T 205 B Block 04 Week 01 Managing

T 205 B Block 04 Week 01 Managing within Organizations Concept File 04 Section I – Organizations Are They rational? T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 1

Sections Concept File 04 1. 2. 3. 4. 5. 6. 7. Section I: Organizations: are they rational? Section II: Control Section III: Structure Section IV: Development Section V: Culture & climate Section VI: Decision making Section VII: Innovation T 205 B - Systems Thinking & Principle - AOU Lebanon branch 2

Section 1 Organizations: are they rational? 1. What is the RUGS approach? 1. Organizations exist to achieve their goals To make maximum profit (by selling good & or services) Or to minimize their losses 2. Organizations are rationally designed to achieve these goals To deploy their human, financial, technological resources effectively (able to bring intended result) & efficiently 3. People in organizations work together on different aspects of the shared organizational task in a coherent (consistent, sticking together), unified and mutually interdependent way T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 3

What is the RUGS approach n The RUGS approach is consistent with the scientific management approach n The RUGS approach views the organization as a smoothly running machine T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 4

RUGS view of organizations “Rational, Unitary, Goal-Seeking” RUGS ideal is a popular view RUGS is just “a” view of organizations not “the” view 3. Is useful in many contexts & organizational activity 4. Is central to managers & administrators thinking & practice reflecting the “scientific management” approach 1. 2. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 5

RUGS view of organizations 1. The RUGS approach to management has serious limitations? 2. It doesn’t provide answers to many tricky & persistent problems in managing organizations 3. Its principles do not recognize the existence of messy problems within organizations 4. It doesn’t provide an accurate representation or “the whole truth” of what goes on in organizations. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 6

RUGS view of organization 5. If it is adopted as the only conception of how organizations operate or ought to operate, then the managements’ understanding of problems & repertoire of responses to them would probably be seriously limited. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 7

According to the RUGS Approach q The DISCUSSION starts by: 1 - looking at the idea that organizations are goal -seeking. 2 - By considering the idea of rationality 3 - By considering the idea of an organization’s unity T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 8

Reading 01 Missions, Goals, Objectives 1. 2. 3. What is a mission? is the vocation (profession, feeling that one is called to a certain kind of work) of a person or group of people What is an objective? is the point or thing aimed at (intended, had in mind as a purpose or plan) What is a goal? is the object of effort or ambition (particular desire to do something) T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 9

Objectives, Goals, & Mission n Objective is used for medium or LT target § Goal is used for ST milestones (important stage or event in history or in human life) on the way to an objective § n n Mission is used for a LT guiding vision or vocation There is no consistent terminology for this Objectives, goals, missions, targets tend to be used interchangeably What is LT for some people may be ST for others n T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 10

The use of goals n If you don’t know where you are going you aren’t very likely to get there n An organization should have very clear mission & specific goals. This means having a general idea of what it is supposed to do & which kind of practices work well with their mission. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 11

Goals & Mission Statement n A company should be a continuing & self-controlling entity To satisfy employees needs in terms of opportunities to exercise skills & initiatives in all fields For job stability, progressive improvement in remuneration {for working conditions & fringe benefits (additional to salaries or wages)} Directing skills & initiatives towards providing high quality of services to customers which should be compatible with the main mission 12 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Different kind of Objectives & Goals n Economic: Financial matters (return on investment, increasing sales in %, improving Cash Flow, increasing productivity) § Non-economic: (employees conditions, career opportunities for staff, customer service) § Strategic: choices needed concerning what the organization wants to be or become (an objective to diversify into new markets in order to protect its LT position, or to concentrate its research in a particular area to establish a reputation, to choose between expanding into highly competitive mass production to secure its position as a quality manufacturer of specialist models ) T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 13

Hierarchy of Objectives 1) Different objectives may conflict 2) Understanding, managing & resolving conflict is important to manage an organization 3) To plan an organizations’ mission & objectives we should assess opportunities & resources, and identify existing constraints (forced things) & trends (tendency) affecting them T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 14

Hierarchy of Objectives 4) 5) You cannot decide what your aims are (where you want to be) without determining where you are (position of your organization)? what are your capabilities (opportunities, resources, special strengths)? And what limitations there exists to possible actions? Goal setting is a difficult & vital part of the decisionmaking process: Goal setting is undertaken (confirmed), and re-undertaken, as a continuous process of re-inquiry (to ask questions & investigate), and to adjust & revise in the light of findings. T 205 B - Systems Thinking & Principle - AOU Lebanon branch 15

Changing Environment n n n This is specially true for large organizations operating in complex changing environments In smaller informal organizations & stable environments objectives & goals are taken well for granted (certain to happen) The reason is the presence of sufficient mutual understanding on the nature and implications of those objectives. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 16

Reading 02 Goals, real Goals, and pluralism n In general organizations can have both formal goals, as well as less visible informal goals. n We can distinguish between three major categories of goals: Official goals, official operative goals, and unofficial operative goals. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 17

3 Major Categories of Goals (Perrow, C 1961) Official Goals 1. 2. 3. 4. 5. Organizations general purposes Charter, annual reports, public statements, authoritative pronouncements Official Goals are vague, general Official Goals don’t address 3 major factors which influence behavior and which include: decisions on alternative ways for achieving official goals, priority selection among multiple goals, and the unofficial goals pursued by organizations) Example: To make profit, To provide customer service, To produce goods Official Operative Goals 1. 2. 3. 4. 5. Organizations’ actual operating policies What an organization is trying to do in actuality, regardless of the aims of Official Goals Provide specific Official Goal content Provide a range of alternative ways for achieving Official Goals Example: Liquidity, diversification, Quantity & Quality specifications, indicate risky or stable profit (factors decisions influence organization nature) Unofficial Operative Goals 1. 2. 3. 4. 5. Goals are tied more to group interests May support, be irrelevant to or subvert (destroy by weakening confidence, belief& trust ) official goals No necessary link with OG UOG affect profits, quality, market position, group morale Using cheap labor, etc 18 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Goal displacement Definition: The shift of attention away from the overall purpose towards the means of achieving it is called Goal displacement T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 19

Reading 02 Goals, Real Goals, and Pluralism n Discussion: Incorporating operative goals & goal displacement into the RUGS view of organizations, by ignoring the Official Goals & using Operative Goals instead” doesn’t work for the following reasons? T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 20

Reading 02 Goals, Real Goals, and Pluralism Three reasons: 1. 2. 3. Official Goals are used to justify & lend legitimacy to Operative Goals. When Operative Goals are unofficial & cannot be publicly justified Official Goals act as a constraint. To work out the Operative Goals you must understand priorities & values governing decision making. Divergence between Official & Operative Goals occurs at all levels and is usually due to goal displacement & personal or group interests. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 21

Pluralism n n Why organizational goals are problematic? Why rational practices may produce unintended consequences? a) The presence of differing interest groups within organizations generates deep conflicts & irrationalities & imperfections. We persist on regarding the RUGS view as a model of how organizations should be, and as unitary entities. Conflicts and irrationalities are seen as imperfections which would not occur in a “really good” organization. Organizations are better thought of as pluralistic entities a rich variety of individuals & groups with distinct attitudes, interests, and concerns where unity is the exception rather than the norm. Coherence and agreement in organizations are not “natural states” but rather “hard won achievements”, which result from many negotiations and realignments among different factions or parties. b) c) d) T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 22

Reading 03: Example, Problems with Performance-Related Pay n PRP Performance related pay are intended to reward good performance with extra pay n PRP is introduced in most organizations to get people to work harder: “job responsibilities and shores are defined and then reward is determined after performance is assessed. It is consistent with the RUGS view of organizations. n PRP may be efficient “doing the job right” but not effective “doing the right job” n In theory PRP is seen important to motivation & for improved performance n However PRP benefits aren’t met in practice. Research has shown that in some cases PRP can have adverse effects on motivation T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 23

Controversial article by Alfie Kohn conformity of Maslow & Herzberg’s motivation theories They suggest that enough money is necessary to satisfy basic needs and additional money beyond that isn’t necessarily a motivator 1. Intrinsic motivators: come from within a person example: sense of achievement, excitement of challenge 2. Extrinsic motivators: come from outside example: money, status, praise (glory), recognition, PRP (a clear extrinsic motivator) 24 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Controversial article by Alfie Kohn conformition of Maslow & Herzberg’s motivation theories 1. Intrinsic motivation is more effective for achieving LT commitment & high performance 2. Extrinsic motivation are ineffective in LT changes in motivation & commitment (attitudes & behaviors) T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 25

Why PRP schemes are bound to fail? Pay is not a motivator 2. Rewards are a covert form of punishment 3. Rewards disrupt teamwork 4. Other things affect performance (lack of resources) 5. PRP discourages risk-taking 6. Rewards undermine interest Read Concept file 4 page 14 Box 3. 1 1. 26 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Fig 3. 1 Performance–related pay: The LT prospects Fundamental belief in pay as motivator reinforces Manag Employees Temporary compliance (in accordance) Leads to Reduced intrinsic motivation ers Some employees get rewards Declining employee Use of performance increased PRP incentives Belief in PRP Jealousy bitterness, rivalry Leads to 27 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Performance-related pay: the longterm prospects n When applied PRP turns into a self-sustaining mechanism: it produces short-term gains (so it appears to work), but it damages long-term performance (something needs to be done). n PRP offers management a simple way to control and improve employee performance, and it is used to decide on pay raises. It places the responsibility for improved performance with the employees instead of the management. n PRP treats the problem of motivation and performance as a difficulty rather than a mess. n The ineffectiveness and the use of PRP present serious challenges to the RUGS approach which views the organization as a smoothly running machine. 28 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Reading 04: The Job Description Story Unintended Consequences n Society is seen as a system of social roles such as occupational n n n n positions or community roles Role is seen as a set of expectations & behaviors associated with the occupation, activity or status People occupy different social roles at different times which is called a person’s “role set” When the demands of different roles in an individuals’ “role set” conflict, or when they are vague or ambiguous, they will cause stress to the individual Research into role conflict reinforced the need to determine clearly specified roles within organization This led to the practice of devising formal “job descriptions” Clear job specifications became central to rational personal management It provides a basis for controlling the activity of the job holder 29 & integrating his. T 205 B activity with others - Systems Thinking & Principle - AOU - Lebanon branch

Job Description n The growth of the personal functions in organizations in the 1960 s lead to the creation of written job descriptions n It ensured that the right person is recruited, and that he is prepared for the job & has received appropriate training T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 30

Job Description n It was used to assess employee performance, to set their salaries, and to resolve role disputes. n The more precise the job description the less freedom the employer had to change the content of the work n Job descriptions were static documents & any changes in work methods required revisions n In larger organizations, the rate of structural change made updating a more or less continuous activity T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 31

Job Description n In recent years, job descriptions became less precise & no longer compulsory (must be done) n Employees & employers expect a much more flexible employment within a concept of ongoing career development. Instead of being exclusive and precise, nowadays, job descriptions provide the framework within which the contracted employee works. n The introduction of job descriptions was a rational development, which later lead to unintended consequences and became counter-intuitive for the originally desired ends. (perfect initiatives can lead to perverse effects). T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 32

Reading 05 Organizational Behavior as Theatrical Performance n Sociology: n Is a social science involving the study of the social lives of people, groups, and societies, sometimes defined as the study of social interactions. n Sociology is interested in our behavior as social beings; thus the sociological field of interest ranges from the analysis of short contacts between anonymous individuals on the street to the study of global social processes. T 205 B - Systems Thinking & Principle - AOU Lebanon branch 33

Reading 05 Organizational Behavior as Theatrical Performance n Within organizations sociological studies can be used to analyze the roles which individuals play in the context of a cooperative performance n This up-to-date view of organizational behavior can be seen as a game of play-acting and is applied to different fields of work and to different work relationships or colleagues interrelationships (public sector, military, police, medical profession) and to relationships with subordinates. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 34

Reading 06 When Rational Analysis Cannot Succeed In cases where the situation is: too complex to understand because of the existence of different views about what is going on & what we can do about it. n Where the evidence on which we base our attempts to understand them is (and always will be) inadequate n What is the right action to take? T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 35

Lindblom’s Disjointed Incrementalism In his analysis Lindblom refuses two key points upon which policy making is usually based which are: 1. The best way to solve public policy problems is to understand them (a widely held view which is often false) 2. There exists sufficient agreement to provide adequate criteria for choosing among possible alternative policies (questioned in most contemporary sciences, necessary for the success of rational problem solving) 36 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Conventional Descriptions of Rational Decision Making Conventional decision making involves identifying the following aspects; Clarification of objectives or values 2. Survey of alternative means of reaching objectives 3. Identification of consequences, side effects or by-products, of each alternative means 4. Evaluation of each set of consequences in light of the objectives. 1. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 37

A synoptic or Comprehensive Attempt at Problem Solving May not be Possible If clarification of objectives is not possible since it raises social conflict 2. If required information is not available or prohibitively costly 3. If the problem is simply too complex for man’s finite intellectual capacities (ex. the existence of a large number of alternative policies, cases where the detailed objectives of each alternative are immeasurable, or when there exists a large supply of information). In these cases Lindblom suggests that it is not desirable nor logical to pursue a synoptic approach of decision making 1. 38 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Disjoint Incrementalism (Lindblom) Policy makers dealing with messy problems Strategies of Disjointed Incrementalism (a departure from comprehensive understanding): 1. Understanding attempts are limited to policies that differ incrementally from existing policy 2. Small number of means: alternative possible policies should be considered 3. Adjusting means to ends or objectives & ends are chosen appropriately to available means 4. Instead of comparing alternative means or policies in the light of declared ends or objectives alternative ends or objectives are compared in the light of available means or policies and their 39 consequences T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Disjoint incrementalism (Lindblom) Ends & means are chosen simultaneously the choice of means doesn’t follow the choice of ends 6. Ends are indefinitely explored, reconsidered, discovered rather than relatively fixed 7. Problems aren’t solved but are repeatedly attacked 8. Analysis & policy making are remedial – they move away from ills rather than towards known objectives 9. Analysis & policy making are socially fragmented; they go on at large number of separate points simultaneously 10. At any one analytical point, analysis of consequences is quite incomplete 5. 40 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Disjoint incrementalism (Lindblom) n n The Most striking characteristic of disjointed incrementalism is that no attempt at comprehensiveness is made Unquestionably important consequences of alternative policies are ignored at any given analytical or policy-making point Lindblom argues that through various specific types of mutual adjustment among the large number of individuals & groups involved what is ignored at one point in policy making become central at another point It will often be possible to find rationality in decision making when the problem is viewed as a whole in its social & political context even if at each individual policy making point analysis remains incomplete T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 41

Messy & Soft Complexities can lead to varied Interpretations of events: in such cases n An over-emphasis on unity can become the goal in itself which leads to false and weak agreements because of the existence of differences and of opposing views. n Apparent unity can sometimes be bought at the cost of misplaced confidence & inadequate appreciation of circumstances n Disagreements can be an advantage since they provide a pool of information and can lead to new understandings emerging as creative resources n Specifying goals too early can obscure means for achieving unclear objectives & for reconciling conflicts between those objectives T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 42

Messy & Soft Complexity lead to varied Interpretations of Events n Insistence on specific goals can generate goal displacement on grand scale n Clear goals are desirable up to a point, but sometimes may prevent the discovery of better ways for pursuing all the purposes & values that might inform the choices of decision makers n With messy problems, it is better to be more sensible to explore goals rather than specifying them & to live with uncertainty a while rather than eliminate it 43 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Reading 07 From Scientific Management to Personal Empowerment n To be effective organizations need to have a high degree of coherence in their activities Over the years the interest in externally imposed control diminished in favor of autonomy and empowerment (a form of internally imposed control). n 2 key principles behind the work of Taylor and Gilbreth: 1. Each job is broken into simpler component tasks with detailed specifications of how each task is to be accomplished & how long it should take to complete it (work study) 2. Planning work becomes completely separated from doing work (O&M: Organization & Methods) n T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 44

From Scientific Management to Personal Empowerment Taylor & Gilbreth’s approach “scientific management” involves 3 methods of control: 1. Planning: “every act of the workman should be preceded by one or more preparatory acts of management for improved efficiency and better coordination 2. Linking the individual worker’s pay to his or her productivity (stick & carrot) 3. Adjusting the speed or capabilities of the machines to control the work of those whose jobs are linked to them (control by performance monitoring) n 45 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Alternative Approaches Alternatives to the scientific management Organization’s goals Area where formal controls provide incentive Individual’s goals T 205 B - Systems Thinking & Principle - AOU Lebanon branch Area of congruence 46

Alternative Approaches n As opposed to the Taylorism approach which assumes that unity of n n interest is the norm, this approach assumes that the interests of the individual differ form those of the organization The green area represents the area where the interests of individual and organization coincide In this area the incentive to work is self-generated & formal controls are less necessary In charities or pressure groups the overlap between individual & organization goals is large enough so that the individual is able to work voluntarily or for a minimal wage The need to pay & control can be reduced if the overlap between organization & individual’s interests can be increased by adapting work practices to fit better with individual’s interests, by encouraging individuals to identify more closely with organization’s interests T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 47

Spectrum or Continuum of Control Mechanism n 6 sections looking at a series of alternatives to scientific management control chosen to illustrate a gradual progression from left to right Direct supervision Standardized processes Tools DECREASING FORMAL CONTROL Standardized outputs Targets Standardized skills Trained people Mutual adjustment Exchanging or Negotiation Total independence autonomy T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 48

Experiences of Job Redesign To increase productivity 2. To cut the volume of work in progress 3. To increase the flexibility of production department 1. Note: giving some autonomy to work groups & enabling them to take responsibility for a whole process can in effect improve morale and increase productivity & job satisfaction T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 49

Job Enlargement n The simpler form of job redesign n By increasing the number & variety of the operations each person or group is required to do n By rotating people through 3 or 4 separate but similar tasks in a day n Reduced stress & increased output but temporarily T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 50

Job Enrichment n More radical form of job redesign n To give people more jobs of the same kind n To give more discretion over how & when to work a whole n n series of tasks Is represented by the shifting from standardization of processes towards the standardization of outputs Extra tasks are often done by skilled & responsible people by those higher up in the organizational structure Control exercised via shared goals rather than via imposed practices Organization should take attention to secure staff commitment to organizational goals T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 51

Semi-Autonomous Work Groups n To achieve job enrichment by the development of semi-autonomous work groups n Workforce should accept greater levels of responsibility n Work-group manager’s role changed from supervision & control to leadership, encouraging, enabling, acting as a channel for information between the work group & other part of the organization 52 T 205 B - Systems Thinking & Principle - AOU - Lebanon branch

Team Working n Is one way of giving greater freedom of action to people who possess a great level of skills, without the risk of a loss of control; n It cuts across existing structures & lines of control n Involves skilled people or expertise from a number of different departments to work on a specific project n Main purpose of setting such a project is to tackle a pressing organizational issue with a team provided with overall objectives & given the responsibility for choosing the best option to achieve the goal. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 53

Team Working n Is the creative stimulus of discussion between people with different perspectives from different areas n Remains too long together to become an established group with its own particular perspective & way of working to achieve their initial objective n Giving greater freedom of action to individuals creates some risks of loss of control to the organization as a whole. n becoming specialized to respond quickly & adapt easily if organizational goals change n Control is achieved by standardization of skills, by negotiation & mutual adjustment T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 54

Team Working n Skunk works team: Skunk works team is a radical form of team working designed to encourage entrepreneurs & innovative ideas in large companies where normal structure doesn’t support creativity. A small group of unconventional imaginative people drawn from any part of the structure grouped together given a challenge that stimulates & excites them & allowed total freedom to do what they want to come up with solutions T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 55

Team Working Formal controls of the group are minimal Control is enforced by keeping the size of the group small, by restricting their work to crucial problems, and by insuring frequent and informal communication with topmanagement. T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 56

Splitting off Altogether n There is total independence n Workgroup is autonomous (no longer part of parent company) n Has the freedom of the team or skunk works n Has lost security & support of belonging T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 57

Splitting off Altogether n Has acquired ultimate responsibility for its own survival n Old in house was simply split off n Large companies began to get rid of all non- core activities preferring to buy at competitive rates from external suppliers rather than have them in house T 205 B - Systems Thinking & Principle - AOU - Lebanon branch 58