Bu 604 Session 2

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Bu 604 Session 2

• Organizational Structure and Change

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Agenda

• Introduction Organizational Structure
• Design variables factors
• How are your firms structured
• Club Ed
• Organizational Change
• Case Jessica Casserras Task Force Hospital
  Integration in the Region of Erie

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Bu 604 Evaluation

• The 30 for Bu604 will be made up of the
  following components
• Participation _at_ 10
• Analytic memo re Wal-Mart case _at_ 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 _at_ 10 (3 pages 1 page of
  exhibits) Due Oct 24 (in class). Same submission
  format as above

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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

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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

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Three-Dimensional Model of the Environment
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Environmental Analysis
Static
Dynamic
Traditional Systems
Simple
Network and Cellular Systems
Complex
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Organizational Evolution
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Co-evolution of Economic Era Organizational
Form
Era of Standardization
Product Services Specialization
Mass Production
Era of Customization
Market Segmentation
Prototypical Production
Era of Innovation
Continuous, Efficient Innovation
Functional Divisional Matrix
Network Cellular Form
Form Form
Form Form 1850 1900
1950 2000 2050
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Location of Managerial Know-how in Alternative
Organizational Forms
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The Strategy-Structure Thesis
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Miles and Snows Organization Typology
Prospectors
Design and
Distribute
Defenders
Purchase and Produce
Analyzers
Prospect and Defend
Reactors
Respond and React
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High
Prospector
Opportunity Focus
Analyzer
Defender
Reactor
Low
High
Low
Efficiency Focus
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Galbraith Organization Design Strategies for
Dealing with Uncertainty
1. Rules and Policies 2. Hierarchies 3. Goals and
Visions
Mechanistic Methods
6. Vertical Information Systems
7. Lateral Relations
5. Self-Contained Tasks
4. Slack Resources
Increase the Capacity to Process Information
Lessen the Need to Process Information
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Organizations information-processing requirements
Information-processing Capacity of Structural
Design Choices

• Vertical Information Linkage Strategies
• Rules, Policies and Plans, including Vision and
  Goals
• 2. Hierarchical Referral
• 3. Increase the Vertical Communication Capacity
  of the Information Systems

• Horizontal Information Linkage Strategies
• Increase the Horizontal Communication Capacity of
  the Information System
• Create Lateral Relations
• Direct Contact
• Liaison Role
• Task Force
• Formal Teams
• Formal Integrating Roles
• Managerial Linking Roles
• Dual-Authority Relationships

Fit

• Strategies to Ease Information Processing Linkage
  Needs
• Addition of Slack Resources
• Creation of Self Contained Tasks

Organizational Effectiveness
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Contrasting Spans of Control
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Centralization and Decentralization

• Are decisions concentrated at top
  (centralization) or pushed to lower levels
  (decentralization)?
• There is a marked trend toward decentralization

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Formalization

• How standardized are the jobs?
• high formalization means employees have little
  discretion
• low formalization means employees have more
  freedom

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Mechanistic versus Organic Models
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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

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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

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Pyramidal Organizational Structure
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Flat Organizational Structure
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Departmentalization by Function
Marketing Sales
Accounting I. T.
Human Resources
Production
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Departmentalization by Product
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Departmentalization by Geography
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Departmentalization by Customer
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Matrix Structure for a Faculty of Business
Administration
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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.

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Network Organizations
Designers
Producers
Integrators Brokers
Purchasers
Distributors
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Building Blocks of Cellular Structures

• Entrepreneurship - Each cell will have
  entrepreneurial responsibility to the rest of the
  organization. The cells 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

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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
  self-governance necessary to fully utilize the
  competencies
• Must be committed to long-term sharing with
  organizational members

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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).
• 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.

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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 were on the subordinate end, its about our
  sensitivity to the aspects of dealing with
  hierarchy

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Organizational Change
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The Evolutionary Cycle
Large SCA L E Sma l l
Renewal
Conservation
Creative Destruction
Exploitation
Loose CONNECTEDNESS
Tight
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Life Cycle Curve and Point of Change
Success
A
C
Time
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Lewins Change Model
Unfreeze
CHANGE
Refreeze
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Organizational Congruence Model
TRANFORMATION PROCESS
OUTPUT SYSTEMS LEVEL UNIT/GROUP LEVEL INDIVI
DUAL LEVEL
INFORMAL STRUCTURE PROCESS PEOPLE
INPUT ENVIRONMENT (P.E.S.T.) RESOURCES
HISTORY/ CULTURE
S T R A T E G Y


FORMAL STRUCTURE
WORK
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Types of Organizational Change
Incremental
Strategic
Anticipatory Reactive
Reorientation
Tuning
Adaptation
Re-creation
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Types Of Change Management
INTENSITY OF CHANGE
MANAGEMENT OF STRATEGIC ORGANIZATIONAL CHANGE
HIGH
Difficulty of Change Transition Management
CHANGE THROUGH NORMAL MANAGEMENT PROCESSES
LOW
LOW
HIGH
ORGANIZATIONAL COMPLEXITY
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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

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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

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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
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CHANGE MANAGEMENT

• VISIONING AND THE NEED FOR CHANGE
• STAKEHOLDER ANALYSIS AND UNDERSTANDING THE POWER
  BASE
• ACTION PLANNING AND CONTINGENCIES

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CHANGE OCCURS WHEN
PERCEIVED BENEFITS OF CHANGE gt PERCEIVED COSTS
OF CHANGE
(Dissatisfaction X Benefits X Probability of
Success) gt Cost of Change
FIEL change.ppt
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Determining Steps

• Why?
• What?
• What!
• How?
• Who
• What
• Where
• When
• How
• And again.

Harveys Monosyllabic Model ?
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Lewins Force-Field Analysis
New Equilibrium
Desired State
Restraining Forces
Current State
Change Forces
Time
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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?
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• 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.
• How could these forces be weakened or removed?
  What actions might create major resentment?

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Types of Commitment to Change
1. Opposed to the Change 2. Let it Happen 3. Help
it Happen 4. Make it Happen
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Stages in the Change Process
Initial Awareness
Interested in the Change
Wanting the Change to Happen
Ready to Take Action
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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?

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Next Session

• We will shift our focus from the Macro to the
  Micro in the next class, putting the spot light
  on the Individual