This Document Contains Chapters 11 to 13 11. Conflict and Negotiation in the Workplace SOLUTIONS TO CRITICAL THINKING QUESTION 1. Distinguish task conflict from relationship conflict and explain how to apply the former, with minimal levels of the latter. Answer: The distinction between task (constructive) and relationship conflict is one of perceptions and emotions toward the conflict. Task-related conflict occurs when the parties view the conflict experience as something separate from them. Differences of opinion are viewed as constructive events in which the parties can learn different perspectives and possibly develop new ideas. Relationship conflict, on the other hand, occurs when the parties view their differences as threatening personal attacks. Rather than focusing on the issue, each party starts to see the other person as the problem. The discussion becomes emotionally charged, so that perceptual biases are introduced and information processing is impeded. One way to encourage task conflict and minimize relationship conflict is by keeping the participants focussed on the issue and its resolution as opposed to individuals. With this in mind experts have identified three strategies: Emotional intelligence. Participants are less likely to resort to personal attacks when they have high emotional intelligence. Such individuals are known to have control over their emotions, and are better able to use the emotions of others as information. Cohesive teams. Members in such teams tend to be more forgiving of team mates with differing view points. This allows them to avoid felling personally offended when others within the team voice opposing arguments. Supportive team norms. If the team encourages frank and open debate while discouraging personal attacks, it can help minimize if not avoid relationship conflict. The norms may include an acceptance of appropriate humor to maintain positive relations. 2. The chief executive officer of Creative Toys, Inc., read about cooperation in Japanese companies and vowed to bring this same philosophy to the company. The goal is to avoid all conflict, so that employees would work cooperatively and be happier at Creative Toys. Discuss the merits and limitations of the CEO’s policy. Answer: This question addresses the idea that conflict can be both good and bad for organizations. To effectively manage conflict, organizational leaders must find interventions that alter the level and form of conflict in ways that maximize its benefits and minimize its dysfunctional consequences. Task conflict is a form of conflict that benefits decision making. This constructive conflict helps people to recognize problems, to identify a variety of solutions, and to better understand the issues involved. Conflict is also a catalyst for change and improved decision making. It occurs when people raise new perspectives of issues and these emerging views are debated. Under certain conditions, conflict between work teams is beneficial to the extent that it builds commitment to the team. Of course, not all conflict is beneficial. When managed poorly, conflict encourages organizational politics by motivating people to attack or undermine the activities of their adversaries. This relationship conflict results in frustration, job dissatisfaction, and stress. Unbridled conflict may cause employees to escape from the situation through turnover or absenteeism. 3. Conflict among managers emerged soon after a French company acquired a Swedish firm. The Swedes perceived the French management as hierarchical and arrogant, whereas the French thought the Swedes were naive, cautious, and lacking an achievement orientation. Identify the source(s) of conflict that best explain this conflict, and describe ways to reduce dysfunctional conflict in this situation. Answer: The most apparent process to minimize conflict in this situation would be some form of structured dialogue. Specifically, the Swedes and French managers need to diplomatically bring out their concerns and understand the other party’s rationale for their behavior. We emphasize “structured” dialogue because informal dialogue (without a facilitator) may increase the risk of conflict escalation. One dialogue-type strategy is intergroup mirroring, which is described as a supplemental lecture later in this instructor’s manual chapter. The process begins with a relationship audit in which consultants meet with individuals and groups of employees to identify the employment-connected relationships that have caused the current disruption and disagreement In this situation, relationship restructuring would involve interviews by consultants with representatives from the Swedish company and French company. Information collected from the relationship audit is used to evaluate the relationships, such as communication deficiencies, misaligned expectations, corporate culture shifts, and so on. This would identify the sources of the conflict, which may be either structural problems or the way each side communicates with the other side. Although intergroup mirroring and other dialogue-type interventions can reduce dysfunctional conflict, students should be able to think of factors in this situation that may interfere with the process. One problem might be that either the Swedes or the French employees might be less willing to discuss the conflict due to cultural values. Some cultures discourage open discussion of conflict, and this might occur here. Another problem may be that the conflict is due to fundamental differences between the parties, such as cultural differences in communication, or stereotypes of each other. These are more difficult to change than are structural causes of conflict. NOTE: This incident is described in M. Raynaud and M. Teasdale, “Confusions and Acquisitions: Post Merger Culture Shock and Some Remedies,” IABC Communication Journal, 9 (May-June 1992), pp. 44-45. 4. You have just been transferred from one unit of the organization to another unit. On the last day of work in the first unit, your current manager calls your new manager, informing her that you are a tough candidate and that you possess an attitude. The would-be manager calls you, providing you with the information, and expresses apprehension. How would you resolve this conflict? Answer: The two types of conflicts, task and relationship seem to exist here. The present manager apparently has reported about some task-related issue as well as the relationship issue. Task conflict occurs when people focus on task related issues and show respect for other points of view and is more productive. However, in the relationship conflict, there is diversion from the task related issue towards personality clashes and other interpersonal incompatibility, gender a common source for this. An option to you is to analyze what is the source of the conflict and be honest and have an honest and transparent conversation with the new manager, understand his/her expectations from you and clarify the possible sources of allegations by the previous manager. 5. You are a special assistant to the commander-in-chief of a peacekeeping mission to a war-torn part of the world. The unit consists of a few thousand peacekeeping troops from the United States, France, India, and four other countries. The troops will work together for approximately one year. What strategies would you recommend to improve mutual understanding and minimize conflict among these troops? Answer: Multicultural forces minimize conflict by ensuring that troops eat and socialize together. Various social activities can occur, such as mixed sports teams (although finding a common sport can be a problem!). Special dialogue sessions can help troops overcome stereotypes of each other. In these sessions, people from each representative country would discuss their backgrounds and how they think about their role in the peacekeeping activity. You will also need to assess and address other issues that could potentially create conflict e.g. need for resources, task interdependence issues, ensuring roles and procedures are clear. 6. The chief operating officer (COO) has noticed that production employees in the company’s Mexican manufacturing operations are unhappy with some of the production engineering decisions made by engineers in the company’s headquarters in Toronto. At the same time, the engineers complain that production employees aren’t applying their engineering specifications correctly and don’t understand why those specifications were put in place. The COO believes that the best way to resolve this conflict is to have a frank and open discussion between some of the engineers and employees representing the Mexican production crew. This open dialogue approach worked well recently among managers in the company’s Toronto headquarters, so it should work equally well between the engineers and production staff. Based on your knowledge of communication and mutual understanding as a way to resolve conflict, discuss the COO’s proposal. Answer: The chief operating officer (COO) should be very cautious about launching into an intervention to improve communication and mutual understanding between these two groups. The problem is that, as the textbook warns, communication and mutual understanding interventions may fail when the parties have high differentiation, as is the case here. Furthermore, the Mexican culture has more conflict avoidance than occurs in Canada, which could further aggravate the situation. Instead, the COO should first try to find ways to reduce differentiation, such as by having both groups perform an interesting task or team-building together (e.g. Habitat for Humanity volunteering day). Even if differentiation is reduced, the national culture differences call for subtle forms of “getting to know you” events, such as social and task-related activities where each party comes to appreciate the uniqueness of the other group. 7. Describe the inquisitional approach to resolve disputes between employees or work units. Discuss its appropriateness in organizational settings, including the suitability of its use with a multigenerational workforce. Answer: By applying the inquisitional approach, managers dominate the intervention process as well as make a binding decision. Specifically, inquisitional managers control all discussion about the conflict, ask questions to the disputing parties, and decide which information to select or ignore. The inquisitional approach is generally inappropriate in typical organizational settings. One problem is that managers tend to collect limited information about the problem using this approach, so their imposed decision may produce an ineffective solution to the conflict. Another problem is that employees tend to think that the procedures and outcomes of inquisitions are unfair because they have little control over this. In an organizational setting with a multigenerational workforce, the inappropriateness of the inquisitional approach is even more evident. In such a workforce there already exists some tension between young and older workers, which has the potential to induce generational conflict. Using the inquisitional approach with its inherent lack of perceived fairness would exacerbate rather than mitigate conflict. The inquisitional approach may be successful in work environments where employees have a high power distance, and are more accepting of autocratic management styles. However, younger employees in North America have different attitudes about work and the role of their superiors, which generally favor participative and more egalitarian management styles. 8. Jane has just been appointed as purchasing manager of Tacoma Technologies, Inc. The previous purchasing manager, who recently retired, was known for his “winner-take-all” approach to suppliers. He continually fought for more discounts and was skeptical about any special deals that suppliers would propose. A few suppliers refused to do business with Tacoma Technologies, but senior management was confident that the former purchasing manager’s approach minimized the company’s costs. Jane wants to try a more collaborative approach to working with suppliers. Will her approach work? How should she adopt a more collaborative approach in future negotiations with suppliers? Answer: The best strategy when entering negotiations is to begin with a cautious win-win orientation. This means that Jane should enter the negotiations with a problem-solving style by sharing information slowly. However, she should carefully watch for evidence that the suppliers are responding with problem-solving behaviors. If suppliers do not reciprocate with a problem-solving style, then Jane should retreat somewhat from the problemsolving approach, perhaps shifting to more of a compromising style. She should return to a more problem solving approach later, again being cautious and watching for reciprocal behaviors from suppliers. 9. You are a new program manager with responsibility for significant funding and external relations, and because of downsizing issues in your area, you have lost two valuable employees (actually 1.5, because the second person is on half time now; she used to be your manager and was the person under whom you trained). You have been in the new job approximately two weeks; however, you have been in the unit for more than a year and seen how systems are man- aged, from your manager’s perspective. You now have her job. Out of the blue, a senior person (not in your area) comes to you and says he is taking most of your space (when the company had to let the 1.5 people go). He doesn’t ask your permission, nor does he seem the least bit concerned with what your response is. What do you do? Answer: You are in a tricky situation, because a superior from a different area is asserting his right to your area. You have checked around but your boss has not been informed, but the senior management seem to approve. You go to your boss and inform her of the untenable situation. She then begins to “yell” at the senior person, but he shifts blame to several others. The boss then goes to these several others and uses the logic of the sensitivity of the materials, the ongoing criticality of the project to make the point. This whole process has rattled the remaining people in the unit, and you have “mirrored” your boss’ voice, by yelling at them. The result was that everyone in your until felt that you were “forcing” a decision down their throats. In reflecting on the OB course you recently had had, you realized that perhaps a better strategy would be to aim for a win-win one, or something called problem solving. Actually, the boss was using that technique, but you hadn’t realized it at the time, unable to decouple “what someone says” and “why they say it”. Problem solving is a critical step in dealing with real time conflict, and it takes skill and practice to perfect it. CASE STUDY: CAR WARS AT WOLFSBURG Case Synopsis This case describes the conflict between executives at Volkswagen (VW) and Porsche and, in particular, between Porsche CEO Wendelin Wiedeking and VW chairman Ferdinand Piëch. The case describes Porsche’s attempted takeover of VW, the different beliefs and values of the top executives, and the unexpected result of the takeover effort. Suggested Answers to Case Questions 1. Identify and discuss the sources of conflict between Porsche and Volkswagen executives. Answer: One very apparent source of conflict is differentiation – the different beliefs and values between Wiedeking and Piëch. Wiedeking and his Porsche executive team are fans of lean management as well as cost control systems. They impersonally cut products that fail to achieve profits. VW chairman Ferdinand Piëch as more emotional connection with engineering excellence and is willing to forego short-term profits for long-term improvements in engineering excellence. Another source of conflict is goal incompatibility. In this case, Porsche’s goal of taking control of VW interferes with VW’s desire to remain independent, which is apparent from VW’s reaction to the takeover attempt. There is also likely some evidence of conflict due to communication problems. The case implies that Wiedeking is quick to criticize VW executives for the company’s inefficiency. These harsh words escalate the conflict because they are seen as attacking individual competence (i.e. relationship conflict), not just suggesting way to improve the company (task-related conflict). 2. Describe the conflict handling styles used by Wendelin Wiedeking and Ferdinand Piëch. Were they appropriate in this situation? Answer: Wendelin Wiedeking’s conflict style seems to be one of forcing, because he apparently speaks bluntly about VW’s weaknesses and initiated the hostile takeover. Ferdinand Piëch’s style is a little less apparent. However, one statement he made about Porsche executives also suggests that he relies on forcing more than other styles. Of course, these seasoned executives likely rely on the full range of conflict handling styles, but they are not apparent in the public documentation. TEAM EXERCISE: THE CONTINGENCIES OF CONFLICT HANDLING These exercise notes are derived from the original article by Gerard A. Callanan and David F. Perri, West Chester University Of Pennsylvania. To get the full benefit of this exercise, instructors should read the original article: G. A. Callanan and D. F. Perri, “Teaching Conflict Management Using a Scenario-Based Approach,” Journal of Education for Business, 81 (Jan/Feb 2006), pp. 131-139. Purpose This exercise is designed to help you understand the contingencies of applying conflict handling styles in organizational settings. Instructions Step 1: Participants will read each of the five scenarios presented below and select the most appropriate response from among the five alternatives. Each scenario has a situationally correct response. Step 2 (Optional): The instructor may ask each student to complete the Dutch Test for conflict handling self-assessment in this chapter (Self-Assessment 13.5) or a similar instrument. This instrument will provide an estimate of your preferred conflict handling style. Step 3: As a class, participants give their feedback on the responses to each of the scenarios, with the instructor guiding discussion on the contextual factors embodied in each scenario. For each scenario, the class should identify the response selected by the majority. In addition, participants will discuss how they decided on the choices they made and the contextual factors they took into account in making their selections. Step 4: Students will compare their responses to the five scenarios with their results from the conflict handling self assessment. Discussion will focus on the extent to which each person’s preferred conflict handling style influenced their alternatives in this activity, and the implications of this style preference for managing conflict in organizations. Suggested Solutions to Scenarios The authors present a model in which the three main contingencies are: 1. Criticality – how important the issue is to you and the other party; 2. Status/power incongruity – the relative power of the two parties in the dispute 3. Perceived aggressiveness of the other party – the extent to which the other party appears to be assertive or cooperative Scenario 1 In this situation, the criticality of the central conflict issue is moderate for both parties. Organizational power of the two parties is moderate and perceived as equal. Further, there is no evidence of perceived aggressive intent on the part of the other party. The combination of these contextual factors, as well as a time constraint for resolution of the disagreement, makes compromise the appropriate choice of conflict-handling strategy. Preferred alternative: #4 – You decide to meet Kathy Gordon halfway in order to reach an agreement. You advise Jane to pursue her MBA in accounting or finance, but also recommend she minor in organizational behavior by taking electives in that field. Scenario 2 The central issue in this scenario is vital to both of the two parties in the conflict, as well as the organization as a whole. It can be inferred, based on position title, that both parties possess relatively high degrees of organizational power. The other party displays a moderate degree of aggressive intent in the conflict. The combined effect of these contextual factors makes collaboration the most appropriate choice of conflict- handling strategy. Preferred alternative: #5 – You try and reach a consensus that addresses each of your concerns. You agree to work harder at hiring more minority applicants and request that the EEO officer agree to help find the most qualified minority candidates available. Scenario 3 This scenario describes an issue with high criticality to the individual. Organizational power of the individual is moderate to high, whereas the power of the opposing party is low to moderate. In addition, there is a clear indication of aggressive intent on the part of the opposing party. All of these situational characteristics make competitiveness the most suitable choice of conflict- handling strategy. Preferred alternative: #2 – Tell Bill Jones that unless you have the data from his department on your desk by tomorrow morning, you will be forced to go over his head to compel him to give you the numbers. Scenario 4 In this incident, the central issue is highly critical to the other party, but is of little consequence to the individual. There is no evidence of aggressive intent on the part of the other party, and the other party has a relatively higher degree of organizational power. The combination of these situational factors makes accommodation the most appropriate choice of conflict-handling strategy. Preferred alternative: #1 – Agree to accept the raw material in the different format. Scenario 5 The central issue in this scenario is not critical to either party. Aggressive intent is not present, and the organizational power of each of the par- ties is relatively low. Based on this combination of contextual factors, avoidance is the most suitable choice of conflict-handling strategy. Preferred alternative: #2 – Tell Beth Hanson you will deal with the matter in a few days, after you have addressed the more pressing issues. Comments to Instructors In addition to completing the five scenarios, this exercise suggests that students complete the Conflict Handling selfassessment (also in this chapter). This instrument estimates the student’s preferred conflict handling style. In the context of this exercise, students can see how their choice of alternatives matches their preferred conflict handling style. As part of this process, the class may want to identify the conflict handling style for each alternative of the five scenarios. This labeling would occur AFTER students have indicated their preferred solutions to the scenarios. SELF-ASSESSMENT: WHAT IS YOUR PREFERRED CONFLICT-HANDLING STYLE? Purpose This self-assessment is designed to help students to identify their preferred conflict handling style. Overview and Instructions People have preferred ways to handle conflicts that they experience. Researchers have identified five conflict handling styles, and this self-assessment estimates the extent to which you prefer to use each of these conflict handling styles. Students are asked to read each statement in this self-assessment and indicate how well the statement reflects the way they tend to act in a conflict with someone else. Feedback for the Conflict Handling Style Self-Assessment This self-assessment estimates the extent to which the person prefers to use each of the five conflict handling styles identified in the conflict management literature: yielding, compromising, forcing, problem solving, and avoiding. Yielding Yielding involves giving in completely to the other side's wishes, or at least cooperating with little or no attention to your own interests. This style involves making unilateral concessions, unconditional promises, and offering help with no expectation of reciprocal help. Compromising Compromising involves looking for a position in which your losses are offset by equally valued gains. It involves matching the other party’s concessions, making conditional promises or threats, and actively searching for a middle ground between the interests of the two parties. Forcing Forcing tries to win the conflict at the other's expense. It includes “ hard” influence tactics, particularly assertiveness, to get one’s own way. Problem Solving Problem solving tries to find a mutually beneficial solution for both parties. Information sharing is an important feature of this style because both parties need to identify common ground and potential solutions that satisfy both (or all) of them. Avoiding Avoiding tries to smooth over or avoid conflict situations altogether. It represents a low concern for both self and the other party. In other words, avoiders try to suppress thinking about the conflict Conflict Handling Scale Norms Scores on the five Conflict Handling Scale dimensions range from 4 to 20. Higher scores indicate that the person has a higher preference for and use of that particular conflict handling style. Norms vary from one group to the next. The following table shows norms from a sample of 225 MBA students. Most are from Australia, but some completed courses in Singapore and many of these people originate from other regions (Europe, South America, Asia, North America). The average age is about 31 years old and two-thirds would be male. To read this chart, consider the top 10 percentile for Yielding. The score is 14, indicating that 10 percent of people score 14 or above and 90 percent score below 14 on this dimension. Keep in mind that these scores represent self-perceptions. Evaluations from others (such as through 360-degree feedback) may provide a more accurate estimate of your preferred conflict handling style. Percentile Yielding Compromising Avoiding Forcing Problem solving Top 10 percentile 14 16 14 16 19 Top 25th percentile 13 15 12 15 17 Median (50th percentile) 12 13 10 13 16 Bottom 25th percentile 10 12 8 11 15 Bottom 10 percentile 9 10 7 10 13 Average Score 11.4 13.2 10.3 12.9 15.9 12. Leadership in Organizational Settings SOLUTIONS TO CRITICAL THINKING QUESTIONS 1. Why is it important for top executives to value and support shared leadership? Answer: Emerging views of leadership support the idea that leadership needs to be developed at all levels of an organization. In a recent study, only 8 percent of executives in large firms indicated their organizations had enough leadership. Effective leaders are responsible and their success may be determined, by their ability to teach and empower employees to take leadership roles. In increasingly dynamic, team-based organizations, an organization’s competitive success may be determined by employees’ ability to understand the business environment and take action consistent with organizational goals. Characteristics associated with leadership such as self-confidence, emotional intelligence, integrity are increasingly being used by organizations to select employees for positions at all levels within an organization (not just management and executive positions). 2. Transformational leadership is the most popular perspective of leadership. However, it is far from perfect. Discuss the limitations of transformational leadership. Answer: Circular definition of effective leadership. One problem with the transformational leadership perspective is that some researchers define this concept in terms of the leader’s success. They suggest that leaders are transformational when they successfully bring about change, rather than whether they engage in certain behaviours we call transformational. This is circular logic, because it means that all successful leaders use the transformational style. Universal approach to leadership. The transformational leadership model still implies a universal rather than contingency approach to leadership. Only very recently have writers begun to explore the idea that transformational leadership is more appropriate or effective in some situations than others. For example, it may be less effective in some cultures. Cross-cultural differences. Implicit in the discussion about the universal nature of transformational leadership is the notion that it applies across cultures. Yet we know that leadership includes behaviours and communication styles that might be inconsistent with some cultures. However, preliminary evidence suggests that transformational leadership is applicable across cultures. 3. This chapter distinguished charismatic leadership from transformational leadership. Yet charisma is identified by most employees and managers as a characteristic of effective leaders. Why is charisma commonly related to leadership? In your opinion, are the best leaders charismatic? Why or why not? Answer: This is an open-ended question that will encourage students to question their notions of leadership. Instructors may find it useful to begin the discussion by having students brainstorm to define what is meant by the term charisma. The next question would be: Is a leader who is viewed as charismatic to some also viewed as charismatic to others as well? One does not have to be charismatic to be a successful leader. Nonetheless, being viewed as charismatic is an advantage in securing the support of followers. There have been suggestions made that charismatic leaders produce dependent followers, whereas transformational leaders produce followers who are more empowered and therefore less dependent on the leader. Charisma is commonly related to leadership because charismatic leaders often inspire and motivate others through their confidence, passion, and compelling communication. They can create a strong emotional connection with their followers, making them seem more influential and persuasive. However, the best leaders are not necessarily charismatic. While charisma can enhance a leader's appeal, effective leadership also requires qualities like integrity, empathy, competence, and the ability to make sound decisions. Leaders can be effective without being overtly charismatic by focusing on building trust, fostering collaboration, and achieving results. 4. Consider your favourite teacher. What people-oriented and task-oriented leadership behaviours did he or she use effectively? In general, do you think students prefer an instructor who is more people-oriented or taskoriented? Explain your preference. Answer: NOTE: This question relates directly to a study that looked into the preferred leadership style of university students. See V. V. Baba, “Serendipity in Leadership: Initiating Structure and Consideration in the Classroom,” Human Relations 42 (1989), pp. 509-25. For this discussion, it may be useful for students to work in groups and write down critical events that characterized effective and ineffective leadership from teachers. Then, the class can compare these critical events to the features of people-oriented and task-oriented leadership. In general, instructors will probably find that students value both people-oriented and task-oriented leadership in teachers. Particularly important is the idea that each style is probably more or less important in different situations. For example, people-oriented leadership would be more valuable in stressful situations (just before the exam!). Notice that it is difficult to discuss these two styles of leadership without moving into path-goal theory and its contingency approach. Another observation is that, given a forced choice, students will prefer a task-oriented leader. As noted in the textbook, research has found that college students apparently value task-oriented instructors because they want clear course objectives and well-prepared lectures that abide by the course objectives. My favorite teacher effectively used a mix of people-oriented and task-oriented leadership behaviors. They were people-oriented by showing empathy, being approachable, and encouraging student participation, creating a supportive and inclusive classroom environment. They were task-oriented by setting clear expectations, organizing lessons efficiently, and providing constructive feedback to ensure academic success. In general, I believe students prefer a balance between people-oriented and task-oriented instructors. This combination fosters a positive learning environment while maintaining a focus on academic goals. Personally, I prefer a teacher who is more people-oriented, as it enhances motivation and engagement, making learning more enjoyable. 5. Your employees are skilled and experienced customer service representatives who perform nonroutine tasks, such as solving unique customer problems or meeting special needs with the company’s equipment. Use pathgoal theory to identify the most appropriate leadership style(s) you should use in this situation. Be sure to fully explain your answer, and discuss why other styles are inappropriate. Answer: According to path-goal theory, the most appropriate leadership styles in this situation are participative and achievement-oriented. Employees have the skill and experience to provide meaningful ideas, and the non-routine task structure gives employees discretion over their work activities. This discretion is necessary for the participative leadership style because it gives employees more freedom to implement their ideas. Achievement oriented leadership is appropriate here because employees have the skills and experience necessary to attempt challenging goals. Directive leadership is inappropriate here because it introduces too much supervisory control for skilled and experienced employees. Supportive leadership is probably unnecessary in this situation. The work isn't too challenging (employees have the necessary skills and experience) nor is it too boring (employees have non-routine tasks). 6. Identify a current political leader (e.g., president, governor, mayor) and his or her recent accomplishments. Now, using the implicit leadership perspective, think of ways that these accomplishments of the leader may be overstated. In other words, explain why they may be due to factors other than the leader. Answer: Generally, students should be able to take a successful political leader and use the three elements of the romance perspective to explain how this leader may be less responsible for success than we imagine. The three perceptual processes that affect the way that people view leaders and the effects of leaders on their environments are as follows: Attributing leadership. When observing others, we tend to attribute events more to the person than the situation because we are less sensitive to situational influences. Leaders reinforce this perceptual bias by taking more credit than they deserve for favourable events. Stereotyping leadership. Employee expectations and stereotypes regarding characteristics of effective leaders influence their evaluation of leaders. It’s usually difficult to objectively evaluate a leader’s long-term effectiveness, so people tend to evaluate leaders by whether they act like leaders, that is, whether their behaviours conform to the leadership stereotype. Romance of leadership. In Western society, people want to believe that leaders make a difference because it simplifies their explanation of organizational events. It also maintains their illusion of control because they want to believe that life events are generated from people rather than from uncontrollable natural forces. 7. Find two newspaper ads for management or executive positions. What leadership competencies are mentioned in these ads? If you were on the selection panel, what methods would you use to identify these competencies in job applicants? Answer: This is an open-ended exercise which could be used as an activity with subsequent class discussion. The main objective is to help students identify the competencies organizations are looking for when hiring managers and/or executives. The competency perspective of leadership should be self-evident. Encourage students to compare the competencies identified in the newspaper ads with the leadership competencies identified below: Personality – Higher levels of extroversion (outgoing, talkative, sociable, and assertive) and conscientiousness (careful, dependable, and self-disciplined) Self-concept – The leader’s self-beliefs and positive self-evaluation about his/her own leadership skills and ability to achieve objectives. Drive – The leader’s inner motivation to pursue goals. Integrity – The leader’s truthfulness and tendency to translate words into deeds. Leadership motivation – The leader’s need for socialized power to accomplish team or organizational goals. Knowledge of the business – The leader’s tacit and explicit knowledge about the company’s environment, enabling the leader to make more intuitive decisions. Cognitive and practical Intelligence – The leader’s above average cognitive ability to process information (cognitive intelligence) and ability to solve real-world problems by adapting to, shaping, or selecting appropriate environments (practical intelligence). Emotional intelligence – The leader’s ability to monitor his or her own and others’ emotions, discriminate among them, and use the information to guide his or her thoughts and actions. 8. How do you think emotional intelligence, cognitive and practical intelligence influence authentic leadership? Answer: Leadership is about influencing, motivating and enabling others to contribute towards effectiveness of organizations, while authentic leadership refers to how well leaders are aware of, feel comfortable with, and act consistently with their self-concept. Emotional intelligence helps leaders to perceive and express emotion , assimilate emotion in thought, understand and reason with emotion and regulate emotion in themselves and others. Since emotions influence human decision making, the ability to understand and express emotions is likely to allow the leader to be herself / himself and also to allow others to see the leader as being authentic. Cognitive and practical intelligence project the competence and combined with emotional intelligence will demonstrate authentic leadership. 9. You hear two people debating the merits of women as leaders. One person claims that women make better leaders than do men because women are more sensitive to their employees’ needs and involve them in organizational decisions. The other person counters that though these leadership styles may be increasingly important, most women have trouble gaining acceptance as leaders when they face tough situations in which a more autocratic style is required. Discuss the accuracy of the comments made in this discussion. Answer: The first statement – that women are more sensitive to employee needs – represents a traditional gender stereotypic view of women in these roles. It may be true to the extent that women generally tend to be more sensitive than men to nonverbal cues and the ability to empathize. However, research suggests that women are generally no more or less likely to apply the people-oriented leadership style. In this respect, the statement is false. The second statement – that most women have trouble gaining acceptance as leaders when they face tough situations where a more autocratic style is required – is generally true. Women may be as skilled as men at applying the autocratic style, but they receive more resistance and unfavourable responses from followers. This reflects the tendency of followers to stereotype leaders, and to give unfavourable evaluations to those who violate the stereotype. CASE STUDY: A WINDOW ON LIFE Case Synopsis LaCroix Industries in St. Jean, Quebec manufactures wood-framed windows. Gilles LaCroix, the company founder, continually reinforced the need to make quality windows because they provided “a window on life” for so many families. He consistently repeated this point by talking with all employees at every convenience. He began taking pictures of people looking through LaCroix windows and this led to the company’s popular marketing campaign. LaCroix also actively involved employees in organizational decisions. Eventually, the company’s continued success depended on expansion to other parts of the country, so a majority share was sold to Build-All Products, a conglomerate with international marketing expertise in building products. Build-All brought in Jan Vlodoski to oversee production while LaCroix met with developers around North America. Vlodoski was a less participative and more directive manager who tried to shift the emphasis from product quality to inventory cost efficiency. Inventory costs were reduced, but product rejects increased markedly during the first year. Employee morale dropped significantly and some people quit in spite of the poor labor market. After 18 months, LaCroix realized that Build-All’s actions were inconsistent with his vision of the company, while Build-All was not sufficiently pleased with the company’s return on equity (not quite the 18 percent required by Build-All). This company does not exist as described. It is a composite of a few situations that the author knows about, both in terms of the company’s growth, experience following acquisition, and leadership of the founder. Suggested Answers to Case Questions 1. Identify the symptoms indicating that problems exist at LaCroix Industries, Ltd. Answer: The main symptoms of this case were that employee morale dropped significantly, product quality was lower, and some valued employees quit. 2. Use one or more leadership theories to analyze the underlying causes of the current problems at LaCroix Industries. What other organizational behaviour theories might also help to explain some of the problems? Answer: 2A. Ineffective Managerial Leadership From a path-goal leadership perspective, LaCroix was clearly more effective than Vlodoski. The employees seem to have high ability and experience due to their long tenure (low turnover) with the organization. The task is structured and employees receive training to perform their tasks well. They also seem to have an internal locus of control to the extent that they actively help the organization and take initiatives on their own. Under these conditions, participative and achievement oriented leadership styles are most appropriate and directive leadership is least effective. LaCroix applies participative leadership because he involves employees in decisions affecting them (e.g. selecting raw materials and deciding whether to sell the business). Vlodoski applies a highly directive leadership style by sending task requirements to supervisors and staff members and by requiring more precise accounting of employee actions (especially the use of raw materials). He announced new procedures for purchasing production supplies which eliminated the participation of production leaders and limited the autonomy of the company’s purchasing experts. Path-goal theory advises that directive leadership is ineffective when employees have high ability and experience in the job. In fact, this style might reduce job satisfaction and motivation under these conditions. This is apparent here as employees are dissatisfied with Vlodoski’s actions. 2B. Transformational Leadership and Org. Culture LaCroix’s effective transformational leadership style built a strong organizational culture around the dominant value of maintaining the highest product quality. The company also has a somewhat egalitarian and employee involvement value system. Over the years, LaCroix has created a vision for his company that employees should try to produce the highest quality windows. LaCroix has communicated this vision effectively around the social values of life and family. Specifically, he has created a meaningful metaphor called “a window on life” and has pictured families looking through LaCroix Industries windows. LaCroix effectively models his vision. He “walks the talk” through his actions on the production floor and in his dealings with clients. He gets out of his office to demonstrate his commitment to the quality vision. It is also apparent that he “positions” himself by being consistent with the quality theme. That is, LaCroix does not seem to deviate from this overarching goal. LaCroix is also a transformational leader because he has been able to effectively build commitment toward the “window on life” vision. He demonstrates his enthusiasm for quality windows and communicates the company’s successes to his employees. The “window on life” metaphor and LaCroix’s effective modelling of the vision also builds commitment. The strength of LaCroix Industries’ culture clashed with the goals and priorities of Build-All Products. This case therefore demonstrates how an acquisition can undermine organizational culture. 2C. Employee Involvement The employee involvement model (see Chapter 7) may be applied here to evaluate the effectiveness of Vlodoski’s decision process, particularly his decisions regarding inventory controls. We do not know whether Vlodoski has much knowledge of this industry, but he is new to LaCroix Industries and has not attempted to understand the existing process. Although Vlodoski used Build-All procedures, the decision to apply these procedures versus continue with the company’s existing practices is actually unstructured. It is evident that employees were not committed to Vlodoski’s decisions. It is probable that subordinates’ goals are congruent with the goals of LaCroix Industries but not necessarily with Build-All. They value product quality over inventory cost control, but were also motivated by profit sharing. Due to the strong organizational culture and long tenure of most employees, it is reasonable to infer that they would have little conflict over this issue. Finally, we know that employees have high ability and many years of experience. Based on this analysis, Vlodoski should have at least consulted with employees about the possible shift from product quality to cost efficiency. If the issue pertains to goal congruence with the organizational effectiveness of LaCroix Industries rather than Build-All, then the decision might even be given to employees to decide. 2D. Managing Organizational Change (Relates to Chapter 15) Vlodoski’s actions of shifting organizational priorities (and organizational culture) from product quality to inventory cost efficiency was ineffectively handled. Aside from the unknown wisdom of this change, he increased the driving forces by introducing new procedures, new directives, and management controls (goals, reports) without sufficiently destabilizing the restraining forces. The restraining forces include direct costs (employees may have feared losing their profit share if product rejects increased), breaking routines (employee long-time actions of choosing raw materials), and team inertia (breaking norms and expectations regarding product quality). Resistance mainly took the form of employee turnover and compliance without commitment to the change. 3. What should Gilles LaCroix do in this situation? Answer: Build-All is not satisfied with its investment and LaCroix wants the company to have its original cultural values. Moreover, the company seems to operate better with LaCroix’s values and with him as its corporate leader. Consequently, LaCroix should buy back the company, perhaps with employee ownership, if a reasonable price can be arranged with Build-All. LaCroix should spend more time at headquarters to rebuild the organization’s culture. He also needs to hire and train leaders who will reinforce these cultural values. LaCroix also needs to prepare for his succession. This is a very difficult process, because founders do not give up ownership easily, and because LaCroix has been the source of the company’s value system. LaCroix needs to arrange a distribution system, perhaps signing an agreement with a distribution company, so that products can be sold to a larger market area. The company also needs to introduce some financial controls, but do so in a way that will not undermine the cultural values of quality and employee involvement that have made LaCroix Industries successful in the past. TEAM EXERCISE: LEADERSHIP DIAGNOSTIC ANALYSIS Purpose This exercise is designed to help students learn about the different path-goal leadership styles and when to apply each style. Instructions The exercise begins with students individually writing down two incidents in which someone had been an effective manager or leader over them. The leader and situation might be from work, a sports team, a student work group, or any other setting where leadership might emerge. For example, students might describe how their supervisor in a summer job pushed them to reach higher performance goals than they would have done otherwise. Each incident should state the actual behaviours that the leader used, not just general statements (e.g., “My boss sat down with me and we agreed on specific targets and deadlines, then said several times over the next few weeks that I was capable of reaching those goals.”) Each incident only requires two or three sentences. After everyone has written their two incidents, the instructor will form small groups (typically between 4 or 5 students). Each team will answer the following questions for each incident presented in that team: 1. Which path-goal theory leadership style(s) – directive, supportive, participative, or achievement-oriented – did the leader apply in this incident? Answer: Incident 1:"My coach always provided clear instructions and set specific performance goals. They frequently gave feedback and encouraged the team to push beyond our limits." • Path-Goal Leadership Style(s):Directive and Achievement-Oriented • Contingency Factors:The team required clear guidance and high expectations to perform at their best. The structured approach helped in situations with complex tasks, and the encouragement was crucial for motivation. 2. Ask the person who wrote the incident about the conditions that made this leadership style (or these styles, if more than one was used) appropriate in this situation? The team should list these contingency factors clearly and, where possible, connect them to the contingencies described in path-goal theory. (Note: the team might identify path-goal leadership contingencies that are not described in the book. These, too, should be noted and discussed.) Answer: Incident 2:"My summer job supervisor would often ask for our input on how to improve processes and genuinely listened to our suggestions. They also ensured we felt supported by regularly checking in on our well-being." • Path-Goal Leadership Style(s):Participative and Supportive • Contingency Factors:The work environment was dynamic, requiring employee input for better decision-making. The supportive style was appropriate for building a positive and inclusive work atmosphere, especially in a job with potentially high stress or uncertainty. Each team should identify how these leadership styles matched the needs of the individuals and the situation, considering factors like task structure, team member characteristics, and the work environment. After the teams have diagnosed the incidents, each team will describe to the entire class its most interesting incident as well as its diagnosis of that incident. Other teams will critique the diagnosis. Any leadership contingencies not mentioned in the textbook should also be presented and discussed. Comments for Instructors This experiential exercise may sound rather mundane, but some teams can develop interesting examples regarding the value of different leadership styles. The exercise is an excellent diagnostic tool, because students must fit their realitybased examples with the path-goal leadership module. There is also a possibility that an incident identifies a contingency for a leadership style that has not yet been discussed in the path-goal literature. Moreover, some teams may have difficulty fitting a particular leader behaviourbehaviour into one of the four path-goal leadership styles. This is because the four styles are not exhaustive. The instructor can make the exercise more competitive by having other teams listen to an incident, then attempt to evaluate it. After some discussion, the team from which the example originated can present its analysis of the incident. SELF-ASSESSMENT: DO LEADERS MAKE A DIFFERENCE? Purpose This assessment is designed to help students assess their beliefs about the influence of leaders. Overview and Instructions Students are asked to read each statement in this self-assessment and check the box that best indicates their personal belief about that statement. After completing this assessment, the class can discuss the relevance and level of implicit leadership theory. Feedback for the Romance of Leadership Self-Assessment Romance of leadership is a phenomenon in which followers (and possibly other stakeholders) want to believe that leaders make a difference in the organization’s success. People with a high romance of leadership score attribute the causes of organizational events much more to its leaders and much less to the economy, competition, and other factors beyond the leader’s short-term control. Romance of Leadership Scale Norms the romance of leadership scale ranges from 10 to 50, with higher scores indicating that the person has a higher belief that leaders make a difference in the organization’s success. The following norms are derived from a large sample of European employees with an average age in the mid 30s and work experience averaging about 15 years. However, these norms should be viewed with caution because the romance of leadership scale is a recent development and norms for any instrument can vary from one group to the next. 13. Designing Organizational Structures SOLUTIONS TO CRITICAL THINKING QUESTIONS 1. Valve Corporation’s organizational structure was described at the beginning of this chapter. What coordinating mechanism is likely most common in this organization? Describe the extent and form in which the other two types of coordination might be apparent at Valve. Answer: The question offers a great opportunity for discussion, not so much about which coordinating mechanisms exist at Valve (because they all operate there to some extent), but the relative emphasis or importance of each mechanism. Informal communication would clearly be the dominant coordinating mechanism at Valve because of it’s teambased structure. The fact that employees move their desks to the team’s area is ample indication that communication is central to coordination here. Standardization through skills is another important coordinating mechanism. The company hires employees with technical skills in a variety of engineering software and related fields. To some extent, they probably also look for people who have experience in flat structures because skills are needed to adapt to the ambiguity of these structures (see discussion of skills and experience in organic structures). There is less information about standardization through work processes. They probably exist to some extent, such as booking time off for vacation or procedures for buying new equipment. Even the company’s orientation booklet serves as a rules/procedures guide to some extent. But Valve plays down this form of coordination. There is no information about standardization through outputs – employees don’t seem to have specific production targets, for example. The opening vignette implies that Valve doesn’t have any coordination through hierarchy. Actually, it does if you consider that the team leader takes on this role. Even though elected by peers, the team leader is given legitimate power to coordinate some of the work activities, as well as serve as liaison to others in the firm. And even if suppressed in public, Valve does have a CEO and executive team who likely wield some power in the organization. 2. Think about the business school or other organizational unit whose classes you are currently attending. What is the dominant coordinating mechanism used to guide or control the instructor? Why is this coordinating mechanism used the most here? Answer: This question is sure to elicit a wide range of answers from students. For many students colleges and universities are viewed as rules-based organizations with formal hierarchies. While this may be the case for students, this is less so for instructors. Undoubtedly, instructors are controlled to some degree. For example, they are compelled to provide and abide by their course outlines, which in some cases must be approved by department heads. They may also be limited in the weightings of their exams, and their institutions’ timetables and deadlines. In this sense, it could be argued the dominant coordinating mechanism is standardization. There are standardized processes, in terms of timetables, deadlines, course outlines, rules for dealing with plagiarism etc. In some cases, there are standardized outputs, in the form of applying grading curves, and failure rates. To some degree there is reliance on standardized skills when delivering lectures and presenting information to students. 3. Administrative theorists concluded many decades ago that the most effective organizations have a narrow span of control. Yet today’s top-performing manufacturing firms have a wide span of control. Why is this possible? Under what circumstances, if any, should manufacturing firms have a narrow span of control? Answer: There are at least two reasons why many organizations are moving toward flatter organizational structures with a wider span of control. First, flatter structures require less overhead – there are fewer middle managers and more people directly involved in the production of goods and/or services. Second, flatter structures are consistent with the trend toward greater autonomy and employee involvement. Managers necessarily have a wide span of control in flatter structures, and they are unable to engage in close supervision. Instead, employees (and work teams) are given more freedom to make decisions without management review. A narrow span or control would be most appropriate with a workforce that is low skilled and made up of workers with a high power distance. In such cases, the close supervision and control would be less likely to be viewed as a lack of trust among workers. 4. Leaders of large organizations struggle to identify the best level and types of centralization and decentralization. What should companies consider when determining the degree of decentralization? Answer: As organizations grow they tend to diversify. Moreover, as the environments within which they operate become more complex, it is necessary for organizations to decentralize. The complexity is such that the burden on senior executives who must process all the accompanying decisions becomes overwhelming. The best way to deal with this is by dispersing decision making authority (decentralize). The contingencies that organizations should considered when deciding the extent of decentralization are: External environment. Decentralized structures are better suited for complex rather than simple environments. On the other hand, it is best to temporarily centralize when operating in a hostile environment. Organizational size. When the organization grows larger, with more specialized jobs, more elaborate coordinating mechanisms, and greater formalization it is better to decentralize its structure. Technology. In cases where the technology used requires many exceptions to standard procedures (high variety), and it is difficult to standardize the transformation of inputs to outputs (low analyzability), it is recommended that organizations should rely on decentralized decision making. Organizational strategy. All of the above contingencies and their relationship to one another are mediated by the organization’s overall strategy. For example, Johnson & Johnson’s decentralized divisional structure was selected because it fits the company’s strategic approach to developing and delivering a diverse array of health-related products around the world. 5. Diversified Technologies Ltd. (DTL), makes four types of products, each type to be sold to different types of clients. For example, one product is sold exclusively to automobile repair shops, whereas another is used mainly in hospitals. Expectations within each client group are surprisingly similar throughout the world. The company has separate marketing, product design, and manufacturing facilities in Asia, North America, Europe, and South America because, until recently, each jurisdiction had unique regulations governing the production and sales of these products. However, several governments have begun the process of deregulating the products that DTL designs and manufactures, and trade agreements have opened several markets to foreignmade products. Which form of departmentalization might be best for DTL if deregulation and trade agreements occur? Answer: In this incident, the organization probably adopts primarily a product-based or client-based divisionalized structure with some functional departments (e.g. finance, legal). The company is sufficiently large and complex that a simple or functional structure is inappropriate. In particular, DTL manufactures several products to different clients globally. A matrix structure is unnecessary because production is not project based and there is not enough complexity across more than one dimension (e.g. functional skills with clients). The product or client form of divisional structure is recommended because either represents the greatest type of differentiation. Geographic divisionalization is not needed because “customer expectations and needs are surprisingly similar throughout the world.” The decision whether to adopt a client or product form of divisional structure depends on whether production or clients are more complex. From the information presented, either form can be applied because they are identical. Each type of product is sold to a specific client. Finally, if the production and sales processes are capable of further innovation, the company might have a teambased structure within its production and/or sales subunits. This means that employees would be divided into work teams around specific work processes, such as manufacturing or selling a particular type of product. 6. Mechanistic and organic structures are two organizational forms. How do the three types of coordination mechanisms operate through these forms? Answer: Three coordination mechanisms are 1) informal communication, 2) formal hierarchy and 3) standardization. Mechanistic structures have high degree of formalization and centralization, limited decision making at lower levels, tasks are rigidly defined, therefore, formal hierarchy and standardization are the coordination mechanisms used here. Organic structures operate with a wide span of control, decentralized decision making and little formalization, and hence make more use of informal communication. 7. From an employee perspective, what are the advantages and disadvantages of working in a matrix structure? Answer: Advantages. From an employee perspective, matrix structures provide opportunities, when properly managed, to enhance communication efficiencies, acquire flexibility to balance workload with other project team members and to interact and coordinate with others who have similar technical specialties. Matrix structures also require employees to have enhanced communication and interpersonal skills. As a result, employees working in matrix structures may enjoy enhanced training and development opportunities. Disadvantages. From an employee’s perspective, matrix organizations may result in increased stress, conflict and organizational politics due to having two bosses that may have divergent expectations. In addition, some employees may experience difficulty adapting to the relatively fluid nature of a matrix structure vs. working in a more structured bureaucracy. 8. Suppose you have been hired as a consultant to diagnose the environmental characteristics of your college or university. How would you describe the school’s external environment? Is the school’s existing structure appropriate for this environment? Answer: This discussion question should raise some interesting ideas about the college’s environment. Students should carefully consider the four environmental elements, then assess whether the environment calls for more of a mechanistic or organic structure. Many people discover that different parts of an organization face different environments. For example, an online learning centre would face a dynamic and hostile environment because of the rapid pace of technology and number of competitors. Here are some details about the four environments. Dynamic environments have a high rate of change, leading to novel situations, so organic structures tend to be best because employees are more flexible. For example, network and cluster structures seem to be most effective in dynamic environments. In contrast, a more mechanistic structure (high use of standardization) is best in stable environments in order to achieve efficiency. Complex environments have more elements to consider, such as more stakeholders. Decentralized structures are therefore better suited to complex environments because they allow people closest to the environmental information to make the main decisions. Diverse environments have greater variety of products or services, clients, and/or jurisdictions. A divisionalized form aligned with the diversity is the best structure for diverse environments. For example, companies with many distinct products in a single area would be best with a product-based divisional form. Hostile environments have a scarcity of inputs and competition in the distribution of outputs. They are usually dynamic environments because access to resources and demand for outputs are less predictable. Organic structures are most appropriate in hostile environments in order to maintain flexibility. In extremely hostile environments, the organization may need to temporarily centralize. This is because crisis situations call for quick decisions and direct supervision is the fastest form of coordination. CASE STUDY: MERRITT’S BAKERY Case Synopsis This case study describes the growth and evolution of Merritt’s Bakery, and small business in Tulsa, Oklahoma. The company began with its two founders and one small store, then expanded with employees performing front-of-store activities. The case identifies a turning point where the owners had to delegate production work to employees due to growing workload. The company expanded to a few stores, which called for further changes in the organizational structure. Finally, the owner’s son took over a key management role, which included the introduction of new activities in the organizational structure. Suggested Answers to Discussion Questions 1. How have the division and coordination of labour evolved at Merritt’s Bakery from its beginnings to today? Answer: Merritt’s Bakery is an excellent “true story” case study of the evolution of an organization’s structure over the years, particularly its division of labour and changing coordinating mechanisms. Division of labour The case identifies a few turning points in the division of labour. The company begins with just the two owners. Even so, they divided labour based on their expertise – Larry made the cakes and Bobbie decorated them (because she had previous experience in this delicate work). Next, after their first expansion, the owners hired two employees to perform front of store sales and service. As the business expanded further, more employee were hired. No information about further division of labour at this stage, possibly all employees performed both cashier and service work as integrated tasks. When Merritt’s Bakery moved to its large 6,000-foot location, the lack of division of labour took its toll. The owners had difficulty keeping up with production, so they stepped back from their production roles and created formalized positions in production for employees. The emerging division of labour is described when Merritt’s opened a second store. “Each store was assigned a manager, a person in charge of baking production, another in charge of cake decorating and pastries, and someone responsible for sales.” Administrative roles also developed, including Larry’s increasing role as a trainer and more recently a marketing director. More division of labour occurred when production was moved to a separate location rather than within each store. There would be a supervisor of production and likely people to perform inventory and delivery activities. Coordinating Mechanisms Informal communication would have been the dominant coordinating mechanism when Merritt’s Bakery began and possibly throughout its early years. Informal communication would also be important as other coordinating mechanisms developed because Merritt’s store operated with a small number of staff, proximate work locations, and frequent coordination is required. Standardization of skills is identified as an increasing coordinating mechanisms as Larry placed more emphasis on training staff in each store to perform the baking consistently and to a high standard. As stated by Larry Merritt, “Because it is so difficult to find qualified bakers nowadays, I want to spend more time teaching and developing our products.” In fact, training became a strong coordination mechanism throughout the company. It has an orientation program, modules for front-of-store staff, coaching with production staff, and so forth. The Merritt’s Bakery case also refers to the increasing emphasis on coordination through standardization of processes. Specifically, Christian Merritt introduced flowcharts that guide employees through most aspects of their job duties without the need for direct supervision. The case does not discuss standardization through output, although it likely existed in the form of production goals (e.g. time to serve customers, time to complete a cake decoration). Finally, there is also some degree of coordination through hierarchy. Each store employed a store manager. The production centre had supervisors who worked closely with staff. Larry (and likely Bobbie) also supervised employees throughout their leadership in this organization. 2. Describe how span of control, centralization, and formalization have changed at Merritt’s Bakery over the years. Is the company’s organizational structure today more mechanistic or organic? Are these three organizational structure elements well-suited to the company in their current form? Why or why not? Span of Control Answer: The main information here is that the owners had increased span of control of front-of-store staff over the years. No mention of employing any supervisors even when there were 20 employees (not all on the job at the same time, though). As the company opened more stores, each operation had its own manager, which would have a set span of control. Again, we don’t have the numbers. However, the case mentions that one or two managers at the production site coach up to five new hires, indicating that their span of control would be much higher than this (i.e. each manager also supervises experienced staff). We don’t know the exact span of control, but generally it seems that this company’s span suits its work activity. The exception might be if there are too many or too few supervisors in the production unit. Centralization This case is an excellent illustration of increasing decentralization as companies grow. In fact, a turning point in the company occurred when the owners realized that they could no longer perform the production work alone, so they “delegated” (decentralized) that work and responsibility to others. When a second and third store opened, Merritt’s Bakery further decentralized operations. The owners no longer directly supervised all employees. There is also some indication of centralization when the production centre opened. This might be considered centralization because these functions were now performed more closely to the owners rather than through the store managers. The production centre had supervisors, but it seems that Larry, Bobbie, or both were also directly involved in leading the production group. Overall, the degree of decentralization seems to fit the nature of this business. Formalization Again, Merritt’s Bakery is a wonderful case study on the evolution of formalization as companies grow. There were likely some procedures and rules established by the time the company opened its first large (6,000-foot) store, but we don’t have those details. However, we do know that Merritt’s Bakery introduced precise flow charts when Christian Merritt joined the business. These represent distinct forms of formalization that fit nicely into the mechanistic structure required for this type of work. 3. What form of departmentalization currently exists at Merritt’s Bakery? Would you recommend this form of departmentalization to this company? Why or why not? Answer: Merritt’s Bakery today has a functional organizational structure to the extent that employees are organized either into specific production positions or store activity positions. The store structure might be viewed by some students as a geographic structure, which it is to some extent. However, some front-of-store staff might rotate around different stores and all of them might report to the head of operations rather than just to the store manager. Also, the “geographic” dimension is not differentiating, unlike divisional geographic structures which are distinct from each other (e.g. Northeast US vs Southwest US division) and might have different services or products to suit each region’s variations. It is somewhat difficult to evaluate the store structure due to lack of information. Students can focus on the wisdom of separating the production activities form the stores. Generally, this makes sense for efficiency and skill development purposes, particularly since (a) high quality is a competitive advantage for the company and (b) the product can be delivered quickly to the stores (i.e. located near each other). TEAM EXERCISE: CLUB ED EXERCISE This exercise was adapted by Steven L McShane from an exercise developed and written by Cheryl Harvey and Kim Morouney at Wilfred Laurier University. These notes were written by Steve McShane. Purpose This exercise is designed to help students understand the issues to consider when designing organizations at various stages of growth. Instructions Students are placed in teams (typically four or five people). After reading Scenario #1 presented below, each team will design an organizational chart (departmentalization) that is most appropriate for this situation. Students should be able to describe the type of structure drawn and explain why it is appropriate. The structure should be drawn on an overhead transparency or flip chart for others to see during later class discussion. The instructor will set a fixed time (e.g.., 15 minutes) to complete this task. At the end of the time allowed, the instructor will present Scenario #2 and each team will be asked to draw another organizational chart to suit that situation. Again, students should be able to describe the type of structure drawn and explain why it is appropriate. This process is repeated for Scenario #3 and, if time is available, Scenario #4. Only Scenario #1 (shown below) is presented in the textbook. The instructor will read and/or distribute the other scenarios (also shown below) at the appropriate times. Scenario 1 (in textbook) Determined never to shovel snow again, you are establishing a new resort business on a small Caribbean island. The resort is under construction and is scheduled to open one year from now. You decide it is time to draw up an organizational chart for this new venture, called Club Ed. (Design an organizational chart that best fits this situation and explain why it is appropriate.) Scenario #2 It is now seven years later. Your resort has been wildly successful. Through profits and investment from private equity partners, Club Ed recently expanded to five resorts and has plans to add four more resorts within the next year. These 9 resorts are equally spread throughout the Caribbean, Central America, and South Pacific. Draw an organizational chart that would best serve Club Ed in this situation, and be prepared to justify it to the class. Scenario #3 Ten years after opening the first resort, Club Ed now has more than 30 successful resorts distributed about equally in the Caribbean, Central America, and South Pacific. Furthermore, the company is also about to launch a charter airline from Toronto to four Caribbean islands where some of its resorts are located (although not just for commuting guests to Club Ed resorts). Draw an organizational chart that would best serve Club Ed in this situation, and be prepared to justify it to the class. Scenario #4 Twenty years after opening its first resort, Club Ed has 75 successful resorts throughout the Caribbean, Central America, South Pacific, and Asia. Its charter airline now has regular flights from four Canadian cities to several Caribbean and Central American destinations. This year, Club Ed acquired a rapidly growing Canadian adventure travel agency, which specializes in small-group socially responsible guided excursions to remote locations around the world. Club Ed plans to market these adventure travel excursions to travellers from other parts of the world. Draw an organizational chart that would best serve Club Ed in this situation, and be prepared to justify it to the class. Comments to Instructors At last! A team exercise on organizational structure that students thoroughly enjoy. I have used this exercise (including this updated version) in more than two dozen classes since it was published in 1998. Students are highly engaged and challenged by the activity. This is also an excellent learning experience because it highlights the dynamics of organizational structures and their relationship with the organization’s environment and strategy. Suggested Solutions Scenario #1: Students usually develop a functional structure in the first scenario. A couple of teams might suggest a simple structure, assuming that the resort is very small. You might also get a few developing a team-based structure where everyone is multi-skilled. (NOTE: When describing the first scenario, I usually say the resort will employee about 75 full-time equivalent employees when fully operation. This size clarification typically results in a functional rather than simple or team-based structure.) The main discussion/justification is about why specific departments were formed. Scenario #2: Most teams draw a geographical divisional structure. However, instructors should ask whether a geographical divisional structure adds an unnecessary layer of management, whereas all nine resort managers could report directly to the CEO. The instructor can refer to Nucor, the steelmaker whose structure until recently had four dozen mills reporting to the CEO. Club Med, on which this exercise is based, had at one time up to 50 resort managers report directly to the CEO or chief operating officer. Students can debate at what stage (size, complexity) an organization should form a divisional structure. Scenario #3: By this stage (30 resorts), students clearly prefer a divisionalized structure around geography. This generally makes sense. However, students should explain why all 30 resorts couldn’t report directly to the CEO. The discussion is mostly about span of control and presence of coordinating mechanisms other than direct supervision to facilitate such a wide span. When recommending a geographic divisional structure teams should explain why Club Ed should be organized by geography rather than customer or function. For instance, why not have a vice-president responsible for all food services in all resorts? The charter airline creates complexity that students need to incorporate into the structure. The airline might stand alone as a division because it requires minimal integration with the resorts. It carries resort guests, but also non-guests. Some teams recommend a matrix structure (for the resorts, not airline) organized by geography and function (food services, housekeeping, etc). The instructor might ask for discussion about the risks of a matrix structure and whether function and geography are equally important. Scenario #4: Many teams now reorganize Club Ed into a product-based divisional structure with three products: resorts, airline, and adventure travel. They tend to have a geographic divisional structure within the resorts division and retain a functional structure for the other two businesses. The instructor might ask whether the structure should support organizational integration, such as how to leverage the strengths of the resorts with the adventure travel and airline. Alternatively, the class might consider whether the three “divisions” should be mostly independent businesses with limited interdependence (i.e. Club ed becomes a holding company). The answers to these issues depends on whether each business is interdependent at all with each other and, if so, how Club ed can build synergies across these divisions. Further Suggestions I give each team several pages of flip chart paper (with sticky backing) so teams can post all of their org charts in the classroom during debriefing. Alternatively, a visualizer (camera projects what’s written on paper) or quick access to computer projector can be used, but they only allow one chart for one team to be viewed at a time. I give students 15 minutes to complete the chart for the first scenario, then about 12 minutes for each of the other scenarios (one scenario — usually the third — is often excluded due to time limits). The activity works best when students are located in nearby breakout rooms. I visit each team to describe the next scenario. I typically print copies of each scenario so students can read the scenario as I describe it. Only one scenario is distributed to them at a time. I describe and distribute the next scenario 12 minutes later, and so one. SELF-ASSESSMENT: WHAT ORGANIZATIONAL STRUCTURE DO YOU PREFER? Purpose This exercise is designed to help students understand how an organization’s structure influences the personal needs and values of people working in that structure. Overview and Instructions Personal values influence how comfortable we are working in different organizational structures. Some people prefer an organization with clearly defined rules or no rules at all. Others prefer a firm where almost any employee can make important decisions, or where important decisions are screened by senior executives. This self-assessment is designed to help students estimate the type of organizational structure in which they would prefer to work based on their personal needs and values. Students are asked to read each statement in this self-assessment and indicate how well the statement reflects the type of organization in which they would prefer to work. Students need to complete each item honestly to get the best estimate of their preferred organizational structure. This instrument has 15 statements. Feedback for the Preferred Organizational Structure Instrument This self-assessment estimates the extent to which students prefer a mechanistic or organic structure, as well as the three dimensions of a mechanistic structure: tall hierarchy, formalization, and centralization. The tables reflect norms based on a sample of over 200 MBA students. Cultural, occupational, and age differences might make the norms less relevant to some students. Tall hierarchy: People with high scores on this dimension prefer to work in organizations with several levels of hierarchy and a narrow span of control (few employees per supervisor). Scores on this subscale range from 0 to 15. The average score among a sample of MBA students was 7.8. Score Interpretation 11 to 15 6 to 10 0 to 5 Strong preference for tall hierarchy Average preference for tall hierarchy Low preference for tall hierarchy Formalization: People with high scores on this dimension prefer to work in organizations where jobs are clearly defined with limited discretion. Scores on this subscale range from 0 to 15. The average score among a sample of MBA students was 9.4. Score Interpretation 12 to 15 9 to 11 0 to 8 Strong preference for formalization Average preference for formalization Low preference for formalization Centralization: People with high scores on this dimension prefer to work in organizations where decision making occurs mainly among top management rather than spread out to lower level staff. Scores on this subscale range from 0 to 15. The average score among a sample of MBA students was 7.7. Score Interpretation 10 to 15 7 to 9 0 to 6 Strong preference for centralization Average preference for centralization Low preference for centralization Mechanistic Structure Preference (Total Score): People with high scores on this overall score prefer to work in mechanistic organizations, whereas those with low scores prefer to work in organic organizational structures. Mechanistic structures are characterized by a narrow span of control and high degree of formalization and centralization. Organic structures have a wide span of control, little formalization, and decentralized decision making. Scores on this subscale range from 0 to 45. The average score among a sample of MBA students was 24.9. Score Interpretation 30 to 45 22 to 29 0 to 21 Strong preference for mechanistic structure Average preference for mechanistic structure Low preference for mechanistic structure Solution Manual for Organisational Behaviour: Emerging Knowledge, Global Insights Steven McShane, Mara Olekalns, Alex Newman, Angela Martin 9781760421649, 9780071016261
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