To note:
• MCQ quiz started Tues 8 Dec 8 am – next Tues
22 Dec midnight
• Topics to be tested: Lectures 1-5
• Covering textbook chapters, 2,3, 4, 6(pp.95 –
97),7 (innovation part only) & 8
Second Assignment Already online:
choose either Video 1 or 2
DESCRIPTION
• In pairs (you have to choose a partner in class to work
with), students are to select one of the two (2) Business
Assignment topics and present a two page paper
answering the set questions provided.
• Change in number of words for each question: 300 words
for each giving a total of 900 words for 3 questions
• Make sure both persons have inputs in all the 3 questions
• Use theories from the lecture plus 2 references (journal &
website references)
ASSESSMENT TASK 1: Business Assignment
Topic
1. Change
Management
Lecture
Session
7
2. Leadership
9
Available
17 Dec – 31
Dec
Due Date
Form
at
31 Dec (Thurs) Video
in tutorial
Case
17 Dec – 14 Jan 14 Jan (Thurs )
in tutorial class
Please take note of the due date!
Video
Case
How to submit
1. Attached the JCU Business School Cover sheet,
marking criteria & peer assessment form to the
hard cover copy
2. Hard copy to be submitted to tutor in class for the
first video assignment due 31 Dec (Thurs) &
second video assignment due 14 Jan 2016
(Thurs).
3. Electronic copy put through Safe Assignment drop
box on the subject site before or on due date.
Session 7 Organising Part 1:
Structure & Designing Adaptive Organisations
• Managing Change
• Managing Teams
Textbook chapters: 7 (pp. 119 – 125) 9, 10
Learning outcomes
After this lecture, you should be able to:
1. Understand what organising is and explain the four departmentalisation
approaches to organisational structure.
2. Explain the factors that influence organisational design/structure focusing
on strategy and environment
3. Explain the 5 stages of organisational decline.
4. Describe Kurt Lewin’s 3 step approach to organisational change.
5. Discuss the different methods that managers can use to minimise resistance
to change.
Organising – Basic Concepts
1.
Set of formal tasks assigned to
individuals and departments.
2.
Formal reporting relationships.
3.
Design of systems to ensure effective
coordination of employees across
departments.
Organisational Structure
The vertical and horizontal configuration of
departments, authority and jobs within a company
Answers questions:
• Who reports to whom?
• Who does what?
• Where is the work done?
Organisational Structure
The framework in which the organisation defines
how tasks are divided, resources are deployed and
departments are coordinated.
1.
Set of formal tasks assigned to individuals and
departments
2.
Formal reporting relationships
3.
Design of systems to ensure effective
coordination of employees across departments.
Organisational Structure– Basic Concepts
Authority, responsibility and delegation
Authority – The formal and legitimate right of a manager to
make decisions, issue orders and allocate resources
Responsibility – The duty to perform an assigned task or
activity
Delegation – Process managers use to transfer authority
and responsibility to positions below them in the hierarchy
Centralisation and decentralisation
Centralisation -The location of decision authority is located
near top organisational levels.
Decentralisation -The location of decision authority is
located near lower organisational levels.
Types of Organisation Structures
Departmentalisation is the process of grouping together
people and jobs into work units/departments
Traditional organisation structures which achieve
departmentalisation are:
1.
Functional structures
2.
Product/Divisional structures
Newer organisation structures are:
3.
Team structures
4.
Network structures
Departmentalisation
Divides work into separate units responsible for particular
tasks.
Types include:
• Functional departmentalisation
• Product departmentalisation
• Geographic departmentalisation
• Customer departmentalisation
Functional Departmentalisation
An organisation structure in which
positions are grouped into departments
based on similar skills, expertise and
resource use
Works well for small organisations
producing few products or services
Functional departmentalisation
Advantages:
• Work done by highly skilled specialists.
• Lowers costs through reduced duplication.
• Communication and coordination problems are lessened.
Disadvantages:
• Cross-department coordination can be difficult.
• May lead to slower decision making.
• Produces managers with narrow experiences.
Product/Divisional Departmentalisation
Sometimes called product, program or self-contained unit
structure
An organisation structure in which departments are grouped
based on similar organisational outputs
Divisions are self-contained units for producing a single product
Group together people who work on the same product or
process, serve similar customers and/or are located in the same
area or geographical region
Common in complex organisations
Avoid problems associated with functional structures.
Diverse skills rather than similar skills: the basis of this form of
departmentalisation
Product departmentalisation
Advantages:
• Managers specialise, but have broader experiences.
• Easier to assess work-unit performance.
• Decision making is faster.
Disadvantages:
• Duplication of activities.
• Difficult to coordinate across departments.
Customer departmentalisation
Advantages:
• Focuses on customer needs.
• Products and services tailored to customer needs.
Disadvantages:
• Duplication of resources.
• Difficult to coordinate across departments.
• Efforts to please customers may hurt the company.
Geographic departmentalisation
Advantages:
• Responsive to the demands of different market areas.
• Unique resources located close to the customer.
Disadvantages:
• Duplication of resources.
• Difficult to coordinate across departments.
Work teams
A small number of people with complementary skills who
hold themselves mutually accountable for pursuing a common
purpose, achieving performance goals and improving
interdependent work processes.
Team-based structure: emphasis is on horizontal
communication and information sharing, because
representatives from all functions are coordinating their
work and skills to complete a specific organisational task
91 per cent of American organisations use work teams to
solve specific problems.
The advantages of teams
Increased customer satisfaction
Increased customer satisfaction
Improved product and service quality
Improved product and service quality
Speed and efficiency in product development
Speed and efficiency in product development
Increased employee job satisfaction
Increased employee job satisfaction
Multiple perspectives
Multiple perspectives
More alternate solutions
More alternate solutions
Commitment to decisions
Commitment to decisions
The disadvantages of teams
Initially high employee turnover
Initially high employee turnover
Social loafing
Social loafing
Disadvantages of
Disadvantages of
group decision making
group decision making
Groupthink
Groupthink
Minority domination
Minority domination
Inefficient meetings
Inefficient meetings
Lack of accountability
Lack of accountability
Organisational Design
Organizational design
– Choosing and implementing structures that best arrange
resources to serve the organization’s mission and
objectives
– Ultimate purpose : to create an alignment between
supporting structures and contingency factors such as
the environment, strategy & technology
Factors shaping/influencing organising
design/structure
• Structure reflects the scale of
operations
• Structure follows strategy
• Structure reflects the environment
• Structure fits the technology
Factors that Influence Organisational Design/Structure
1. Scale : As organisations grow in numbers, products,
roles, location, so does its complexity. Eg: BHP
Billiton head office is in Melbourne & it employs
38,000 staff throughout 25 different countries.
2. Strategy : What you do to achieve the goals set by the
CEO?
3. Environment : The impact of both the external and
specific environments.
4. Technology : A combination of resources, knowledge
and techniques that convert inputs into outputs
LESSON
Strategy and structure are intertwined….
one cannot exist without the other
Alfred Chandler argued
structure should follow
strategy– an organization’s
structure must support its
strategy if desired results are
to be achieved (Campling et
al (2008) text, p.287)
These contingency factors influence whether an organisation structure is rigid or
flexible.
Relationship between structure and strategy
Differentiation:
Growth oriented
Cost leadership:
Stability oriented
Porter proposed two generic competitive or business-level strategies that organisations
can adopt:
1 Differentiation: where organisation attempts to develop innovative products unique
to the market. Strategic goals include differentiation, innovation and flexibility.
2 Cost leadership: where organisation strives for internal efficiency. Strategic goals
include cost leadership, efficiency and stability.
The strategies of differentiation or cost leadership require different structural
approaches so managers try to pick strategies and structures that are compatible.
Structure follows Strategy…
1. When strategy is growth oriented such as differentiation
and likely to change frequently, the situation is more complex,
fluid and uncertain. Operations and plans are likely to have
short life spans and require frequent and even continuous
modification over time. So most suitable to use a structure that
allows for internal flexibility and freedom to create new ways
of doing things – most characteristic of empowerment found in
adaptive orgs using more organic design alternatives – such as
team and network structures. Especially applicable to orgs based
on new digital or information technology
Structure follows Strategy…
2. When strategy is stability oriented such as cost
leadership – choice of org design should be based
on the premise that little significant change will be
occurring in the external environment & that the
plans can be set up and operations programmed to
be routinely implemented. To best support this
strategic approach, org should be structured to
operate in a well defined and predictable way. so
most likely to adopt a functional approach.
Organisational Design:
Fitting structure to the environment
Two broad choices:
– Mechanistic design:
• bureaucratic
• rigid, vertical, centralised structure
• lots of rules & procedures & clear lines of authority
– Organic design:
• adaptive
• wider span of control so more horizontal, decentralised
structure
• lots of delegation of authority to lower levels
Mechanistic vs Organic Designs
Source Campling et al. (2008) , Figure 10.2
Organisational Design:
Fitting structure to the environment
Environment uncertainty causes:
– Increased differences among departments
– Need for increased horizontal coordination
to keep departments working together
– Need to be flexible and responsive toward
environment
SO…
Organisational Design:
Fitting structure to the environment
•
•
–
Mechanistic designs (vertical structure) suited to stable, certain environments
A certain environment is composed of relatively stable and predictable elements.
As a result, an organization is able to succeed with relatively few changes in the
goods or services produced or in the manner of production over time.
Bureaucratic organs and mechanistic designs are quite adequate under such
conditions.
Organic designs (horizontal structure) suited to unstable, uncertain environments
An uncertain environment will have more dynamic and less predictable elements.
As a result, an organisation must be flexible and responsive over relatively short
time horizons.
This requires more adaptive organisations and organic designs.
Organic design
Mechanistic design
Fit between Strategy, Environment and Structure
Source: Campling et al., 2008, Figure 10.3
E.g. Differentiation
e.g. Cost Leadership
Remember …. Good organisational design uses contingency thinking
1. Does the design fit well with the major problems and
opportunities of the external environment?
2. Does the design support implementation of strategies and the
accomplishment of key operating objectives?
3. Does the design support core technologies and allow them to
be used to best advantage?
4. Can the design handle changes in organisational size and
different stages in the organisational life cycle?
5. Does the design support and empower workers and allow their
talents to be used to best advantage?
Organisational Design
Contingency thinking
Campling et al (2008) Text, Figure 10.1
Organisational change Chap 7:119-125
Organisations need to respond to both internal and
external environmental changes.
Failure to change can lead to business collapse.
Managing change
Change forces
From external
environment
Change
Resistance forces
From internal
environment
Managing Change
• Change is a function of the forces that promote change & the
opposing forces that slow or resist change.
• Change forces lead to differences in the form, quality or
condition of an org over time & often would come from the
external environment such as technological advancement etc.
• Resistance forces: are forces that support the existing state of
conditions in the org & often would come from the internal
environment where employees are resistant to change i.e.
status quo – change is difficult under any circumstances
• Resistance to change is one of them caused by self-interest,
misunderstanding & distrust
Managing Change
Planned and unplanned change
– Planned change
• Occurs as a result of specific efforts of a change agent
• Direct response to perception of a performance gap
(a discrepancy between the desired and actual state
of affairs)
– Unplanned change
• Occurs spontaneously or randomly and without
benefit of a change agent’s attention – maybe
disruptive (like a strike)
• Acting immediately is the appropriate response
goal( to minimize negative consequences and
maximize possible benefits)
Five stages of
organisational
decline
Blinded
Blinded
Inaction
Inaction
Faulty
Faulty
action
action
Crisis
Crisis
Dissolution
Dissolution
Decline occurs when organizations do not recognize the need for change
Resistance to change
Causes:
Eg: Fear of the unknown, disrupted habits, loss of
control, poor timing, work overload
– Fear of the unknown – not understanding what is happening or what
comes next
– Disrupted habits – feeling upset when old ways of doing things cannot
be followed
– Loss of control – feeling that things are being done to you rather than
by or with you
– Poor timing – feeling overwhelmed by the situation or that things are
moving too fast
– Work overload – not having the physical or psychic energy to commit to
the change
Managing resistance to change: Kurt Lewin
Unfreezing
• Share reasons
• Empathise
• Communicate
Change
intervention
•
•
•
•
•
•
•
Benefits
Champion
Input
Timing
Security
Training
Pace
Refreezing
• Top management
support
• Reinforce
Lewin’s three phases of planned organisational change
: getting the
people affected
by change to
believe that
change is
needed
: getting
workers &
managers to
change their
behavior &
work practices
: supporting &
reinforcing new
changes for
them to ‘stick’
Errors made when leading change
Unfreezing
1. Not establishing a great enough sense of urgency.
2. Not creating a powerful enough guiding coalition.
Change
3. Lacking a vision.
4. Under communicating the vision by a factor of 10.
5. Not removing obstacles to the new vision.
6. Not systematically planning for and creating short-term wins.
Refreezing
7. Declaring victory too soon.
8. Not anchoring changes in the corporation’s culture.
Managing resistance to change
Education and communication
Education and communication
Participation
Participation
Negotiation
Negotiation
Managerial support
Managerial support
Coercion
Coercion
Managing resistance to change
Methods for dealing with resistance:
– Education and communication
– Use discussions, presentations & demonstrations to
educate people
– Participation and involvement
– Allow others to contribute ideas and help design and
implement change
– Facilitation and support
– Encourage and training given, listening actively to
problems & complaints
– Explicit and implicit coercion
– Forces people to change by threatening those who
resist with a variety of undesirable consequences
Summary Session 7
After this lecture, you should be able to:
1. Understand what organising is and explain the four departmentalisation
approaches to organisational structure.
2. Explain the factors that influence organisational design/structure focusing
on strategy and environment
3. Explain the 5 stages of organisational decline.
4. Describe Kurt Lewin’s 3 step approach to organisational change.
5. Discuss the different methods that managers can use to minimise resistance
to change.
Coming up……
• Next lecture: Organising Part II: read texbook
chapters 9: 156 – 158; Chapter 11
• This week’s tutorial: download material from
blackboard & PREPARE your individual
statement before class.
