Session 5 Managing Structure

8/12/2019 Session 5 Managing Structure

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Food for thought

Corporate revitalization often includes shifts instrategy or process or structure, butrevitalization means a good deal more it

means a permanent rekindling of individualcreativity and responsibility, a lastingtransformation of the companys internal andexternal relationships, an honest-to-God change

in human behavior on the job


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Where We Are

EIS Simulation:

The change process

Leadership& Initiation of change

Individual level:

Change agent

Organization level:

Culture & structure

Interpersonal level:Social capital

Introduction& overview

Strategies of change& conclusion


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Session 5

Managing Change at theOrganizational Level


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Topics for Today

Theme 1: Organizational change through empowerment Strategic consideration: top-down vs. bottom-up Empowerment as a strategy

Theme 2: Organizational change through structuraldesign The role of structural designs in organizational change Case study: Appex Corporation Debate: structural change vs. cultural change Summary and takeaways


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Theme 1: Organizational change throughthe management of culture

The need to get people involved The key is to change the mental model

Organizational culture values and norms that are shared by people/groups

that control the way they act internally andexternally.

Values = beliefs about goals and appropriatestandards for achievement (behaviors)

Norms = expectations about behavior in specificsituations and toward one another.


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Organizational Culture

Espoused Values individual values (CEO, managers) that the group

adopts through validation (cognitive transformation

to shared value) conscious and explicit - serve a normative or moralfunction to guide members in certain situations andin socializing members.

Strategies - goals - philosophies


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Basic underlying assumptions: a solution to a problem that works repeatedly &becomes taken for granted

cannot be confronted or debated and are difficult

(if not impossible) to change. can only be changed through re-examination and

re-evaluation of the cognitive structure. individuals will distort or deny rather than adopt -

thus culture at this level is a defense mechanism somajor change means managing at this level.


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Socialization - how people learn the culture Consists of stories, myths, legends, etc.

influence of the founder organizational structure composition of TMT

Adaptive cultures - encourage and rewardinitiative/innovativeness - easiest to change

Inert cultures - cautious and conservative, does notvalue initiative & may discourage


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Strong Adaptive Cultures characterized by: Bias for action - autonomy, risk-taking,

entrepreneurship

Coherent mission - sticks to knitting, close tocustomers Structured for flexibility


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Changing organizational culture(Pascale et al. 2000)

Incorporating employees in the process Not communicating, motivating It is resocialization changes the way people think

Leading from a different place Out of the comfort zone Generate a sense of urgency, maintain healthy levels of stress,

resist coming to the rescue with ready answers.

Instilling mental disciplines Let employees see the larger picture Manage from the future Cerate relentless discomfort with the status quo.


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Empowerment(Quinn and Spreitzer 1997)

Empowered people have a sense of Self-determination Meaning Competence ImpactBecause empowerment includes risk -taking, it opens the

possibility of making mistakes. If those mistakes werepunished, then individuals became disenchanted with their newways of thinking, and regressed to past behaviors. If theyreceived no support or reinforcement, then the cycle ofempowerment was halted and individuals actually felt moredisempowered than before.

Quinn and Spreitzer (1997, p. 45)


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Are you empowered?(Quinn and Spreitzer 1997)

To what extent do I have a sense of meaning and taskalignment, and what can I do to increase it?

To what extent do I have a sense of impact, influence,and power, and what can I do to increase it?

To what extent do I have a sense of competence andconfidence to execute my work, and what can I do toincrease it?

To what extent do I have a sense of self-determinationand choice, and what can I do to increase it?


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Theme 2: Organizational change throughstructural design

Strategic design and organizational control

The role of structure in organizational change Structure and organizational alignment Structure power, resources Structure vested interests Structure generates stability, predictability

Types of organizational structures


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Organizational Structure

Functional structure - groups people on thebasis of common expertise & resources

Pro: learning (transfer of knowledge within function)monitoring is easierprocesses become more efficientgreater managerial control

Con: control becomes a problem as company growscommunication and coordination (between functions)

measurement (contribution of function)loss of strategic focus by TMT


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Multi-Divisional Structure

Product lines or business unit is self-contained -corporate HQ established for support & control Divisional unit = operating authority HQ = strategic authority

Adv: Financial control - easier to monitorStrategic control - time for TMT to focus on strategyGrowth - add businesses or productsInternal efficiency - allows clearer varianceidentification

Disadvantages: Division/Corporate relationship Interdivisional competition - resources, parent attention Short-term focus Bureaucratic costs


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Multi-Divisional Structures


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Matrix Organization

Based on two forms of horizontal differentiation:functional and project/product Advantages:

Employees tend to be highly qualified, professional, &perform best in autonomous, flexible working conditions

Employees can be moved from project to project leaves TMT to focus on strategy

Disadvantages: high bureaucratic costs

constant movement of employees means $ two boss role can create conflict


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Matrix Structure


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Team Structure

Many companies use permanent cross-functional teams

formed at the beginning of product development process andcontinued throughout implementation

speeds innovation and customer responsiveness stronger in highly dynamic industries


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Team Structure


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Network Organizations

Core group of experts manages the outsourcingprocess closely

This forms a hub & spoke type of organization

consisting of many contracts Could create a control problem with contract

organizations

Example: Nike


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Network Structure

.


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Case study: Appex Corporation


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Background

Shikhar Ghosh expertise in structural design Appex before Shikhar:

Small size: 20 employees, $2mil.

Entrepreneurial Technology-driven, project-based Loosely structured Organizational culture: informal

Challenges: Growing pains: consider Greiners 5 stages of growth From innovation to sustainable growth


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The Five Phases of Growth Larry Greiner


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The search for structural fit

Circular structure What kinds of problems does it run into?

Horizontal structure Why does it not work for Appex at this stage?

Hierarchical, functional structure Does it address the challenges? Why?

Divisional structure What is the rationale? Does it work?


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Questions for discussion

Is structure and control the most important aspectfor organizational change at this stage of Appexsdevelopment?

How do you evaluate the effectiveness of the differentstructures adopted at Appex over time?

Would you do anything differently?

What is the relationship between organizationalstructure and culture?

The lessons from Citibank practice in Taiwan


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Strategic choice in knowledge management(Hansen, Nohria, and Tierney 1999)

Two strategies: codification vs. personalization Examples: IBM versus 3M Codification: Provide high-quality, reliable and fast information

implementation. Personalization: Provide creative, analytically rigorous advice

on high-level strategic problems.

The trade-off between professionalization andbureaucratization

Implications: structure vs. culture as control device Strategic design in culture, strategy, HRM


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Summary and takeaways

Strategic choices for change: Top-down versus bottom-up Leadership and the initiation of change Empowerment: Organizational changes need bottom-up

processes that involve employees and change their mindsets.

Strategic choices for change: Cultural vs. structuralchanges Complementality between the two

The need for a systematic change program What is your priority?

Documents

Session 5 Managing Structure