Organizational Behavior, 9

1. Organizational Behavior, 9/EChapter 18Organizational Design for Strategic Competency Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc.

2. Organizational Behavior: Chapter 18 2 Chapter 18 Study Questions What is organizational design and how is it linked to strategy? What is information technology and how is it used? Can the design of the firm co-evolve with the environment? How does a firm learn and continue to learn over time?

3. Organizational Behavior: Chapter 18 3 What is organizational design and how is it linked to strategy? Organizational design. The process of choosing and implementing a structural configuration. The choice of an appropriate organizational design depends on the firm’s: Size. Operations and information technology. Environment. Strategy for growth and survival.

4. Organizational Behavior: Chapter 18 4 What is organizational design and how is it linked to strategy? The structural configuration of organizations should: Enable senior executives to emphasize the skills and abilities that their firms need to compete, and to remain agile and dynamic in a rapidly changing world. Allow individuals to experiment, grow, and develop competencies so that the strategy of the firm can evolve.

5. Organizational Behavior: Chapter 18 5 What is organizational design and how is it linked to strategy? Co-evolution. The firm can adjust to external changes even as it shapes some of the challenges facing it. Shaping capabilities via the organization’s design is a dynamic aspect of co-evolution. Even with co-evolution, managers must maintain a recognizable pattern of choices in organizational design.

6. Organizational Behavior: Chapter 18 6 What is organizational design and how is it linked to strategy? Organizational size. As the number of employees increase, the possible interconnections among them increase even more. The design of small firms is directly influenced by core operations technology. Larger firms have many core operations technologies in a variety of specialized units.

7. Organizational Behavior: Chapter 18 7 What is organizational design and how is it linked to strategy? The simple design for smaller units and firms. A configuration involving one or two ways of specializing individuals and units. Vertical specialization and control emphasize levels of supervision without elaborate formal mechanisms. Appropriate for many smaller firms because of simplicity, flexibility, and responsiveness to a central manager.

8. Organizational Behavior: Chapter 18 8 What is organizational design and how is it linked to strategy? Organizational design must be adjusted to fit technological opportunities and requirements. Operations technology. The combination of resources, knowledge, and techniques that creates a product or service output. Information technology. The combination of machines, artifacts, procedures, and systems used to gather, store, analyze, and disseminate information for translating it into knowledge.

9. Organizational Behavior: Chapter 18 9 What is organizational design and how is it linked to strategy? Thomson’s view of technology. Technologies classified according to the degree of specification and degree of interdependence of work units. Intensive technology. Uncertainty as to how to produce desired outcomes.

10. Organizational Behavior: Chapter 18 10 What is organizational design and how is it linked to strategy? Thomson’s view of technology (cont.). Mediating technology. Links parties that want to become interdependent. Long-linked technology. The way to produce desired outcomes is known and broken down into a number of sequential steps.

11. Organizational Behavior: Chapter 18 11 What is organizational design and how is it linked to strategy? Woodward’s view of technology. Small-batch production. The organization tailor makes a variety of custom products to fit customer specifications. Mass production. The organization produces one or a few products through an assembly line system. Continuous-process technology. The organization produces a few products using considerable automation.

12. Organizational Behavior: Chapter 18 12 What is organizational design and how is it linked to strategy? Woodward’s view of technology (cont.). The proper matching of structure and technology is critical to organizational success. Successful small-batch and continuous-process plants have flexible structures with small work groups at the bottom. Successful mass production operations are rigidly structured and have large work groups at the bottom.

13. Organizational Behavior: Chapter 18 13 What is organizational design and how is it linked to strategy? Adhocracy. An appropriate structural design when managers and employees do not know the appropriate way to service a client or produce a particular product.

14. Organizational Behavior: Chapter 18 14 What is organizational design and how is it linked to strategy? An adhocracy is characterized by: Few rules, policies, and procedures. Substantial decentralization. Shared decision making among members. Extreme horizontal specialization. Few levels of management. Virtually no formal controls.

15. Organizational Behavior: Chapter 18 15 What is organizational design and how is it linked to strategy? An adhocracy is useful when: The tasks facing the firm vary considerably and provide many exceptions. Problems are difficult to define and solve.

16. Organizational Behavior: Chapter 18 16 Study Question 2:What is information technology and how is it used? Why IT makes a difference. IT provides a partial substitute for: Some operations. Some process controls. Some impersonal methods of coordination. IT provides a strategic capability. IT provides a capability for transforming information to knowledge for learning.

17. Organizational Behavior: Chapter 18 17 Study Question 2:What is information technology and how is it used? Information technology as a substitute. Initial implementation of IT often displaced routine, highly specified, and repetitious jobs. Did not alter fundamental character or design of the organization. A second wave of substitution replaced process controls and informal coordination mechanisms with IT. Brought some marginal changes in organizational design.

18. Organizational Behavior: Chapter 18 18 Study Question 2:What is information technology and how is it used? Information technology as a strategic capability. IT has been used to improve the efficiency, speed of responsiveness, and effectiveness of operations. IT provides individuals the information they need to plan, make choices, coordinate with others, and control their own operations. This new strategic IT capability resulted from IT being broadly available to everyone.

19. Organizational Behavior: Chapter 18 19 Study Question 2:What is information technology and how is it used? IT and learning. IT systems empower individuals and expand their jobs. IT encourages the development of a “virtual” network. IT transforms how people manage.

20. Organizational Behavior: Chapter 18 20 Study Question 2:What is information technology and how is it used? IT and e-business. Many dot-com firms adopted some variation of adhocracy. As the dot-coms grew, the adhocracy design became problematic. Limits on the size of an effective adhocracy. Actual delivery of products and services rested more on responsiveness to clients and maintaining efficiency than on continual innovation.

21. Organizational Behavior: Chapter 18 21 Can the design of the firm co-evolve with the environment? Understanding the environment is important because an organization is an open system. General environment. The set of cultural, economic, legal-political, and educational conditions found in the areas in which the organization operates. Specific environment. The owners, suppliers, distributors, government agencies, and competitors with which an organization must interact to grow and survive.

22. Organizational Behavior: Chapter 18 22 Can the design of the firm co-evolve with the environment? Environmental complexity. The magnitude of problems and opportunities in the organization’s environment, as reflected in: Degree of richness. Degree of interdependence. Degree of uncertainty. More complex environments provide more problems and opportunities.

23. Organizational Behavior: Chapter 18 23 Can the design of the firm co-evolve with the environment? Environmental richness. The environment is richer when: The economy is growing. Individuals are improving their education. Those on whom the organization relies are prospering. A rich environment has more opportunities and dynamism. The opposite of richness is decline.

24. Organizational Behavior: Chapter 18 24 Can the design of the firm co-evolve with the environment? Environmental interdependence. Linkage between environmental independence and organization design may be subtle and indirect. Organization may co-opt powerful outsiders. Organization may absorb or buffer demands of powerful external elements.

25. Organizational Behavior: Chapter 18 25 Can the design of the firm co-evolve with the environment? Environmental uncertainty. Uncertainty and volatility can be particularly damaging to large bureaucracies. A more organic form is the appropriate organizational design response to uncertainty and volatility. Adhocracy may be needed extreme uncertainty and volatility.

26. Organizational Behavior: Chapter 18 26 Can the design of the firm co-evolve with the environment? In a complex global economy, firms must learn to co-evolve by altering their environment. Two important ways of co-evolution: Management of networks. Development of alliances.

27. Organizational Behavior: Chapter 18 27 Can the design of the firm co-evolve with the environment? Networks and alliances around the world. Informal combines or cartels exist in Europe but are illegal in the United States except in rare cases. Networks are called keiretsu in Japan. Bank-centered keiretsu. Vertical keiretsu. In the United States, outsourcing is developing as a specialized form of network organization.

28. Organizational Behavior: Chapter 18 28 Can the design of the firm co-evolve with the environment? Interfirm alliances. Announced cooperative agreements or joint ventures between two independent firms. Alliances are quite common in high technology industries. Since firms cooperate rather than compete; consequently, both the alliance managers and sponsoring executives must be patient, flexible, and creative in pursuing goals.

29. Organizational Behavior: Chapter 18 29 Can the design of the firm co-evolve with the environment? Virtual organization. An ever-shifting constellation of firms, with a lead corporation, that pool skills, resources, and experiences to thrive jointly. A design option when internal and external contingencies are changing quickly.

30. Organizational Behavior: Chapter 18 30 Can the design of the firm co-evolve with the environment? Key to making a virtual organization work. The production system needs to be in a partner network bound together by mutual trust and survival. The partner network needs to develop and maintain an advanced IT, trust and cross-owning of problems and solutions, and a common shared culture. The lead firm must take responsibility for the whole network and coordinate member firm actions. The lead corporation and the partners need to rethink how they are internally organized and managed.

31. Organizational Behavior: Chapter 18 31 Can the design of the firm co-evolve with the environment? Boundaryless organization. A design option that eliminates vertical, horizontal, external, and geographic barriers that block desired action. Actions to create a boundaryless organization. Executives should systematically examine the organization and its processes. Organization members should initiate a process of improving their cooperation.

32. Organizational Behavior: Chapter 18 32 How does a firm learn and continue to learn over time? Organizational learning. Process of knowledge acquisition, information distribution, information interpretation, and information retention in adapting successfully to changing circumstances. Adjustment of organization’s and individual’s actions based on experience. The key to successful co-evolution.

33. Organizational Behavior: Chapter 18 33 How does a firm learn and continue to learn over time? Mimicry. Occurs when managers copy what they believe are the successful practices of others Is important to new firms. Provides workable, if not ideal, solutions to many problems. Reduces the number of decisions that need to be analyzed separately. Establishes legitimacy or acceptance and narrows the choices requiring detailed explanation.

34. Organizational Behavior: Chapter 18 34 How does a firm learn and continue to learn over time? Experience. A primary way to acquire knowledge. Besides learning by doing, managers can also systematically embark on structured programs to capture the lessons to be learned. The major problem with emphasizing learning by doing is the inability to precisely forecast changes.

35. Organizational Behavior: Chapter 18 35 How does a firm learn and continue to learn over time?

36. Organizational Behavior: Chapter 18 36 How does a firm learn and continue to learn over time? Scanning. Involves looking outside the firm and bringing back useful solutions. Grafting. The process of acquiring individuals, units, or firms to bring in useful knowledge.

37. Organizational Behavior: Chapter 18 37 How does a firm learn and continue to learn over time? Common problems in information interpretation. Self-serving interpretations. People seeing what they want to see, rather than seeing what is. Managerial scripts. A series of well-known routines for problem identification and alternative generation and analysis that are commonly used by a firm’s managers.

38. Organizational Behavior: Chapter 18 38 How does a firm learn and continue to learn over time? Organizational myths. Commonly held cause-effect relationships or assertions that cannot be empirically supported. Common myths. Single organizational truth. Presumption of competence. Denial of tradeoffs.

39. Organizational Behavior: Chapter 18 39 How does a firm learn and continue to learn over time? Information retention mechanisms. Individuals. Organizational culture. Transformation mechanisms. Formal organizational structures. Ecology. External archives. Internal information technologies.

40. Organizational Behavior: Chapter 18 40 How does a firm learn and continue to learn over time? Deficit cycles. A pattern of deteriorating performance that is followed by even further deterioration. Factors associated with deficit cycles. Organizational inertia. Hubris. Detachment.

41. Organizational Behavior: Chapter 18 41 How does a firm learn and continue to learn over time? Benefit cycles. A pattern of successful adjustment followed by further improvements. Firms can successfully co-evolve by initiating a benefit cycle. The firm develops adequate mechanisms for learning.

42. Organizational Behavior, 9/EChapter 19Organizational Culture and Development Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc.

43. Organizational Behavior: Chapter 18 43 Chapter 19 Study Questions What is organizational culture? How do you understand an organizational culture? How can the organizational culture be managed? How can you use organizational development to improve the firm?

44. Organizational Behavior: Chapter 18 44 What is organizational culture? Organizational culture. The system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members. Called corporate culture in the business setting. No two organizational cultures are identical.

45. Organizational Behavior: Chapter 18 45 What is organizational culture? External adaptation. Involves reaching goals and dealing with outsiders regarding tasks to be accomplished, methods used to achieve the goals, and methods of coping with success and failure. Important aspects of external adaptation. Separating eternal forces based on importance. Developing ways to measure accomplishments. Creating explanations for not meeting goals.

46. Organizational Behavior: Chapter 18 46 What is organizational culture? External adaptation involves answering important goal-related questions regarding coping with reality. What is the real mission? How do we contribute? What are our goals? How do we reach our goals? What external forces are important? How do we measure results? What do we do if specific targets are not met? How do we tell others how good we are? When do we quit?

47. Organizational Behavior: Chapter 18 47 What is organizational culture? Internal integration. Deals with the creation of a collective identity and with finding ways of matching methods of working and living together. Important aspects of working together. Deciding who is a member and who is not. Developing an understanding of acceptable and unacceptable behavior. Separating friends from enemies.

48. Organizational Behavior: Chapter 18 48 What is organizational culture? Internal integration involves answering important questions associated with living together. What is our unique identity? How do we view the world? Who is a member? How do we allocate power, status, and authority? How do we communicate? What is the basis for friendship?

49. Organizational Behavior: Chapter 18 49 What is organizational culture? Subculture. A group of individuals with a unique pattern of values and philosophy that are not inconsistent with the organization’s dominant values and philosophy. Counterculture. A group of individuals with a pattern of values and philosophy that outwardly reject the surrounding culture.

50. Organizational Behavior: Chapter 18 50 What is organizational culture? Problems associated with subcultural divisions within the larger culture. Subordinate groups are likely to form into a counterculture pursuing self-interests. The firm may encounter extreme difficulty in coping with broader cultural changes. Embracing natural divisions from the larger culture may lead to difficulty in international operations.

51. Organizational Behavior: Chapter 18 51 What is organizational culture? Taylor Cox’s five step program. Step 1: The organization should develop pluralism. Step 2: The organization should fully integrate its structure. Step 3: The organization must integrate the informal networks. Step 4: The organization should break the linkage between naturally occurring group identity and organizational identity. Step 5: The organization must actively work to eliminate identity-based interpersonal conflict.

52. Organizational Behavior: Chapter 18 52 How do you understand an organizational culture?

53. Organizational Behavior: Chapter 18 53 How do you understand an organizational culture? Sagas. Heroic accounts of organizational accomplishments. Rites. Standardized and recurring activities that are used at special times to influence organizational members. Rituals. Systems of rites. Cultural symbols. Any object, act, or event that serves to transmit cultural meaning.

54. Organizational Behavior: Chapter 18 54 How do you understand an organizational culture? Culture often specifies rules and roles. Rules. The various types of actions that are appropriate. Roles. Where individual members stand in the social system.

55. Organizational Behavior: Chapter 18 55 How do you understand an organizational culture? Shared values. Help turn routine activities into valuable and important actions. Tie the organization to the important values of society. May provide a very distinctive source of competitive advantage.

56. Organizational Behavior: Chapter 18 56 How do you understand an organizational culture? Characteristics of strong corporate cultures. A widely shared real understanding of what the firm stands for, often embodied in slogans. A concern for individuals over rules, policies, procedures, and adherence to job duties. A recognition of heroes whose actions illustrate the company’s shared philosophy and concerns.

57. Organizational Behavior: Chapter 18 57 How do you understand an organizational culture? Characteristics of strong corporate cultures (cont.). A belief in ritual and ceremony as important to members and to building a common identity. A well-understood sense of the informal rules and expectations so that employees and managers know what is expected of them. A belief that what employees and managers do is important and that it is essential to share information and ideas.

58. Organizational Behavior: Chapter 18 58 How do you understand an organizational culture? Organizational myths. Unproven and often unstated beliefs that are accepted uncritically. Myths enable managers to redefine impossible problems. Myths can facilitate experimentation and creativity. Myths allow managers to govern.

59. Organizational Behavior: Chapter 18 59 How do you understand an organizational culture? National culture influences. Widely held common assumptions may be traced to the larger culture of the host society. National cultural values may become embedded in expectations of organization members.

60. Organizational Behavior: Chapter 18 60 How can the organizational culture be managed? Strategies for managing corporate culture. Managers help modify observable culture, shared values, and common assumptions directly. Use of organizational development techniques to modify specific elements of the culture.

61. Organizational Behavior: Chapter 18 61 How can the organizational culture be managed? Why a well-developed management philosophy is important. Establishes generally understood boundaries on all members of the firm. Provides a consistent way for approaching new and novel situations. Helps hold individuals together by showing them a known path to success.

62. Organizational Behavior: Chapter 18 62 How can the organizational culture be managed? Strategies for building, reinforcing, and changing organizational culture. Directly modifying the visible aspects of culture. Changing the lessons to be drawn from common stories. Setting the tone for a culture and for cultural change. Fostering a culture that addresses questions of external adaptation and internal integration.

63. Organizational Behavior: Chapter 18 63 How can the organizational culture be managed? Mistakes that managers can make in building, reinforcing, and changing culture. Trying to change people’s values from the top down: While keeping the ways in which the organization operates the same. Without recognizing the importance of individuals. Attempting to revitalize an organization by dictating major changes and ignoring shared values.

64. Organizational Behavior: Chapter 18 64 How can you use organization development to improve the firm? Organization development (OD). The application of behavioral science knowledge in a long-range effort to improve an organization’s ability to cope with change in its external environment and to increase its internal problem-solving capabilities.

65. Organizational Behavior: Chapter 18 65 How can you use organization development to improve the firm? Organizational development. Designed to work on both issues of external adaptation and internal integration. Used to improve organizational performance. Seeks to achieve change so the organization’s members maintain the culture and longer-run organizational effectiveness.

66. Organizational Behavior: Chapter 18 66 How can you useorganization development to improve the firm? Underlying assumptions of OD. Individual level. Respect for people and their capabilities. Group level. Belief that groups can be good for both people and organizations. Organizational level. Respect for the complexity of an organization as a system of interdependent parts.

67. Organizational Behavior: Chapter 18 67 How can you useorganization development to improve the firm? Organization development goals. Outcome goals. Mainly deal with issues of external adaptation. Process goals. Mainly deal with issues of internal integration.

68. Organizational Behavior: Chapter 18 68 How can you useorganization development to improve the firm? In pursuing outcome and process goals, OD helps by: Creating an open problem solving climate. Supplementing formal authority with knowledge and competence. Moving decision making where relevant information is available. Building trust and maximizing collaboration. Increasing the sense of organizational ownership. Allowing people to exercise self-direction and self-control.

69. Organizational Behavior: Chapter 18 69 How can you useorganization development to improve the firm? Action research. The process of systematically collecting data on an organization, feeding it back to the members for action planning, and evaluating results by collecting and reflecting on more data after the planned actions have been taken.

70. Organizational Behavior: Chapter 18 70 How can you useorganization development to improve the firm?

71. Organizational Behavior: Chapter 18 71 How can you useorganization development to improve the firm?

72. Organizational Behavior: Chapter 18 72 How can you useorganization development to improve the firm? Organizationwide OD interventions. Survey feedback. Collection and feedback of data to organization members for action planning purposes. Confrontation meetings. Activities for quickly determining how an organization can be improved and taking initial actions for betterment.

73. Organizational Behavior: Chapter 18 73 How can you useorganization development to improve the firm? Organizationwide OD interventions (cont.). Structural redesign. Realigning the organization’s structure or major subsystems. Collateral organization. Using representative organizational members in periodic small group problem-solving sessions.

74. Organizational Behavior: Chapter 18 74 How can you useorganization development to improve the firm? Group and intergroup OD interventions. Team building. Activities to improve the functioning of a group. Process consultation. Activities to improve the functioning of key group processes. Intergroup team building. Activities to improve the functioning or two or more groups.

75. Organizational Behavior: Chapter 18 75 How can you useorganization development to improve the firm? Individual OD interventions. Role negotiation. Clarifying expectations in working relationships. Job redesign. Creating long-term congruence between individual goals and organizational career opportunities. Career planning. Structured opportunities for individuals to work with managers or staff experts on career issues.