INP3004/MAN3360 Dr. Steve

1. MacDonald INP3004/MAN3360Dr. Steve 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 it’s 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 it’s 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 line’s 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. Scalar Principle Vertical Structure Functional Principle Horizontal Structure 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 aren’t • 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 mgr’s ability, amount of supervision req’d, quality of workers, type of work, etc.

9. Systems Theory Systems Theory – developed to account for modern org’s 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 KSA’s & 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. Organization Complexity Organizational StructureCoordinating Mechanisms • Mutual Adjustment – Informal communication between workers who adjust to one another • “You wash, I’ll 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. Mintzberg’s Basic Parts to all Organizations Strategic Apex Techno Support Support Staff Middle Line Operating Core

14. Mintzberg’s 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 PinkSlip 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 $$ • However, most responsibility, make big decisions • Operating core? • Lots of workers, perhaps don’t need as many • However, they make the products, low salaries don’t save that much $$ • 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 org’s effectiveness. • Takes place throughout the org from line worker to upper management • OD consultant like an Org Doctor • Diagnoses org’s 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 Spreitzer’s (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 one’s 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 don’t 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 performance Organizational Outcomes 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 org’s 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 don’t feel as though they are losingsomething • 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 that’s 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 – can’t 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 --> Do --> Check --> Act -->

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 org’s 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 don’t get better, some do, very few get worse.