Summary Organizational Structure: - H11, H12
Organizational Structure (EBP670C05)
Rijksuniversiteit Groningen
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Summary chapter 11 and 12
Group 4.
Adrienn Juhász
Hieke Bruinsma
Rogier Groote
Chantal van Putten
Chapter 11 Managing the environment
All organisations have to face environmental uncertainty, as they cannot isolate themselves from their environment and they cannot control and generate all needed resources.
To lessen environmental uncertainty, managers can use two general strategies:
- Internal strategies: those which adapt and change organisational practices to better fit the environment; as a result, the organisation’s dependence on its environment is decreased
- External strategies: those which change the environment in order to fit better with the organisation
Internal strategies:
Domain choice: The domain is a part of the environment, where the organisation operates. To reduce uncertainty, the organisation can move from one domain to another, which is less dynamic. If it cannot change its domain, it can change its strategy to a more general format, which can adapt to the uncertain environment more easily. Recruitment: If the organisation’s staff has the appropriate skills, it is able to decrease the environment’s effect on the organisation. Environmental scanning: To find all actions, factors, which can lessen the organisation’s effectiveness, the organisation can scrutinize its environment. By predicting and finding these actions, it is easier for the management to make changes in advance.
To make this strategy more effective, organisations need to have boundary spanners. This staff’s job is to operate between the environment and the organisation by performing organizationally relevant tasks and to relate the organisation to elements outside it. Buffering: Protecting the operating core from environmental variations and protects both the input and output side of the production process from environmental changes. Smoothing: Lessening environmental fluctuation by stimulating environmental units in order to standardize their interactions with the organisation. Rationing: In case of excess demand, the organisation’s management need to consider allocating output according to a kind of priority system. Improving information processing: If the organisation is lack of information, it has to improve the flow of information. Modern information technology is the best way to do that. Geographic dispersion: When location uncertainty is high, organisations have two options: find another geographic location or operate in multiple locations.
External strategies:
Bridging: Trying to regulate the environment by any form of mutual benefit and social action, for instance negotiation, cooperation or exchange. Advertising: By building brand loyalty, the organisation is able to create a loyal costumer base as well. Management uses this strategy to reduce its dependence on fickle consumers. Contracting: This strategy protects the organisation from changes in quantity or price on either the input or the output side. Co-opting: To protect the organisation’s survival, the organisation can absorb those individuals or organisations, which threaten it. Coalescing: Merging with another organisation or taking it over for the purpose of joint actions. Lobbying: To achieve favorable outcomes, an organisation can use its influence on external parties. Insuring: To avoid the damage caused by rare risks, like fires, accidents or hailstorms, the organisation might insure itself by and insurance company. Hedging and futures markets: Using financial instruments for the purpose of lessen uncertainty, for example exchange markets or futures markets.
Guidelines for managing the environment:
See table 11 on page 365.
Chapter 12 Managing organisational change
Not all organizational change is the same. So, in order to fully understand the nature of change, we will clarify the various forms that change may take. If an organization is faced with a change that alters the very nature, we talk about revolutionary change. Mostly, this emerges as a response to significant technological and environmental changes. Revolutionary change is often accompanied by redundancies and downsizing, shifts in power, changes in strategy and a new organizational structure. Change becomes evolutionary when the organization is settled into its new pattern and people are adapted to their new roles. Evolutionary change describes ongoing minor changes that are incorporated in the existing organizational structure. Organizations cannot (completely) manage their environment, so management has essentially two options. It can change incrementally as environments change or delay change until it is absolutely necessary and then make it comprehensive. As management always aims at stability, they will choose the second option in most situations. We can also classify change whether it is planned or unplanned. Planned change refers to situations in which organizations have adequate time to anticipate and formulate a response to the drivers of change. Unplanned change emerges as a response to an unanticipated threat or event. Through combining the two dimensions of change we can develop a matrix which categorizes the various forms of change, namely adaptive change, systemic change, transitory change and chaotic change.
The indications that a new structure may be called for can be summarized in the following three areas:
- Decision making is slow or inappropriate
- The organization is not responding innovatively to environmental change
- All important tasks should have someone responsible for them The following four points explain why organizations resist change:
- Members fear losing what they already have
- Most organizations are bureaucracies
- Many organizations can manage their environment and hence can reduce the pressures for change
- Organization cultures resist pressures for change
A model for managing planned organisational change
In table 12 you can see a model for managing organisational change. Change is initiated forces that generally originate in the environment. The forces for change must be identified and interpreted by management, which then decides how the organisation should respond. In some cases the responsibility is delegated to a change agent, while in others a management team will take the responsibility for the change. The need for change is presumed to be both inevitable and continual.
Forces leading to change
All organisations change at some time during their life. This is particularly so for the business organisations which face a constantly changing environment. The factors capable of initiating structural change are countless. In table 12 at page 386 you can find the more visible reasons for an organisation considering change in structure. This list is far from comprehensive. Organisations are continuously absorbing changes in environments and technologies with little in the way of structural change. Most modern structures, with the exception of those of the most rigid bureaucratic type, are
designed to absorb ongoing changes of a minor nature. It is only when the organisation has lost the capacity for self-design that major structural change occur.
Interpretation of the forces
Interpreting changes in the environment and the impact of new technologies is not an exact science. There is always disagreement over the environmental changes taking place and what they mean for the organisation. Managers do not have perfect knowledge of their organisation, particularly if it is of considerable size, and we have seen that their knowledge of major environmental changes taking place around them is often imperfect. Consultants often have considerable experience in given industries. This allows them to bring to the company perspectives that are better informed than those inside the company. Consultants may be able to provide expertise. However, not all consultants are perceived this way, they may also be hired by management to confirm and legitimise changes that might otherwise be perceived as self-serving. Another function of consultants is to work with senior management as facilitators. Some managers build their career around implementing major change programs. This is never a popular task and difficult for those who have spent a long time in the organisation. Major change programs occur infrequently in people’s lives and they are often so draining that many managers feel that one major program is sufficient to manage and live through. As a result, the learning derived from repetitive action is often absent. However there are sources which managers may draw on upon support; we have already mentioned consultants, but former or retired managers are often a good source of advice.
Development of a change plan
Minor changes may be accommodated as part of an ongoing process of adjustments to areas of authority and responsibility and the process of self-design. But large scale change programs require a comprehensive plan. In table 12 you can find the major steps in a change program. The plan is influenced by the interpretation of the organisation’s problems and the desired outcomes. The plan also needs to take into account whether the change is a one-off or whether it will be ongoing. The change plan identifies the intervention strategies, the choice of means by which the change process takes place. Intervention strategies tend to fall into one of four categories: people, structure, technology and organisational processes. We are concerned with structural issues rather than with behaviour. Structural changes affect the distribution of authority. The technology classification encompasses modifications to the equipment that employees use, any change must be supported by appropriate technology. The final strategy considers organisational processes, such as decision-making and communication patterns.
Changing culture and behavior
If a so-called 'change program' wants to be successful, it should contain not only an outline of actions that have to done, but also elements of the expected outcome of the program. The method of implementing a change program depends on whether it is an ongoing change plan or a one-off event. Most change plans are one-off programs, and they follow three steps in implementation:
affected by it. This is often used in large organizations where the upper level managers will leave the actual process of change to the lower level staff. 3. Persuasion is change agents abdicating the decision to experts. These experts will then persuade the board members to sell their ideas. 4. Edict is basically briefly telling everyone about the upcoming change, and then to simply execute it through authority.
In a recent study, the persuasion tactic proved to be the most common within organizations, with edict being the second most popular and intervention and participation being the least popular. Although, this research also showed that even though intervention wasn't nearly the most popular tactic, it did achieve a 100% success rate within this research, whereas for example edict only attained a 43% success rate.
Very often organizational change does not significantly affect an organization's effectiveness, as figure 12 on page 383 of the "Organizational Theory" book might suggest, and since competitors often apply similar changes, it is not likely that a major change will really give a firm a competitive edge over the competition.
Managing unplanned change
We can distinguish planned change from unplanned change and chaotic change from transitory change. Transitory changes are usually within local adaptiveness, and are generally short-term, whereas chaotic changes can put the entire organization at risk through, for example, a major environmental change. There are certain methods that the management of a firm can use to deal with unplanned change, either chaotic or transitory:
- Centralization of management. In times of unplanned change, information usually needs to flow rapidly, which will go easier with a centralized structure. This is why it can be advised to centralize to a certain extent.
- Establishment of special task forces. Crises that might occur will probably require special task forces to be solved, since the original organizational structure will not be fully able to cope with all problems.
- Active management of the environment. In times of crisis, organizations should pay close attention to their critical constituencies in order to survive.
- Management of resources. The management needs to use their resources wisely to decrease the impact of change and increase the chance of survival.
- Need for active leadership. Unplanned change causes lots of pressure on the management. The CEO must actively be involved in every decision making process to ensure the problem is being handled correctly.
‘Food for thoughts’ chapter 12
I believe this image suits the chapter very well, because this chapter is all about change within organisations and the other factors that influence or are influenced by these changes. The image above is a quote which shows someone’s opinion on changes, particularly technological changes. You can see the person, Deb Schultz, is saying technology changes and people don’t. This sentence might make you question if either people adapt to technology, or if technology adapts to people. I personally think this is quite an interesting statement, since it depends on the organisation. For example, in most organisations, technological changes come before adapting to them, like entire working groups have to leave because of these technological changes. Considering the statement above, changes within organisations are made due to other changes. While, at page 388 it is said that changes must be supported by technology. Meaning that you make a change, then choose the right technology. It is not clear whether the technology then has already been made. On the other hand, later in the chapter, at page 391, it is said that any introduction of new technology will lead to organisational change. Keeping that in mind, I think it is fair to say that I have to agree with the author of this quote. Even though some organisations manufacture technology themselves, it is safe to say that technology usually changes before the humans.
Image chapter 12 Can information drive behaviour change? nicktemple1/2011/09/08/behaviourchange/
Summary Organizational Structure: - H11, H12
Vak: Organizational Structure (EBP670C05)
Universiteit: Rijksuniversiteit Groningen
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