Advance Topics in Change Management

Lecture 32 Basic Concepts in Change Management

MASS PRODUCTION AND C.I.MMass Production C.I.M.

Structure    

Supervisor spans of control Wide Narrow

Hierarchical Levels Many Few

Supervisor Role Controller Facilitator

Tasks Routine, simple Complex, adaptive

Specialization High Low

Operator discretion Low Considerable

Formalization High Limited

Human Resources    

Interactions Low Considerable

Training Narrow, limited Broad, frequent

Expertise Standardized, manual/technical

Cognitive and social, developing, problem solving

Inter-organizational    

Customer demand Stable, predictable Changing

Suppliers Many, arm’s length Few, interdependent

CHARACTERISTICS OF SERVICE AND PRODUCT ORGANIZATIONS

SERVICE BOTH PRODUCT

Boundary Roles Few Some Many

Geographical Dispersion

Considerable Some Low

Technical Expertise of Operators

High Moderate Low

Skill Emphasis Broad and interpersonal

Narrow and broad

Narrow and technical

Centralization Low Medium High

Formalization Low Medium High

Examples Airlines, hotels Fast food, real estate

Steel, cars

SERVICE BUSINESSES

CUSTOMER INTERACTION AND CUSTOMIZATION

LOW HIGH

LABOUR INTENSITYratio of labour cost to plant and equipment

LOWAIRLINES

HOTELS

HOSPITALS

MACHINERY REPAIRS

HIGH

MASS RETAILING

FAST FOOD RESTAURANTS

PROFESSIONAL SERVICES

ACCOUNTANTS

LAWYERS

VARIETY OF TASKS AND PROBLEMS

1. How many of your tasks are the same from day to day?

2. Do you do the same job in the same way most of the time?

3. How different are the problems you have to deal with on a daily basis?

ANALYSABILITY OF TASKS AND PROBLEMS

1. To what extent is there a clearly known way to do your major tasks?

2. To what extent is there a clearly defined body of knowledge that can be followed in your work?

3. How often do you have to deal with unforeseen problems and difficulties?

4. How much can you rely on established procedures and practices to do your job effectively?

DEPARTMENTAL TASKS AND TECHNOLOGIES

CALL-CENTRE WORKERS

An Apprentice Contestant

Mechanistic

Technology and Interaction

• Technology can also be thought of as ways in which groups of individuals interact.

Interdependence and Co-ordination Mechanisms

DEPARTMENTAL GROUPING OPTIONS

Functional Structure with Geographical Sub-Divisions

Functional Structure with Functional Sub-Divisions

FUNCTIONAL GROUPING

CONTEXT• ENVIRONMENT: LOW UNCERTAINTY, STABLE• TECHNOLOGY: ROUTINE, LOW INTERDEPENDENCE• SIZE: SMALL TO MEDIUM• GOALS: INTERNAL EFFICIENCY, TECHNICAL

SPECIALISATION AND QUALITYSTRENGTHS1. ECONOMIES OF SCALE WITHIN FUNCTIONS2. IN-DEPTH SKILL DEVELOPMENT3. BEST WHEN ONLY ONE OR A FEW SIMILAR PRODUCTSWEAKNESSES1. SLOW RESPONSE TIME TO ENVIRONMENTAL CHANGES2. DECISIONS MAY PILE ON TOP, HIERARCHY OVERLOAD3. POOR INTERUNIT CO-ORDINATION4. LESS INNOVATION5. RESTRICTED VIEW OF ORGANISATION GOALS.

Divisional Structure

DIVISIONAL GROUPING

CONTEXT• ENVIRONMENT: MODERATE TO HIGH UNCERTAINTY• TECHNOLOGY: NON-ROUTINE, HIGH INTERDEPENDENCE• SIZE: LARGE• GOALS: EXTERNAL EFFECTIVENESS, ADAPTATION,

CLIENT SATISFACTIONSTRENGTHS1. SUITED TO FAST CHANGE IN UNSTABLE ENVIRONMENT2. CLIENT SATISFACTION BECAUSE PRODUCT RESPONSIBILITY AND

CONTACT POINTS ARE CLEAR3. HIGH CO-ORDINATION ACROSS FUNCTIONS4. UNITS ADAPT TO DIFFERENCES IN PRODUCTS, REGIONS, CLIENTS5. BEST WHEN SEVERAL DIFFERENT KINDS OF PRODUCTSWEAKNESSES1. LOSE ECONOMIES OF SCALE IN FUNCTIONAL DEPARTMENTS2. POOR FUNCTIONAL CO-ORDINATION ACROSS PRODUCT LINES3. LOSE IN-DEPTH COMPETENCE AND TECHNICAL SPECIALISATION4. INTEGRATION AND STANDARDISATION ACROSS PRODUCT LINES IS

DIFFICULT

DEPARTMENTAL GROUPING OPTIONS

Personal Computers

Business Computers

Business Services

HRFinance

MULTI-FOCUSED GROUPING

CONTEXT• ENVIRONMENT: MODERATE TO HIGH UNCERTAINTY,

CHANGING CUSTOMER DEMANDS• TECHNOLOGY: ROUTINE OR NON-ROUTINE, WITH

INTERDEPENDENCIES ACROSS BOTH FUNCTIONS AND PRODUCT LINES

• SIZE: MEDIUM TO LARGE• GOALS: EXTERNAL EFFECTIVENESS AND

ADAPTATION PLUS EFFICIENCY WITHIN SOME FUNCTIONS

STRENGTHS1. ORGANISATION CAN ACHIEVE ADAPTABILITY AND CO-

ORDINATION IN SOME AREAS AND EFFICIENCY IN OTHERS2. BETTER ALIGNMENT BETWEEN CORPORATE LEVEL AND

DIVISION LEVEL GOALS3. ACHIEVES CO-ORDINATION BOTH WITHIN AND BETWEEN

PRODUCT LINESWEAKNESSES1. POTENTIAL FOR EXCESSIVE ADMINISTRATIVE OVERHEAD2. CONFLICT BETWEEN DIVISION AND CORPORATE DEPARTMENTS

Matrix: Advantages

According to Bartlett and Ghoshal (1993):

• Decrease bureaucracy

• Create ‘distributed entrepreneurship’

• Delegation of responsibilities

• Thinning out of corporate (HO) staff (<100)

• Aligning and supporting initiatives

• Integrating resources and capabilities

Matrix: Disadvantages

• Lack of clarity over who is responsible for decisions

• Lack of clarity over how much time should be spent on different tasks

• In-fighting between two line managers• Decision-making process could be

lengthened• Excessive demands placed on senior

managers to cope with information

MATRIX STRUCTURESCONTEXT• ENVIRONMENT: HIGH UNCERTAINTY• TECHNOLOGY: NON-ROUTINE, MANY INTERDEPENDENCIES• SIZE: MODERATE, A FEW PRODUCT LINES• GOALS: MULTIPLE, CUSTOMER RESPONSIVENESS, PRODUCT

INNOVATION AND TECHNICAL SPECIALISATIONSTRENGTHS1. ACHIEVES CO-ORDINATION NECESSARY TO MEET DUAL DEMANDS FROM

ENVIRONMENT2. FLEXIBLE USE OF HUMAN RESOURCES ACROSS PRODUCTS3. SUITED TO COMPLEX DECISIONS AND FREQUENT CHANGES IN UNSTABLE

ENVIRONMENT4. PROVIDES OPPORTUNITY FOR FUNCTIONAL AND PRODUCT SKILL

DEVELOPMENTWEAKNESSES1. PARTICIPANTS EXPERIENCE DUAL AUTHORITY, WHICH CAN BE FRUSTRATING

AND CONFUSING2. PARTICIPANTS NEED GOOD INTERPERSONAL SKILLS; EXTENSIVE TRAINING

REQUIRED3. TIME CONSUMING - FREQUENT MEETINGS AND CONFLICT-RESOLUTION

SESSIONS4. WILL NOT WORK UNLESS PARTICIPANTS UNDERSTAND IT AND ADOPT

COLLEGIAL RATHER THAN VERTICAL-TYPE RELATIONSHIPS5. REQUIRES DUAL PRESSURE FROM ENVIRONMENT TO MAINTAIN POWER

BALANCE

THE PROJECT-BASED FIRM

Advantages• Reduces overhead costs• Improves speed and efficiency• Increases adaptability

Disadvantages• Time-consuming and difficult to identify and manage

processes• Limited organisational learning• Threat to management (downsizing and deskilling)

Applicability• Sectors and Firms that meet the following criteria:

– Workforce generally highly skilled and well-motivated– Sector undergoing major change (from competition and/or

technology change)– High level of consensus

Types of Project-Based FirmsSingularity (‘Uniqueness’) of Goals and Outputs

Low High

Separation

and

Stability

of

Work Roles

Low

Organisational

PBFs producing multiple and varied outputs with different and changeable skills and roles.

E.g. strategic consultancy, enterprise software, innovative business services.

Precarious

PBFs producing risky, unusual outputs with varied and changeable skills and roles.

E.g. some dedicated biotechnology firms, internet software firms, such as Vermeer Technologies, many Silicon Valley companies

High

Craft

PBFs producing multiple, incrementally related outputs with distinct and stable roles and skills. E. g. some business and professional services including London advertising firms, Danish furniture and machinery firms, some IT consulting.

Hollow

PBFs producing single outputs and coordinating tasks through standardised, separate and stable roles and skills.

E. g. complex construction projects, many feature films in the UK and USA

DEVELOPING ORGANISATIONAL KNOWLEDGE

MANAGERIAL NEEDS AND INFORMATION MEDIA

Formal Management Control Systems

System Content

Budget Financial data

Statistical Reports Non-financial data

Performance appraisal Evaluation on basis of goals

Standard operating procedures

Rules, regulations and policies

Organisational Control Strategies

Type of Control

Output/ Market-based Bureaucratic Normative Personal and Direct

Characteristics of the Control System

Behaviour Control Low High Unclear High

Formalisation High High Low Low

Subordinate Involvement Limited Low High Low

Scope and variety of Information

Low Medium High High

Requirements (Features of the Organization/Task)

Standard outputs Yes No No No

External benchmark of performance (e.g. price)

Yes No No No

Process knowledge No Yes No Yes

Employee commitment No No Yes No

Stable environment No Yes No No

Culture: Two Definitions

Drennan (1992: 3): Culture is ‘how things are done around here’. It is what is typical of the organization, the habits, the prevailing attitudes, the [established] pattern of accepted and expected behaviour.

Daft (2007: 239): Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and is taught to new members.

Describing Organizational CultureBrown (1995: 8):• Artefacts• Symbols and symbolic action • Language in the form of jokes, metaphors, stories,

myths and legends – and advertising• Behaviour patterns in the form of rites, rituals,

ceremonies and celebrations• Norms of behaviour• Heroes• Beliefs, values, attitudes• Ethical codes• Basic assumptions• History

STRENGTH OF ORGANISATIONAL CULTURES

Intensity of Commitment to Organisational Beliefs and

Norms

Low High

Proportion of Employees Sharing Organisational Beliefs and Norms

Low Weak Elitist

High Diffuse Strong

Types of Organisational Cultures Autocracy Task Role Professional

Delegation of discretion and involvement in problem solving

Low High Low High

Conformity to established rules and procedures

Limited Limited High Considerable

Flexibility High High Low Limited

Sources of innovation and learning

Owner-manager

Project teams of specialists

Managers Professionals

Ability to integrate different knowledge and skills

Limited High Limited to managerial hierarchy

Limited to professional

groups

Typical control system Personal Normative and output

Bureaucratic Normative and some

bureaucratic

Contrasting Organisational Practices I

a) Process-oriented vs. Results-oriented

Extent of focus on outputs and results

b) Employee-oriented vs. Job-oriented

Extent to which managers focus on employee development rather than immediate task performance

c) Parochial vs. Professional

Extent of staff identification with organisational unit and company or occupation and skill

Contrasting Organisational Practices II

d) Open system vs. Closed systemExtent to which organisation is internally focused and

separate from environment

e) Loose control vs. Tight controlExtent to which staff are expected to conform to

organisational norms of behaviour

f) Normative vs. PragmaticExtent of commitment to meeting customer needs

An Example of Open vs Closed Systems?

• Sanofi chief lays out distinctive strategy• http://www.ft.com/cms/s/0/1b23c578-d7d0-11de-b578-

00144feabdc0.html 03 December 2009

• In a swipe at Gerard Le Fur, his predecessor and former head of research and development, who was appointed chief executive and ousted within months, he said: "We had really a scientific organisation that really lived within its own walls; not a lot of external partnerships, virtually no contact with our commercial organisations."

• …• Mr Viehbacher also criticised the "ridiculous" Sanofi-

Aventis name in China, where he said most company names have just three syllables. It would be shortened to Sanofi, he said. "We have to be much more adapted to our markets and customers and fight globalisation," he said.

Question

• How are organizational cultures created?

Distinctive Organisational Cultures

Depend on:

• Selection

• Training

• Rituals, Symbols and Legends

• Reward Systems

• Promotion and Career Structures

• Top Management Behaviour

MOTHER-DAUGHTER STRUCTURE

MNCs WITH AN INTERNATIONAL DIVISION

WORLDWIDE FUNCTIONAL STRUCTURE

WORLDWIDE FUNCTIONAL STRUCTURE

• Similar advantages and disadvantages to domestic functional structures (economies of scale within functions, skill development, but slow response and decision-making).

• But less effective in many MNCs: inability to adapt readily to the greater local diversity of business environments.

• Typically found in firms with narrow product ranges in relatively stable technical environments where technical excellence is crucial.

WORLDWIDE GEOGRAPHIC GROUPS

Question

• What sort of industry characteristics might lead MNCs to establish world-wide geographic groups?

WORLDWIDE GEOGRAPHIC GROUPS

• Typically found in low technology industries where sales and marketing are key functions and vary regionally. Product range diversity tends to be limited in such MNCs and products are often modified extensively to suit local markets.

WORLDWIDE GEOGRAPHIC GROUPS An Example: Unilever

• Unilever Executive• is responsible for managing profit and loss, and delivering growth

across our regions, categories and functions.• Paul Polman - Chief Executive Officer• James A Lawrence - Chief Financial Officer• Sandy Ogg - Chief HR Officer

• Professor Geneviève Berger - Chief Research & Development Officer

• Manvinder Singh (Vindi) Banga - President Foods

• Douglas Anderson Baillie - President of Western Europe • Harish Manwani - President, Asia Africa• Michael B. Polk - President, Americas

Worldwide Product Structure

Worldwide Product Structure

• Often found in large MNCs that have a variety of diverse product ranges that need little adaptation for different markets, and where technological scale economies are important.

Worldwide Product Structure An Example: Lafarge

• Chairman and Chief Executive Officer• Chief Financial Officer• Vice-President Organization and Human

Resources• Vice-President Strategy, Business Development

and Public Affairs• Vice-President Communications

• Co-President of the Cement Business * 3• Co-President of the Aggregates and Concrete

Business * 2• President of the Gypsum Business

Worldwide Matrix