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CH 7 managing change and innovation
Organization change
If it wasn’t for change, a managers job would be easy. Planning would be simple because tomorrow would be no different. The issue of effective organizational design would also be resolved because the environment would not be uncertain and there would be no need to redesign the structure.Organizations face changes because external and internal factors create the need for change. Forces for organizational change
External
– Changing consumer needs ad wants, new govt laws, changing technology, economy changes. Internal
– New organizational strategy, change in composition of workforce, new equipment, changing employee attitudes.
Two views of the change process
One metaphor envisions the org as a large ship crossing a calm sea. The ships captain and crew know exactly where theyre going because theve made the trip many times before. Change comes in form of the occasional storm, a brief distraction in otherwise calm and predictable trip. In calm water metaphors change is seen as an occasional disrupt in normal flow of events. Once disruption have been dealth things can continue continue under the new changed situation. This type of environment isn’t what most managers face.
In the other metaphor the org is seen as a small raft navigating a raging river with uninterrupted white-water rapids. Aboard the raft are halfa dozen people who a have never worked together before, totally unfamiler with the river, who are unsure of their destination, who are also traveling at night. In the white rapids methphor change is normal and expected and managing it is a continue process.
THE CALM WATER REFRENCE
Lewins 3 step process for change – Unfreezing the status quo, changing to a new state, and refreezing to make the change permanent. The status quo is considered equilibrium. To move away from this equilibrium, unfreezing Is necessary. Unfreezing can be thought of as preparing for the needed change. It can be done by increasing the driving forces, which are forces pushing
for change; by decreasing the restraining forces, which are forces that resist change, or by combining the 2 approaches. Once unfrrezing is done change itself can be implemented, just introducing change doesn’t ensure that it will take hold. New situation needs to be refrozen so that it can sustained overtime. Unless this last step Is done , theres a strong chance that employees will go back to old equilbirum state --- that is the old ways of doing things. The objective of refreezing, then is to stabilize the new situation by reinforcing the new bahaviors.
Lewins 3 step process treats change as a move away from the org current equilibrium state. Not
what most managers face today.
WHITE WATER RAPIDS METAPHOR
Made by dj patil – expert in chaos theory – business climate is turning out to be a lot like the two weather scenario. The pace of change in our economy and our culture is accelerating and our visibility about the future is declining. Example of managing change might be like for you in a white water rapids environment: the college youre attending has the following rules; courses
cary in length. When you sign up you don’t know how long it courses will run. It might go for 2 weeks or 15 weeks or instructor can end the course at any time with no prior warning, and if its even challenging sometimes class last 20min or for 3 hours.
This stability and predictability all of the calm water metaphor does not
exist. Disruptions in the status quo or not occasional and temporary and they are not followed by return to calm waters many marriages never rapids they phase constant change.
Any organization that treats change as the occasional disturbance in an otherwise calm and stable world run to great risk. Too much is changing too fast for an organization or its managers to be complacent
it's no longer businesses usual and managers must be ready to see Shelly and effectively manage to change is facing their organization or their work area.
Types of Organizational Change
What is Organizational Change? Managers at one point or another will have to change something in their workplace we classify these changes as organizational change
,
which is any alteration of people,structure,or technology. Organization changes often need someone to act as a catalyst and assumr the responsibility for managing the changing process that person is a change agent
.Change agents can be a manager within the organization(internal), but could be another nonmanager for example a
change specialist from the HR department or even an outside consultant. Outside consultants often provide advice and assistance for
major changes, because they're from the outside they have an objective perspective that insiders may lack, also have limited understanding of the company's history culture operating procedure and people theyre also more likely to make a drastic change than an insider would because they don't have to live with the repercussions of
the change implemented. Internal managers may be more thoughtful, but possibly overcautious because they must live with the consequences of their decisions.
Types of change
Three main types of changes structure,technology,people.
Changing structure(structural components and structural design) includes any change in structural variable such as reporting relationships coordination mechanism employee empowerment or job redesign.Changes in the external environment or an organizational strategies often lead to changes in organizational structure, because organization structure is defined by how work gets done and who does it managers can alter one or both of these structural components.you
can also make major changes in the actual structural design, structural
design changes might include a shift from a functional to a product structure of the creation of a project structural design.
Changing technology(work processes, methods, and equipment) encompasses modifications in the way work is performed or the methods and equipment that are used.managers can also change the technology used to convert inputs into outputs. Scientific management techniques involved implementing changes that would increase production efficiency. Technological changes usually involve the introduction of new equipment tools,or methods;automation or computerization.competitive factor in the visions of been in industry often require managed to introduce new equipment tools or operating methods. Automation- is a technological change that replaces certain tasks done by people with tasks done by machine. The most visible technology cool changes have come from -computerization,most organizations have sophisticated information system(telxongun)
(tracking workers computer).
People (attitudes expectation perceptions and behaviors—individual and group) refers to changes in attitude expectation perception and behaviors something that's not easy to do. Organizational development OD is the term used to describe change methods that focus on people and the nature and the quality of interpersonal work relationships. Some OD techniques work for US organizations may not be appropriate for organizational based in other countries before using the same OD techniques to implement behavior changes managers need to be sure they've taken into account cultural characteristics and whether the technique make sense for the local culture.
Managing resistance to change
Change can be a threat to people in an organization.organization's can build up inertia the motivates people to resist changing the status quo,
even though change might be beneficial.
Why do people resist change?
The main reason include uncertainty, habit, concern over personal loss and the believe that the change is not the organization's best interest. Change replaces the known with uncertainty, some may fear that it will
be unable to perform so to develop a negative attitude towards a change or behave poorly if required to use them.
Another cause of resistance is that we do things out of habit when confronted with change our tendency to respond in her accustomed ways become a source of resistance. Third cause of resistance is the fear of losing something already possessed change threatens the
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investment you've already made in the status quo. Final cause of resistance is a person's belief that the changes is incompatible with the
goals and interests of the Organization, this type of resistance actually can be beneficial to the organization if expressed in a positive way.
Techniques for reducing resistance to change
Approaches include education and communication(used one resistance
is due to misinformation clears up misunderstandings but it may not work when mutual trust and credibilityarelacking),participation(used when resistors have the expertise to make a contribution. Allows individuals to express their feelings increase the quality of process increase employee commitment to the final decision),facilitation and support(used one resistors there are fearful and anxiety ridden, like counseling therapy new skills training or short paid leave of absence. but it's expensive doesn't guarantee success), negotiation(used when resistance come from a powerful group. Involves to exchanging something of value for an agreement to lessen the resistance to the change effort.can buy commitment but I had a potentially high cost open doors for others to applypressure), manipulation and co-optation(refer to cook for attempts to influence others about to change may involve the store and facts to make the change appear more attractive.used when a powerful groups endorsement is needed it's inexpensive and easy way to gain support can backfire causing change agent to lose credibility) coercion(can be used to do with resistance of change.coercion involves the use of direct threats or force against a resistors.used to in the powerful is group endorsement is needing an expensive easy way to gain support may be legal may undermine change agents credibility).
Contemporary issues in managing change
Employee stress is one of the major critical concerns for managers today.
Changing organizational structure
culture
The fact that an organizational culture is made up of relatively stable and permanent characteristics tend to make it very resistant to change. A culture takes a long time to form, and once established it tends to become entrenched. Strong cultures are resistant to change because employee have become so committed to them. Culture isn't just one aspect of the game it is the game.overtime if a certain culture becomes handicap a manager might be able to do little to change it especially in the short run even under the most favorable conditions, cultural changes have to be viewed in years not weeks or even months.
Understanding the situational factors
What favorable conditions facilitate cultural change? Dramatic crisis occurs- such as unexpected financial setback, loss of a major customer
or a dramatic technological innovation by a competitor. This shock can weaken the status quo make people start questioning the relevance of the current culture.
Leadership changes hands - New top leadership can provide an alternative set of key values and maybe perceived as more capable of responding to the crisis than the old leaders were.
Organization is young and small - the younger the organization, the less entrenched it's culture.its easier for managers to communicate new values in a small organization than in a large one.
Culture is weak - weak cultures are more receptive to Change than strong ones.
Making changes in culture
Managers need a strategy for managing cultural change. Following strategy doesn't guarantee a change in culture org members don't quickly let go of their values that they understand and that worked in the past. Change if it comes, will be slow. Mgrs must stay alert to protect against any return to old familiar traditions.
Employee stress
For many employees org changes creates stress. Uncertain environment characterized by time pressures, increasing workloads,mergers, and restructuring has created a large number of number of employees who are overworked and stressed. U.S. Workers experience stress range drone 40 percent and 80 percent. Stress was the leading cause of people quoting their jobs. But according to employers stress isn't top 5 reasons why people leave and instead believed low pay was the main reason.
What is stress
Stress is the adverse reaction people have to excessive pressure placed on them from extraordinary demands, constraints, or opportunities. Stress isn't always bad, it can be positive when it offers potential gain. Functional stress allows athlete or performer, or employee to perform at his highest level at crucial times. However stress is more often associated with constraints and demands. A constraint prevents you from doing what what you desire; demands refer to the loss of something desired, we feel stress because we confront opportunity, constraints, demands. Also just because the conditions are right for stress to surface doesn't always mean it will. 2 conditions are necessary for potential stress to become actual stress. First, there must be uncertainty over the outcome, and second, the
outcome must be important. What causes stress?
Stress can be caused by personal factors and by job related factors clef
stressors. Organization have no shortage of factors that can cause stress. Pressures to avoid errors or complete tasks in a limited time period,changes in the way reports are filed, A demanding supervisor and Unpleasant coworkers. 5 categories of stressors: task demand, role demands, interpersonal demands, organization structure, and organization leadership.
Task demands- are factors related to an employee's job. Cool design of
a person job( autonomy,task variety degree of automation), working conditions and the physical work layout and work quotas. The more interdependence between an employees task and the task of others the greater the potential for stress. Autonomy, on the other hand tend to lessen stress.
Role demands-relate to the pressures placed on an employee as a function of the particular role she plays in the organization. Role conflict/ create expectations that may be hard to reconcile or satisfy. Role overload/ is experienced when an employee is expected to do more than the time permits. Role ambiguity/ created when expectations are not clearly understood and the employees not sure what he or she is to do.
Interpersonal demands - pressure created by other employees. Lack of social support from colleagues and poor interpersonal relationships can
cause stress,among workers with high social need.
Organization structure- can increase stress. Excessive rules and employees lack of opportunity to participate in decisions that affect him or her are examples of structural variables that might be potential source of stress.
Organizational leadership - represents the supervisory style of the organizations managers. Some mgr create culture characterized by fear, tension, and anxiety. Establish unrealistic pressures to perform in the short run, impose excessively tight controls and routinely fire employees who don't measure up. This style foyer down thru organization and affects all employees.
Personal factors that can stress include family issues, economic problems, inherent personality characteristics. Employees personality have an effect on how susceptible they are to stress.type A and type B are most common personality traits.
Type A - chronic feelings of a sense of time urgency,an excessive competitive drive, and difficulty accepting and enjoying leisure time.
Type B - opposite of type A. Don't suffer from time urgency or
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impatience. Both are susceptible to the same anxiety producing elements. Mgrs most recognize that type A employees are more likely to shoe symptoms of stress, even if organizational and personal stressors are low.
What are the symptoms of stress?
An employee who is experiencing high stress may become depressed,accident prone, or argumentative;may have difficulty making the routine decisions;may be easily distracted. Can be group into 3 symptoms physical, behavioral, psychological.
Physical- changes in metabolism, increased heart and breathing rates, raised blood pressures,headaches, potential of heart attacks.
Psychological- job related dissatisfaction, tension, anxiety, irritability,boredom,and procrastination.
Behavioral- changes in productivity, absenteeism, job turnover, changes in eating habits, increased smoking or consumption of alcohol,
rapid speech, fidgeting, and sleep disorders.
Stress phenomenon karoshi in Japan meaning death from overwork.
How can stress be reduced?
By controlling certain organizational factors to reduce job related stress and to a more limited extent, offering help for personal stress.
Things managers can do in terms of job related factors begin with employee selection.managers need to make sure an employees abilities match the job requirements. When workers are in over their heads stress levels are high. Realistic job preview during selection process can minimize stress by reducing ambiguity over job expectations. Improved organizational communications will keep ambiguity induced stress to a minimum. MBO (planning program) will clarify job responsibilities provide clear performance goals and reduce ambiguity through feedback. Job redesigns - also reduces stress,If stress can be traced to boredom or work overload job can be redisign.
Stress from workers personal life raises 2 problems, it's difficult for managers to control directly, 2ndly ethical considerations include whether managers have right to intrude.
Employee counseling- can provide stress relief.
Time management program- can help workers whose personal lives suffer from lack of planning to sort
Out their priorities.
Wellness programs- organizationally sponsored.
Making change happen successfully
Managers at all organizational levels are involved in the change process. Change efforts don't always work the way they should.
Managers can make change happens ; they can 1 make the
organization change capable. 2 understand their own role in the process(be a catalyst for change;they must also be change leaders), and 3 give individual employees a role in the change process.
Employees are a powerful resource in addressing chafe issue. If you just developed a change program and tell employees To implement it it's not going work but if employees help build it they will make it work.
Mgrs should encourage workers to be change agents.
Stimulating innovation
Innovation is the key to success, we innovate today to secure the future.
Creativity vs innovation
Creativity- refers to the ability to combine ideas in a unique way or to make unusual associations between ideas. A creative organization develops unique ways of working or novel soluts to problems. Creativity by itself isn't enough. The outcomes of the creative partners to be turned into useful products or work methods which is defined as innovation. The innovative organization is characterized by its ability to
Generate new ideas that are implemented into new products,
Processes, and procedures designed to be useful.
Stimulating and nurturing innovation
Getting desired outputs (innovative products and work methods) involve transforming inputs. These inputs include creative people and groups within the organization, takes right environment to help transform those inputs into innovation. Right environment that stimulates innovation- includes 3 variables : org structure, culture, and human resource practices.
Structural variables
Organization structure can have a huge impact on innovativeness.5 structural variables-organic type structure positively influence innovation, it's low in formalization, centralization, and work specialization. 2nd the availability of plentifully
resources provides a key building block for innovation.3rd frequent communication between organizational units helps break down barriers to innovation, ie cross functional teams, task forces.4th innovative organization try to minimize extreme time pressures in creative activities despite the demands of white water Rapids environments. 5th studies have shown that an employee creative performance was enhanced when an organization structure explicitly supported creativity.
Cultural variables
Throw the bunny is part of the lingo used by a product development team first juggling lesson where team members learn to juggle two balls in the stuffed bunny most people learn to juggle two balls but
can't let go of the third object .creativity like juggling is learning to let go that is to throw in a bunny have in the culture where people are encouraged thrown a bunny is important to its continued product innovations.
Innovative organizations tend to have similar cultures they encourage experimentation set creativity goes reward both success and failures and celebrate mistakes.innovative organization is likely to have the following characteristics- accept ambiguity(too much emphasis on objectivity and specifically constraints creativity), tolerate the impractical, keep external controls minimal(rules,policies),tolerate risk,tolerate conflict,focus on ends rather than means(goals are made clear encouraged to take alternative routes), use an open system focus,provide positive feedback,exhibit empowering leadership.
Human resource variables
Innovative organizations promote the training and development of their members so they're knowledge remains current; offer their employees high job security to reduce the fear of getting fired for making mistakes; and encourage individuals to become idea champions- which is actively and enthusiastically supporting new ideas, building support, overcoming resistance, and ensuring that innovations are implemented. Research finds that idea champions have common personality characteristics extremely high self-
confidence ,persistence, energy and a tendency toward risk taking. Also display characteristics associated with dynamic leadership also good At gaining commitment of others to support their mission, in addition idea champions have jobs that provide considerable decision-
making discretion this autonomy helps them introduce and implement innovations in organizations.
Innovation and design thinking
Design thing can do for innovation what TQM did for quality. Design thinking can provide a process for coming up with things that don't exists, when the business approach is Innovacion with the design thinking mentality the emphasis is on getting a deeper understanding of what customers need and want it entails noncustomers as real people with real problem not just the sales targets are demographic statistics
ch 8 foundations of planning
The what and why of planning
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What is planning ?
Planning - involves defining the organizations goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities. It's concerned with both ends (what) and means (how). We normally use formal planning.
In formal planning- specific goals covering a specific time period are defined. These goals are written and shared with organizational members to reduce ambiguity and create a common understanding about needs to be done. Specific plans exist for achieving these goals.
Why do managers plan?
4 reasons managers should plan. 1 planning provides direction to managers and non-managers alike. When workers know what the organization is trying to accomplish and what they must contribute to read goals, they can coordinate activities,cooperate with each other, and do what it takes to accomplish those goals. Without plan, departments and individuals might work at cross purposes and prevent
the organization from efficiently achieving its goals. 2 planning reduces
uncertainty by forcing managers to lol aged, anticipate change, consider the impact of change and develop appropriate responses.planning won't eliminate uncertainty, managers plan so the can respond effectively. 3 planning minimizes waste and redundancy. When work activities are coordinated around plans, inefficiencies become obvious and can be corrected or eliminated. 4 planing establishes the goals or standards used in controlling. When managers plan they develop goals and plans. When's they control the see whether the plans have been carried out and the goals met. Without planning their would be no goals against which to measure work effort.
Planning and performance
Studies have shown positive relationships but we can not say that organization that formally plan always outperform those that doesn't plan. We can conclude- that formal planning is associated with positive
financial results- higher profit/return on assets. doing a good job planning and implementing the plan plays a bigger part in performance
than how much planning is done. Also situations where formal planning
doesn't lean to high performance, external factors was to blame. When
external factors like govt regulations or labor union constrain mangers options it reduces the impact planning has on an organization performance. Finally planning performance relationship seems to be influenced by the planning time frame,At least 4years of formal planning is required before it begins to affect performance.
Goals and plans
Planning is often called the primary management function cuz it
establish basis for other thing managers do as they organize, lead, and
control. It involves goals and plans.
Goals(objectives) - are desired outcomes or targets. They guide mgrs decisions and form the criterion against which work results are measured. You have to know the desired target or outcome befit you can establish plans for reaching it.
Plans - documents that outline how goals are going to be met. Usually include resource, allocations, schedules, and other necessary actions to accomplish the goals.
As mgr plans they develop plans and goals.
Types of goals
All organization have multiple goals. We can classify most company's goal as either strategic or financial. Financial goals - related to the financial performance of the organization. Strategic goals - related to other areas of an organization's performance.
Stated goals - official statements of what an organization says and what it wants its various stakeholders to believe it's goals are. Stated goals found in org character, annual report, public relations announcements,or in public statements by mg are influenced by what various stake holder think organization should do. Stated goals are vague and represent managements public relations skills rather than meaningful guides to what org is tryna accomplish.
Real goals - goals organization actually pursues, as defined by the actions of its members. Action defines priorities.
Type of plans
Organization plans are breadth (strategic vs operation), time frame (short term vs long term), specificity (directional vs specific), and frequency of use(single use vs standing).
These type of plans aren't independent. Strategic plans are usually long term, directional, and single use whereas operational plans are usually short term, specific,
And standing.
Strategic plans - plans that apply to entire org and establish the orga overall goals. Operational plans - plans that encompass a particular operational area of the org. Both of these plans Differ because strategic are broad and operational are narrow.
Long term plans- plans with time frame above 3 years. Short term plans - plans with 1 year or less. Any time period in between is an intermediate plan.
Specific plans - are clearly defined and leave no room for interpretation. Eliminates ambiguity and misunderstanding. Intuitively preferred. Directional plans- flexible plans that set out general
guidelines.provide mangers flexibility to respond to unexpected changes.
Flexibility of directional plans must be weighed against the lack of clarity of specific plans.
Single use plan - one time plan specifically designed to meet the need of unique situation. Standing plans - ongoing plans that provide guidance for activities performed repeatedly, includes policies, rules, and procedures, ie non discrimination and anti harassment policy.
Setting goals and developing plans
Approaches to setting goals
Everything org members do should be oriented toward achieving goals.
Goals can be set either through a traditional process or using management by objectives. Traditional goal setting - goals set by top managers flow down thru the org and become subgoals for each org area, assumes that top mgrs know what's best because thy see the big
picture. Goals are passed to the next org level and written to reflect the responsibilities of that level, passed to the next level. Then at some
time performance is evaluated so see whether assigned goals are being achieved.Turning broad strategic goals into departmental, team, and individual goals can be a difficult and frustrating process. Another problem is that when mgrs defined orgs goals in broad terms they have make goals more specific as they flow down thru organization. What ends up
Happening is that mgrs at each level will transmit the broad goals into specific goals thru their own interpretation and biases, clarity is lost as goals make their way down from top to lower level.Means ends chain - when the orgs goals are clear it forms integrated network of goals in which the accomplishment of goals at one level (low) serves as means for achieving the goals at the next level(high). This is how traditional goal setting is suppose to work.
Management by objectives (mbo) - process of setting mutually ahead upon goals and using those goals to evaluate employee performance. Have 4 elements - goal specificity, participative decision making, an explicit time period, and performance feedback. Mbo uses goals to make sure employees are doing what their supposed to be doing it also
uses goals to motivate them as well. It focuses on employees working to accomplish goals they've had a hand in setting. Mbo as showed to increase employee performance and organizational productivity. Mbo can be relevant for today's org if it's viewed as a way of goal setting which effectively motivate employees.
Characteristics of well written goals
Aren't all written the same way,
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Steps in goal setting
5 steps, 1 review the org mission or purpose- broad statement of orgs purpose that provides an overall guide to what organizational members think is important. Goals should reflect the mission. 2 evaluate available resources - don't set goals that are impossible giving available resource. Should be challenging and realistic. 3. Determine goals individually or with input from others- goals reflect desired outcome and should be congruent with org mission and goals in other organizations areas. These goals should be measurable,specific,and include a time frame for accomplishment. 4. Write down the goals and communicate them to all who need to know-
forces people to think them
Through, also become visible evidence of the importance of working towards something. 5. Review results and whether goals are being met
- if goals aren't being met change them immediately.
Once goals have been established, written down, and communicated, a
manger is ready to develop plans for pursuing the goals.
Developing plans
Influenced by 3 contingency factors
Contingency factors in planning
3 contingency factors affect choice of plans ; org level, degree of environmental uncertainty,
Length of future commitments.
Lower level managers do operational planning while upper level mangers do strategic planning. 2nd contingency factor is environmental uncertainty,- when uncertainty is high plans should be specific but flexible. Mgrs must be ready to abandon plan or change it. Commitment concept - says that plans should
extend far enough to meet those commitments made when the plans were developed.
Planning for too long or to short is inefficient and ineffective.
Approaches to planning
How an org plans can best be understood by looking at who does the planning.
Formal planning department - in traditional approach planning is done by top management who are assisted with formal planning dpt- group of planning specialists whose sole responsibility is to help write various
org plans. Under this approach plans flow down thru org levels like traditional approach to goal setting. These plans are tailors to the needs of each level. The focus is developing the plan the plan which is like a thick binder used for corporate not integrated in real life.
Another approach to planning is to involve more org members in the
process. Plans aren't handed down from one level to another it's developed by members at the various levels for specific needs. Employees can see the plans are used in directing and coordinating work.
Contemporary issues in planning
Planning effectively in dynamic environments and how managers can use environmental scanning. Especially competitive intelligence.
How can managers plan effectively in dynamic environments?
Managers should develop plans that are specific but flexible. Plans should not be set in stone. Managers should recognize that planning is a ongoing process. Plan stands like a roadmap ready to change direction due to dynamic market conditions. Mgrs need to pay attention to environment changes. Mgrs should continue formal planning to see any effect on org performance even if environment is highly uncertain. Persistence of planning that contributes to significant performance improvement. Make org hierarchy flatter to effectively plan in dynamic environments. Meaning long Lowe organizational levels to set goals and develop plans because theirs no time to allow plans to flow down from the top.
How can managers use environmental scanning ?
A managers analysis of the external environment may be improved by environmental scanning- involves screening info to detect emerging trends. One of the fastest growing forms of environment scanning is competitor intelligence-gathering info about competitors that allows managers to anticipate competitors actions rather than react to them. Seeks basic info about competitors : who are they? What are they doing? How will what they're doing affect us?
Most of competitors related info managers need to make strategic decisions is available to the public, ie ads, promo,pres release,info on the Internet etc are. Mgr can tap into this wealth competitive by purchasing access to databases. Debriefing your own sales staff and buying competitors brand and evaluating them are good source of info.
Mgr should car about ways competitors info is gathered as in legal or ethical. Fine line between legal and ethical, legal and unethical
Ch 9 strategic management
Strategic management
What strategic management is and why it's important?
What is strategic management?
Difference in org performance is due to different strategies and
competitive abilities. Strategic management- is what managers do to develop the organizations strategies. Important task involvitall basic management functions like planning, organizing, leading, and controlling. Organization strategies - are plans for how it will the do what it's in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals. Business model - which is how company is going to make money. Focuses on two things. 1. Whether customers will value what the company is providing. 2 whether the company can make any money doing that. As managers think about strategies they need to think about the economic viability of their company business model.
Why is strategic management important?
3 reasons, most important reason is that it can make a difference in how well an org performs. Why do some org fail and some succed when face with same environmental conditions research found positive
relationship between strategic planning and performance. Org that uses strategic management have higher levels of performance which is
important to mangers. 2nd reason all managers no matter size faces continually changing situations. Mgrs cope with this Uncertainty by using strategic management to examine relevant factors and decide what actions to take. Lastly, strategic management is important because organization are complex and diverse. Each part needs to work together toward achieving orgs goals; strategic management helps do this.both buisnes organizations and not for profit use strategic
management.
The strategic management process
Is a six step process that encompasses strategy planning, implementation, and evaluation.
Step 1 identifying the organizations current mission, goals, and strategies
Every org needs a mission- statement of purpose defining the mission forces managers to identify what it's in business to do. Sometimes the mission statement can be too limiting. Mission statement should include customers,markets,concern for survival growth and profitability, philosophy,concern for public image, product, technology, self concept, concern for employees.
Step 2 doing an external analysis
What impact might technology advancement trends have for businesses? Mgrs do an external analysis so they know what the competition is doing, what pending legislation might have an affect the
org ir what the labor supply is like in locations where it operates. Mgrs should examine the demographic political legal social cultural
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technological and global components to see trends and changes. Mgrs should identify both threats and opportunities. Opp- positive trend threats- negative trend
Step 3 doing an internal analysis
Provide info about an orgs specific resource and capabilities. An orgs resources - what orgs have.are its asset(financial physical human and intangible) used to develop mfr and deliver goods to customers. capabilities - skills and abilities in doing work activities needed in its business how it does its work. Core competencies- major value creating capabilities of the org.both resources and core competencies Determines org competitive weapons. Mgrs should identify strength and weakness. Strength - is activities that org does well or unique resources. Weakness- activities the org doesn't do well or resources it needs but doesn't posses.
External and internal analysis are called swot analysis- which is analysis of orgs strength and weakness opportunity and threats. After swot mgrs are ready to form strategies 1 exploit orgs strength and external opportunity 2buffer or protect orgs from external threats or 3 correct critical weakness.
Step 4 formulating strategies
Mgrs should consider realities of the external environment and their available resources an capabilities in order to design strategies that will help in org achieve its goals. 3 main types of strategies that mgrs will formulate include corporate, competitive,and functional.
Step 5 implementing strategies
Once strategies are formulated they must be implemented, performance will suffer if strategies aren't implemented properly.
Step 6 evaluating results
Final step in strategic mgmt, how effective have strategies been at helping the org reach goals? What adjustments are necessary?
Corporate strategies
Org uses 3 types of strategies: corporate, competitive, and functional. Top level mgrs are responsible for corporate strategies, middle level mgrs for competitive strategies,Lowe level mgrs for function.
What is corporate strategy?
Corporate strategy- determines what businesses a company is in or wants to be in and what it wants to do with those businesses. Based on
missions and goals of the org and the roles that each business unit of the org will play. Other part of corporate strategy is when top mgrs decide what to do with busy; grow then, keep them the same, or renew
them.
What are the types of corporate strategy?
3 types growth,stability,and renewal.
Growth
Growth strategy- org expands number of markets served or products offered, through current businesses or through new businesses. Because of growth growth strategy org may increase revenues , number if employees or market share. Org grow by using concentration, vertical integration, horizontal integration, or diversification. Orgs that grow using concentration focuses on its primary line of business and increases number of product offers or markets served in this primary business. Compan may grow by vertical
integ, either backward,forward, or both.!backward vertical integration, org becomes its own suppliers so it can control its input. In forward vertical integration org becomes its own distributor and is able to control its outputs. Horizontal integeration, company grows by combining with competitiors, used in financial services, consumer products, airlines,!department stores,!and software among others. Org
can grow diversification either related or unrelated. Related diversification- happens when company combines with other company in different but related industries. Unrelated diversification -when company combines with firms in different and unrelated industries.
Stability
Stability strategy- a corporate strategy in which an org continue to do what it's currently doing. Org doesn't grow but does not fall behind.Ie continue to serve same clients by offering same product or sericice.
Renewal
Renewal strategies- when org is in trouble something needs to be done
mgrs need to develop strategies called renewal that address declining performance. Two types are retrenchment and turnaround. Retrenchment strategy- short run renewal strategy used for minor performance problems. This strategy helps an org stabilize operations, revitalize org resources and capacitance prepare to compete once again. Turnaround strategy- when org problems are more serious more
drastic action. Managers do two things for both renewal strategies cut cost and restructure org operations, in turnaround strategy the measures are more extensive than in retrenchment.
How are corporate strategies managed?
When orgs corporate strategy encompasses a number of businesses mgrs can manage this collection or portfolio by using a tool called corporate portfolio matrix, which provides framework for understanding diverse businesses and help mgrs establish priorities for
allocating resources.
Bcg matrix - 1st portfolio matrix develop by Boston consulting group
introduced idea that an orgs various businesses a could be evaluated and plotted using a 2x2 matrix to identify which ones offered high potential and which were a drain on organizational resources. The horizontal axis represents market share(low or high)and the vertical axis indicates anticipated market growth (low or high) a business unit is evaluated using a swot analysis and placed in one of the four categories,
Which are as follows:
Stars:'high market share/high anticipated growth rate
Cash cows :'high market share/low anticipated growth rate.
Question marks: low market share/high anticipated growth rate.
Dogs- low market share/low anticipated growth rate.
Strategic implications of the big matrix- dogs should be sold off or liquidated as they have low market share in markets with low growth potential. Mgrs should Milk cash cows for as much as they can, limit any new investment in them and use the large amounts of cash generated to invest in stars and question marks with strong potential to improve market share, heavy investment will take advantage of the market growth. Stars will eventually develop into cash cows as their markets mature and sales growth slows. Hardest decisions for mgrs relate to the questions marks. After careful analysis some will be sold off and others strategically nurtured into
Stars.
Competitive strategies
Competitive strategy- is a strategy for an org will compete in its businesses. Business competitive strategy describes how it will. Impede in its primary or main market. If an org is involved in more than one business each business will have its own competitive strategy
that defines its competitive advantage, the products or services it will offer,the customer it wants to reach and the like.
Strategic business unit (sbu) -single
Independent businesses of an org that formulate their own competitive
strategies.
The role of a competitive advantage
Developing an effective competitive strategy requires an understanding of a competitive advantage- which is what set an org apart; its distinctive edge. The distinctive edge can come for orgs core competencies by doing something other cannot do or do it better.ie
Michelin mastered process of making tires, coke creating the worlds best and powerful brand.
Quality as a competitive advantage
If implemented properly quality can be a way for org to create
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sustainable competitive advantage. That's why many companies apply quality management concepts in an attempt to set themselves apart from competitors. If business is able to continuously improve the quality and reliability of its products it may have s compete advantage that can't be taken away.
Design thinking as a competitive advantage
Using design thinking means thinking in unusual ways about what the business is and how it's fm doing what it's in business to do or solving problems with creative resolutions by thinking outside existing alternatives and creating new alternatives. As important as design thinking is to design of amazing products, it also means recognizing that isn't just for products or processes but for any org work problems that can arise. That's why a company's ability to use design thinking in the way it's employees and managers strategically manage can be s powerful competitive tool.
Sustaining competitive advantage
Every org has resources (assets) and capabilities (how work gets done)
why do some companies continue to gain success, same for the sports teams. Answer is not all org is able to effectively exploit its resources and to develop the core competencies that can provide it with a competitive advantage. And it's not enough to simply create a competitive advantage the org must be able to sustain that advantage;
that is to keep its edge despite competitors actions or evolutionary changes in the industry. Not easy to do market instabilities, new technology, and other changes can challenge managers attempt at creating a long term,'sustainable competitive advantage. By using strategic management managers can better position their organization
to get a sustainable competitive advantage.
Mike porter 5 forces model.
1threat of new entrants - how likely is it that new competitors will come into the industry?
2threat of substitutes - how likely is it that other indoor prices can be substituted for our industries products?
3 bargaining papers of buyers- how much bargaining power do buyers(customers) have?
4 bargaining power of suppliers - how much bargaining power do suppliers have.
'5 current rivalry- how intense is the rivalry among current industry competitors?
Choosing a competitive strategy
Once mgrs have assert the five force models and done a swot analysis they're ready to select a competitive strategy- which is one that fits its
competitive strengths (resources and capabilities) of the org and the industry it's in. Porter said no firm can be successful by trying to be all things to all people, he proposed that mgrs select a strategy that will give the org w competitive advantage, either from having lower costs than all other industry competitors or by being significantly different from competitors. Cost leadership strategy- when org competed on the
basis of having the lowest (costs or expenses, not prices) in its industry. A low cost leader is high efficient. Overhead is kept to a minimum and firm does everything it can to cut costs. You won't find expensive art or interior decor at offices of low cost leaders. lowcost leader doesn't place a lot of emphasis on "frills" it's product must be perceived as comparable in quality to that offered by rivals or at least acceptable to buyers. Differentiation strategy - a company that competes by offering unique products that are widely valued by a customer. Product differences might come drone exceptional high quality, extraordinary service,innovative design. Technological capabilities or an unusually positive brand image. These 2 competitive strategies are aimed at the broad market. The focus strategy- involves s cost advantage (cost focus) or a differentiation advantage (differentiation focus) In a narrow segment or niche. Segments can be based on product variety, customer type, distribution channel, or geographical location. Whether a focus strategy is feasible depends on the size of the segment and whether the organization can make money
serving the segment. When an org can't develop a cost or a differentiation advantage, porter calls that being stuck in the middle and earned that's not a good place to be. An org becomes stuck when it's costs are too high to compete with low cost leader or when it's product aren't differentiated enough to compete with the differentiator.
Getting unstuck means choosing which competitive advantage to pursue and then doing so by aligning resource, capably, and core competencies.
Although Peter said choose between low cost or differentiation advantage to prevent being stuck but reasearch shows that org can be
successfully pursue both low cost and differentiation advantage and achieve high performance which is not easy have to keep costs low and be truly differentiated, ie fedex coke southwest.
Functional strategies - final type of organizational strategy, which are the strategies used by an org various functional departments to support the competitive strategy.
Current strategic management issues
Managers everywhere face increasingly intense global competition and
high performance expectations by investors and customers. We look at
3 current strategic management issues - need for strategic leadership, the need for strategic flexibility, how mgrs design strategies to emphasize e business,customer service and innovation.
The need for strategic leadership
Orgs strategies are usually developed and overseen by its top managers, which is ceo who works with top management team that includes other executives or senior managers such as COO chief operating officer or cfo financial officer, cio information officer. CEOs role in strategic management include being the chief strategist,structural architect, and developer of the orgs information/control systems. Other roles includes key decision maker, visionary leader,political actor, monitor and interpreter of environment changes and strategic designer. Top managers are responsible for every decision and action of every org employee, they are also strategic leader. Organization researchers study leadership in relation to strategic management because an orgs top managers must provide effective strategic leadership. Strategic leadership - it's the ability to anticipate, envision, maintain flexibility, think strategically and work with others in the org to initiate changes that will create a viable and valuable future for the org.?mangers can provide effective strategic leadership 8 key dimensions have been identified includes determining
the orgs purpose or vision, exploiting and maintaining the orgs core competencies, developing the orgs human capital, creating and sustaining a strong org culture , creating and maintaining orgs relationships, reframing prevailing views by asking penetrating questions and questioning assumptions, emphasizing ethical org decisions, and practices, and establishing appropriately balanced org controls.
The need for strategic flexibility
Even when managers use the strategic management process there's no guarantee that the chosen strategies will lead to positive outcomes.
Key is responding quickly when it's obvious the strategy isn't working. Strategic flexibility- the ability to recognize major external changes to quickly commit resources, and to recognize when a strategic decision isn't working, strategic decision seems absolutely necessary in the highly uncertain environment.
Important organizational strategies for today's environment
3 strategies in today's environment; e-business, customer service, and innovation.
E-business - to develop sustainable competitive advantage. Cost leader
can use ebuisness to lower costs in various ways , might use online bidding and order processing to eliminate the need for sales call and to
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decrease sales for expenses; could use web based inventory control systems that reduces storage costs or it might use online testing and evaluating of job applicants. Differentiator needs to offer products or services that customer perceive and value as unique, ie using rapid online responses to service requests.
Reasearch shown important ebuisness strategy might be a clicks-and-
bricks strategy clicks and bricks firm is one that uses both online(clicks) and traditional stand alone locations (bricks) ie Walmart using web returns free shipping outlet and payment booth.
Customer service strategy
Companies emphasizing excellent customer service need strategies that cultivate atmosphere from top to bottom, ie like giving customers what they want , communicating well with customer, providing employees training in customer service. Having customer communication system is an important customer service strategy. Mgrs should know what's going on with customers they need to find out what customers liked or disliked with their employees to the actual product or service. Also good to let customers know if something is going on with company thatgiht affect future purchase decisions. Orgs culture is important to provide excellent customer service.
Innovation strategies
Aren't always focused on breakthrough products. Can include applying existing technology to new uses. Innovation strategy needed in today's
environment should reflect innovation philosophy, which is shaped into
2 strategies decisions : innovation emphasis and innovation timing. Managers must first decide where their emphasis of their Innovacion efforts will be. Is the organization going to focus some basic scientific research, product development or process improvement? Basic scientific research requires the most resource commitment because it involves the nuts and bolts worth of scientific research. In numerous industries like pharmaceuticals ,information technology ,cosmetics the organizations expertise in basic research is the key to a sustainable competitive advantage. Not every organization requires this extensive commitment to scientific research to achieve high performance levels instead may depend on product development strategies. Although this strategy also requires a significant resource investment it's not an Areas associate with scientific research instead the organization takes existing technology improves on it or applies it in new ways. Both of these first two strategic approaches to Innovation( basic scientific research and product development) can help in organization achieve high levels of differentiation which can be significant source of competitive advantage.The last strategic approach to Innovation
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emphasis is a focus on process development. Using this strategy in organization looks for ways to improve in enhance it work processes.the organization innovates new improved ways for employees to do their work in all organizational areas. This innovation strategy can lead to lower cost which as we know also can be significant source of competitive advantage.once managers have determined the focus of their innovation efforts it must decide their innovation timing strategy. Some organization want to be the first with innovations whereas others are content to follow mimic the innovations
and organization is first to bring a product innovation to the market to use a new process innovation is called a first mover. Advantages of being the first mover -reputation for being innovative an industry leader, cost and learning benefit ,control over scars resource and keeping competitors from having access to them.opportunity to begin building customer relationships and customer loyalty. Disadvantage- uncertainty over exact direction technology and market will go, risk of competitors imitating innovations, financial and strategic risks, high development costs. Some organizations pursue this route hoping to develop a sustainable competitive advantage others have successfully developed a sustainable competitive advantage by being followers and
in the industry they let the first movers pioneered innovation and then mimic their products and processes. The approach managers choose depend one their org innovation philosophy and specific resources and capabilities.
Ch 10 managerial controls
What is controlling and why is it important?
Controlling - the process of monitoring, comparing, correcting work performance. All managers should control even if their units are performing as planned because they can't really know that unless they've evaluated what activities have been done and compared actual
performance against the desired standard. Effective controls ensure that activities are completed in ways that lead to the attainment goals.
Whether controls are effective is determined by how well they help employees and managers achieve their goals. Control is important because it's the only way that managers know whether orgs goals are being met and if not why. Value of control function are ; planning , empowering, and protecting the workplace. Controlling provides critical
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link back to planning.2nd reason controlling is important is because of employee empowerment, managers fear empowering employees because they fear things going wrong and they will be held accountable. An effective control system can provide info and feedback
on employee performance and minimize the chance of potential problems. Final reason mgrs control is to protect the org and its assets.
Environment brings threats of natural disasters, financial scandals,workplace violence, global disruptions ,security breaches, terrorist attacks. Comprehensive controls and back up plans will help assure minimal work disruption .
The control process
Control process - 3 step process of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or to address inset standards. Control process assumes that performance standards already exist and
they do they're the specific goals created during the planning process.
Step 1: measuring actual performance
How we measure
4 approaches used by mgrs to measure and report actual performance and personal observations (1st hand knowledge, unfiltered info,intense
converge of work activities.disadvantage ;subject to personal biases, time consuming, obtrusive), statistical reports(easy to visualize, effective for showing relationships. Disadvantage provide limited info, ignore subjective factors), oral reports(fast way to get info,allow for verbal and nonverbal feedback. Disadvantage;info is filtered,info can't be documented), and written reports(comprehensive, formal,easy to file and retrieve.disadvantages take more time to prepare)
What we measure
What is measured is probably more critical to the control process than how it's measured, because selecting the wrong criteria can create serious problems and what is measured determines what employees will do. Some control criteria can be use for any management situation.
Most work activities can be expressed on quantifiable terms, managers
should use subjective measures when they can't, such measures may have limitations but they're better than having no standards at all and doing no controlling.
Step 2 comparing actual performance against the standard
Range of variation - acceptable parameters of variance between actual
performance and the standard.
Step 3 taking managerial actions
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3 course of action do nothing, correct the actual performance or revise standards.
Correct Actual performance
managers can take different actions depending on the problem.if unsatisfactory work is reason for low performance mgr can implement training programs, discpline actions, change compensation practices. Immediate corrective action - corrects problems at once to get performance back on track. Basic correction action - looks at how and why performance deviated before correcting the source of deviation. Mgrs most chose between the two. Managers don't have time to find sources of problem ( basic corrective action) and continue to put out fires with immediate corrective action.
Revise the standard
Variance was a result of unrealistic standard too low or too high a goal,
in this case standard need corrective action not the performance. If performance consistently exceeds goal then mgr should look if goal is to easy and should be raised. Mgrs should be cautiouof about revising goal downward cuz it's natural to blame Goal when team fall short.
Managerial decisions in controlling
Standards are goals developed during the planning process, the goals provide basis for the control process which involves measuring actual performance to the standard.
Controlling for the organizational and employee performance
Cost efficiency and customer satisfaction in with sevice provided are ways that mgrs can manage orgs and employee performance.
What is org performance
Performance- is the end result of an activity. Organizational performance- the accumulated results of all the orgs work activities, managers are concerned with this. Multifaceted concept but managers need to understand the factors that contribute to orgs performance.
Measure of organizational performance
All managers must know which measures will give them the info they need about orgs performance.most used ones include org productivity,
org effectivenes, and industry rankings.
Organizational productivity
Productivity- is amount of goods or services produced divided by the inputs needed to generate that output. Orgs wants to be productive. Output - measured by sales revenue an org receives when goods are sold(selling price x number sold). Input- measured by cost if acquiring and transforming resources into outputs. Mgrs job to increase ratio. By
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raising prices of the outputs which may not be a option or decrease size of input by being workers being efficient reducing orgs expenses.
Organizational effectiveness - measure of how appropriate orgs goals are and how well those goals are met, it's bottom line for mgrs and what guides they decisions.
Industry and company rankings
Ranking are popular ways for mgr to measure their orgs performance these ranking give mgrs an indicator of how well their company performs in comparison to others.
Controlling for employee performance
Mgrs concerned with employee performance make sure their works a their works are quantity and quality needed to accomplish orgs goal, mgr does this by measuring actual performance to standard and take actions if needed. It's important for mgr to give feedback to workers. disciplinary actions - actions taken by a manager to enforce the orgs work standard and regulations .
Delivering effective performance feedback
Mgrs should give feedback because employees like to know where they
stand in terms with their work. while giving feedback both parties need
to feel Heard. Positive outcome can come from feedback, however sometimes feedback don't work and employee performance is still a issue. Then disciplinary actions may be necessary.
Using disciplinary actions
Mgrs should know orgs policies on discipline, like process for dealing with unsatisfactory job performance or warning signs. Disciplinary actions are not easy but it can be use to control and correct employee performance mgrs must know how to discipline.
Tools for measuring organizational performance
All mega need tools for monitoring and measuring performance.
Feedforward/concurrent/feedback controls
Mgrs can implement controls before activity begins, during the time the activity is going on, and after the activity has been completed the first type is called Feedforward control; the second, concurrent control,
and the last, Feedback control.
Feedforward control- most desirable. Prevents problems because it takes place before the activity. The key is to taking managerial action before a problem occurs, that way problem can be prevented rather than having to correct them after damage (poor quality products, lost customer and revenue). Control requires timely and accurate info which is hard to get, mgrs just end up using concurrent and feedback
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controls.
Concurrent control - takes place while a work activity is in progress. Best form of concurrent control is direct supervision. Another term for it is management by walking around- term used to describe mgr is out in work areas interacting directly with employees. Concurrent control is
beneficial because it can correct problems before they become too costly.
Feedback control - most popular,Takes place after activity is done. Major problem with this control is by the time mgr has the info the problems have already occurred leading to a waste or damage but in areas like financial feedback is the only viable way of control. 2 advantage, give mgrs info on how their planning efforts were,it can enhance motivation.
Financial control
- that mgrs use includes financial ratio(liquidity, leverage, activity,profitability)and budgets- planning and control tools.
Information controls
Mgrs deal with information control in 2 ways. 1 as a tool to help them control other org activities and 2 as an org area they need to control.
How is info used in controlling
Mgrs need info at right time in the right amount to monitor and measure org activities and performance. In measuring act performance
mgrs need info about what is happening within their area of responsibility and about the standards in order to be able to compare actually performance with the standard. Also rely on info to tell them if deviations are acceptable. Rely on info to help them develop appropriate course of action most info come follow orgs MIS. MIS - (mgmt) system used to provide managers with needed info on a regular basis. MIS implies order,arrangement, purpose. MIS provide mgr with information which are processes analyzed data not just sat which are raw unanalyzed facts.
Controlling information
Mgrs must comprehensive and secure controls in place to protect info. Equipments such as computers, smart phones rfid tags are vulnerable to virus and hacking.
Balanced scorecard - a way to evaluate orgs performance from more than just the financial perspective. Looking at the financial, customer, internal process, and people/innovation/growth assets. Mgrs should develop goals in all four areas and measure.
Benchmarking of best practices
Benchmarking- the search for the best practices among competitors or non competitors that lead to their superior performance. Mgrs in diverse fields like healthcare, education, and financial services
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recognize the benefits of benchmarking. Benchmarking should identify benchmarks - the standard if excellent against which to measure and compare. Best practices aren't just found external must of the time the
best practices can be found inside org but needs to be shared. For example an idea box.
Contemporary issues in control
4 controls issues . Cross cultural differences, workplace concerns, customer interactions, corporate governance.
Adjusting controls for cross cultural differences and global turmoil
Control techniques are different for different countries. Differences are in the measurement and corrective action steps of the control process. I'm global corporations mgrs of foreign operations tend to be less controlled by the home office. Orgs often rely on extensive formal reports for control communicated electronically. Mgrs in countries where technology is more advance often use indirect control devices such as computer generated reports and analyses in addition to standardized rules and direct supervision to ensure that work activities
are going as planned. In less technology area managers tend to use more direct supervision and highly centralized decision making for control. Laws are also big factors when taking corrective actions, some laws forbid closing facilities, laying off workers, taking money out the country or bringing in new mgmt team from outside the country. Another global challenge is collecting dat for measurement and comparison in comparability, comparing cheap labor work in China vs us. Finally global org need to have controls in place to protect workers and assets.
Workplace concerns
Mgrs need controls to ensure that work can be done efficiently and effectively as planned.
Workplace privacy
Employees can read your emails, tap your phone, monitor your work by computer, store and review computer files, monitor you in the bathroom or dressing rooms and track you in company car. Mgr monitors employees because they are hired to work. Recreational on the job web surfing cost billions of dollars in lost productivity. They also
monitor employee reducing risks they won't be sued for creating a hostile work environment because of offensive messages or inappropriate image displayed on a coworkers computer screen. Concerns about racial or sexual harassment are one reasons orgs might want to monitor all emails. Managers also want to make sure company secrets aren't being leaked, company banning camera
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phones.
Employee theft - any unauthorized taking of company property by employees for personal use. Can range for embezzlement to fraudulent
filing of expense reports to removing equipment, parts, software or office supplies from company premise. The concept of Feedforward, concurrent, and feedback control is useful for identifying measures to deter or reduce employee theft.
Workplace violence
Workplace violence is an issue for mgr. employee stress can factor . Competitive demands of succeeding in a 24/7
global economy put pressure on org and employees in many ways. Using the concept of Feedforward, concurrent,and feedback control can help identify actions
mgr can take.
Controlling customer interactions
There's no Bette area to see the link between planning and controlling than in customer service.
Service profit chain - the service sequence from employees to customers to profit. Company's strategy and service deliver system influence how employees deal with customers; that is how productive they are in providing service and the quality of that service. The level
Of employee service productivity and service quality influences customer perceptions of service value. When service value is high it has positive impromptu customer satisfaction which leads to loyalty.
Corporate governance - system used to govern w corporation so that the interests of corporate owners are protected.
The role of boar of directors
Original purpose was to have group independent from management looking out for interests of shareholders who are not involved in the day to day operations. But it didn't workout that way managers and board of directors haft cozy relationships. The "quid pro quo" has been changed. Sarbanes-oxley act put demands on BOD of publicly traded company to do what they were empowered to do.
Financial reporting and audit committee
Sarbanes-oxley act also called for more disclosure and transparency of corporate financial information. In US senior managers are required to verify their companies financial records.
Ch 11 basic organizational design
Designing organizational structure
Managers are reevaluating traditional approaches to find new structural designs that best support and facilitate employees doing the
orgs work - designs that can achieve efficiency but also flexible.
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Organizing - arranging and structuring work to accomplish organizational goals. Organizational structure- the formal arrangement of jobs within an org. Organizational chart - the visual representation of
an orgs structure, serves many purposes. Organizational design - process that involves decisions about six key elements: work specialization, departmentalization, chain of command, span of control,
centralization and decentralization and formalization.
Work specialization - diving work activities into separate job tasks.individual employee specialize in doing part of an active than the
entirety., it's Also known as division of labor. Skilled workers at paid more than non skilled.
Today's view
Most managers knows work specialization helps work be more efficient. At some point work specialization no longer leads to productivity.
Departmentalization - the basis by which jobs are grouped together. 5 common forms functional departmentalization- group job according to functions(accounting manager, engineering manager, plant manger).
Geographical departmentalization-groups jobs according to geographic
region (sales director southern region)
Product - groups jobs by product line ( industrial environment, recreational products development)
Process departmentalization- groups jobs on the basis of product or customer flow(sawing department,finishing department manager.
Custer departmentalization- groups jobs on the basis of specific and unique customers who have common needs (manager retail accounts, wholesale accounts manager).
Most companies continue to use combinations of most of all of these types if departmentalization. Cross functional team - a work team composed of individuals from various functional specialities. Chain of command-the line of authority extending from upper org levels to the lowest levels, which clarifies who reports to whom. To understand chain of command one must understand 3 concepts ; authority, responsibility, and unity of command.
Authority- the rights inherent in a managerial position to tell people what to do and to expect them to do it. Can be delegated downward to
lower level managers while prescribing certain limits. Authority is related to ones posting in the company have nothing to do with the personal characteristics of an individual manager. Acceptance theory of authority- the view that authority comes from the willingness of subordinates to accept it. If employees don't accept mgrs order theirs no authority. Workers will accept orders if they understand the order,
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feel the order is consistent with orgs purpose, order does not conflict with their personal beliefs, they're able to perform the task as directed.
Mgrs doesn't have total control over what employee does or doesn't only in the military.
2 forms of authority (line authority and staff authority)
Line authority- authority that entitles a manager to direct the work of an employee. The employer- employee authority relationship that extend from the top to the bottom. A manager with line authority has the right to direct the work of employees and to make certain decisions
without consulting anyone.in the chain of command every manager is subject to the authority of his superior. Line is used to differentiate line
mangers from staff managers. Line refers to manager who functions contribute directly to the achievements of orgs objectives, think usf professors vs fin aid staff.
Staff authority- functions to support, assist,advise and reduce some of their info burdens.ie
hospital manager cannot handle the load of ordering supplies so they create a purchasing department.
Responsibility- the obligation or expectation to perform any assigned duties. Assigning work authorities without responsibility and accountability can create opportunities for abuse. No one should be held responsible or accountable for work tasks over which he or she has no authority to complete those tasks.
Unity of command- (1 of fayols 14 management principles) that each person should report to only one manager, without this creates conflicts.
Today's view
Reporting to more than one business which violates the unity of command principle such arrangement can work if communication, conflict, and other issues are managed well by all involved parties
Span of control
Span of control - the number of employees a manager can efficiently and effectively manage. Traditional view that managers should not directly supervise more than five or six workers. Wider spans are more efficient in term of cost. Wider spans may reduce effectivenes if employee performance worsen because managers don't have time to lead effectively.
Today's view
Their is no magic number for control. Factors includes how many employees a manager can manage efficiently and how skills and abilities of the manager and the employees and the characteristics of the work being done.ie
mgrs with well trained employees can function with a wider span.
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Centralization and decentralization
Question that needs to be answers when organizing is at which org level are decision made? Centralization- degree to which decimating is concentrated at upper levels. Decentralization- degree to which Lower level employees provide input or actually make decisions. They're both
not an either-or concept. The decision is relative, not absolute which means org is never centralized or decentralized.
Traditional pyramid org uses centralized while org today have become more complex and uses decentralization.
Today's view
Mgrs choose how much centralization or decentralization in org. What works in one org won't want in another. Employee empowerment - giving employees more power to make decisions.
Formalization- refers to how standardized an orgs jobs are and the extent to which employee behavior is guided by rules and procedures. I'm high formalized org there are lots of rules, explicit job description, clearly defined procedures covering work processes, employees have little discretion over what's done, how's it done, when formalization is low employees have more discretion in how they do their work.
Today's view
Many org relies less on strict rules. Doesn't mean throwing out all orgs rules because there will be Rules that are important for employees to follow.
Mechanistic and organic structure
Mechanistic organization- (bureaucracy) was the natural result of combining the six elements of structure. Adhering to the chain of command principle ensures the existence of a formal hierarchy of authority, with each person controlled and supervised by one superior. Keeping span of control small at increasingly higher levels in the org created tall impersonal structures. (High specialization, rigid departmentalization, clear chain of command, narrow spans of control, centralization, high formalization.)
Organic organization- a highly adaptive form that is loose and flexible as the mechanistic org is rigid and stable. Rather than having standardized jobs and regulations the organic organizations loose structure allows it to change rapidly as required.has division of labor but not standardized, need few formal rules and little direct supervision.(cross functional teams, cross hierarchical teams, free flow of information,wide span of control, decentralization, low formalization.)
Contingency factors affecting structural choice
What the appropriate structure is depends on 4 contingency variables:
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orgs strategy, size, technology, and degree of environmental uncertainty.
Strategy and structure
Orgs structure should facilitate goal and achievement. Flexibility and free-flowing information of the structure works well when an organization is pursuing meaningful and unique innovations. the mechanistic organization with its efficiency stability in tight controls works best for companies wanting to tightly controlled costs.
Size and structure
Orgs size effects it structure. Large organizations(2000employees)typically tend to have more specialization departmentalization centralization the
and rules and regulations then do some organizations once an organization grows pass a certain size size has the most influence on structure. Adding 500 employees will impact the structure of a 2000 employee organization but adding 500 employees to an organization at
300 employees is likely to make it more mechanistic
Technology and structure
Every org use technology to convert its inputs Into outputs. 3 Distinct technology that had increasing levels of complexity and sophistication.
First category is unit production - production of items in units or small batches. Mass production - the production of items in large batches. Process production- production of items in continuous processes. The more technology the more mechanistic structure. The more non routine technology like to be organic structure.
Environmental uncertainty structure
Some organization face stable and simple environments with little uncertainty others faces dynamic and complex environments with a lot
of uncertainty managers trying to minimize environmental uncertainty by adjusting the organization structure. In stable and simple environments mechanistic designs can be more effective on the other hand the greater uncertainty organization needs The flexibility of an organic design. Mechanistic are not equipped to respond to rapid environmental change and environmental uncertainty unlike organic.
Traditional organizational designs
When designing a structure managers may choose one of the traditional organization designs ; simple, functional, divisional structure.
Simple structures - an org design with low departmentalization wide spans of control, centralized authority and little formalization.most company start as entrpreneurial ventures using this. As workers are added most don't stay as simple structures, they tend to become more
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formalized and specialized. As org becomes more bureaucratic mgrs choose other structure .(fast,flexible , inexpensive$
Functional structure- an org design that groups similar or related occupational specialties together. Think of it as functional
Departmentalization applied to the entire organization(cost savings economies of scale, pursuit of fictional goalsMight cause mgr to lose sight of orgs overall goals.)
Division structure - an orgs structure made up of separate business units or divisions. Each division has limited autonomy, with a division mgr who had authority over his or her init and is responsible for performance. Parent corporation typically acts as an external overseer to coordinate and control the various divisions and often provides support services such as financial and legal.( focuses on result, duplication of activities and resources increase costs and reduce efficiency)
Chapter 12 adaptive organization designs
Contemporary organization designs
Orgs need to be lean,flexible,and innovative, meaning they need to be more organic. Contemporary designs include team structures, matrix and project structures, boundaryless organizations.
Team structure - one in which the whole org is made up of work teams that do the orgs work. In this structure employee empowerment is crucial because of no line of managerial authority flows from top to bottom. Employee teams designs and work the way that's best and are
held accountable for work performance. In large org the team structure
complements what is typically a functional or divisional structure and allows the org to have the efficiency of a bureaucracy and the flexibility that teams provide.
Matrix and project structures
Other popular contemporary designs are the matrix and project structures. Matrix structure- assigns specialist from different functional
department to work on projects being led by a project manager. It creates a dual chain of command because employees in a matrix org have two managers: their functional area many and their product or project manager, who share authority. The project manager has authority over the functional members who are part of his project team
in areas related to
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Project goals but when it comes to things like salary,promotions and annual review that s the functional managers responsibility. Violate the
unit of command principle which says each person should report to only one boss. Project structure - in which continuously work on projects. Unlike matrix structure a project structure has no formal department to go to at the completion of a project, employees take their skills to another project. It tend s to be more flexible. Managers serve as facilitators and mentors and coaches, they eliminate or minimize org obstacles and ensure that teams have the resources they
need to effectively and efficiently complete their work.
The structural arrangement for getting work done that has developed around the massive collider is an example of another contemporary organizational design called The boundaryless organization -an organization whose design is not defined by or limited to the horizontal
vertical or external boundaries imposed by predefined structure. Many organizations operate most effectively by remaining flexible and unstructured: that the ideal structure for them is not having a ragged bounded and predefined structure.two types of boundaries 1internal -
the horizontal ones imposed by work specialization and departmentalization in the vertical ones that separate employees into organizational levels in hierarchies. 2 external -the boundaries that separate the organization from its customers suppliers and other stakeholders to minimize or eliminate these boundaries managers must use virtual or network structure and design. Virtual organization- consists of small core of full time employees and outside specialists temporarily hired as need to work on projects. Biggest challenge is creates virtual culture. Network organization- uses its own employees to do some work activities and networks of outside suppliers to provide
other needs product components or work processes. This org form is sometimes called a modular org by manufacturing firms, this approach
let org focus on what they do best by contracting out other activities to
companies that do those activities best.
Learning organization- organization that has developed the capacity to continuously learn, adapt, and change. Managers challenge is to inspire and enable knowledge workers to solve day in day out problems that cannot be anticipated. Some org theorists day that org that is to learn and to apply the learning may be the only sustainable source of competitive advantage, such environment requires minimal structural and physical barriers which allows employees to work together in doing orgs work the best way and they can and in the process, learn from each other.
With empowers employ and teams theirs no need for bosses to direct
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and control instead mgrs serve as facilitators,supporters and advocates.
Organizing for collaboration
Internal or external
Internal collaboration
When collaboration is needed theirs several different structural options
like cross functional teams, task forces, and communities of practice.
Org uses team based structures because they found that teams are not flexible and responsive to changing events than traditional department of other permanent work groups.
Cross functional team - work team composed of individuals from various functional specialities. Ie group of (doctors,lawyers,technicians).
Task force ( or ad hoc committee) - temporary committee or team formed to tackle a specific short term problem affecting several department. The temporary nature is what differentiates it from a cross functional team. Task force members usually perform many of their normal work take while serving on the task force; the members return to their regular assignments.
Communities of practice
Are groups of people who share a concern, a set of problems or a passion about topic and who deepen their knowledge and that area by interacting on an ongoing basis. Communities of practice can create value by contributing to increased effectiveness in employees job performance through greater access that they provide to the ideas, knowledge and best practices shared among community work.
External collaboration
Poplar in the area of product innovation. Two forms of external collaboration : open innovation and strategic partnerships. These can provide org with needed info, support, and contributions to getting work done and achieving org goals.
Open innovation- opening up the search for new ideas beyond the orgs
boundaries and allowing innovations to easily transfer inward and outward. Many companies are collaborating directly with customers in the product development process.others partnering with suppliers other outsiders and even competitors.
Strategic partnerships
Organizations are looking for advantages wherever they can get them. Strategic partnerships - collaboration relationships between two or meow orgs in which they combine their resources and capabilities for some business purpose. These partnerships are flexibile and informality of arrangements promote efficiency, provide access to new
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markets and technologies entail less paperwork when creating disbanding projects; risk and expense I shared by multiple parties ,independent brand identification is kept and can be exploited working with partners possessing multiple skills can create major synergies ;rivals can often we're together Harmaniously; partnerships can take on varied forms from simple to complex; dozens of particitcan
be accommodated in partnerships arrangements; and antitrust laws can protect R&D activities.
Flexible work Arrangements
Thanks to technology work canal be done anywhere. Life is a blend of home and office , work and leisure. Give org the flexibility to deploy employees when and where needed.
Telecommuting
Information technology has made telecommuting possible and external
environmental changes I've made it necessary for me organizations. Telecommuting -is a work arrangement in which employees work at home and not link to the workplace by computer. Now many businesses veiw telecommuting as a business necessity. Getting more employees to telecommute providing the company a way to grow without having to incur any additional fixed cost such as office buildings equipment or parking lots. Employers argue that employees will waste time surfing the Internet or playing online games instead of working, they'll ignore clients and miss social exchanges of the workplace. Mgrs wonder how they're manage employees with work performance and gain workers trust. One of the first issues to address is encouraging employees to make that decision to become remote workers. Company have encouraged employees to work from home to see how much they're pay increase when they don't have to waste money on gas, dry cleaning and eating lunch.
Compressed workweeks, flextime, and job sharing
Compressed workweek- a workweek where employees work longer hours per day but fewer days per week. Flextime (or flexible work hours) - a scheduling system in which employees are required to work a specific number of hours a week but are free to vary those hours within certain limits. Flextime schedule typically designates certain common core hours when all employees are required to be in the job, but allows starting, ending, and lunch hour times to be flexible. Job sharing - having two or more people split a full time job, which is great for professionals who want to work but don't want the demands and hassless of a fulltime position.
Contingent workforce
Contingent workers- are temporary, freelance, on contract workers
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whose employment is contingent on demand for their services. Some are now referring to these workers as the independent work force, since there's no dependent relationship between worker and organization. As organizations eliminate full-time jobs through downsizing and other organizational restructuring they often rely on the contingent workforce to fill in as needed one of the top ranking forecast was that firms will become adeptly at sourcing and engaging transient talent around short-term needs and focus considerably energy in a long-term retention of smaller core talent groups. But contingent workers can also be temporary employees brought in to help with special needs such as seasonal work. One of the main issues business face with contingent workers especially does that are freelancers and independent contractors is classifying who actually qualifies as one. The question is who is and who's not an independent contractor isn't easy or unimportant. Companies don't have to pay social Security Medicare or unemployment insurance taxes on workers classified as independent contractors. The federal govt is also looking at increased power to penalize employers that missclassify workers ,so
there is an incentive to be totally aboveboard and classifying who is who is not an independent contractor.
Another issue with contingent workers is the process for recruiting, screening. And placing these contingent workers where their work skills and efforts are needed. Any organization that wants to minimize potential problems with it's contingent workers need to pay attention to hiring. Final issue is the importance of potential employees performance ,contingent employee is brought on board to do some specific work task it is important that managers have a method of establishing goals ,schedules, and deadlines with the contingent employees it's also important that mechanism be in place to monitor work performance and goal achievement especially if the contingent employee is working off-site.
Today's organizational design challenges
As managers look for an organizational design that will best support facilitate employees that work efficiently and affectively they must contend with certain challenges challenges include keeping employees connected to management mobile structural issue.
Keeping employees connected
Mobile computing and communication technology have given organizations in the ploy ease ways to stay connected and to be more productive.employee can video conference is in broadband network's and webcams.The biggest issue and doing work anywhere anytime however is security companies must protect their important sensitive
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information fortunately saw for another disabling devices have minimize security issues considerably.
Managing global structural issues
when designing or changing structure managers may need to think about the cultural implications of certain design elements studies show
that formalization rules and bureaucratic mechanism maybe more important in less economically developed countries and less important and more economically developed countries where employee may have higher levels of professional education and skills .study also find that organizations with people from high power distance countries such as Greece France and most of Latin America find that employees are much more excepting of mechanistic's structures than are employees from low power distance countries. no matter what structural design managers choose for the visitations design should help employees do you work in the best most efficient and effective way they can.
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