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Session 11 - 18

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Organizing

Organization

Organizer

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A social relationship which is either closed or limits the

admission of outsiders by rules, so far as its order is

enforced by the action of a head.. (Weber, 1947: 145

146) Hierarchy of authority

Division of labor

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Activity is accomplished through conscious, deliberateand purposeful coordination.

Karl Marx

Focus was on outcomes.

System ofconsciously coordinated activities or forces of

two or more persons (Chester Barnard, 1938: 37)

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Organizations are social units (or human groupings)

deliberately constructed and reconstructed to seek specific

goals (Etzioni, 1964)

Organizations have distinctive features other than goal

specificity and continuity (Scott, 1964)

Relatively fixed boundaries

A normative order

Authority ranks

A communication system

Incentive system

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Coordination of

Effort

CommonGoal

Division ofLabor

Hierarchy of

Authority

Conscious coordination

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Environment

Stakeholders

DistributorsSuppliers

Customers Competitors

Government

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Use of an

Organization allows

People Jointly

Increase

Specialization and

Division of Labor

Use Large-scale

Technology

Managing ExternalEnvironment

Economize on

Transaction Cost

Exert Power and

Control

Increases Value that

an Organization can

Create

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Inputs

InformationEnergy

People

Transformations

Social Component

Technological Component

Outputs

Finished GoodsServices

Ideas

Feedback

Environment

Alignment Equifinality

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Measuring Effectiveness

Goal Approach:

When output goals can easily measured

Ex: Business organizations (Profitability, Growth, Market

share, ROI)

Resource Based Approach:

When other indicators of performance is difficult to obtain.Ex: Not-for-profit organizations, Social welfare organizations

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Integrated effectiveness Model

External

Control

Flexible

Internal

Rational Goal Emphasis

Primary goal: productivity,

efficiency, profit

Sub goals: planning, goal

setting

Internal Process Emphasis

Primary goal: Stability,

Equilibrium

Sub goals: Information

Management, Communication

Open Systems Emphasis

Primary goal: Growth & Resource

Acquisition

Sub goals: flexibility, readiness

Human Relations Emphasis

Primary goal: HR Development

Sub goal: cohesion, morals,

training

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Organizational

Design

Effectiveness in

Satisfying Stakeholders

Human Resource

OutcomesSituational Factors

Organizations History

Labor Market and

Workforce Characteristics

Task TechnologyBusiness/ Financial

Pressure

Country culture/ Laws

Union

GM and TMT

Business Goals and

Strategy A Diagnostic Model of Organizational

Effectiveness

Coordination

Competence

CommitmentOrganization of work

Measurement and Reward

Systems

Personnel Flow

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International

The

OrganizationUnion

Competitors

Suppliers

Distributors

Customers

Ecological

Cultural

Political

Legal

Demographic

Economic

Technological

General Environment: Specific environment andOrganizations ability to secure resources

Specific Environment Organizations ability to secure resources

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Environmental complexity: The strength, number, and

interconnectedness of the specific and general forces that an

organization has to manage

Wider variety of products for different groups of customers

Environmental

ComplexityUncertainty about the

environment

Predicting and

Controlling flow ofresources

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Environmental dynamism: The degree to which forces in the

specific and general environments change over time

Stable environment

Unstable (dynamic) environment

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Environmental richness/ Munificence: Amount of

resources available to support an organizations domain

Environments may be munificence because:

The organization is located in a poor country or in a

poor region of a country

There is a high level of competition, and organizations

are fighting over available resources

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Content

Conditions

Analytical Categories

Complexity Dynamism Munificence

Technological

Legal

Political

Economic

Demographic

Ecological

Cultural

International

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Degree of

Uncertainty

Level of

Differentiation

Level of

Integration

As the level of Uncertainty increases, effective organizations

increase their level of differentiation and integration

HighHigh

Low Low

High

Low

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Adapting to Environmental Uncertainty

IntegrationDifferentiation

Number of Positions and

Departments

Environmental

Complexity

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Tasks are broken down into specialized,

separate parts

Tasks are rigidly defined

There is a strict hierarchy of authority

and control, and there are many rules

Knowledge and Control of tasks are

centralized at the top of the organization

Communication is vertical

Dynamism

Employees contribute to the common

tasks of the department

Tasks are adjusted and redefined

Less hierarchy

Knowledge and control of tasks are

located anywhere in the organization

Communication is horizontal

Mechanistic Organic

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Manufacturing Sales R & D

Mechanistic

structure

Organic

structure


Tallorganization

Flatorganization


Centralized

decision

making

Decentralized

decision

making


StandardizationMutual

adjustment

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External Environment and Uncertainty

Number of Factors in Organization Environment

Adapt to

EnvironmentHigh

Uncertainty

Low

Uncertainty

HighLowLow

High

Rate of

Change in

Factors in

Environment

High-Moderate

Uncertainty

Low-Moderate

Uncertainty

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Simple

Low Uncertainty

Stable

Mechanistic Structure:

Formal, Centralized

Few Departments

No integrating Roles

Current operations orientation:

low-speed response

High-Moderate Uncertainty

Unstable

Organic Structure, teamwork:

participative, decentralized

Few Deptts, much boundary

spanning

Few integrating roles

Planning Orientation; fast response

Complex

Low-Moderate Uncertainty

Mechanistic Structure: Formal,

Centralized

Many Deptts, some boundary

spanning

Few integrating roles

Some planning: moderate-speed

response

High Uncertainty

Organic Structure, teamwork:

participative, decentralized

Many Deptts differentiated,

extensive boundary spanning

Many Integrating roles

Extensive Planning, forecasting;

high-speed response

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Complex

Dynamic

High

Uncertainty

Organic Structure(Low Centralization,

formalization, and low

standardization)

Greater Differentiation

and More Integration

Environment

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Strategies for Managing Resource Dependencies

Two basic types of interdependencies cause uncertainty

Symbiotic interdependencies: Interdependencies that

exist between an organization and its suppliers and

distributors

Competitive interdependencies: Interdependencies that

exist among organizations that compete for scarce inputsand outputs

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Establish Interorganizational Linkages

(Competitive Interdependency)

Cartel CollusionStrategic

Alliance

Merger &

Takeover

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Controlling the Environmental Domain

Change the Domain

Political Activity, Regulation (Influence Govt. Legislation andRegulation)

Trade Associations

Illegitimate Activities

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Complex

Munificence

Dynamic

ResourceDependence

High

Uncertainty

Control of

environmental domain

Establishment of

favorable linkage

Organic Structure

(Low Centralization,

formalization, and lowstandardization)

Greater Differentiation

and More Integration

Environment

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Technical complexity

The extent to which a production process can be programmed

so that it can be controlled and made predictable

High Technical Complexity

(Automation)

Low Technical Complexity(Depends primarily on KSA of

people)

Theory of Joan Woodward

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Three types of production technology:

Small-batch and unit technology

Large-batch and mass production technology Continuous-process technology

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Small-batch and unit technology

Involves making one-of-a-kind, customized products or

small quantities of products

Can be adapted to individual orders Is relatively expensive

Scores ______ on the dimension of technical complexity

_________ structure is the most appropriate structure for

this technology

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Large-batch and mass production technology

Involves producing large volumes of standardized

products

The conversion process is standardized and highlycontrollable

Allows an organization to save money on production and

charge a lower price for its products

Scores _______ on the technical complexity dimension

___________ structure is the most appropriate structure

for this technology

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Structural

characteristics

Small-Batch

Technology

Mass

ProductionTechnology

Continuous

ProcessTechnology

Organizational

Structure

Low Technical Complexity High

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OrganicMechanistic

Model

2

Model

4

Model

3

Model

5

Model

6

Model

1

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It facilitates fast innovative responses

Run by self-driven entrepreneurs (expertise, know each other,

Company survival)

No formal structure and control system

Entrepreneurial Structure

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The structure of an organization helps in

Division of labor Defining the Identity within the organization and

How they relate to each other

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Was the functional structure a good way for

Appex to solve its earlier problems?CEO

Engineering Marketing Finance R & D

Groups people on the basis of

their common skills, expertise, or

resources they use

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Limitations of functional structure

Proliferation of jobs both horizontally and vertically

(Communication Problem)

Emergence of organizational politics

Differentiation and integration

Lot of pressure on CEO (Strategic Problem)

Dilutes accountability for the financial performance of the

organization (Measurement problem)

Can lead to diminished zeal to produce new and innovativeproducts and services

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Do you think the Product and Business teamstructures were useful ways of addressing the

limitations of functional structure?

Strategic focus to the development and performance of various

products and services

Reduced integrative role of Shikhar

Greater emphasis on product development

Ambiguity and conflict over who had what decisions right

Resource allocation

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Product

Team

VP

Purchasing

CEO

VP

Engineering

Manager

Product A

Manager

Product D

Manager

Product C

Manager

Product B

VP

Marketing

VP

Finance

VP

R & D

Matrix Structure

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Network Structure

A cluster of different organizations whose actions are

coordinated by contracts and agreements rather than through a

formal hierarchy of authority

Very complex as companies form agreements with many

suppliers, manufacturers, and distributors

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Divisional structure: To solve some of the control problems

Create smaller, more manageable subunits

Product structure Geographic structure

Market structure

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Division

C

Division

B

Division

A

VP

R&D

VP

Marketing

VP

Finance

CEO

VP

MM

Corporate Headquarter Staff

Division

D

Support Functions

Corporate

Managers

Divisional

Managers

Functional

Managers

Multi Divisional Structure

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SalesEngineering Marketing Finance R & D

CEO

PT

Manager

PT

Manager

PT

Manager

Product

Division

Product

Division

Product

Division

Product

Development

Teams

Functions

Functionalspecialists

Product Team Structure

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1984-May, 1988

Division of Labor Projects, Interest and Skill

CoordinationMechanism

Senior LeadershipFace2face

Conflict Resolution Persuasion

Distribution of

Decision Rights

Informal

Control Commitment

Identity and Careers Entrepreneur

Strengths

Responsive

Innovative

Fast

Weakness Short term focus

No Accountability

No career Path

Service suffered

May 1988-Feb, 1989

Expertise

Not Clear

Consensus

Not Clear

Not specified

Experts

Fast

Egalitarian

Difficult to Understand

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Feb, 1989 Mar, 1989

Division of Labor Functional Expertise

Coordination

Mechanism

Conflict Resolution

Distribution of

Decision Rights

Partitioned. But Ghosh

was involved in everything

Control Compliance Actions

Identity and Careers Functional Experts

Strengths

Focused People in Specific

tasks

Efficient Pooling

Weakness

May 1989-Aug, 1990

(Product Team)

Product & Functional

Expertise

Product

Team manager

Team Persuasion

Product Manager

P & L

General Management

Balanced functional and

product focus

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Aug, 1990 Jan, 1991

(Divisional)

Division of Labor Products

Coordination

Mechanism

Authority of Div. Head

Conflict resolution Senior Management

Distribution of

Decision Rights

Division Head

Control Profit and Loss Results

Identity and Careers General Management

Strengths Profit Focused

Strategic Responsive

Weakness Walls between Divisions

Innovation Lowers

Duplication of Resources

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Functional

Division of

Labor

By Inputs

Coordination Hierarchy,

Supervision,

plans

Decision Rights Highly

Centralized

Boundaries Core/Periphery

Importance of

Informal

Structure

Low

Network

By Knowledge

CFT

Highly

decentralized

Porous and

Changing

High

Matrix

By Both

Dual Reporting

Relationships

Shared

Multiple

interfaces

Considerable

Divisional

By Outputs

Division

manager and

Corporate staff

Separation of

Strategy and

execution

Internal/

External

Markets

Modest

Comparison among Different Structures

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Functional Divisional Matrix Network

Resource Efficiency Excellent Poor Moderate Good

Time Efficiency Poor Good Moderate Excellent

Responsiveness

Adaptability

Relative Advantage and Disadvantage of Different

Structures

Accountability Good Excellent Poor Moderate

Environment for

which Best suited

Stable Heterogeneous

Environment

Complex

Environment

Volatile

Environment

Strategy for which

best suited

Focused/Low

Strategies

Diversified

Strategy

Responsiveness

strategy

Innovation

Strategy

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Opinion about Beta culture

Weird, penguin, primitive, materialistic, etc. Opinion about Alpha culture

Close, Insulting, No purpose, etc..

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Make it legitimate for people in culture A to stereotype and

make fun of the people in culture B

Tend to discount everything in culture B so no one tries tounderstand any of it

No one in culture A says anything good about the people in

culture B for fear of appearing disloyal

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It is often difficult to get people value Others who are

different from them in looks, dress, or behavior

Some of us are marginalized because we are fromdifferent

Gender

Race

Too tall, too short

Different age

Different social background etc.

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Some traits that characterize culture

High territoriality vs. Low Territoriality

Respect for elders

Respect for authority

Individualism vs. Collectivism

Monochronic vs. Polychronic

Work to live vs. Live to work

Relationship vs. Deal-focused Formal vs. Informal

Past, present, future emphasis

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ExternalFocusI

nternalFocu

s

Flexibility and Discretion

(Interest in Making Changes)

Stability and Control

(Interest in Keeping things the same)

Clan

Culture

Adhocracy

Culture

MarketStructure

HierarchyCulture

Competing Values Framework

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Contingency Approach to Organizational Design

Design ofStructure

Environment

Fit

Effectiveness

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State of collaboration among organizational units

Differences among several units of the organization

Greater the differentiation the more difficult it becomes

for employees to communicate across unit boundaries

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Form of

Interdependence

Main type of

coordination

Communication Strategy to reduce

uncertainty

Pooled Standardization Low

Increase number

of Customers

served

Sequential

Planning

&

Scheduling

Medium

Slack Resources/

Vertical

Integration

Reciprocal

Mutual

Adjustment High

Specialism of task

activities

Number and Pattern of units that have to collaborate

Aspects of Integration

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Frequency with which collaboration is necessary

Importance of achieving the objective

Certainty and predictability of the information involved

Aspects of Integration

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Organizational Design Challenges

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To determine the levels of vertical and horizontal

differentiation to reach organizational goals

CEO

Vertical

Differentiation

Horizontal

Differentiation

Improve Coordination

among subunits

To facilitate

specialization

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How to Link and Coordinate organizational

activities

Higher the differentiation

the more complex the

integration mechanisms

Integration

Differentiation

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Who will make Decisions

Makes Planning and Coordination

Difficult

Lose control of decision making

Risk Averse

Decision making process

Slow

Centralization

Decentralization

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To decide Mechanisms to control specific

employee tasks and roles

Standardization

Mutual Adjustment

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Resource Constraints

Existing Players

Population Ecology Model

The factors that affect the rate at which new organizations are born

(and die)

Population Density

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Organizational Isomorphism

(Similarity among organizations in a population)

Coercive isomorphism

Mimetic isomorphism

Normative isomorphism

Pressures exerted by other

organizations and by society in general

Indirectly adopt the norms and values

of other organizations

Organizations intentionally imitate one

another to increase their legitimacy

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Evolution and Revolution

Prolonged periods of growth where no major upheaval

occurs in organization practices

Periods of substantial turmoil in organizational life

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Key Forces in Organizational Development

Age of the Organization

Size of the Organization

Stages of Evolution

Stages of Revolution

Growth rate of the Industry

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Management practices that work well in one phase may

bring on a crisis in another

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Organizational Practices in Five Phases of

GrowthCategory Phase 1

Measurement

focus

Make and Sell

OrganizationalStructure

Informal

Top-

Management

Style

Individualistic

and

Entrepreneurial

Control System Market Results

Management

Reward

Emphasis

Ownership

Phase 2

Efficiency of

Operation

Centralizedand functional

Directive

Standards &

Cost Centers

Salary and

Merit

increases

Phase 3

Expansion of

Market

Decentralizedand

Geographical

Delegative

Reports and

Profit Center

Individual

Bonus

Phase 4 Phase 5

Consolidation of

Organization

Problem

solving and

innovation

Line staff andProduct group

Matrix ofTeams

Watchdog Participative

Plans and

investment

centers

Mutual Goal

setting

Profit Sharing

and stock

options

Team Bonus

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Organizational Decline

When the organization fails to

Anticipate

Recognize

Avoid, neutralize, or adapt to

external or internal threats

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Weitzel and Jonssons Model of Organizational

Decline

Decline

BeginsDissolutionTime

P

E

RF

O

R

M

A

N

C

E

Blinded InactionFaulty

ActionCrisis Dissolution

Good

Information Acceptable Performance

Prompt

Action

Corrective

ActionEffective

Reorganization

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The Commonwealth Mini-society

Top Group

Middle Group

Bottom Group

Promote Learning

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Appreciation for structural injustice and its effect on

individuals

Individual efforts and goodwill can be distorted and

wasted in the absence of a social system that permits theirexpression

Our understanding of power and authority

Complex interplay between structure and the individuals Regardless of individual beliefs and make-up, being on the top

is very different from being on the bottom

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In-group and out-group dynamics

How difficult it is to create effective communication and

decisions even with best of intentions.

Experience of dilemmas and conflicts of power

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Life generally seems good for high-power persons

Usually hard to move towards cooperation, conciliation,

and compromise.

Protect their superior power

High-power members tend to be more angered by lowpower members insult than when the position is reversed

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Tug-of-war

Organizational

Contributors

Individuals

Groups

Group/

Organizational

Interest

ConflictManagement

Power

Influence Tactics

Political

Tactics

Climate of Destructive

Competition and Suspicion

Climate of Openness,

Cooperation, and Trust

Self-interest

Source: Kreitner, R., & Kinicki, A. (1995). Organizational Behavior. Chicago: Irwin

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Sources of Power

Source: Mcginn, K. L., & Lingo, E. L. (2007). Power & Influence. Harvard

Business School Publication

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Unique personal attributes and

skills

Your relationship with others

Formal roles in your organization

Personal

PowerRelational

Power

Position

Power

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Ability to endure and succeed

in competitive situations

Ability to obtain others social support

Ability to encourage others cooperation by building trust and

understanding

Personal

Power

Charisma

Communication

Skills

Track

Record

Energy &

Stamina

Focus

Tolerance

for Conflict

Sensitivity Submerging ego Flexibility

Expertise &

Self-confidence

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Position

Power

Formal Hierarchical

Position

Controlling Strategic

Resources

Control over entry

Legitimate Power

Control over values and

terms of Legitimacy

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Relational

Power

Direct Ties

Mutual Intimacy

Tie Strength

Frequency of Interaction

Duration

Multiplexity

Reciprocity

Tie Content

Information

Money Emotions

Social Support

Exchanged Based Trust Based

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Relational

Power

Networking

Density

Centrality

Coalition

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Coercive

Reward

Legitimate Informational

Referent

Expert

Bases

ofPower

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Influence Tactics

Consultation

Rational Persuasion

Inspirational Appeal

Personal Appeal Ingratiation

Coalitions

Pressure

Legitimacy Exchange

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Indirect Influence

Beat Around the bush

Let people figure things out for themselves, come to their own

conclusions, and take initiative on their own

Talk Less, Listen More

Need to be understood, affirmed and appreciated

Make them like you

Craumer, M. (2006). When direct approach backfires, try indirect influence,Harvard

Management Update .

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Use stories and metaphors

Do a favor even a small one

Make them laugh

Humor can create common bond that melt resistance andencourages cooperation

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Thank You

session 11 18

Documents