MPO Final: Chapter 15: Organizational Structure and Chapter 18: Organizational Change

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  1. What are the 6 elements of organizational structure?
    Work specialization - to what degree are activities subdivided into separate jobs?

    Departmentalization - On what basis will jobs be grouped together?

    Chain of Command - to whom do individuals and groups report?

    Span of Control - How many individuals can a manager efficiently and effectively direct?

    Centralization and decentralization - Where does the decision making authority lie?

    Formalization - To what degree will there be rules and regulations to direct employees and managers?
  2. What is Departamentalization (Organizational Structure)?
    One key element of organizational design is departmentalization. Companies usually group their companies into different departments. These departments usually specialize in certain areas to provide various types of expertise to the organization. Two common types of departmentalization are functional and product departmentalization. Functional structures are when companies center departments around functions, such as marketing, finance, accounts payable and engineering. Product structures are used by companies that have many extensive product lines, including department stores and high-tech companies. Departments are divided by product categories, including housewares, sporting goods and hardware, for example.
  3. What is Chain of Command (Organizational Structure)?
    A company would accomplish little without a hierarchy of authority. A hierarchy of authority determines who is in charge of certain elements and who their direct reports are, according to professor Craig W. Fontaine of Northeastern University's College of Business Administration. A hierarchy of authority ensures that every director, manager or employee is held accountable for specific projects or tasks. The CEO or chief executive officer usually sits atop the hierarchy in most companies.
  4. What is Span of Control (Organizational Structure)?
    Span of control is the number of people in which managers, directors or high-level executives are in charge. A marketing director who oversees the work of five managers in his department has a span of control of five people. Each manager may, in turn, be responsible for the work of several analysts or coordinators. Span of control can vary in size among companies. Managers are usually in charge of fewer employees in smaller companies versus larger corporations.

    How many employees can a manager efficiently and effectively direct? Thisquestion of span of control is important because it largely determines the number of levels and managers an organization has. All things being equal, the wider or larger the span, the more efficient the organization.
  5. What is Centralization/Decentralization  (Organizational Structure)?
    Centralization refers to the degree to which decision making is concentratedat a single point in the organization. In centralized organizations, top managersmake all the decisions, and lower-level managers merely carry out their directives.In organizations at the other extreme, decentralized decision making ispushed down to the managers closest to the action.The concept of centralization includes only formal authority—that is, the rights inherent in a position. An organization characterized by centralization is inherently different structurally from one that’s decentralized. A decentralizedorganization can act more quickly to solve problems, more people provideinput into decisions, and employees are less likely to feel alienated from thosewho make decisions that affect their work lives. Management efforts to make organizations more flexible and responsivehave produced a recent trend toward decentralized decision making by lowerlevelmanagers, who are closer to the action and typically have more detailedknowledge about problems than top managers. Sears and JCPenney have giventheir store managers considerably more discretion in choosing what merchandiseto stock. This allows those stores to compete more effectively againstlocal merchants. Similarly, when Procter & Gamble empowered small groupsof employees to make many decisions about new-product development independentof the usual hierarchy, it was able to rapidly increase the proportionof new products ready for market. 7 Research investigating a large number ofFinnish organizations demonstrates that companies with decentralized researchand development offices in multiple locations were better at producing innovation than companies that centralized all research and development in a single office.

    Geography is another important element of organizational design. Smaller companies may sell their products on a local or regional basis. They typically start in markets within their own state, expanding to other areas as profits increase. Certain geographic areas may be more practical for smaller companies. For example, a manufacturer of surfboards would likely market to customers who live near oceans.
  6. What is Departamentalization (Organizational Structure)?
    Once jobs have been divided through work specialization, they must be grouped so common tasks can be coordinated. The basis by which jobs are grouped iscalled departmentalization .One of the most popular ways to group activities is by functions performed.A manufacturing manager might organize a plant into engineering, accounting,manufacturing, personnel, and supply specialists departments. A hospitalmight have departments devoted to research, surgery, intensive care, accounting,and so forth. A professional football franchise might have departments entitledplayer personnel, ticket sales, and travel and accommodations. The majoradvantage of this type of functional departmentalization is efficiencies gainedfrom putting like specialists together.We can also departmentalize jobs by the type of product or service the organizationproduces. Procter & Gamble places each major product—such as Tide,Pampers, Charmin, and Pringles—under an executive who has complete globalresponsibility for it. The major advantage here is increased accountability forperformance, because all activities related to a specific product or service areunder the direction of a single manager.When a firm is departmentalized on the basis of geography, or territory, thesales function, for instance, may have western, southern, midwestern, and easternregions, each, in effect, a department organized around geography. Thisform is valuable when an organization’s customers are scattered over a largegeographic area and have similar needs based on their location.
  7. What is Formalization (Organizational Structure)?
    Formalization refers to the degree to which jobs within the organization are standardized. If a job is highly formalized, the incumbent has a minimal amountof discretion over what to do and when and how to do it. Employees can be expectedalways to handle the same input in exactly the same way, resulting ina consistent and uniform output. There are explicit job descriptions, lots oforganizational rules, and clearly defined procedures covering work processesin organizations in which there is high formalization. Where formalization islow, job behaviors are relatively unprogrammed, and employees have a greatdeal of freedom to exercise discretion in their work. Standardization not onlyeliminates the possibility of employees engaging in alternative behaviors, but iteven removes the need for employees to consider alternatives.The degree of formalization can vary widely between and within organizations.Publishing representatives who call on college professors to inform themof their company’s new publications have a great deal of freedom in their jobs.They have only a general sales pitch, which they tailor as needed, and rules andprocedures governing their behavior may be little more than the requirementto submit a weekly sales report and suggestions on what to emphasize aboutforthcoming titles. At the other extreme, clerical and editorial employees in the same publishing houses may need to be at their desks by 8:00 a.m. and follow a set of precise procedures dictated by management.
  8. What are some forces of change?
    Nature of the workplace

    Technology

    Economic Shocks

    Competition

    Social trends

    Outside forces for change include macroeconomics, technological evolution, globalization, new legislation, and competitive dynamics.

    Inside forces for change include intrapreneurship, new management and restructuring.The first step in effective change management is being prepared, in a timely and knowledgeable fashion, for internal and external potentialities that may force organizational adaptation.Source: Boundless. “Inside and Outside Forces for Organizational Change.” Boundless Management.
  9. What is change management?
    Change Management (CM) refers to any approach to transitioning individuals, teams, and organizations using methods intended to re-direct the use of resources, business process, budget allocations, or other modes of operation that significantly reshape a company or organization.

    Change management is an approach to shifting individuals, teams, and organizations to a desired future state. Examples of organizational change can include strategic, operational, and technological change that can come from inside or outside the organization.Source: Boundless. “Inside and Outside Forces for Organizational Change.” Boundless Management.
  10. What can happen if change is not managed?
    Productivity declines as people become more consumed with the change being introduced.

    Passive resistance festers.

    Active resistance emerges and sabotages
    the change.

    Valued employees leave the organization, a very costly proposition in terms of the lost contribution and the cost to replace them.

    Employees become disinterested in the current state and the future state.

    Employees begin arguing about change and the direction of the company.

    People are left to wonder why the change is happening.

    More people begin taking sick days or not showing up for work.

    People find work-arounds
    to avoid implementing the new way of doing things.

    Employees revert back to the old way of doing things.

    Changes are scrapped and cancelled due to the lack of support
    throughout the organization.

    Divides are created in the organization between 'us' and 'them'.
  11. What can happen if change is EFFECTIVELY managed?
    Employees have a solid understanding of why change is happening.

    Employees engage in both the solution and the change.

    Training is used to build knowledge after employees have made the personal decision to support the change.

    Resistance is identified and dealt with early in the process.

    Senior leaders demonstrate their own and the organization's commitment to the change.

    Communications are segmented and customized for different audiences, answering the questions that they care about.

    Momentum is built throughout different areas and levels within the organization

    Changes are less painful to the organization and to the employees.

    A coalition of support among senior leaders and managers creates momentum throughout the organization.

    Probability of meeting project objectives is increased.
  12. Why change management now?
    Change management as a discipline has grown tremendously over the last five years.

    More and frequent changes - Change is occurring at an incredible pace in organizations today. The sheer quantity of changes is increasing, and changes are happening more frequently and faster than ever before. With such large amounts of change happening, organizations need a better and more structured way to manage the individuals in the organization impacted by all of these changes

    Value system of empowerment - Over the last fifty years, value systems have shifted in many organizations. Old values of control and predictability have been replaced by new values to push decision making, authority and responsibility down into the organization. While this shift has delivered many benefits, it has also made top-down changes more difficult and increased the resistance they face. Organizations with empowered workforces need to manage the human side of change more effectively than they did in the very hierarchical structure of the past.

    Competitive advantage - Many sources of competitive advantage have eroded as information moves more quickly and across the globe in seconds. In upcoming years, speed and agility will be a central differentiator in the market place. And organizations that do not use change management cannot build their internal competency to quickly and effectively implement change. Strong change management competencies within an organization are a key source of competitive advantage in coming years.
  13. What is Lewin's three step  model to change management?
    Unfreeze  - Change - Freeze.

    • Unfreeze
    • This first stage of change involves preparing the organization to accept that change is necessary, which involves break down the existing status quo before you can build up a new way of operating.Key to this is developing a compelling message showing why the existing way of doing things cannot continue. This is easiest to frame when you can point to declining sales figures, poor financial results, worrying customer satisfaction surveys, or suchlike: These show that things have to change in a way that everyone can understand.To prepare the organization successfully, you need to start at its core – you need to challenge the beliefs, values, attitudes, and behaviors that currently define it. Using the analogy of a building, you must examine and be prepared to change the existing foundations as they might not support add-on storeys; unless this is done, the whole building may risk collapse.This first part of the change process is usually the most difficult and stressful. When you start cutting down the "way things are done", you put everyone and everything off balance. You may evoke strong reactions in people, and that's exactly what needs to done.By forcing the organization to re-examine its core, you effectively create a (controlled) crisis, which in turn can build a strong motivation to seek out a new equilibrium. Without this motivation, you won't get the buy-in and participation necessary to effect any meaningful change.


    Change - After the uncertainty created in the unfreeze stage, the change stage is where people begin to resolve their uncertainty and look for new ways to do things. People start to believe and act in ways that support the new direction.The transition from unfreeze to change does not happen overnight: People take time to embrace the new direction and participate proactively in the change. A related change model, the Change Curve , focuses on the specific issue of personal transitions in a changing environment and is useful for understanding this specific aspect in more detail.In order to accept the change and contribute to making the change successful, people need to understand how the changes will benefit them. Not everyone will fall in line just because the change is necessary and will benefit the company. This is a common assumption and pitfall that should be avoided.


    Refreeze -  When the changes are taking shape and people have embraced the new ways of working, the organization is ready to refreeze. The outward signs of the refreeze are a stable organization chart, consistent job descriptions, and so on. The refreeze stage also needs to help people and the organization internalize or institutionalize the changes. This means making sure that the changes are used all the time; and that they are incorporated into everyday business. With a new sense of stability, employees feel confident and comfortable with the new ways of working.
  14. What is a good metaphor for Lewin's change management model?
    If you have a large cube of ice, but realize that what you want is a cone of ice, what do you do?

    First you must melt the ice to make it amenable to change (unfreeze).

    Then you must mold the iced water into the shape you want (change).

    Finally, you must solidify the new shape (refreeze).


    • By looking at change as process with distinct stages, you can prepare yourself for what is coming and make a plan to manage the transition – looking before you leap, so to speak. All too often, people go into change blindly, causing much unnecessary turmoil and chaos.
  15. What are some piratical steps for UNFREEZING within Lewin's change management model?
    • 1. Determine what needs to change.
    • Survey the organization to understand the current state.
    • Understand why change has to take place.

    • 2. Ensure there is strong support from upper management.
    • Use Stakeholder Analysis and Stakeholder Management to identify and win the support of key people within the organization.

    Frame the issue as one of organization-wide importance.

    • 3. Create the need for change.
    • Create a compelling message as to why change has to occur.Use your vision and strategy as supporting evidence.


    Communicate the vision in terms of the change required.

    Emphasize the "why".

    • 4. Manage and understand the doubts and concerns.
    • Remain open to employee concerns and address in terms of the need to change.
  16. What are some piratical steps for CHANGE within Lewin's change management model?
    1. Communicate often.

    Do so throughout the planning and implementation of the changes.

    Describe the benefits.

    Explain exactly the how the changes will effect everyone.

    Prepare everyone for what is coming.

    2. Dispel rumors.

    Answer questions openly and honestly.

    Deal with problems immediately.

    Relate the need for change back to operational necessities.

    3. Empower action.

    Provide lots of opportunity for employee involvement.

    Have line managers provide day-to-day direction.

    4. Involve people in the process.

    Generate short-term wins to reinforce the change.

    Negotiate with external stakeholders as necessary (such as employee organizations).
  17. What are some piratical steps for REFREEZE within Lewin's change management model?
    1. Anchor the changes into the culture.

    Identity what supports the change.

    Identify barriers to sustaining change.

    2. Develop ways to sustain the change.

    Ensure leadership support.

    Create a reward system.

    Establish feedback systems.

    Adapt the organizational structure as necessary.

    3. Provide support and training.

    Keep everyone informed and supported.

    4. Celebrate success!
  18. What is Kotter's eight step plan for implementing change?
    • Step 1: Create Urgency
    • For change to happen, it helps if the whole company really wants it. Develop a sense of urgency around the need for change.

    • Step 2: Form a Powerful Coalition
    • Convince people that change is necessary. This often takes strong leadership and visible support from key people within your organization. Managing change isn't enough – you have to lead it.

    • Step 3: Create a Vision for Change
    • When you first start thinking about change, there will probably be many great ideas and solutions floating around. Link these concepts to an overall vision that people can grasp easily and remember.

    • Step 4: Communicate the Vision
    • What you do with your vision after you create it will determine your success. Your message will probably have strong competition from other day-to-day communications within the company, so you need to communicate it frequently and powerfully, and embed it within everything that you do.

    • Step 5: Remove Obstacles
    • If you follow these steps and reach this point in the change process, you've been talking about your vision and building buy-in from all levels of the organization. Hopefully, your staff wants to get busy and achieve the benefits that you've been promoting.

    • Step 6: Create Short-Term Wins
    • Nothing motivates more than success. Give your company a taste of victory early in the change process. Within a short time frame (this could be a month or a year, depending on the type of change), you'll want to have some "quick wins " that your staff can see. Without this, critics and negative thinkers might hurt your progress.

    • Step 7: Build on the Change
    • Kotter argues that many change projects fail because victory is declared too early. Real change runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term change.

    • Step 8: Anchor the Changes in Corporate Culture
    • Finally, to make any change stick, it should become part of the core of your organization. Your corporate culture often determines what gets done, so the values behind your vision must show in day-to-day work.
  19. How can you overcome resistance to change?
    Education and Communication Communicating the logic of a change can re- duce employee resistance on two levels. First, it fights the effects of misinfor- mation and poor communication: if employees receive the full facts and clear up misunderstandings, resistance should subside. Second, communication can help “sell” the need for change by packaging it properly.8 A study of German companies revealed changes are most effective when a company communicates a rationale that balances the interests of various stakeholders (shareholders, employees, community, customers) rather than those of shareholders only.9 Another study of a changing organization in the Philippines found that formal change information sessions decreased employee anxiety about the change, while providing high-quality information about the change increased commit- ment to it.10

    Participation It’s difficult to resist a change decision in which we’ve par- ticipated. Assuming participants have the expertise to make a meaningful contribution -  their involvement can reduce resistance, obtain commitment, and increase the quality of the change decision. However, against these advantages are the negatives: potential for a poor solution and great consumption of time.

    Building Support and Commitment When employees’ fear and anxiety are high, counseling and therapy, new-skills training, or a short paid leave of absence may facilitate adjustment. When managers or employees have low emotional commitment to change, they favor the status quo and resist it.11 Employees are also more accepting of changes when they are committed to the organization as a whole.12 So, firing up employees and emphasizing their commitment to the organization overall can also help them emotionally commit to the change rather than embrace the status quo.

    Develop Positive Relationships People are more willing to accept changes if they trust the managers implementing them.13 One study surveyed 235 employ- ees from a large housing corporation in the Netherlands that was experiencing a merger. Those who had a more positive relationship with their supervisors, and who felt that the work environment supported development, were much more positive about the change process.14 Another set of studies found that individuals who were dispositionally resistant to change felt more positive about the change if they trusted the change agent.15 This research suggests that if managers are able to facilitate positive relationships, they may be able to over- come resistance to change even among those who ordinarily don’t like changes.

    • Implementing Changes Fairly
    • One way organizations can minimize negative impact is to make sure change is implemented fairly. As we saw in Chapter 7, procedural fairness is especially important when employees perceive an out- come as negative, so it’s crucial that employees see the reason for the change and perceive its implementation as consistent and fair.16

    • Manipulation and Cooptation
    • Manipulation refers to covert influence at- tempts. Twisting facts to make them more attractive, withholding information, and creating false rumors to get employees to accept change are all examples of manipulation. If management threatens to close a manufacturing plant whose employees are resisting an across-the-board pay cut, and if the threat is actu- ally untrue, management is using manipulation. Cooptation, on the other hand, combines manipulation and participation. It seeks to “buy off” the leaders of a resistance group by giving them a key role, seeking their advice not to find a bet- ter solution but to get their endorsement. Both manipulation and cooptation are relatively inexpensive ways to gain the support of adversaries, but they can backfire if the targets become aware they are being tricked or used. Once that’s discovered, the change agent’s credibility may drop to zero.

    • Selecting People Who Accept Change
    • Research suggests the ability to eas- ily accept and adapt to change is related to personality—some people simply have more positive attitudes about change than others.17 Such individuals are open to experience, take a positive attitude toward change, are willing to take risks, and are flexible in their behavior. One study of managers in the United States, Europe, and Asia found those with a positive self-concept and high risk tolerance coped better with organizational change. A study of 258 police of- ficers found those higher in growth-needs strength, internal locus of control, and internal work motivation had more positive attitudes about organizational change efforts.18 Individuals higher in general mental ability are also better able to learn and adapt to changes in the workplace.19 In sum, an impressive body of evidence shows organizations can facilitate change by selecting people predis- posed to accept it.


    • Coercion
    • Last on the list of tactics is coercion, the application of direct threats or force on the resisters. If management really is determined to close a manufac- turing plant whose employees don’t acquiesce to a pay cut, the company is using coercion. Other examples are threats of transfer, loss of promotions, negative performance evaluations, and a poor letter of recommendation. The advantages and drawbacks of coercion are approximately the same as for manipulation an

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