INP3004MAN3360 Dr' Steve

1
INP3004/MAN3360Dr. Steve
MacDonald
Organizations and Organizational Change
2
Organizational Research Macro vs Micro Levels

• Macro level Organizational level
• Study what makes one organization more successful
  than another in terms of its structure,
  hierarchy, upper management strategies and
  policies, history, etc.
• Micro level Individual level
• Study worker productivity, satisfaction,
  communication between workers, etc.
• Macro vs Micro research - Very little empirical
  data at macro level due to difficulty of
  conducting this type of research
• Sample size, cooperation, of orgs w/ variable
  of interest.
• Talk in terms of Organizational Theory

3
Organizational Theories

• Classical Theory
• Neo-Classical Theory
• Systems Theory

4
Classical TheoryComponents

• Classical Theory Highly structured,
  bureaucratic approach to organizations
• Four Components of classical theory
• Differentiated Activities Organizations divided
  by function, but rely on relationships between
  functions
• Ex Research, Personnel, Finance, Marketing,
  etc.
• People Though Orgs consist of activities and
  tasks, people run the show
• Ex Communicate, perform tasks, report to
  superiors
• Cooperation toward a goal People must cooperate
  to reach common org goal
• Ex Make profit to continue operation, provide
  quality product/services, etc.
• Authority Supervisor-subordinate relationships
• Ex Manager tells worker what to do and how to do
  it

5
Classical TheoryPrinciples

• Four Principles of Classical Theory that guide
  four components
• Functional Principle Division of labor
  (Horizontal) departments are set up so that
  people in each dept perform similar work
• Allows one manager to supervisor many similar
  tasks
• Scalar Principle Chain of command (Vertical)
  structure of org such that each level has its
  own level of responsibility
• each worker has only one supervisor to report to
• Line/Staff Principle Differentiates between
  personnel
• Line responsible for meeting org goals
  production, engineers, faculty, etc.
• Staff support lines activities personnel
  dept, quality control, admin, custodial, etc.
• Span of Control Number of subordinates under
  each mgr
• Flat each worker has more autonomy
• Tall more authority to supervisors

6
Functional vs Scalar Principles
7
Neo-Classical Theory

• Neo-classical theory softer version of
  classical theory based on following challenges to
  bureaucracy
• Differentiated activities some orgs allow
  people to get involved in many different
  activities
• Less specialization
• People people are interchangeable, rules arent
• When someone leaves org, the position usually
  remains
• Cooperation toward a goal Not everyone in org
  shares the same goal
• Some might see profit as goal, others
  environmental concern
• Authority Supervisors do not always direct
  subordinate performance
• Current trend toward more autonomy and
  participative decision making

8
Neo-Classical Theoryin Comparison to Bureaucracy

• Neo-classical theory
• More humanistic approach uses psychological
  principles of behavior
• Scalar principle need not be so rigid
• Distinction between line and staff often blurred
• Span of control size depends on several factors
  (no magic number)
• Consider mgrs ability, amount of supervision
  reqd, quality of workers, type of work, etc.

9
Systems Theory

• Systems Theory developed to account for modern
  orgs need to adapt to changing environment
• Treats org similar to biological system
  (Darwinian model)
• Must consider org within the context of its
  relationship to the environment
• Cannot study individual or small group behavior
  in isolation, all part of an interacting system
  affecting all other parts

10
Systems Theory

• Five Parts to an Organizational System
• Individuals bring KSAs personalities to org
• Formal Organization system structure
• Small Groups made up of interrelating
  individuals
• Status and Role differences in status and role
  dictate behavior norms more so than the
  individual
• Physical Setting physical environment
  technology

11
Systems Theory Model

• Output Users
• Consumers
• Clients
• Government
• Non-consumers

• Input Resources
• Families
• Banks
• Environment
• Material suppliers

Feedback

• Input
• Human Resources
• Financial Resources
• Physical Resources
• Materials
• Information

• Output
• Products/Services
• Satisfaction
• Reputation
• Profit/loss
• Wages/Salaries
• Taxes

• Process
• Organizational Structure
• Admin Decision Making
• Org policies, procedures
• Production process
• Org Climate

12
Organizational StructureCoordinating Mechanisms

• Mutual Adjustment Informal communication
  between workers who adjust to one another
• You wash, Ill dry
• Direct Supervision One person tells the other
  what to do
• Manager provides instruction to stock clerk
• Standardization of Work Processes Strict
  operating procedures w/little room for individual
  input on how
• Routine assembly line work
• Standardization of Work Output Specify exact
  quality of product or service (quality control)
• Every pizza tastes the same regardless of who
  made it
• Standardization of Skills Knowledge Everyone
  doing a particular job gets the same training
• Certified Public Accountants

13
Mintzbergs Basic Parts to all Organizations
Strategic Apex
Techno Support
Support Staff
Middle Line
Operating Core
14
Mintzbergs Basic Parts to all Organizations

• Operating Core Individuals producing the goods
  or services
• Production workers
• Strategic Apex Top level management responsible
  for overall effectiveness of the org
• President, CEO, VPs, Top Mgrs
• Middle Line Connects apex to operating core,
  chain of command
• Middle managers
• Techno Structure People who design the work,
  plan it, and train workers
• Analysts, I/O psychologists, Human Factors
  specialists
• Support Staff Provides services to org to
  assist function, but not directly related to org
  mission
• Custodial, mailroom, security

15
Re-organizing Downsizing

• Restructure in response to environmental changes
• Reorganize to change roles and authority
  hierarchy, rename, split, combine departments
• Downsize or right sizing to layoff large numbers
  of workers

Sent packing
Fired
Pink Slip
Rightsized
Canned
Axed
Laid off
Riffed
Walking papers
16
Reasons for Downsizing

• Automation machines do work of people
• Obsolescence positions become obsolete
• Salary Expense cut costs to survive by cutting
  salary

Pink Slip
17
Who gets the Axe?

• Strategic Apex?
• Very high salaries, could save big
• However, most responsibility, make big decisions
• Operating core?
• Lots of workers, perhaps dont need as many
• However, they make the products, low salaries
  dont save that much
• Middle line?
• Can reorganize and eliminate many middle mgr jobs
  and fairly high salaries
• Support Staff?
• Can be contracted or leased out, save on senior
  salaries and benefits
• Techno Structure?
• In house advisors/analysts can be replaced with
  outside consultants that charge more, but only
  work when you need them

18
Before Downsizing
Total Salary 1,400,000
19
After Downsizing
New Total Salary 650,000
20
Dilbert
21
Organizational Social System

• Social System informal structure apart from the
  formal organizational structure
• Three components
• Roles Expected behavior in a given position,
  related to the task
• One person can be production worker and coach of
  company softball team
• Norms Acceptable behaviors w/in a group
  developed through experience and maintained by
  peer reinforcement and punishment
• Dress, lunch breaks, topics discussed
• Organizational Culture Attitudes, behaviors,
  customs, and habits of organization
• The way we do things around here

22
Organization Development

• Organization Development (OD) Change aspects of
  the organization (rather than job) to increase
  productivity, motivation, etc.
• Uses psychological principles to improve orgs
  effectiveness.
• Takes place throughout the org from line worker
  to upper management
• OD consultant like an Org Doctor
• Diagnoses orgs problems
• Prescribes a corrective intervention
• Rechecks with follow-up evaluation

23
Organization DevelopmentComponents

• Change Agent Usually a consultant educated in
  business or psychology
• Capable of diagnosing org problems, developing
  ways to correct, and implementing the changes or
  instructing the org on how
• Client Org or individual or group
• Ethical considerations do not want to help
  managers at expense of employees even though mgr
  might be the client
• Intervention What change agent is paid to do
  (change program)

24
Empowerment

• Giving more power and decision-making authority
  to employees within a context of less traditional
  managerial oversight
• Spreitzers (1997) four dimensions of
  empowerment
• Meaning Believing that what you do matters
• e.g., being energized and passionate about your
  work
• Competence Sense of self-effectiveness
• e.g., having the confidence to perform
  successfully
• Self-determination Behaviors initiated and
  regulated by ones self
• e.g., sense of responsibility and ownership of
  work
• Impact Belief that you can effect
  organizational outcomes
• e.g., making a difference

25
How many psychologists does it take to change an
organization?

• One, but it has to want to change.

• Cannot change an org if you dont understand
• What can be changed
• What outcome you expect to accomplish
• Those things that can affect the change

26
Model of Organizational Change
Intervention Activity
Organizational Work Setting
Social factors
Physical setting
Organizing arrangements
Technology
Individual Behavior
Organizational Outcomes
Organizational performance
Individual development
27
Model of Organizational Change(Robertson
Porras)

• Organizational Work Setting Four interacting
  components
• Organizing Arrangements structure,
  administrative system, reward systems
• Ex bureaucracy or open systems approach
• Social Factors org culture, norms, roles,
  management styles
• Ex formal or casual, personal or business
  relationships
• Physical Setting layout of building
• Ex factory, offices, cubicles
• Technology machines required to do job
• Ex computers, phones, tools, production line

28
Model of Organizational Change(Robertson,
Roberts, Porras)

• Individual Behavior changes in the work setting
  affect worker behavior
• Ex New technology may frustrate workers
  affecting org culture and negatively impacting
  performance and satisfaction
• Organizational Performance if individuals work
  hard and cooperate, then org benefits
• Individual Development knowing one contributes
  to orgs success makes one feel better about self
  and org, thus providing motivation to work harder

29
Overcoming Organizational Resistance to Change

• Due to increased ambiguity in the environment and
  other undesirable effects, individuals often
  resist change in an organization
• Dirks, Cummings, Pierce (1996) used the concept
  of psychological ownership to understand why
  people promote or resist change
• Three needs related to psychological ownership
• 1. Self-enhancement Individuals desire to
  maintain high levels of self-esteem
• 2. Self-continuity Individuals attempt to
  maintain stability of their self over time
• 3. Control and efficiency Individuals
  attracted to situations where control and
  efficiency are likely to occur

30
Resistance to Change

• Three types of organizational change
• 1. Self-initiated vs. imposed change
  Individuals are more likely to accept
  self-initiated change (change seen as a result
  of their own choosing)
• 2. Evolutionary vs. revolutionary change
  Evolutionary change is more likely to receive
  positive reactions as it is a gradual more
  comfortable change process
• 3. Additive vs. subtractive change Additive
  change is often viewed more favorably, as the
  employees dont feel as though they are losing
  something
• Additional ways a consultant can ease concerns in
  a change situation
• educate about the reasons why change is needed
• provide feedback sessions during the change
  interventions

31
Organization DevelopmentIntervention Activities

• Diagnostic fact finding using tools such as
  interviews, records, observations, surveys
• Intergroup team building, conflict resolution,
  developing interpersonal and communication skills
• Education Training improve KSAs
• Coaching Counseling behavioral interventions,
  behavior modification, defining goals,
  encouraging empathy
• Life Career Planning identify individuals
  life career goals, plan ways to help achieve
  them

32
OD Intervention Depends on Client, Type of
Change, and Role of Change Agent
Total Org
Client
Group
Individual
Conceptual
Behavioral
Type of Change
Procedural
Structural
Catalyst
Prescriptive
Acceptant
Role of Change Agent
Confrontative
33
Change Agent Roles

• Acceptance Allows clients to explore their own
  problems (Rogerian-like approach)
• Active listening (hmm, uh huh)
• Catalyst Allows self discovery by client, but
  provides feedback
• If you think thats the problem, then why?
• Confrontative Probes clients and challenges
  their views providing supporting data
• You say you the guys on the line have gotten
  lazy, but their performance has actually improved
  over time
• Prescriptive Doctor/patient-like relationship
• I think this is the problem and this is what you
  should try

34
Culture Change

• What is necessary for an org to change its
  culture (norms, beliefs)?
• Strong leader need a persistent leader to help
  employees who are resistant to change
• Clear vision vision of what the new culture is
  and how workers will be effected must be clear
  and gain commitment at all levels
• New work procedures cant change if everything
  remains the same (how decisions are made,
  communication channels, policies)
• Org must be open to learn No one knows for sure
  what will happen, but must be willing to try

35
Total Quality Management

• Total Quality Management (TQM) or Total Quality
  Leadership (TQL)
• OD intervention begun by W. Edwards Deming
  (American Physicist)
• First adopted by Japanese business
• Became popular in U.S. after success of Japan
• Based on premise Continuous Process Improvement

Plan --gt Do --gt Check --gt Act --gt
36
Total Quality Management

• How does it work?
• Employee Involvement gets everyone involved in
  decision making. How?
• Sharing info goals, org performance, mission
• Develop knowledge training at all levels
• Reward org performance rewards tied to org
  performance, not individuals
• Redistribute power more autonomy to workers
• Quality Control strive for consistent high
  quality
• Customer Satisfaction emphasis on client
• Org Policies consistent with TQM rewards for
  quality, not speed

37
Re-engineering

• Re-engineering 3 part approach to changing an
  org tear down and make better
• Identify orgs distinctive competencies what
  does the org do best?
• Assess Core Processes determine which processes
  are working and which are remnants of past
  management
• Re-organize horizontally by process - cut out
  unnecessary middle management (more autonomy to
  workers)

38
TQM vs. Re-engineering
TQM Re-engineering

• Gradual improvement
• Bottom-up
• participative decision-making in planning TQM
  and execution
• Results in new processes

• Drastic change
• Top-down
• management decides how to re-engineer
• Often results in downsizing

39
Does OD work?

• Like therapy, a single dose is often not
  effective
• Empirical findings
• No change about 50 of the time
• Negative change less than 10 of the time
• Positive change about 40 of the time
• Results similar to that of psychotherapy with
  therapy many people still dont get better, some
  do, very few get worse.