T 205 B Block 04 Week 03 Managing

T 205 B Block 04 Week 03 Managing within Organizations Concept File 04 Section III - STRUCTURE & Section IV Development T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 1

Concept file 04 Section 03 - Structure n Structure refers to those parts of organizational life that are relatively fixed and that provide the background against which and within which organizational life gets played out. n In this section the readings are mostly about formal structure- the organizational chart that defines formal roles and relationships in most organizations. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 2

Reading 14 Structure & Process 14. 1 Structure and process When dealing with a problem or an issue it is useful to distinguish between those aspects of the situation that are relatively fixed over a given time-scale, and those that are changing and are easier to alter. Structure refers to the stable and unchanging aspects of something (relative to the time-frame of your current concern). It is usually taking for granted and considered the background or picture frame for our actions. 3 T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch

Reading 14 Structure and Process n 14. 1 Structure and process n Process refers to the faster moving events that happen against the backdrop (background, environment, condition) provided by the structure. n A system could simply be defined as “an assembly of interconnected parts that does something and is of interest to somebody”. n In this sense “the assembly of interconnected parts” is the structure n And the “doing something” is the process 4 T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch

Reading 14 Structure and Process 14. 2 Rigidity and flexibility Structure does not mean rigidity. A well-developed structure can support change and flexibility, and may provide the framework for creativity. n 14. 3 Designed and emergent structure Structures within organizations can be designed deliberately (on purposes), Or they can reflect emergent (developing, growing) features which have evolved informally (develop easily, unofficially). 5 T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch

Reading 14 Structure and process 14. 4 Different views of structure When thinking about different descriptions of structure, we need to clearly distinguish between: Official Maps: publicly visible representations of what those in charge say is supposed to be there. Informal structure: networks and relationships that often cut across the official hierarchy. T 205 BThinking - Systems Practice - AOU - Branch T 205 B - Systems & Thinking Practice&- AOU - Lebanon Branch 6

Reading 14 Structure and process n 14. 4 Different views of structure n Personal Viewpoints: the personal understandings about the structure of the situation that each of us form and that guide what we do. Ø In order for the organization to run smoothly (efficiently) and for employees to perform and interact in a coherent way the management must ensure that all these different realities share enough common T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 7

Reading 15 - The Basic Hierarchy 15. 1 The role of hierarchy T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 8

Reading 15 -The Basic Hierarchy n 15. 1 The role of hierarchy n Hierarchical structures are considered a structuring principle in many organizations. n They might be tall and include many layers, or flat with very few hierarchies. n A popular structure found in many organizations is illustrated in figure 15. 1 T 205 BThinking - Systems Practice - AOU - Branch T 205 B - Systems & Thinking Practice&- AOU - Lebanon Branch 9

Reading 15 -The Basic Hierarchy n Usually when they grow larger, organizations become more centralized in administrative structure & more formalized in the way they operate, which leads to the establishment of different sections & departments coupled with a high standardization of procedures & high formalization of documentation. n This expansion could be seen as a vertical and horizontal differentiation. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 10

Reading 15 -The Basic Hierarchy 15. 1 The role of hierarchy n In general differentiation is the allocation (distribution) of people and resources to tasks and the establishment of task & authority relationships: 1. It identifies total set of organizational tasks 2. It divides tasks into jobs, departments, divisions 3. It assigns (allocates or gives) authority and authority relationships. n Differentiation (allocation) can be vertical or horizontal: n Vertical differentiation is the design of hierarchy with n reporting relationships to link roles and sub-units. It defines who reports to whom, and specifies areas of responsibility. T 205 B - Systems T 205 B Thinking - Systems & Practice Thinking - AOU & Practice - Lebanon - AOU Branch Lebanon Branch 11

Reading 15 -The Basic Hierarchy n n Horizontal Differentiation is the way an organization groups tasks into jobs/roles into subunits. It establishes the division of labor and level of specialization and defines personal tasks and responsibilities. When left unmanaged horizontal differentiation can lead to conflict and hinder (delay) the organizations’ ability to coordinate all efforts in order to meet its goals. Horizontal differentiation can be offset (balance, compensate) by integration mechanisms T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 12

Reading 15 - The Basic Hierarchy 15. 1 The role of hierarchy n n n 1. 2. 3. Integration is the process of coordinating tasks, functions, subunits so they work effectively together and not at crosspurposes. In general the forces that cause horizontal & vertical differentiation impose a need for counteracting (neutralize) forces of horizontal and vertical integration. This results in a hierarchical structure where: Information about progress & problems flows up and executive authority to set targets and deal with problems flows down. The person in charge of the department is held responsible for its performance by those higher up in the hierarchy. The department manager has the power to control the team that reports to him. 13 T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch

Reading 15 - The Basic Hierarchy n n n The number of people any one person in the hierarchy looks after at the level immediately below is called his or her Span of Control. The maximum span of control varies according to the circumstances. In the last three decades a trend to greater local-self management combined with computer based information systems, has led to flat (horizontal) hierarchies with large spans of control. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 14

Reading 15 - The Basic Hierarchy 15. 2 The hierarchy as symbol n In addition to the practical reasons for adopting a hierarchical structure, hierarchy has some profound emotional and symbolic significance. 15. 3 Bureaucracy – the extreme hierarchy n The most formal version of hierarchy is the classic bureaucracy essentially the Taylorist “scientific management” approach to running an organization where: T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 15

Reading 15 - The Basic Hierarchy 1. 15. 3 Bureaucracy – the extreme hierarchy 1. Roles are hierarchically arranged with a single chain of command from the top to the bottom with many layers. Work is divided between well-defined & highly specialized jobs. Employees carry out their roles impersonally with heavy reliance on rules, procedures, and written records. Coordination between two different areas happens only at the point where the chains of command of the two areas cross. 2. 3. 4. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 16

Reading 15 - The Basic Hierarchy 15. 4 The demise (end) of the tall hierarchy Since the 1980 s many tall rule-bound hierarchies have disappeared for several reasons: Ø They limit employee’s ability to react and adapt rapidly to changing and uncertain environments. Ø It is expensive and uncompetitive to maintain layers of unproductive management. n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 17

Reading 15 - The Basic Hierarchy Ø The wide believe that it is not possible to maintain effective central control over large organizations. Organizations are seen as “learning organizations that can adapt and change intelligently as conditions demand” T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 18

Reading 16 Structure to meet communication needs n n In general the form of the basic hierarchy is determined by the communication requirements of supervisory control However, there can also be task-specific communication requirements that generate specific kinds of structure. q The three common forms of task-related structure include: T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 19

Reading 16 Structure to meet communication needs 16. 1 Radial interdependence It is found where there is a central head office or controller, and a series of geographically distributed outposts. In such cases, the link between the center and each outpost is more important than the links between the outposts themselves. Failure of the center is catastrophic for the whole organization. (Ex. A bank and its local branches). T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 20

Reading 16 Structure to Meet Communication Needs 16. 2 Sequential interdependence is found where there a series of processes, each dependent on the successful outcome of the previous one. (Ex. Production line processes). Failure of any one step is catastrophic for the whole process. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 21

Reading 16 Structure to meet communication needs 16. 3 Reciprocal interdependence n It is found where there is a general interdependence of every section on most other sections. (Ex. Team members) 16. 4 Relations between structures It is normal to form different parts of one organization to show different types of interdependency if they are doing different tasks. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 22

Reading 17 How Organizations cope with Increasing Uncertainty Reading 17. Uncertainty and structure T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 23

Reading 17 How Organizations cope with Increasing Uncertainty n 17. 2 Structural changes as uncertainty grows n As uncertainty increases more problems arise and the hierarchy becomes overloaded with issues that must be dealt with. T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 24

Reading 17 How Organizations cope with Increasing Uncertainty Seen from an “information load” perspective, there are two logically different types of option for meeting this increasing strain: 1. Options that reduce the hierarchy’s information handling load 2. Options that increase the hierarchy’s information handling capacity. n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 25

Reading 17 How Organizations cope with Increasing Uncertainty 17. 3 Options for load reduction n Creation of slack resources In general, an organization with a degree of slack in its operation can cope with uncertainties more easily than one that is so tightly coupled that it has no room for maneuver. Giving people more time and resources for handling local difficulties helps in resolving problems locally and reduces the load on the hierarchy. Creation of self-contained, task-based teams In this approach work is organized around output based categories (such as serving a region or handling a particular customer), and each of these serving teams includes the full range of specialist skills needed for the task. The drawbacks of this approach are loosing access to the specialists tied up in the team, and the loss of economies of scale. n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 26

Reading 17 How Organizations cope with Increasing Uncertainty 17. 3 Options for load reduction Outsourcing In this case the “task-based team” and its detailed management load are fully contracted out to an external contractor. This approach raises some challenges concerning flexibility, communication delays, and quality-control and so on. Its development have however reduced the effects of such issues. n T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 27

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity The options in this section are concerned with increasing the hierarchy’s capacity to handle high information loads. 1. Delegation n Delegation of selected aspects to specialists: A decision maker can process many more decisions if he or she can delegate time-consuming aspects to support staff. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 28

Reading 17 How Organizations cope with Increasing Uncertainty Delegation of problem-analysis to generalist teams: In this case the entire problem analysis is delegated to an Operation Research or Planning Department. The delegated group gathers information, conducts analysis, generates ideas, and comes up with suggested solutions. The responsibility for the decision however still rests with the formal hierarchy. The weakness of this approach is that the delegates may not understand important aspects of the decision makers’ position or they may fail to bring him on board. Reading a description of a journey is not the same as making the journey. n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 29

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity Using Information Technology IT developments have had a huge impact on the hierarchy’s capacity to handle information. 2. Ø Development of decision-support systems (DDS). There has been a great deal of work designed to help the manager/decision maker to make decisions better and faster. The desktop computer has become the ultimate personal assistant and research team rolled into one. T 205 B - Systems Thinking & Practice - AOU – Lebanon Branch 30

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity 2. Using Information Technology Ø Development of group decision support systems (GDSS). These include modern developments in email, computer conferencing, telephone conferencing, video conferencing which have extended the possible ways of meeting. T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 31

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity 2. Using Information Technology Ø Wide area supplier-distributor networks: This involves using computer based networks to couple a core company very closely into its network of small suppliers and distributors. This makes it possible to operate “just-in-time” production which reduces stocking and handling costs. Further it made it possible for customer demands to be rapidly reflected in changes in production and supply. T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 32

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity Vertical Integration Vertical integration is effective in complex and sophisticated situations where action needs to be taken quickly (disaster relief, military actions) It includes a repertoire of pre-planned and pre-trained activities that can be switched on rapidly. It occurs when the organization develops a compact language for talking about relevant actions. Its disadvantages are that tight vertical integration is possible only in situations for activities which we are able to plan and train for. 3. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 33

Reading 17 How Organizations cope with Increasing Uncertainty 17. 4 Some options for increasing capacity Creation of Lateral Relationships Another approach to increasing the hierarchy’s capacity involves devising ways to create horizontal links that bridge between different vertical threads of a hierarchy. 4. The following options represent different ways of handling lateral relations of increasing complexity: Direct contact, service roles, liaison roles, task forces, teams, managerial team, and the matrix organization. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 34

Reading 19 - Failing and Developing Ø Many different reasons can contribute to a failure in an organization’s structure. This failure usually leads to an increase in costs and a decrease in performance quality, which reduces employees’ commitment to the organization’s goals. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 35

Reading 19 - Failing and Developing Examples of reasons include: No standardized rule, insufficient delegation of decision-making, unclear work programs, unclear priorities, inadequate provision for coordination, excessive procedure and paperwork, no team structure etc. Two different approaches can be used to implement structural changes and repair such defects the “Top-Down” and the “Bottom-Up” approaches. n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 36

Reading 19 - Failing and Developing 19. 2 The “Top-Down” approach Also called top-down change or reengineered change, this approach treats the required organizational change as a matter of reengineering, or a difficulty rather than a mess. A common “top-down” approach is project appraisal where senior management calls in expert consultants to investigate and report their conclusions and recommendations. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 37

Reading 19 - Failing and Developing While this approach can work very well and cost effectively it does have some drawbacks. Ø The first is that the expert may not appreciate the political nuances (degrees) which may prevent the successful implementation of the recommendations, Ø Second people don’t always work well as passive components. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 38

Reading 19 Failing and developing 19. 3 The “Bottom-Up” approach Under the “bottom-up”, “process-oriented” or “participative” approach the issue is seen as a mess rather than a difficulty. This approach encourages team work, good communication skills, and sensitivity to group dynamics. . T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 39

Reading 19 - Failing and Developing Its advantages are: Ø taking advantage of and welcoming different perspectives and skills. The disadvantages include: Ø Prototyping and Ø Time consuming. The classic examples of a “bottom-up” approach are Organizational Development and Total Quality Management system T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 40

Reading 19 - Failing & Developing 1. Organizational Development: n Organization" has come to mean the coming together of people and resources to form a unit. "Development" in its simplest form suggests change and growth. So OD could be defined as "the practice of changing people and organizations for positive growth. “ In practice, Organizational Development can take on many forms, and typical OD activities can include some of the following: team-building, organizational assessment, career development, training, coaching, talent management, change management. n n n T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 41

Reading 19 - Failing and Developing 2. Total n n n Quality Management: According to Tenner and De. Toro (1992), “Quality is a basic business strategy that provides goods and services that completely satisfy both internal and external customers by meeting their explicit and implicit expectations”. This strategy utilizes the talent of all employees, to the benefit of the organization in particular and society in general, and provides a positive financial return to the shareholders. TQM aims at achieving continuous improvement via three fundamental principles and different supporting elements. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 42

Reading 19 - Failing and Developing n Fundamental Principle: 1. Customer focus: internal and external. 2. Process improvement: improving process to produce consistent, acceptable output. 1. Total improvement that focuses on utilizing and improving employees’ talents. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 43

Reading 19 - Failing and Developing n Supporting Elements: 1. 2. 3. 4. 5. 6. Leadership Education and training Supportive structure Communications Reward and recognition Measurement T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 44

Reading 20 Organizational Structure as a Developing Process 20. 1 A case study n Organizational structures are often the result of evolutionary processes, rather than imposed design – of “organizing” (a process) rather than “organization” (a structure). n Insert figures 20. 1 page 94 & 20. 2 page 95 T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 45

Reading 20 Organizational Structure as a Developing Process 20. 1 A case study Satisfaction with individual + relationships + Quality of solutions to problems Frequency of direct contacts + + + Availability of information about other departments’ concerns T 205 B - Systems Thinking & Practice - AOU 46 A mutual-cause process involved in the development of lateral relations through Lebanon Branch direct contacts

Reading 20 Organizational Structure as a Developing Process + Number of structural changes supporting lateral relations Quantity of slack resources Quality of interdepartmental relations Frequency of direct contacts + + Director’s evaluation of lateral relations + + + Extent democratic philosophy + + + Amount of information about other departments + Extent of adoption of culture + Quality of solutions to problems + + Standard of performance T 205 B - Systems Thinking & Practice - AOU - 47 Some of the wider processes of structural change which might develop from the Lebanon Branch increase in direct contacts

Reading 20 Organizational structure as a developing process 20. 2 Organisations as Complex Adaptive Structures n n Organizations don’t only behave like an equilibriummaintaining mechanical system. They are also capable of elaborating and transforming their structures. They choose from a series of developmental pathways the course that is consistent with the existing feedback loops. Organizations may transform themselves in response to positive feedback loops or be held stable by negative feedback loops. T 205 B - Systems Thinking & Practice - AOU - Lebanon Branch 48

Reading 20 Organizational Structure as a Developing Process n Organizations often alternate between periods of stability (negative feedback loops predominate), and periods of change (when internal or external events trigger new positive feedback loops). n In addition it is possible for one department within an organization to be in a stage of stability while another department goes through a process of change. This usually creates complex internal tensions, which may be resolved either constructively or destructively. The implications of this sort of behavior are: Structures can be self-sealing Timing is critical (acting quickly before a trend is established) n n T 205 B - Systems Thinking & Practice - AOU Lebanon Branch 49