Determine the Focus and Direction of Improvement

1
Unit 5

• Determine the Focus and Direction of Improvement

2
Unit Objectives

1. To discuss several approaches to determine the
   focus and direction of improvement.
2. To discuss relevant classical management theories
   to implement improvement and
3. To introduce emerging strategies of improvement.

3
Approaches to determine focus direction of
improvement

• There are several approaches that may be used to
  determine the focus and direction of improvement
  in organization.
• The approaches include
• (a) the key organizational components approach
  (Leavitt, H,.J,, 1964) and
• (b) the systems theory approach (Bartol, K.M. and
  Martin, D.C., 1994).

4
Other approaches The classical Management
Theories

• The classical management theories include
• bureaucratic theory,
• human relations theory, and
• contingency theory.
• Theory Z

5
Emerging Strategies of Improvement

• Emerging strategies of improvement such as
• customer-oriented/driven strategy, and
• process-oriented Strategy
• These two will be dealt in details in separate
  units.

6
Key Organizational Components Approach

• According to Leavitt (1964), significant changes
  and innovations usually involve alterations in
  one or more of these key components
• structure,
• technology,
• human resources and
• culture (see exhibit 1).

7
Key Organizational Components Approach (Exhibit 1)
8
Interrelated components

• Since these components are somewhat interrelated,
  a change in one may create the need for
  adjustments or adaptations in others.

9
Structural Components

• Organization structure is the pattern
  interactions and coordination designed by
  management to link the tasks of individuals and
  groups in achieving organizational goals.
• Structure determines how division of work,
  responsibility, cooperation, consultation and
  decision levels need to be created in
  organizations.

10
Structural Components

• Structure includes such factors as the way jobs
  are defined and clustered into work units and the
  various mechanisms used to facilitate vertical
  and horizontal communication (e.g., delegation
  and the use of interdepartmental teams).
• Structure must be adapted as circumstances
  change, reorganization are common and results in
  continuous restructuring.

11
Structural Components

• Reorganizations influence change by altering the
  pattern of interactions and coordination.
• Research suggests that reorganizations
  representing a quantum change a change that is
  both concerted and dramatic tend to be more
  frequently associated with subsequent high
  performance than do piecemeal and incremental
  reorganization.

12
Technology Components

• Technology involves
• the knowledge,
• tools,
• machines,
• equipment, and
• work technique, used by an organization in
  delivering its products or services.

13
Technology Components

• Changes in technology are reflected both in major
  new products and services and in frequent
  improvements in current products and services.
• Technological change is an important factor in
  international competition.

14
Technology Components

• Technological innovations are also altering the
  work methods in organizations.
• Technological changes often affect the number of
  employees required and the types of skills they
  need.

15
Human Resources Components

• Bringing about improvement or change in
  individuals in the workplace is typically aimed
  at altering
• the knowledge,
• skills,
• perceptions, and
• behaviors needed to do the job more effectively
  and efficiently.

16
Human Resources Components

• Changing individual relies on training and
  development activities, supplemented by
  performance appraisal and reward systems that
  reinforce the needed behaviors.
• Frequently, recruitment and selection systems
  must be adjusted to reflect the needs for
  individuals with differing skills.

17
Human Resources Components

• Having individuals who possess the knowledge and
  skills required to handle changing circumstances
  takes careful planning.
• Improvement/change in human resource systems are
  necessary to enhance the effectiveness of
  alterations made in other organizational
  components, such as structure and technology.

18
Culture Components

• Organizational culture is a system of
• shared values,
• assumptions,
• beliefs and
• norms that unite members of the organization.

19
Culture Components

• A number of organizations attribute their success
  partly to distinctive cultures that are rooted in
  values articulated by strong founders and
  reinforced by subsequent leaders.
• Some have made cultural changes based on such
  factors as visions of their leaders or threats to
  survival. For example from money-losing, little
  concern for customers, costs, or productivity to
  one that emphasizes customer focus, productivity,
  and initiatives

20
Culture Components

• The change in culture may be part of the major
  changes that help the transformation.
• Major organizational changes often require
  alterations in organizational culture.
• A major change in one component tends to have
  implications for the others.

21
The Systems Theory Approach

• The systems theory approach is based on the
  notion that organizations can be visualized as
  systems.
• A system is a set of interrelated parts that
  operate as a whole in pursuit of common goals.

22
Exhibit 2 The Classic Systems Approach

• According to the systems approach, an
  organizational system has three major components
  input, process and output (see exhibit 2).

23
The Contemporary Systems Approach

• However according to Bartol and Martin (1994) the
  expanded version of systems approach has four
  main components as follow
• inputs,
• transformation processes,
• outputs and
• feedback (see Exhibit 3).

24
Exhibit 3 The Contemporary Systems Approach
25
The Advantages of Systems Approach

• The systems approach has a number of advantages
• First, it can analyze systems at different levels
  (individual, group, organization, society and
  supranational level).
• Second, the systems view provides a framework for
  evaluating how well the various parts or
  components of an organization interacts to
  achieve a common goal.

26
The Advantages of Systems Approach

• Third, it emphasizes that a change in one part of
  the system may affect other parts.
• Fourth, the systems approach considers how a
  organization interacts with its environment the
  factors outside the organization that can affect
  its operations. In order to consider the
  environment adequately, an organization needs to
  operate as an open system.

27
Open System

• Open system is a system that operates in
  continual interaction with its environment.
• Through such interaction the system takes in new
  inputs and learns about how its outputs are
  received by various important outside elements.
• This open system received numerous feedback
  compared to a closed system.

28
Characteristics of Open System

• Three major characteristics of open systems are
• negative entropy,
• differentiation, and
• synergy.

29
Negative entropy

• It is the ability of the open systems to bring in
  new energy, in the forms of inputs and feedback
  from the environment, in order to delay or arrest
  decay over time (entropy).

30
Differentiation

• Is the tendency of open systems to become more
  complex.
• The increased complexity usually stems from the
  addition of specialized units to handle
  particularly troublesome or challenging parts of
  the environment.

31
Synergy

• Is the ability the whole to equal more than the
  sum of its parts.
• This means that an organization ought to be able
  to achieve its goal more effectively and
  efficiently than would be possible if the parts
  operated separately

32
Open System

• According to the systems viewpoint, managers are
  likely to be more successful if they attempt to
  operate their units and organizations as open
  systems that are carefully attuned to the factors
  in the environment that could significantly
  affect them.

33
Determine the New Focus and Direction

• Intended improvement strategies must be in line
  with its vision and purpose/mission.
• In other words all improvement strategies must be
  aligned with its grand strategic plans.
• For an organization, continuing to do the same
  things it has done in the pass may not help it
  survive, let alone be competitive in a dynamic,
  at time erratic and unpredictable business
  environment.

34
Introduction

• Even trying to do the same thing harder, or
  fine-tuning it, may not pay off.
• Things have to be done differently. Structures,
  processes, methods, and product technologies that
  were appropriate to the earlier market conditions
  may not be relevant to present or future markets.
  
• These have to be replaced by new structures,
  processes, and methods relevant to changing
  times.

35
Introduction

• Organizations may have to reset themselves on a
  different set of basic assumptions and business
  opportunities that relate to
• customer focus,
• competitive intelligence,
• its knowledge and competency base,
• innovativeness,
• a new products/services or markets.

36
Introduction

• Designing a new state is possible if organization
  is clear as to what the new focus and direction
  of improvement.
• That is, it needs to be clear about its intended
  improvement and it should be in line or aligned
  with its grand strategic plans.

37
Introduction

• It has to examine its
• current strength and weaknesses in the context of
  opportunities,
• threats, and
• dynamism of the business environment, while
  identifying what should be improved or changed
  and how, and determining the pace of improvement
  or change (see Exhibit 4).

38
(No Transcript)
39
Possible focus and direction of improvement are

1. Responsiveness to environment changes
2. Management process and control strategy
3. Human resource strategy
4. Structure and systems strategies
5. Political strategy
6. Outcome strategy

40
1. Responsiveness to environment changes

• be consumer and market focused (providing
  better value to the customer).

41
2. Management process and control strategy

• geared to policy considerations relating to
  product, process and market.
• It is also geared towards improving
  intra-organizational dynamics such as
• intra-and inter-unit coordination,
• individual and group accountability,
• distribution of benefits/resources, and
• shaping or reorienting its information management
  in line with the planned strategy.

42
3. Human resource strategy

• aimed at designing people-oriented strategies
  that involve employees and enable them to achieve
  the organizations goals and objectives.
• It helps them develop the knowledge, skills and
  behavior necessary for change implementation.

43
4. Structure and systems strategies

• organizations may have to
• redesign their structure,
• reorganization tasks, positions, people, and
  systems for the speedy delivery of product or
  service which is of high customer value.

44
5. Political strategy

• is to identify the external and internal
  political realities influencing the organization.
  
• Conflicting interests,
• shifts in power balance, and
• coalitions/alliances among individuals/groups
  often accompany significant organizational
  changes.

45
6. Outcome strategy

• focused on
• individual,
• team and
• organizational effectiveness and efficiency.

46
Classical Management Theory Approach

• The classical management theory includes the
  following theories among others
• 1. Bureaucracy theory developed by Weber, 1947
• 2. Human relations theory developed by Likert,
  1961 McGregor, 1960 and Maslow, 1954 and others.
• 3. Contingency theory developed by Gilbreth,
  1977 Lawrence and Lorsch, 1967 Trist, 1981 and
  Woodward, 1965.
• 4. Theory Z

47
Basic Assumption of Bureaucracy Approach

• Bureaucracy approach emphasizes the need for
  organizations to operate in a rational manner,
  rather than, relying on the arbitrary whims of
  owners and managers.
• Organizations operate more fairly and efficiently
  if there are rules and standardized procedures
  governing every conceivable situation.

48
Characteristics of Bureaucracy Theory Approach to
bring Improvement

• The following are the characteristics of
  bureaucracy approach
• 1. Specialization of labor.
• 2. Formal rules and procedures.
• 3. Impersonality.
• 4. Well-defined hierarchy (well-structured).
• 5. Career advancement based on merit
• 6. Slow respond to change

49
1. Specialization of labor

• jobs are broken down into routine well-defined
  tasks and members are extremely competent at
  their tasks.

50
2. Formal rules and procedures

• written rules and procedures specify the
  behaviors desired from members facilitate
  coordination and ensure uniformity.

51
3. Impersonality

• Rules, procedures, and sanction are applied
  uniformly regardless of individual personalities
  and personal considerations.

52
4. Well-defined hierarchy (well-structured)

• multiple levels of positions, with carefully
  determined reporting relationships among levels,
  provide supervision of lower offices by higher
  ones, a mean for handling exceptions, and the
  ability to establish accountability of actions.
• Change is handled by creating new structure and
  new rules and ignoring the roles of individuals
  in dealing with change.

53
5. Career advancement based on merit

• selection and promotion is based on the
  qualifications and performance of members.

54
6. Slow respond to change

• Slow respond to change

55
Basic Assumption of Human Relation Theory

• The assumption of human relationship theory is
  that
• improving social relations in organizations,
• understanding workers and managers as human
  beings with social and emotional needs, and
• improving interpersonal communication may cause
  organization to function more effectively and
  efficiently.

56
The Human Relation Approach Basics Principles

• The basic principles of the human relations
  approach are as follows
• Decentralization
• Participatory Decision-Making
• Concern for Developing Self-Motivated Employees

57
Decentralization

• The strict notion of hierarchy employed by
  classical management theorists is replaced with
  the idea that individual workers and functional
  areas (i.e., departments) should be given greater
  autonomy and decision-making power.
• This requires greater emphasis on lateral
  communication so that coordination of efforts and
  resources can occur.
• This communication occurs via informal
  communication channels rather than the formal,
  hierarchical ones.

58
Participatory Decision-Making

• Decision-making is participatory in the sense
  that those making decisions on a day-to-day basis
  include line workers not normally considered to
  be "management."
• The greater autonomy afforded individual
  employees -- and the subsequent reduction in
  "height" and increase in span of control of the
  organizational structure -- requires that they
  have the knowledge and ability to make their own
  decisions and the communication skill to
  coordinate their efforts with others without a
  nearby supervisor.

59
Concern for Developing Self-Motivated Employees

• The emphasis on a system of decentralized and
  autonomous decision-making by members of the
  organization requires that those members be
  highly "self-motivated" (that is, able to set
  their own task-related goals and monitor their
  own performance in achieving them).
• So one goal of managers in such an organization
  is to design and implement organizational
  structures that reward such self-motivation and
  autonomy.
• Another is to negotiate working relationships
  with subordinates that foster effective
  communication in both directions.

60
Concluding Remark on the Human Relations approach

• Thus, the human relations approach suggests
  changes in
• the structure of the organization itself,
• in the nature of work, and
• in the relationship between supervisor and
  subordinate.
• Each of these changes relies upon assumptions
  about the individual, the organization, and
  communication.

61
Basic Assumption of The Contingency Theory

• Contingency theory is a viewpoint that argues
  that appropriate managerial actions depends on
  the particular parameters of the situation (see
  Exhibit 5).

62
Exhibit 5 Contingency Theory Approach to
Improvement
63
The Contingency Theory

• This theory holds that neither structure nor
  people are the determinants of organizational
  success.
• Successful organizations develop their structures
  by studying and adapting to different situations.

64
Contingency Theory Approach to Improvement

• Contingency theorists do not believe that one
  type of organization fits all environments.
• Each organization must be sufficiently flexible
  to adapt to changing conditions.

65
Theory Z (Japanese Management)

• The Theory Z approach involves
• giving workers job security
• including them in some decision making
• emphasizing group responsibility
• increasing quality
• establishing gradual advancement policies, more
  informal controls and broader career paths
• and showing greater concern for employees work
  and nonwork well-being.

66
Other Emerging Strategies

• Two recent perspectives that have gained
  attention over the recent years include
• A customer-oriented/driven strategy Tenner and
  DeToro, 1992 and Harigopal, 2001.
• A process-oriented Strategy Tenner and DeToro,
  1992 and Harigopal, 2001.