical excellence

is

WORLDWIDE GEOGRAPHIC GROUPS

Question

• What sort of industry characteristics might lead MNCs to establish world-wide geographic groups?

WORLDWIDE GEOGRAPHIC GROUPS

• Typically found in

low technology

industries where sales and marketing are key functions and vary regionally.

Product range diversity

tends to be limited in such MNCs and products are often modified extensively to suit local markets.

WORLDWIDE GEOGRAPHIC GROUPS

An Example: Unilever

• • • •

Unilever Executive

• is responsible for managing profit and loss, and delivering growth across our regions, categories and functions.

Paul Polman James A Lawrence Sandy Ogg Chief Executive Officer Chief Financial Officer Chief HR Officer

• •

Professor Geneviève Berger - Chief Research & Development Officer Manvinder Singh (Vindi) Banga - President Foods

• • •

Douglas Anderson Baillie Europe Harish Manwani Michael B. Polk President of Western President, Asia Africa President, Americas

Worldwide Product Structure

Worldwide Product Structure

• Often found in large MNCs that have a variety of

diverse product ranges

that need little adaptation for different markets, and where technological scale economies are important.

Worldwide Product Structure

An Example: Lafarge

• Chairman and Chief Executive Officer • Chief Financial Officer • Vice-President Organization and Human Resources • Vice-President Strategy, Business Development and Public Affairs • Vice-President Communications • Co-President of the Cement Business * 3 • Co-President of the Aggregates and Concrete Business * 2 • President of the Gypsum Business

Worldwide Matrix