MS 10-OD-Dev and Change

Unit 4 (Book 2)

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.1 Introduction 4.2 The design process 4.3 Evolutionary process of OD 4.4 Universal perspectives of OD 4.5 from strategy structure to process: The new perspective on OD 4.6 Restructuring strategies

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.1 Introduction Putting together people, technology, plan etc. Who reports to whom Degree of centralization Decision making power Rules, policies, regulations, procedures Size and priorities of organization-determine OD

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.2 The design process Involves both science and art Seven-step design process:
Identify major objectives Organize top-down scalar chain (authority & responsibility) Bottom-up task integration Decide management positions Identify groups Balanced resource distribution Appropriate span of control

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.3 Evolutionary process of OD Birth stage:

decision making-highly centralized Informal Few rules and regulations No professional staff No internal system of planning

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.3 Evolutionary process of OD Youth stage:

Additional employees as sales and services increase Authority fairly centralized Few trusted employees involved in decision making Some informal rules and procedures Few professional and administrative personnel Division of labor begins with task assignments

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.3 Evolutionary process of OD Middle stage:

Somewhat successful and growth in size Structure similar to bureaucracy with formalized departments, support staff departments Many professional and clerical staff Large set of rules and procedures Authority decentralized Extensive division of labor

Unit 4- Some Basic Organization Design and Restructuring Strategies

4.3 Evolutionary process of OD Maturity stage:

Very large and mechanistic A set of bureaucratic rules, regulations and policies Centralized decision making Highly refined division of labor Nearly stagnant, thus requires innovation and flexibility- starts again decentralization, task forces, project teams

4.4 Universal perspectives of OD

4.4.1 The bureaucratic model (Max Weber) First model of OD Legitimate and formal system of authority Characteristics:
Division of labor on functional expertise Well-defined hierarchy of authority (scalar chain from top to bottom) Rules for rights and duties of employees Work procedures Promotion and selection based on technical competence Impersonality of interpersonal relations, social distance

4.4 Universal perspectives of OD

4.4.1 The bureaucratic model (Max Weber) Drawbacks:
Individual is not identified rather, total process Is important Too much rules and regulations-rigid Not suited for changing and uncertain external environment-slow response to change requirements

4.4 Universal perspectives of OD

4.4.2 The behavioral model Evolved from human relations school of management thought Identifies human beings, their behavior, characteristics and their mutual relationships emerging from work patterns and organizational settings Important factors- needs, motivation, attitudes, values, leadership, group behavior, perceptions, communications, responsibility and authority relationship etc Reflects social and psychological implications of organizational life

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Socio-technical Systems Theory Likerts system 4 organization Contingency perspective

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Socio-technical Systems Theory:
Developed by Eric Trist and KW Bamforth Based on need to balance organizations human side with its technical and mechanical side Focuses on two systems:
Social system which provides framework for human interactions to sustain formal and informal organizations Technical system which provides framework of the tasks that produce organizations goods and services

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
Developed b Rensis Likert Critical relationship between OD and organizational effectiveness

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
Focuses on eight characteristics of organizations: leadership process:
Leadership process Motivation process Communication process Interaction process Decision process Goal-setting process Control process Performance goals

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
Systems 1, 2, 3 and 4 are the approaches to generate these eight characteristics (1 and 4 more significant)

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
System 1- represents bureaucratic form of OD
Information flows downwards Distorted centralized decision process Goal-setting at the top Centralized control process Group participation discouraged

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
System 4- represents behavioral form of OD
Information flows freely Undistorted and decentralized decision process Goal-setting process includes participation control process at various levels Self-control and problem solving approach

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Likerts System 4 Organization:
Strength:
Recognizes unique value of each individual

Weakness:
Based on the premise that there is only one best way to design organizations (doesnt address- contingent factors)

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Contingency perspective:
Best design based on situational factors:
External environment Technology Organization size

Contingent factors (env, tech and size) lead to strategy Strategy determines OD

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Contingency perspective:
Strategy:
Describes the organizations goals and ways to achieve them Needs to adapt with external and internal environment Structure follows strategy

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Contingency perspective:
External environment
General environment : economic, technical, socio-cultural, political, legal, and international dimensions Task environment: customers, competitors, suppliers, and government agencies

4.4 Universal perspectives of OD

4.4.2 The behavioral model Popular models: Contingency perspective:
Technology:
Conversion of input to output

Size:
Small organizations- little specialization, few formal rules, narrow span of control, informal decision process, simple design Large organizations- elaborate specialization, formal rules and relationships, decentralized system

4.4 Universal perspectives of OD

Mintzbergs Typology (for integration of organization structure to contingency factors): Top management- strategic apex Middle management- technical/operating core Technical staff Administrative staff

4.4 Universal perspectives of OD

Mintzbergs Typology (for integration of organization structure to contingency factors): Combination in five forms:
Simple structure Machine bureaucracy Professional bureaucracy Divisionalized form Adhocracy

4.4 Universal perspectives of OD

Simple structure Small and entrepreneurial A top manager and a few assistants Overlapping activities Technical/professional staff lack Centralized decision making, informal coordination, minimal division of labor Adapts well to the environment- stress survival and innovation Suitable in service technology or small batch processing technology

4.4 Universal perspectives of OD

Machine bureaucracy: Found in large company organized along functional lines with little lateral coordination Bureaucracy principles- heavy specialization, many rules and regulations, centralized authority, large technical/professional and administrative staff, formalized processes Suitable for routine services, mass production technology, generally stable environment, with organizational goals- to improve internal efficiency

4.4 Universal perspectives of OD

Professional bureaucracy: Found in big functionally designed organizations employing professional people Non-routine service technology (in which new problems arise everyday and task variety is very high and in which employees rely on experience, education, training and trial and error, search for alternative procedures) Highly formalized still decentralized decision making Operates in complex and relatively stable environments Goals- innovation and quality Core tasks performed by professional staff, small tech. staff, large administrative staff Eg, hospitals, universities

4.4 Universal perspectives of OD

Divisionalized Form: Large organization having different subunits (divisions) within it Few lateral coordinating devices Decentralized decision making Each division- autonomous Varying non-routine manufacturing technologies External environment-stable Technical staff concentrated at corporate head quarters providing services to subunits Administrative support in each division

4.4 Universal perspectives of OD

Adhocracy: Much like a matrix organization Evolves in complex environment Sophisticated technology Informal structure Dual chain of command for coordination of different activities Administrative staff is large but technical support staff is small as most of the technical work is performed by the experts located in the technical core.

Characteristics of Mintzbergs Five Org. Types

Simple Structure Structure Approach Functional Functional Functional, sometimes hybrid Division, Hybrid Matrix Machine Structure Professional Bureaucracy. Divisionalised adhocracy form

Formalization

Low

High

Low to moderate
Low to moderate Many

High within divisions

Decentralized to divisionalized Some across divisions, many within divisions

Low

Centralization

High

High

Low

Lateral relationships

Few

Few

Many, built into structure

Characteristics of Mintzbergs Five Org. Types

Simple Structure Configuration Technical/prof essional support staff Administrative support staff None Many Few Many Many-part of headquarters matrix departments Many within divisions Many Machine Structure Professional Bureaucracy. Divisionalise d form adhocracy

Few

Many

Many

Characteristics of Mintzbergs Five Org. Types

Simple Structure Contingency Environment Simple, changing Routine, product or service Stable, certain Routine product or service Stable, complex Service complex, changing Unstable, uncertain Machine Structure Professional Divisionalise adhocracy Bureaucracy. d form

Technology

Divisible, Non-routine, varies across sophisticate divisions d

Size, life cycle

Very small

Large, mature

Any size, age Large, mature

Innovation, quality Adaptability, efficiency

Moderate, midlife
Innovation, adaptation

Strategic objectives

Innovation, Efficiency survival

Activity A
Fill the basic parts in fig 3 with the typical job titles of an organization with which you are familiar. State the functions/activities performed by the people in various positions in each part.

Activity B
i. Identify the strategy being adopted by an organization with which you are familiar; and examine whether corresponding structural changes are being made in the OD. ii. Make a brief analysis of the contingent factors that have influenced the strategy of the said organization.

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Structural and formal coordinative mechanisms Systems and tools (administrative mechanism) Cultural transformation (socialization, normative integration)

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Structural and formal coordinative mechanisms
Centralization Formalization specialization

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Systems and tools (Administrative Mechanism)

Data management mechanisminformation systems, measurement systems, resource allocation procedures, strategic planning, budgeting processes

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Systems and tools (Administrative Mechanism)

Managers management systems:

choice of managers, career paths, rewards and punishment systems, compensation schemes, management development and pattern of socialization

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Systems and tools (Administrative Mechanism)

Conflict resolution mechanismcoordination committees, task forces, issue resolution processes

4.5 From strategy-structure to process: the new perspective on OD

Design parameters for second generation OD models: Cultural transformation (socialization/normative integration) Internalize values Strategize operations based on those values Socialization: Job rotation, regular transfer of people, management development Building informal network through mgmt dev prg Transfer of knowledge and learning Task forces Encouraging informal communication channels

4.6 Restructuring Strategies

Relation between strategies of OD and structure Strategies of OD Organizational growth Growth in size per se Structural changes that are often assumed to be outcomes Increased vertical differentiation Lengthening hierarchies-growing number of jobs and departments- horizontal differentiation, rising formalization, increased delegation, possible economies in administration, offset by rising problems of administering complexity Increased specialization of skills and functions, divisionalization of major subunits, rising formalization, especially of planning and resources allocation procedures, increased delegation

Growth via diversification

4.6 Restructuring Strategies

Relation between strategies of OD and structure Strategies of OD Technological development Structural changes that are often assumed to be outcomes Growth of specialized professional staff, increased specialization of skills and functions, other structural concomitants depended on the type of technology employed

Acquiring a secure domain Establishment of new roles, especially to manage through non-competitive means- relationships with other organizations, increased especially joint programmes delegation, more active internal communications via lateral relationships Improving managerial techniques with a view of enhancing flexibility Depends on methods adopted, but usually associated with- establishment of new specialized roles to service vertical information systems- for e.g., computer based systems- are to promote lateral coordination, more active internal communication via lateral relationships, increased delegation

4.6 Restructuring Strategies

These four strategies not mutually exclusive, can be in combined form Depends on circumstances, as for e.g., growth is possible through increase in volume of operations or through acquisitions, the degree of diversification varies depending on the companys market share, technological synergy, government regulations, management capacity etc.

4.6 Restructuring Strategies

As organizations seek to become flexible, or to retain flexibility in the face of growing complexity and as they employ larger number of professional and trained personnel, the forms of effective and acceptable control and integration within the organizations change--

Therefore, bureaucracy needs to be modified

4.6 Restructuring Strategies

The problem of elongation of organizational hierarchies and the serious problems thereof need to be tackled through policies aimed at increasing spans of control, and thereby, delegation of responsibility So, organizational control systems have to shift from an emphasis on the specification and supervision of means- how people are to behave and carry out their work- towards an emphasis of results

Self assessment questions

1. Briefly describe the evolutionary process of OD. 2. Outline the universal perspectives of OD. 3. Briefly explain the design parameters of second generation of models of OD.