Field Project By now you should have met

Field Project By now you should have met with your field site. What is the nature of your projects? A written proposal will be due to me and TAs next week. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 81

Historical Background Frederick the Great of Prussia (1740 -1786) inherited an army and introduced ranks, uniforms, common language, training and drills. Adam Smith (19 th Century) Division of Labor Max Weber (19 th Century) observed parallels between the mechanization of industry and bureaucratic forms of organization. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82

Classic Management Perspectives Fayol Mooney Urwick 1) Management is a process of planning, organization, command, management techniques and other means for stressing rational planning and control. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83

Scientific Management Frederick Taylor (1915) is the “father” of scientific management. Also, an engineer by training. Taylor recognized that workmen were not working their machines or themselves as hard as they could, which as costly. Principles ◦ Shift all responsibility for the organization of work from the worker to the manager (split the brain and the hands) ◦ Use scientific methods to determine efficient way to work ◦ Select the best person to perform the job ◦ Train the worker to work efficiently ◦ Monitor worker performance to achieve desired performance. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 84

What is Organization Structure? It defines how job tasks are formally divided, grouped, and coordinated Key elements to be addressed: ◦ ◦ ◦ ◦ 14 -5 Work specialization Departmentalization Chain of command Span of control Centralization Decentralization Formalization

Element 1: Work Specialization Also known as division of labor Describes the degree to which activities in the organization are subdivided into separate jobs Benefits: ◦ Greater efficiency and lower costs Costs: ◦ Human costs when carried too far ◦ Job enlargement as a solution 14 -6

Element 2: Departmentalization Basis by which jobs are grouped together so that common tasks can be coordinated Common bases: ◦ ◦ ◦ 14 -7 Functional Departments Geography Process Customer

Element 3: Chain of Command Unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom Authority: positional rights Unity of Command principle: one boss Fewer organizations find this is relevant 14 -8

Element 4: Span of Control The number of employees a manager is expected to effectively and efficiently direct Determines the number of levels and managers an organization has ◦ Trend is toward wider spans of control ◦ Wider span depends on knowledgeable employees ◦ Affects speed of communication and decision making 14 -9

Element 5: Centralization and Decentralization Centralization - degree to which decision making is concentrated at a single point in the organization ◦ Only includes formal authority: positional rights ◦ Highly centralized when top managers make all the decisions ◦ Decentralized when front line employees and supervisors make decisions ◦ Trend is toward increased decentralization 14 -10

Element 6: Formalization Degree to which jobs within the organization are standardized ◦ Formal = minimum discretion over what is to be done, when it is done, and how ◦ Informal = freedom to act is necessary 14 -11

Common Organizational Designs Simple structure Bureaucracy ◦ Functional ◦ Divisional Matrix structure 14 -12

Simple Structure 14 -13 Low degree of departmentalization Wide spans of control Authority centralized in a single person Little formalization Difficult to maintain in anything other than small organizations

Bureaucracy Highly routine operating tasks achieved through specialization ◦ Formal rules and regulations ◦ Centralized authority ◦ Narrow spans of control ◦ Tasks grouped by functional departments ◦ Decision making follows the chain of command 14 -14

Matrix Structure Combines two forms of departmentalization ◦ Functional ◦ Product Dual chain of command Advantages: Disadvantages: ◦ Facilitates coordination and efficient allocation of specialists ◦ Possible confusion, fosters power struggles, stress 14 -15

Matrix Structure for a College of Business Administration 14 -16

Models of Organizational Design 14 -17

Organizational Structure Activity Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 818

Organic and Mechanistic Characteristics Organic Mechanistic 1. Employees contribute to the common task of the org 2. Tasks are adjusted and redefined through employee interactions 3. There is less hierarchy of authority and control, and there are few rules 4. Knowledge and control of tasks are located anywhere in the organization 5. Communication is horizontal 1. Tasks are broken down into specialized, separate parts 2. Tasks are rigidly defined 3. There is a strict hierarchy of authority and control, and there are many rules 4. Knowledge and control or tasks are centralized at the top of the organization 5. Communication is vertical 19

When is the mechanistic approach most appropriate? In organizations where the following are at a premium: 1) Precision 2) Safety 3) Accountability For instance, surgical wards, aircraft maintenance, or finance offices. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 0

Conditions that Support the Mechanistic Approach When there is a straightforward task to perform When the environment is stable enough to ensure that the products produced will be appropriate ones When one wishes to produce exactly the same product time and time again When precision is at a premium When the human machine parts are compliant and behave as intended. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 1

What are some weaknesses of the mechanistic approach? Difficulty adapting to change Employees are unlikely to take initiative People may justify mistakes by saying that they are “obeying orders” Lack of pride can emerge because people aren’t feeling empowered. Competition can arise from the division of labor Employees lose opportunities for growth Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 2

A few more words about structure… Formal org structure is about reporting relationships ◦ Goals and structure go hand in hand ◦ Behavior and structure go hand in hand 23 Organic/mechanistic (design) vs. matrix/functional/division (structure)

Organizational Change Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 824

Processes of Change In your “change” toolbox, you will need a clear understanding of which approaches to change work best under what conditions. What criteria help you to determine whether a more top down or bottom up approach is most appropriate? Discuss in small groups and be ready to report the criteria you all decided upon. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 5

Questions When would you want top down change? Cummings & Worley, 9 e (c)

Top-down Change: Some Assumptions Top-led is simply not a CEO-driven approach, it should be a team of top management This TMT should be talented and aware of external and internal environment Nature of today’s work environment (e. g. , need for speed; shifts in corporate culture and informational systems; high capital needs) require fundamental shifts that need to come from the top. Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 7

Top Down Change Pushes people towards change Cuts across intra-organizational boundaries to affect the entire system People at lower-levels don’t have the perspective, resources or power to make system-wide change It does require buy-in from all levels Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 8

Bottom Up Change Has to pull or attract people to change Starts with a champion who is passionate about his/her cause Develop coalition of supports Get the buy-in of corporate Let’s ideas and suggestions come from below More perspectives could be considered, resulting in innovative alternatives Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 82 9

Advantages of Top-Down Change The senior team’s breadth of perspective and strategy-formation role ◦ From the view from the top, they can see all aspects, not just the view of a single department Attributions about leadership itself ◦ Possess visible, formal authority to be a natural point of projections for attributions and to avoid punishment for highly countercultural attributes. Power of the top leadership’s position ◦ Control over rewards and Process (e. g. , ceo of Coke) Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83 0

Leading Change from the Top Down vs. Bottom Up Dimensions of Change Theory E Theory O Goals Maximize Shareholder Value Develop organizational capabilities Leadership Managing change from the top down Encourage participation from the bottom up Focus Emphasize Structure & Systems Build corporate culture; employees’ behavior and attitudes Process Plan and Establish Programs Experiment and evolve Reward System Motivate through financial incentives Motivate through the commitment – pay as fair exchange Use of Consultants Analyze and Shape Problems Consultants support management in shaping proglems and goals Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83 1

Addressing the Paradox Top-down change requires the participation and buy-in of people at the bottom Unitary leadership is not about a single individual. However, these leader’s must work to create conditions that harness breadth of perspectives Clear strategic intent is important (from the top) but multiple perspective is also key! Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83 2

Case Questions Why has Lincoln Electric been so successful? What are the key elements

What problems does its management system create? In what kind of industries would

Can the Lincoln system be introduced into other companies? What parts of the

What should Lincoln’s president be worried about? Are there changes that could threaten Lincoln? What recommendations would you make to Mr. Willis? Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83 6

What is the applicability of Lincoln's approach to motivation to other companies and situations? Why do not more companies operate like Lincoln? Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 83 7

Rewarding Employees Major strategic rewards decisions: 1. What to pay employees 2. How to pay individual employees 3. What benefits to offer 4. How to construct employee recognition programs 6 -38

1. More on Rewards: What to Pay Need to establish a pay structure Balance between: ◦ Internal equity – the worth of the job to the organization ◦ External equity – the external competitiveness of an organization’s pay relative to pay elsewhere in its industry A strategic decision with trade-offs 6 -39

2. How to Pay: Variable-Pay Programs Bases a portion of the pay on a given measure of performance ◦ Piece-Rate Pay – workers are paid a fixed sum for each unit of production completed ◦ Merit-Based Pay – pay is based on individual performance appraisal ratings ◦ Bonuses – rewards employees for recent performance ◦ Skill-Based Pay – pay is based on skills acquired instead of job title or rank – doesn’t address the level of performance 6 -40

More Variable Pay Programs Profit-Sharing Plans – organization-wide programs that distribute compensation based on an established formula designed around profitability Gainsharing – compensation based on sharing of gains from improved productivity Employee Stock Ownership Plans (ESOPs) – plans in which employees acquire stock, often at belowmarket prices While it appears that pay does increase productivity, it seems that not everyone responds positively to variable-pay plans. 6 -41

3. What Benefit to Offer: Flexible Benefits Each employee creates a benefit package tailored to their own needs and situation ◦ Modular plans – predesigned packages to meet the needs of a specific group ◦ Core-plus plans – core of essential benefits and menu of options to choose from ◦ Flexible spending plans – full choice from menu of options 6 -42

4. How to Recognize Them: Employee Recognition Programs In addition to pay there are intrinsic rewards ◦ Can be as simple as a spontaneous comment ◦ Can be formalized in a program Recognition is the most powerful workplace motivator – and the least expensive! Thank you! 6 -43

Next Week Cummings & Worley Chapters 15 & 16 Morgan, G. (2006). Organizations as Organisms (pp. 33 -38). Thousand Oaks, CA: Sage Publications. Case : Johnsonville Sausage Cummings & Worley, 9 e (c) 2008 South-Western/Cengage Learning 84 4