organisational dynamics
DESCRIPTION
OD and OBTRANSCRIPT
OD vs OB• Organizational Dynamics
• Macro
• Behavior of organization
• Organization’s ability to learn, adapt and achieve its goals
• Individual and Group Dynamics • Micro
• Behavior in organization
• Individual and small groups
• Employee productivity, absenteeism, turnover, job satisfaction
• Learning motivation personality
• Role status, leadership, power, communication, interpersonal conflict
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Reasons of Organizational Failure
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• Failure to respond to external elements
• Inappropriate Strategy and Structure
• Inability to achieve internal efficiency
• Slow decision making
• Negative use of power and politics
• ethical lapses
• outmoded corporate culture
• Inability to manage internal conflicts
• Inability to change and innovate
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What is an Organization?
Social entities that are goal-directed
Designed as deliberately structured and coordinated activity systems
Linked to the external environment
Includes large multinational corporations, family owned businesses as well as nonprofits
• Two sets of factors merge into interactive systems, that the design parameters “cause” the so called
contingency factors just as much of the contingency factors influence the choice of design parameters
Environment
• Environment: the set of forces surrounding an organization that have the potential to affect the way it operates and its access to scarce resources
Two ways environment influences organizations
The Need for information about the environment
The need for resources from the environment
(a) Competitors, industry size and
competitiveness, related issues
(b) Suppliers,
manufacturers, real
estate, services
(c) Labor market,
employment agencies,
universities, training
schools, employees
in other companies,
unionization
(d) Stock markets,
banks, savings and
loans, private
investors
(e) Customers, clients,
potential users of products
and services
(f) Techniques of production, science,
computers, information technology
(g) Recession, unemployment rate,
inflation rate, rate of investment,
economics, growth
(h) City, state laws
and regulations, taxes,
services, court system,
political processes
(i) Age, values, beliefs,
education, religion,
work ethic, consumer
and green
movements
(j) Competition from
and acquisition by
foreign firms,
entry into overseas
markets, foreign
customs, regulations,
exchange rates
An Organization’s Environment
(j)
International
Sector
(d)
Financial
Resources
Sector
(e)
Market
Sector
(f)
Technology
Sector
(g)
Economic
Conditions
Sector
(a)
Industry
Sector
(h)
Government
Sector
(c)
Human
Resources
Sector
(b)
Raw Materials
Sector
(i)
Sociocultural
Sector
ORGANIZATION
DOMAIN
Goal and Strategy
• Goal –Company intent
• Strategy –a plan of action that describes resource allocation and activities for dealing with the organization and for reaching the organization’s goals
• Low Cost• Differentiation
• Organizational culture: the set of shared values and norms that controls organizational members’ interactions with each other and with people outside the organization
Culture
• Refers to the tools, techniques, and actions used to produce the organization’s products or services
Technology
Differences Between Large and Small Organizations
organization's magnitude as reflected in the number of people in the organization
Organization Size: Is Bigger Better?
Pressures for Growth• Companies in all industries strive for growth to acquire the
size and resources needed to compete globally• Size enables companies to take risks
Dilemmas of Large Size• Large organizations are able to get back to business more
quickly following a disaster• Large companies are standardized, mechanistic, and
complex• Small companies are flexible and can be responsive• Many companies aim to have a big company/small-
company hybrid
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Structural Dimensions
• Formalization• Specialization
• Horizontal specialization –number of task and breadth of it• Vertical specialization – control of these task
• Unskilled job – highly specialized in both vertical and horizontal dimensions
• Professionals – specialized horizontally but enlarged vertically
• Hierarchy of Authority• Centralization
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The Evolution of Organization Theory and Design
Historical perspectives provide insight into
how organization design and management
practices have varied over time in response
to changes in society.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Historical Perspectives
• Efficiency is Everything
• Scientific Management: Pioneered by Frederick Winslow Taylor
• How to Get Organized
• Administrative Principles
• Contributed to Bureaucratic Organizations
• What about People?
• Hawthorne Studies
• Can Bureaucracies Be Flexible?
• Flexible and lean; focused on service, quality, and engaged employees (1908s)
• It All Depends: Key Contingencies
• Contingency: there is no “one best way”
Mintzberg distinguished five components of an organization:
The strategic apex: ensuring that the organization serve its mission in an effective way, and also that it serve the needs of those people who controls.
The operational core: Those who perform the basic work related directly to the production of products and services
The technostructure: The analysts who serve the organization by affecting the work of others. They may design it, plan it, change it, or train the people who do it, but they do not do it themselves.
The supporting staff: Composed of specialized units that exist to provide support to the organization outside the operating work flow
The Middle Line: Form a chain joining the strategic apex to the operating core by the use of delegated formal authority
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Each of these five parts has a tendency to direct the organization in a particular direction.
Strategic Apexes – centralization
Support Staff - collaborationTechnostructures - standardization
Middle Line - balkanisation
Operating Core – professionalization
Five Generic Structures
There are five generic organisation structures which can be described in terms of the five-part theory:- Simple structure,- Machine bureaucracy,- Professional bureaucracy,- Divisionalised form,- Adhocracy.
Simple Structure
The simple structure, typically, has:-little or no technostructure,- few support staffers,-a loose division of labour, -minimal differentiation among its units, -and a small managerial hierarchy.
Most organizations pass through the simple structure in their formative years.
Simple Structure – a
centralized form of
organization that
emphasizes the upper
echelon and direct
supervision
Machine Bureaucracy
The design of a machine bureaucracy tends to be as follows:-highly specialised routine operating tasks;-very formalised procedures in the operating core;-a proliferation of rules, regulations, & formalised communication;-large-sized units at the operating level;-reliance on the functional basis for grouping tasks;-relatively centralised power for decision making;an elaborate administrative structure with sharp distinctions between line and staff.
The machine bureaucracies are typically found in the mature organizations.
Machine Bureaucracy –
a moderately
decentralized form of
organization that
emphasizes the
technical staff and
standardization of
work processes
"performance organizations" not
"problem solving"
Professional Bureaucracy
The professional bureaucracy relies for coordination on:-The standardization of skills and its associated parameters such as design, training and indoctrination.
-In professional bureaucracy type structures duly trained and indoctrinated specialists -professionals- are hired for the operating core, and then considerable control over their work is given to them.Most of the necessary coordination between the operating professionals is handled by the standardization of skills and knowledge .
The professional bureaucracy emphasizes authority of a professional nature .
"the power of expertise".
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Professional
Bureaucracy –
a decentralized
form of
organization that
emphasizes the
operating level
and standardization
of skills
Divisionalised Form
Divisionalised form type organizations are composed of semi-autonomous units - the divisions. An operational solution to co-ordinate and controls a large conglomerate delivering:-Horizontally diversified products or services-In a straight-forward, stable environment-Where large economies of scale need not apply.
"the power of expertise".
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Divisional Form – a
moderately decentralized
form of organization
that emphasizes the
middle level and
standardization of outputs
Adhocracy
Adhocracy includes a highly organic structure, with:-little formalization of behaviour;-job specialization based on formal training;--a reliance on liaison devices to encourage mutual adjustment, the key coordinating mechanism, within and between these teams
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Adhocracy – a
selectively
decentralized
form of
organization that
emphasizes
mutual adjustment
among people
Simple Structure
Machine Bureaucracy
Professional Bureaucracy
Adhocracy
Division of Labor
Functional Functional Functional Project/
Teams
Differentiation Small Large Large Variable
Hierarchy Director/
Founder
Techno-structure
Professionals Experts
Centralization High High High Low
Formalization Low High Low Low
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Organizational Alignment
• Organizational alignment occurs when a firm’s organization is aligned with firm strategy, so that firm’s structure, systems, staffing, etc
supports its strategy
Hard" elements
Easier to define or identify
and management can
directly manipulate and
change them
Can be found in strategy
statements, corporate plans,
organizational charts and
other documentations.Leader first try to change
these in order to improve
performance
soft S’s
Harder to change directly,
and typically take longer to
do so.
They are harder to
describe since capabilities,
values and elements of
corporate culture are
continuously developing and
changing.
The 7-S model
Tool for analysis and action
Emerged from a stream of research that sought to identify the best way to manage and organize firms
Team – McKinsey & company consultants, Harvard Business school, and Stanford business school professors
The 7-S model
Conclusions◦ No single best way to organize
◦ Ideal organization aligned with or “fits” its environment
◦ Organization –complex system with inter-related elements –each contributes to its effectiveness
◦ Seven key elements critical to understanding organization effectiveness
◦ To be effective, an organization must have a high degree of “fit” or internal alignment, among these seven elements
Commonly Found Misalignments
• Strategy Is Out of Line with External Competitive Environment
• Organisation and Competencies Fail to Support Strategy
• Incompatibilities and Tensions Within the Organisation Level
• Rewarding One Thing but Expecting Another
• Failure to Realign Strategy and Organisation with Environmental Changes
Managing Change
A leader is wise to recognize the full range of elements that may need to be changed and focus on the ones that will have the greatest effect
All seven variables are interconnected. It is often difficult to make progress on one without making adjustments in the other as well
The model does not imply any natural starting point for a change effort. Only by going through a diagnosis of the alignment of the organization – determine where you need to focus attention
Hard ‘S’ –Strategy, structure, Systems
Soft ‘S’ – Style, staffing, skills, shared values