CH-13-15 Designing Organizational Structures – Organizational Behavior: Emerging Knowledge, Global Reality : Book Guide

This Document Contains Chapters 13 to 15 Chapter 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 team based 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, Inc. (DTI), 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 DTI designs and manufactures, and trade agreements have opened several markets to foreign made products. Which form of departmentalization might be best for DTI 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, DTI 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 team based 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. To diagnose the external environment of the college or university, I would assess factors such as competition from other institutions, regulatory changes affecting higher education, technological advancements impacting teaching methods, demographic trends affecting student enrollment, and economic conditions influencing funding and donations. I would also consider societal attitudes towards education and any cultural shifts impacting student expectations. Whether the existing structure of the school is appropriate depends on how well it aligns with the identified environmental characteristics. For example, if the school operates in a highly competitive market, its structure should support agility and innovation. Similarly, if regulatory changes are frequent, the structure should facilitate adaptability and compliance. Regular evaluations and adjustments to the structure may be necessary to ensure alignment with the evolving external environment. 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 labor 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 labor and changing coordinating mechanisms. Division of Labor The case identifies a few turning points in the division of labor. The company begins with just the two owners. Even so, they divided labor 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 labor 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 labor 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 labor 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 labor 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 center 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 center 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 center 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 written by Cheryl Harvey and Kim Morouney at Wilfred Laurier University. These notes are partly based on their exercise comments in the original article, and partly on Steve McShane’s class experiences. 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 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. Scenario #2 It is now seven years later. Your resort has been wildly successful. Through profits and investment from a silent partner, Club Ed now owns resorts – two in the Caribbean, two in Mexico, and one in the South Pacific. Draw an up-to-date organizational chart and answer the questions above in Step 1. Scenario #3 Ten years later, you and your partners own 80 Club Ed resorts in North, Central, and South America, the Caribbean, and South Pacific. The company also operates a cruise ship. Draw an up-to-date organizational chart for Club Ed and answer the questions above in Step 1. Scenario #4 Ten more years have passed. The Club is now has 112 resorts and 3 cruise ships. A recent customer profile shows that almost 50% of its customers are repeat business and are older than 40 years old. The three "S's" (sun, sand, and sex) marketing theme is out of date in a world where AIDS and fears of skin cancer are all too real. This has contributed to fewer guests over each of the past three years. Moreover, North America and Europe are entering a recession, which will further reduce demand for Club Ed’s services. How does Club Ed adapt to these new realities? Diagram the company’s organizational chart and answer the questions above in Step 1. In particular, be prepared to discuss Club Ed’s new structure in terms of its new business strategy. Discussion Questions 1. How does the Club Ed’s organizational structure change as it grows and diversifies? What factors drive these structural changes? Answer: As Club Ed grows and diversifies, its organizational structure becomes more complex and layered. Initially, a flat structure might suffice, with a small team handling multiple roles. As the company expands, it likely adopts a hierarchical structure to better manage increased operations and specialized functions. Factors driving these structural changes include the need for improved efficiency, better coordination across diverse activities, and the necessity of specialized departments (e.g., marketing, finance, customer service). The complexity of managing a larger workforce and the introduction of new products or services also necessitate clearer lines of authority and responsibility. Additionally, geographic expansion might lead to the establishment of regional offices, further complicating the organizational structure. 2. How can Club Ed structure itself as an adaptive organization? Does it always have to react to environmental changes or are there some ways it can be proactive? Answer: Club Ed can structure itself as an adaptive organization by fostering a flexible and dynamic framework. This can involve implementing cross-functional teams, promoting a culture of continuous learning, and leveraging technology for real-time data analysis. To be proactive, Club Ed can engage in strategic planning and scenario analysis, anticipating market trends and potential disruptions. Establishing innovation hubs or R&D departments can help the company stay ahead of industry developments. Additionally, maintaining strong relationships with stakeholders and actively seeking customer feedback can provide early insights into changing preferences. By balancing reactive measures with proactive strategies, Club Ed can enhance its adaptability and resilience. Comments to Instructors At last! A team exercise on organizational structure that students thoroughly enjoy. I have used this exercise in several classes since it was published in 1998. In every class, students were completely involved and challenged by the activity. These students ranged from mid-20s graduate students to 30s and 40s managers to military officers. They all enjoy it, as far as I could tell from the class activity. From my many years with undergraduate students, I would suggest that this exercise is just as much fun for them. Usually, students 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. In Scenario #2, most groups form a geographical divisional structure. It is useful to question them on this, asking whether this structure adds an unnecessary layer, whereas all five resort managers could report directly to the CEO. Students then debate at what stage (size, complexity) an organization should form a divisional structure. In Scenario #3, teams develop a divisionalized structure around geography. The cruise ship is an odd configuration that some teams have trouble placing in the structure. Should it be its own division, or under the regional head where it usually sails? Most teams will consider the five regions listed as the natural grouping. However, you might ask whether they should assume that one regional head could manage a region with many resorts. Similarly, you might ask whether all 80 resorts could report directly to one person. Students should explain why they organized by geography rather than customer or function. For instance, why not have a vice-president responsible for all food services in all resorts? Scenario #4 raises some interesting variations in the structures presented. Many see the need for differentiation by client group rather than geography. Further Suggestions When doing this exercise. I recommend that you give each team enough overhead transparencies so that they can present their structure quickly on the overhead projector. You can also change the conditions, perhaps bringing in more cruise ships earlier or expanding product lines into fitness centers. The possibilities are endless! 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 Chapter 14: Organizational Culture SOLUTIONS TO CRITICAL THINKING QUESTIONS 1. Superb Consultants has submitted a proposal to analyze your organization’s culture. The proposal states that Superb has developed a revolutionary new survey to tap the company’s true culture. The survey takes just 10 minutes to complete, and the consultants say results can be based on a small sample of employees. Discuss the merits and limitations of this proposal. Answer: Understanding an organization’s culture requires painstaking assessment of many artifacts because they are subtle and often ambiguous. Consequently, we should be skeptical about claims that a consultant can assess an organization’s culture quickly through a survey. Moreover, a survey is more likely to determine an organization’s espoused values -- the values people say they believe in -- rather than its enacted values -- the values that actually guide individual decisions and behavior in the workplace. To effectively analyze an organization’s culture, consultants need to investigate subtle artifacts, ranging from daily rituals to the physical workspace. 2. Some people suggest that the most effective organizations have the strongest cultures. What do we mean by the “strength” of organizational culture, and what possible problems are there with a strong organizational culture? Answer: Cultural strength refers to how many employees in the organization accept the dominant values; how strongly, deeply, and intensely they believe in these values; and how long these values have dominated in the organization. Strong cultures are long-lasting, dispersed across subunits, deeply internalized by employees, and institutionalized through well-established artifacts. Although potentially beneficial, strong cultures also create three potential problems. First, strong culture increases organizational effectiveness only when the cultural content is appropriate for the organization’s environment. If the cultural values are incompatible with the environment, then the organization is misaligned and will be less effective. A second problem is that a company’s culture might be so strong that employees blindly focus on the mental model shaped by that culture. They have difficulty seeing different perspectives of problems and, consequently, might not make appropriate decisions. A third problem with strong cultures is that they discourage people from holding or expressing dissenting values. In the long term, this prevents organizations from nurturing new cultural values that might emerge as dominant values as the environment changes. 3. The CEO of a manufacturing firm wants everyone to support the organization’s dominant culture of lean efficiency and hard work. The CEO has introduced a new reward system to reinforce this culture and personally interviews all professional and managerial applicants to ensure that they bring similar values to the organization. Some employees who criticized these values had their careers sidelined until they left. Two midlevel managers were fired for supporting contrary values, such as work–life balance. Based on your knowledge of organizational subcultures, what potential problems is the CEO creating? Answer: This incident describes how an organization subdues organizational subcultures, particularly countercultures. The textbook explains that organizational subcultures serve two important functions. First, they maintain the organization's standards of performance and ethical behavior. Employees who hold countercultural values are an important source of surveillance and critique over the dominant order. This monitoring role is lost if subcultures are suppressed. Second, subcultures are the spawning grounds for emerging values that keep the firm aligned with the needs of customers, suppliers, society, and other stakeholders. Companies eventually need to replace their dominant values with ones that are more appropriate for the changing environment. If subcultures are suppressed, the organization may take longer to discover and adopt values aligned with the emerging environment. 4. Identify at least two artifacts you have observed in your department or school from each of the four broad categories: (a) organizational stories and legends, (b) rituals and ceremonies, (c) language, (d) physical structures and symbols. Answer: Understanding your department or faculty’s culture requires assessment of many artifacts that may be subtle and ambiguous. The following questions are intended to serve as a framework for generating a variety of responses from students. a. Organizational stories and legends -- These are descriptions of incidents in the past that send a message about the way things should, or should not, be done. -- What could cause someone to be fired? -- Who if anyone can break the rules? -- How much help/support can students expect? b. Rituals and Ceremonies -- (These could be considered two types of artifacts, but are grouped together logically). Rituals are the programmed routines of daily life that dramatize the culture. This includes the way people are greeted and addressed, etc. Ceremonies are more formal and deliberate artifacts, such as graduation ceremonies or other special events. -- What daily routines frequently occur? -- What planned activities are carried out? -- What achievements are celebrated? c. Language -- Language represents a subtle artifact that communicates culture. This particularly applies to the special vocabularies that represent each person’s perspective of reality. -- How do instructors and department/faculty address students? Co-workers? -- Are there any phrases, or other language that reveal what is most important to your department/faculty? d. Physical structures and symbols -- The size, shape, location, and age of buildings often indicate the emphasis on certain values or beliefs. The same is true of the use of physical space inside those buildings. -- What are your observations about the type of classrooms, classroom technology and furnishings, office space, wall hangings, etc. that are observable in your department/faculty? -- What do these observations tell you about your department/faculty? 5. “Organizations are more likely to succeed when they have an adaptive culture. ” What can an organization do to foster an adaptive culture? Answer: An adaptive culture exists when employees focus on the changing needs of customers and other stakeholders and support initiatives to keep pace with these changes. Organizations are more likely to succeed when they have an adaptive culture. Based on the textbook’s description of an adaptive culture, here are ways to foster such a culture: Encourage an external focus. Organizations foster an adaptive culture by adopting an external focus – creating a common mental model that the organization’s success depends on monitoring and supporting external stakeholders and by continuously adapting to their changing needs and expectations. Create a sense of ownership. Encourage employees to assume responsibility for achieving organizational goals and performance expectations. They take responsibility for the organization’s performance and alignment with the external environment. This might occur by giving employees more autonomy, responsibility, and accountability. Pay attention to organizational processes. Help employees to be continuously mindful of the need for continuous improvement of internal processes (e. g. productivity, customer service) to serve external stakeholders. Support a learning orientation culture. Support employees’ efforts to engage in action-oriented discovery. Welcome learning opportunities and view reasonable mistakes as part of the learning process. 6. Suppose you are asked by senior officers of a city government to identify ways to reinforce a new culture of teamwork and collaboration. The senior executive group clearly supports these values, but it wants everyone in the organization to embrace them. Identify four types of activities that would strengthen these cultural values. Answer: The textbook identifies four ways to strengthen organizational culture: Actions of founders and leaders. Transformational leaders strengthen organizational culture by communicating and enacting their vision of the future. Cultural values are particularly reinforced when leaders behave in ways that are consistent with the vision. Aligning artifacts. Ceremonies, language, routine behaviors, stories, and physical workspace not only symbolize the organization’s culture; they also reinforce and maintain that culture. To support a culture of teamwork and collaboration, for example, the city might refer to employees as “team members”, engage in events that emphasize teamwork and cooperation, and rearrange the workplace in a way that encourages teamwork. Introducing culturally consistent rewards. Reward systems strengthen corporate culture when they are consistent with cultural values. A team-oriented city might introduce more team-based rewards, for example. Selecting and socializing employees. The city should consider hiring people whose values are consistent with teamwork and collaboration. Then, new staff should receive a formal socialization process to reinforce these values. 7. Is it possible to have a knowledge of what an organizational culture is before you become a part of the organization? How important is it for you to align yourself with your organizational culture? Answer: Organizational culture is artifacts and shared values and assumptions. Artifacts may be observable before you become a part of the organization but the shared organizational values and assumptions are the intangibles and difficult to decipher before you become a part of it. It is important to align with the organizational culture because it represents the way things work in the organization. Organizational culture acts as the control system, the social glue and sense making. Any violation of what is shared by members of an organization is likely to create alienation for a new member. 8. Socialization is most intense when people pass through organizational boundaries. One example is your entry into the college or university that you are now attending. What learning and adjustment occurred as you moved from outsider to newcomer to insider as a student here? Answer: This discussion question will generate a number of interesting stories, many of them negative, about initial experiences at school. The concept of “reality shock” will likely emerge from the discussion, such as how people were overwhelmed with the number of buildings, rules, task requirements, and other forms of learning and adjustment. Some students will likely note how attending school required adjustment to their non-school life, such as the amount and form of social and family activity. Finally, this discussion should bring out the sense that students experience being an “insider”, that is, an experienced student who knows his/her way around the system and can lead others as they adjust as newcomers. As I transitioned from outsider to newcomer to insider as a student, I learned to navigate the campus culture, academic expectations, and social norms, while building relationships and integrating into the community. This adjustment involved acquiring new skills, adapting to a different level of independence, and finding my place within the institutional structure. 9. In Chapter 2, we discussed “values across cultures,” including individualism, collectivism, power distance, uncertainty avoidance, and achievement orientation. How are these national cultures different from and similar to an organization’s culture? Answer: Scholars have often used the two terms synonymously, and the way they think about them tend to blur. Nevertheless, studies have shown similarities and differences across both levels of analysis. We can think about the extent to which companies that have an “individualistic” culture by easily looking at what they reward. If their performance evaluations are predicated on “individual” contributions, likely this is a culture that is more individualistic; similarly, if they are evaluated on their “collective” performance, then likely they will tend to have a less individualistic company culture. However, we also know that certain cultures have higher power distance, so companies in that culture will likely have a more hierarchical and formal culture. This is true across most of Latin America for example, where even MNCs observe the phenomenon and tend to hire accordingly. The company cultures often parallel those of the country cultures, based on Hofstede’s work. CASE STUDY: HILLTON’S TRANSFORMATION Case Synopsis This case describes organizational changes over twenty years in the municipality of Hillton (not its real name). As a community of 70,000 residents, Hillton’s rule of employment was that employees should learn the job skills, maintain a reasonably good work record, and wait their turn for promotion. The organization’s culture could be described as one of entitlement and comfort. The community grew rapidly as an outer suburb of a large Midwest metropolitan area, so there were few cost or employment controls and senior people came mainly from outside departments (e. g. road building). But as the city expanded and more professionals moved into the area, increased pressure was placed on “soft” services and customer service. In the mid-1990s, a new mayor and city council was elected. Over the next two years, the city manager and several senior managers were replaced with qualified candidates from large municipal corporations elsewhere. The new executives, known as the “professionals”, dramatically changed municipal practices and values (e. g. customer service, performance-based employment). They experienced resistance from workers in outside departments, who no longer had co-workers in senior positions. What Actually Happened: This case is adapted from actual events in a suburban municipality along the west coast of North America. The community has continued to grow (after the temporary slow down) and has developed a very professional approach to municipality management. It has become a center for trade and home to a large upwardly mobile population with diverse cultural backgrounds. Although some degree of entitlement value still exists among employees, it is mostly overshadowed by the need for good customer service. Note: Since writing this case, other municipal leaders have commented to the author about similar experiences, either about the dichotomy between inside and outside workers or about the entitlement culture that they faced when joining the organization. In other words, the inside-outside conflict as well as the customer-focused culture issue are not unique to Hillton. Suggested Answers to Case Questions 1. Contrast Hillton’s earlier corporate culture with the emerging set of cultural values. Answer: During the early years, Hillton’s corporate culture was described as one of entitlement and comfort. The rewards and promotion system reinforce seniority and city employees faced few controls from elected officials. There was little emphasis on customer service. In contrast, Hillton’s emerging corporate culture -- which was introduced by the new group of city managers -- places more emphasis on performance and customer service. The value of entitlement has weakened significantly, as noted by the layoffs and decreased importance of seniority in promotions. Accountability also seems to be a value or belief that has gained importance. 2. Considering the difficulty in changing organizational culture, why does Hillton’s management seem to be reasonably successful at this transformation? Answer: One of the main reasons why Hillton’s corporate culture has changed relatively easily is that there has been a complete overhaul among the senior management as well as elected officials. This enabled the new group to send a common signal to employees regarding the emerging set of corporate values. They were consistent in their leadership behaviors. Moreover, they seem to have altered the reward system (promotions) to be more consistent with the new set of cultural values. A second reason why the cultural transformation occurred was that there was external pressure to change. The community was no longer growing quickly and people living in the community had developed a different set of needs from the municipality. Moreover, there were complains about poor services. It is likely that employees increasingly realized that the old corporate culture was now misaligned with the external environment. 3. Identify two other strategies that the city might consider to entrench the new set of corporate values. Answer: The textbook identifies four strategies for strengthening an organization’s culture. Two of these -- role of leaders and introducing culturally-consistent rewards --have been applied by city managers. Students may therefore identify any two of the following three strategies: One strategy for maintaining and strengthening the new corporate culture is to carefully select and socialize new hires. The municipality should test the customer service orientation and respect for accountability among people who apply for positions. Employee orientation and training programs could be introduced to further reinforce the emerging belief system. Another strategy is to introduce other artifacts that support the new culture. These might range from customer focused symbols throughout buildings and special ceremonies and everyday rituals that might remind employees of the customer orientation. Other Issues to Consider This case raises other organizational behavior topics that instructors may want to discuss in class. One of these is the process of organizational change. Another topic is organizational power, influence, and politics. For example, students should consider the influence tactics used by outsiders to retain their control. TEAM EXERCISE: ORGANIZATIONAL CULTURE METAPHORS Purpose Both parts of this exercise are designed to help students understand, assess, and interpret organizational culture using metaphors. Part A: Assessing Your School’s Culture Instructions A metaphor is a figure of speech that contains an implied comparison between a word or phrase that is ordinarily used for one thing but can be applied to another. Metaphors also carry a great deal of hidden meaning – they say a lot about what we think and feel about that object. Therefore, this activity asks you to use several metaphors to define the organizational culture of your university, college, or institute. Alternatively, as mentioned in the exercise, the instructor might ask students to assess another organization that most students know about. The class is divided into teams of 4 to 6 members. Each team will reach consensus on which words or phrases should be inserted in the blanks of the statements presented below. This information should be recorded on a flip chart or overhead acetate for class presentation. The exercise states that the instructor will provide 15 to 20 minutes for teams to determine which words best describe the college’s culture, although you may change this if you wish. If our college were an animal, it would be a __ because _ If our college were a food, it would be __ because __. If our college were a place, it would be __ because __. If our college were a season, it would be __ because _. If our college were a TV show or movie, it would be __ because ___. The class will listen to each team present the metaphors that it believes symbolizes the college’s culture. For example, a team that picks winter for a season might mean they are feeling cold or distant about the college and its people. The class will discuss the discussion questions stated below. Comments for Instructors The authors of this exercise (David L. Luechauer and Gary M. Shulman) did an admirable job developing this activity. I have had very good success with it. Indeed, it has been one of the most popular exercises in some courses. However, the conditions must be right. Students need to be comfortable discussing (and lampooning) their college. They must a creative bunch so that entertaining and representative metaphors are identified. I also introduced this exercise several times with military officers (Majors in a command and staff college) in the Singapore Armed Forces. It was the hit of the course! Presented below are a few of the metaphors that this group of military officers presented, including their explanations. These metaphors illustrate their creative spirit and pride in their organization. Discussion Questions for Part A 1. How easy was it for your group to reach consensus regarding these metaphors? What does that imply about the culture of your school? Answer: The easier it is to reach a consensus, the more likely it is that the institution has a strong and easily identifiable corporate culture. Reaching consensus on these metaphors was relatively straightforward, implying that our school culture values collaboration and open dialogue. It suggests a supportive environment where diverse perspectives are respected and integrated, fostering a sense of unity and mutual understanding among students. 2. How do you see these metaphors in action?. In other words, what are some critical school behaviors or other artifacts that reveal the presence of your culture? Answer: Students might cite examples from any aspect of college life. They might refer to the registration process, student life after school, relations between instructors and students, and so on. In one university, students identified the culture partly by the building design, which consisted of a maze of hallways and drab concrete exterior. These metaphors manifest through collaborative projects, inclusive events, and strong mentorship programs, reflecting our school's commitment to community and support. Visible artifacts include communal study spaces, frequent group activities, and accessible faculty, all of which highlight the emphasis on teamwork and connectedness in our culture. 3. Think of another organization to which you belong (e. g. , work, religious congregation). What is its dominant cultural values, how do you see them in action, and how do they affect the effectiveness of that organization? Answer: This question asks students to present various artifacts as well as their interpretation of those artifacts in terms of the organization’s dominant culture. If you have a class with students who are mainly in the workforce, you could have many excellent examples. In classes with students who lack work experience, you may need to prompt them with questions about other organizations they participate in. In my volunteer organization, the dominant cultural values are service, compassion, and community engagement. These values are evident through regular community outreach programs, supportive interactions among volunteers, and a strong emphasis on helping those in need. This culture fosters a sense of purpose and unity, significantly enhancing the organization's effectiveness by motivating members to work collaboratively towards common goals and consistently deliver impactful services. Part B: Analyzing and Interpreting Cultural Metaphors Instructions In the previous section, students completed a metaphor exercise to describe the corporate culture of their university or college. That exercise gave them a taste of how to administer such a diagnostic tool and draw inferences from the results generated. This activity builds on that experience and is designed to help refine the students’ ability to analyze such data and make suggestions for improvement. Five work teams (4 to 7 members/mixed gender in all groups) of an organization located in Cincinnati completed the metaphor exercise similar to the exercise in which you participated in class (see Part A above). Their responses are shown in the table in the exercise. Working in teams, students are asked to analyze the information in this table and answer the discussion questions. Comments for Instructors This second part of the exercise generally doesn’t take much time. Students seem to recognize some of the meaning behind the metaphors. In my experience, they have more difficulty recognizing the type of organization, although the authors of this exercise report that many of their students do recognize this as an advertising agency. (NOTE: Most original answers in the “TV show” category were quite dated, so instructors might want to describe those shows or replace them with contemporary titles.) You may also want to put together an exhibit showing some of the metaphors presented by the Singapore military officers (described above). This is a distinctly different set of metaphors with some very interesting interpretations of their meaning. Discussion questions for Part B 1. In your opinion, what are the dominant cultural values in this organization? Explain your answer. Answer: The organization had just reorganized to form competitive teams, and this is noted by the predator/prey nature of the animals and the shows, which were largely based on the notion of chasing or being chased. 2. What are the positive aspects of this type of culture? Answer: This culture’s benefits are that it encourages a lot of preparation, desire to excel, and speed (responsiveness). The positive aspects of this type of culture include a strong sense of community and purpose, which enhances motivation and collaboration among members, leading to more effective and impactful service delivery. 3. What are the negative aspect of this type of culture? Answer: This culture’s main problems are that it emphasizes excessive competition and a win-lose mentality. The negative aspects of this type of culture can include potential burnout from high emotional investment and the possibility of neglecting individual needs in favor of group goals, which may lead to decreased personal well-being over time. 4. What is this organization’s main business, in your opinion? Explain your answer. Answer: The company is an advertising agency. Students should link their interpretation of each metaphor with their image of the company they identified. 5. These groups all reported to one manager. What advice would you give to her about this unit? Answer: It seems that these teams have experienced a lot of change and may need to plateau before experiencing more change. There may be some dysfunctional competition amongst teams that should be minimized. The elephant group stands out among the others and may require some exploration. TEAM EXERCISE: DIAGNOSING CORPORATE CULTURE PROCLAMATIONS Purpose To understand the importance and contents in which corporate culture is identified and discussed in organizations Instructions This exercise is primarily intended to a be take-home activity, although it can be completed in classes with computers and Internet connections. The instructor will divide the class into small teams (typically 4-5 people per team). Each team is assigned a specific industry – such as energy, biotechnology, computer hardware. The team’s task is to search web sites of several companies in the selected industry for company statements about their corporate culture. Instructors should remind students that most company web sites have a search engine, which can assist their discovery of cultural artifacts at that web site. to find documents with key phrases such as “corporate culture” or “company values”. In the next class, or at the end of the time allotted in the current class, students will report on their observations by answering the following three discussion questions: 1. What values seem to dominate the corporate culture of the companies you searched? Are these values similar or diverse across companies in the industry? Answer: In the energy sector, the dominant corporate values often revolve around sustainability, innovation, and safety. While these values may vary slightly from company to company, they generally align with the industry's overarching focus on environmental responsibility, technological advancement, and employee well-being. 2. What was the broader content of the web pages where these companies described or mentioned its corporate culture? Answer: The web pages where companies describe or mention their corporate culture often contain a variety of content. This may include mission and vision statements, employee testimonials or stories, descriptions of company events or initiatives, information about diversity and inclusion efforts, and details about corporate social responsibility programs. Overall, these pages aim to provide insight into the company's values, beliefs, and the overall work environment they strive to cultivate. 3. Do companies in this industry refer to their corporate culture on the web sites more or less than companies in other industries searched by teams in this class? Answer: In comparison to companies in other industries, the frequency with which companies in this industry refer to their corporate culture on their websites may vary. Some industries, like technology or hospitality, might emphasize their corporate culture more prominently as a selling point for attracting talent or customers. However, industries with a more traditional or regulated focus may not highlight corporate culture as prominently but still value it internally. Comments for Instructors This is a wonderful open-ended assignment that involves active learning on the topic of organizational culture. Many students seem to enjoy the exercise simply because it involves surfing the web. But the real benefit is that students must search out information about a company’s culture and integrate the material for classroom discussion. Here are a few issues that often arise in this activity: Espoused versus enacted values. Students should note that the cultural values that corporate leaders describe on the company’s web site and in news releases isn’t necessarily the culture that actually exists at that organization. When presenting their findings, some students will point out this fact. Moreover, they might identify artifacts that either support or contradict the cultural values espoused by the company. How many values? Occasionally, students might discover companies that list a dozen or more values that they saw represents the company’s culture. Yet, as we learned in this chapter, corporate culture reflects only a few (typically 3-5) dominant values. Even with a small number of dominant values, companies have trouble with inherent conflicts among these values. Pervasiveness of the “corporate culture” phrase. Along with identifying the company’s cultural values, students should note how commonly the company referred to the concept of organizational culture on its web site and online news releases. Some firms rarely mention the term, whereas others use the phrase (or its variations) in most public statements. Why do these differences in language use occurs? SELF-ASSESSMENT: WHAT ARE YOUR CORPORATE CULTURE PREFERENCES? Purpose This self-assessment is designed to help students to identify a corporate culture that fits most closely with your personal values and assumptions. Overview and Instructions This corporate culture preferences scale estimates the extent to which students prefer each of four corporate cultures. These corporate cultures may be found in many organizations, but they represent only four of many possible organizational cultures. Students should also keep in mind none of these subscales is inherently good or bad. Each is effective in different situations. Students are asked read each pair of the statements in the Corporate Culture Preference Scale and circle the statement that describes the organization they would prefer to work in. Then students use the scoring key to calculate their results for each subscale (or complete this self-assessment online for automatic scoring). This exercise is completed alone so students assess themselves honestly without concerns of social comparison. However, class discussion will focus on the importance of matching job applicants to the organization’s dominant values. Feedback for the Corporate Culture Preference Scale This self-assessment estimates the extent to which students prefer each of four corporate cultures. Each subscale has a potential score ranging from 0 to 6 points. Higher scores indicate that students have a stronger preference for organizations with that type of culture. The tables provide norms based on a sample of more than 200 MBA students. Control Culture This culture values the role of senior executives to lead the organization. It’s goal is to keep everyone aligned and under control. Scores on this subscale range from 0 to 6. The average score among a sample of MBA students was 1. 1. Score Interpretation 3 to 6 . 6 to 2 0 to . 5 Strong preference Average preference Low preference Performance Culture This culture values individual and organizational performance and strives for effectiveness and efficiency. Scores on this subscale range from 0 to 6. The average score among a sample of MBA students was 2. 9. Score Interpretation 5 to 6 3 to 4 0 to 2 Strong preference Average preference Low preference Relationship Culture This culture values nurturing and well-being. It considers open communication, fairness, teamwork, and sharing a vital part of organizational life. Scores on this subscale range from 0 to 6. The average score among a sample of MBA students was 3. 9. Score Interpretation 5 to 6 3. 6 to 4. 9 0 to 3. 5 Strong preference Average preference Low preference Responsive Culture This culture values its ability to keep in tune with the external environment, including being competitive and realizing new opportunities. Scores on this subscale range from 0 to 6. The average score among a sample of MBA students was 4. 1. Score Interpretation 5 to 6 3. 6 to 4. 9 0 to 3. 5 Strong preference Average preference Low preference Chapter 15: Organizational Change SOLUTIONS TO CRITICAL THINKING QUESTIONS 1. Chances are that the school you are attending is currently undergoing some sort of change to adapt more closely with its environment. Discuss the external forces that are driving the change. What internal drivers for change also exist? Answer: There are many possible changes that your college is currently experiencing. Some of the more common changes might be: (a) shift from quarter to semester schedule; (b) introduction of online learning; (c) changing library hours; (d) new courses and disciplines; (e) reassignment of physical space due to new construction or closure of old buildings. There are just as many possible external forces for change to consider, including: (a) increased competition for students; (b) emerging technologies; (c) cost pressures (restricted budgets); (d) changing student expectations (e. g. new course content, more flexible learning); (e) college ratings. Internal forces for change mainly come from such things as leadership, physical structures (e. g. aging buildings), and student and faculty coalitions. It is important to distinguish the changes from the forces for change. For example, the introduction of online learning might have resulted from both new technologies and increased competition for students. 2. Use Lewin’s force field analysis to describe the dynamics of organizational change at Ford Motor Company. The Global Connections 15. 2 feature about Ford’s transformation provides some information, but think about other forces for and against change beyond the information provided in this vignette. Answer: There are many possible changes that This open-ended question will get students thinking about the dynamics of the external environment for car industry manufacturing firms. There are too many to list here, but some of the top factors might include cost competitiveness, changing consumer expectations and tastes, and changing government regulations (e. g. fuel efficiency). Students should not only identify these and other potential forces for change, but also forces that restrain organizational change. Using Lewin's force field analysis, Ford Motor Company's organizational change was driven by forces such as the need for innovation, market competition, and a shift toward electric vehicles. Resisting forces included entrenched corporate culture, labor union resistance, and the costs associated with transitioning to new technologies. Balancing these forces required strategic leadership and substantial investment in new processes and training. 3. Employee resistance is a symptom, not a problem, in the change process. What are some of the real problems that may underlie employee resistance? Answer: The textbook outlines six main reasons why employees resist change. The following reasons explain the real problems that employees experience and are concerned about with change processes. Negative valence of change. Employees apply a cost–benefit analysis to determine if the change will make them better or worse off. Resistance to change is higher when employees believe that: (a) the change will have more negative than positive outcomes (e. g. , lost status, lower pay, poorer working conditions), and (b) the negative outcomes have a high probability of occurring and the positive outcomes have a low probability of occurring. Fear of the unknown. People resist change because they are worried they will not be able to adopt the new behaviors required. . Not-invented-here-syndrome. Some employees oppose change whose success threatens their self-esteem. This occurs when the change was within the individual’s job duties or mandate, but was discovered or decided by others instead. Breaking routines. People do not want to give up their comfort zones and daily routines that provide predictability. Incongruent team dynamics. Team norms may conflict with the desired change and consequently reinforce conformity to the status quo. Incongruent organizational systems. Organizational systems may actually be discouraging employees from adopting new ways. For example, the organization’s reward, selection, training and other control systems may be causing employees to maintain the status quo. 4. Senior management of a large multinational corporation is planning to restructure the organization. Currently, the organization is decentralized around geographic areas so that the executive responsible for each area has considerable autonomy over manufacturing and sales. The new structure will transfer power to the executives responsible for different product groups; the executives responsible for each geographic area will no longer be responsible for manufacturing in their area but will retain control over sales activities. Describe two types of resistance senior management might encounter from this organizational change. Answer: The answer to this question should include direct costs as one type of resistance to change among the geographic executives. They will lose status, power, and responsibility from the change effort. The other type of resistance to change might be incongruent organizational systems, incongruent team dynamics, or breaking routines. Unless the company has taken specific steps to alter organizational systems, these systems might still support the decentralized organizational structure. For example, communication patterns and physical structures might still be configured around the geographic rather than product structure. Regarding team dynamics, departmental norms might support the geographic executive. For example, employees might have developed a “we-they” attitude toward product leaders in headquarters. Although the restructuring placed regional product groups under product executives, these antagonistic norms may continue. Finally, some students might argue that resistance will occur because employees will be breaking routines. For instance, geographic executives and their employees may have formed habits regarding relations between sales and production units. Now that production units are no longer under the executives’ control, these habits must be altered and perhaps sales practices changed to fit the new reporting structure. 5. Discuss the role of reward systems in organizational change. Specifically, identify where reward systems relate to Lewin’s force field model and where they undermine the organizational change process. Answer: Students should recognize that reward systems can be either a source of resistance to change or a system that reinforces the desired change (i. e. refreezes the system). As a source of resistance, rewards would be an incongruent organizational system, such as where rewards reinforce efficiency but the organization is trying to change toward a customer focus. As a mechanism for refreezing, rewards are introduced or change so they are compatible with the desired behaviors. Reward systems can reinforce driving forces in Lewin's model by incentivizing employees to embrace change through recognition and bonuses. However, if rewards are not aligned with the desired changes or if there's a lack of clarity in reward criteria, they can create resistance and undermine change efforts by reinforcing status quo behaviors. 6. Web Circuits is a Malaysian-based custom manufacturer for high-technology companies. Senior management wants to introduce lean management practices to reduce production costs and remain competitive. A consultant has recommended that the company start with a pilot project in one department and, when successful, diffuse these practices to other areas of the organization. Discuss the advantages of this recommendation, and identify three ways (other than the pilot project’s success) to make diffusion of the change effort more successful. Answer: A pilot project is usually an effective change management strategy. It is more flexible and less risky than centralized organization wide programs. There are several ways to make diffusion of the change effort more successful. Several strategies are described in the textbook around the four elements of the MARS model. Here is a summary of these recommendations: Motivation: Ensure that employees see that the pilot project is successful and that people in the pilot project receive recognition and rewards for changing their previous work practices. Supervisors need to actively support and reinforce the desired behaviors. They also need to remove sources of resistance that act as counter-motivators to diffusion of change. Ability: employees must have the ability – the required skills and knowledge -- to adopt the practices introduced in the pilot project. Also, people adopt ideas more readily when they have an opportunity to interact and learn from others who have already applied the new practices. Role Perceptions: Employees need to understand how the practices in a pilot project apply to them even though in a completely different functional area. This requires guidance that is neither to specific, because it might not seem relevant to other areas of the organization, nor too abstract. Situational Factors: Employees require supportive situational factors, including the resources and time necessary to adopt the practices demonstrated in the pilot project. 7. What is the role of formal and informal networks in organizations interested in undergoing change? Answer: Environmental forces push companies to change. However, change agents cannot lead the initiative alone. It requires assistance from several others equally committed to the change. A formal guiding coalition can be structured to serve this purpose, however, change also occurs informally through social networks. These informal social networks have an important role in communication and influence, both of which are key ingredients for organizational change. 8. Suppose that you are vice president of branch services at the Bank of East Lansing. You notice that several branches have consistently low customer service ratings, even though there are no apparent differences in resources or staff characteristics. Describe an appreciative inquiry process in one of these branches that might help overcome this problem. Answer: Appreciative inquiry reframes relationships around the positive and the possible. The bank branches should look at another branch that has been successful. This increases open dialogue by redirecting attention away from internal problems. If branch rivalries are a problem, then each branch might compare itself with a successful operation in another organization or industry. There are four main stages to appreciative inquiry. The process begins with the discovery stage, whereby the participants identify the positive elements of the observed organization. As they discuss their findings, participants shift into the dreaming stage by considering what might be possible in an ideal organization. The third stage of appreciative inquiry is known as designing, in which participants listen with selfless receptivity to each other’s models and assumptions, and eventually form a collective model for thinking within the team. Throughout this stage, team members shift the focus back to their own organization and eventually enter the delivering stage. This is the phase in which participants begin discussing their own organization again. They establish specific objectives and direction for their own organization based on their model of what should be. CASE STUDY: TRANSACT INSURANCE CORPORATION Case Synopsis Trans Act Insurance Corporation (TIC) provides automobile insurance throughout the southeastern United States. Jim Leon was hired as vice-president of Claims and immediately began a series of changes. He decided to make morale and supervisory leadership his top priority. One of Leon’s most pronounced symbols of change was the "Claims Management Credo" outlining the philosophy that every claims manager would follow. After the credo was “approved” by claims managers, Leon announced plans to follow up with an annual survey to evaluate each claims manager's performance. One year later, a survey of claims center employees was held. Claims managers didn’t believe that Leon would really conduct the survey. The survey had a high response rate, with most managers receiving moderate or poor ratings on the ten credo items. The survey results, including every comment made by employees at that claims center, were shown to employees. Claims center managers were shocked. Discussion meetings with employees were attended by the regional director to control or avoid confrontations. Soon after these meetings, some claims managers quit or asked for transfers into nonmanagement jobs. Epilogue. Shortly after the first survey, the newsletter was suspended. Jim had many more meetings with his managers and directors. Jim eventually concluded that too many of his managers were “technical experts” in insurance and lacked the people skills necessary for management. To resolve this problem, managers were asked to compete for revised positions with a greater emphasis on management ability rather than technical prowess. A few new managers were brought in but most of the successful candidates were selected from the existing roster of managers. Employee surveys stopped after four years. Jim left and went into semi-retirement. Suggested Answers to Case Questions 1. What symptom(s) exist in this case to suggest that something has gone wrong? Answer: There are several symptoms suggesting that Jim Leon’s change process is not going well. First, employees and managers alike are dissatisfied with the process, although for different reasons. some of the debriefing sessions revealed levels of unhealthy conflict. A few managers have quit their jobs or asked for transfers. Earlier, managers quietly resisted the changes by not taking the process seriously (i. e. they ignored it until the next round of events). 2. What are the root causes that have led to these symptoms? Answer: Jim Leon was unsuccessful with this change process. Although his small changes described at the beginning of the case seem to have worked, the survey process created such resistance and reaction from managers that change probably became more difficult afterwards. By looking at the action research model, we can see that at least the first two stages were not conducted sufficiently well. The main causes can be identified from evidence of (a) the lack of urgency to change among managers, (b) various sources of resistance to change, and (c) lack of diagnosis for the change intervention. Lack of urgency. Jim Leon did not diagnose the readiness for change of his claims managers and employees. The claims managers did not believe that the survey would be conducted, they doubted the importance of the Claims Management credo, and they did not support the open survey feedback process. Consequently, Leon did not provide enough evidence and argument to motivate the claims managers to embrace or at least prepare themselves for the change process. Sources of Resistance. The claims managers engaged in passive resistance to the change. Students should be able to identify likely reasons for this resistance. The intervention might require changing managerial practices, which relates to breaking routines, fear of the unknown, and possibly direct costs (where managers lose power, resources, or status). Managerial norms of behavior might also be present that interfere with the desired changes. We don’t have information about systems or structures, but they might also act as barriers. Students might note the lack of involvement of managers in the change process. Although they identified the survey performance factors, this list was really restricted to the point that Leon was more in control of the factors to be considered. Diagnose Need for Change. The employee survey is an intervention, because it was intended to be an ongoing system in management development at Trans Act. However, the initial survey was also a diagnostic tool to help Leon and claims managers identify areas that need improvement. Although students may debate the appropriateness of a survey for data collection, the main problem is that the data were not fed back to claims managers in a way that minimizes perceptual defense. This is important, because it affects the willingness of participants to continue with the intervention. For example, the survey data were both an evaluation tool and a organizational change assessment tool. Moreover, the process was delayed for one year, so managers may have lost any inertia toward change that occurred when the credo was formed a year earlier. Another concern is that some of the survey items may relate to factors over which the claims managers have no control. Employees had low morale and overwork before Leon took over as VP of claims. Several years of pent-up frustration were vented in the survey, and claims managers were not completely responsible for those feelings. There are arguments in favor of using the employee survey process, such as that this is cost-efficient for a large group of people. However, the survey design and feedback should be changed to improve their relevance and acceptability to everyone involved. The claims managers should be put in a better state of readiness to participate in the survey design process. The questions should be clearly and objectively related to the claims manager’s jobs. The survey feedback should be more confidential, perhaps with feedback sessions based only on overall statistical results across the claims division (i. e. , not within the small claims centers and not with individual comments). 3. What actions should the company take to correct these problems? Answer: The company should begin the change process again. This would begin by identifying on what needs to change (more customer focus? cost efficiency? employee engagement?). Next, the change process requires stronger mechanisms to create an urgency to change, such as more direct evidence of company problems, of increased competition, or of a greater potential effectiveness. Third, employee and management involvement in the process needs to be real rather than highly restricted. Thus, in line with action research, the preferred intervention and indicators of its effectiveness should rely on input from these stakeholders, not just Jim Leon or the CEO. The latter may have ultimate decision control, but involvement is critical for buy in. The CEO and Leon might also consider a pilot project if the change is difficult and risky. However, since the unit is integrated, a pilot project may be difficult. Finally, the choice of intervention needs to be carefully chosen such that it is aligned with the change objectives. This may involve training, changing rewards and information systems, or other systems alterations. Students should also discuss Jim Leon as a change agent. Specifically, there is reason to believe that Leon has lost trust, respect, and credibility to lead the change process. This does not necessarily mean that he needs to be replaced as head of claims. Rather, an external consultant who works with management and employees may be required to engage in the next attempt to change. The company should align reward systems with desired change outcomes and communicate clear criteria for rewards tied to change initiatives. Additionally, regular evaluation and adjustment of reward structures are crucial to ensure ongoing alignment with organizational objectives. TEAM EXERCISE: STRATEGIC CHANGE INCIDENTS Purpose This exercise is designed to help students to identify strategies to facilitate organizational change in various situations. Instructions Step 1: The instructor will place students into teams, and each team will be assigned one of the scenarios presented in this exercise. Step 2: Each team will diagnose its assigned scenario to determine the most appropriate set of change management practices. Where appropriate, these practices should (a) create an urgency to change, (b) minimize resistance to change, and (c) refreeze the situation to support the change initiative. Each of these scenarios is based on real events that occurred in the United States and elsewhere. Step 3: Each team will present and defend its change management strategy. Class discussion regarding the appropriateness and feasibility of each strategy will occur after all teams assigned the same scenario have presented. The instructor will then describe what the organizations actually did in these situations. Comments for Instructors This exercise has been used several times in MBA classes and executive development programs, with consistently good results. The activity should also work well with undergraduate university and college classes because it is straightforward and applies concepts from the textbook. The activity is made more interesting by the fact that these scenarios involve REAL COMPANIES, so the instructor can advise students that their strategies will be compared with what the companies actually did. The PowerPoint file for this chapter includes a summary of these scenarios, including the actions taken by the two real organizations. (These PowerPoint slides appear after the slides for the chapter content.) Scenario 1: Greener Telco The board of directors at a large telecom company wants its executives to make the organization more environmentally friendly by encouraging employees to reduce waste in the workplace. Government and other stakeholders expect the company to take this action and be publicly successful. Consequently, the managing director wants to significantly reduce paper, usage, refuse, and other waste throughout the company’s many widespread offices. Unfortunately, a survey indicates that employees do not value environmental objectives and do not know how to “reduce, reuse, recycle. ” As the executive responsible for this change, you have been asked to develop a strategy that might bring about meaningful behavioral change toward this environmental goal. What would you do? What Actually Happened: This incident describes the “Zero Waste” program several years ago at Bell Canada. Bell Canada is the largest telephone company in that country. Although the intervention occurred two decades ago, it is a timeless incident for discussion because it applies to behavior change that might occur in any organization and would involve employees at all levels. Bell Canada invoked change by applying several strategies to minimize resistance to change. Here are the steps the telephone company took to bring about Zero waste: Communication: Employees attended information sessions and saw banners at the front entrance about the beginning of “Zero Waste”. A task force of employee representatives kept everyone informed about developments leading up to the first day of zero waste. Training. Employees were shown how to reduce paper waste by using both sides of paper, using scrap paper as memo pads, re-using office envelopes, and relying more on email and voice mail than written memos. In the cafeteria, they learned to separate leftover food and deposit it into the appropriate compost bin. The company also installed a special telephone hotline to answer questions about recycling. Bell Canada employees also received feedback about their progress toward the waste reduction goal. The task force weighed the garbage twice each week and publicly displayed these results on charts. The garbage was occasionally ‘audited’ for incorrect behaviors, such as throwing apple cores in the paper recycling bin. Offending employees were politely encouraged to use the compost bin instead. Employee involvement. Bell Canada deliberately selected the more popular employees in each department to serve on a special task force to develop the Zero Waste program. These employees quickly became champions as they took ownership of the program. They were also conduits of information and enthusiasm back to the departments where they worked. Coercion (structural). The Zero Waste program created barriers to wasteful behavior. Paper towels were replaced with electric hand dryers in the washrooms. Styrofoam cups were replaced with reusable mugs at each employee’s desk. Metal garbage cans at each workstation were replaced with plastic recycling bins. Employees were left with tiny reusable bags to carry nonrecyclables to specially marked bins located elsewhere in the building. Along with these strategies, Bell Canada began the program as a pilot project in one of its largest buildings. That pilot project reduced waste by 98 percent -- from nearly 1,000 pounds of waste each day to less than 25 pounds of waste each day. The company subsequently applied similar change management principles to improve energy conservation. Some students might correctly suggest that the change process is essentially applying the MARS model to alter individual behavior. Bell Canada motivated employees, changed their role perceptions, and improved their ability through training to reduce waste. Perhaps most important, Bell Canada changed the environment so that situational factors made it more difficult to engage in wasteful behavior. References: J. Mills, “Bell Sets Example with ‘Zero Waste’ Program,” Montreal Gazette, (February 14, 1993), p. C3; C. Mahood, “Bell Zeros in on Waste,” Globe & Mail, (May 4, 1992), pp. B1, B2; “Bell Canada,” Inside Guide, (January 1993), pp. 46-48; D. Hogarth, “Firms Reap Green Harvest,” Financial Post, (June 15-17, 1991), p. 18. Scenario 2: Go Forward Airline A major airline had experienced a decade of rough turbulence, including two bouts of bankruptcy protection, 10 managing directors, and morale so low that employees had ripped off company logos from their uniforms out of embarrassment. Service was terrible and the airplanes rarely arrived or left the terminal on time. This was costing the airline significant amounts of money in passenger lay-overs. Managers were paralyzed by anxiety and many had been with the firm so long that they didn’t know how to set strategic goals that worked. One-fifth of all flights were losing money and the company overall was near financial collapse (just three months to defaulting on payroll obligations). The newly-hired CEO and you must get employees to quickly improve operational efficiency and customer service. What actions would you take to bring about these changes in time? What Actually Happened: Scenario #2 describes the troubles that Continental Airlines experienced during the 1980s and early 1990s. The airline, now merged with United Airlines, was itself the result of seven merged airlines and had been managed badly over the previous decade. Continental went into bankruptcy twice and was almost out of cash when Gordon Bethune and Greg Brenneman were hired as chairman and president, respectively. The company was continually losing money and its continuous cost-cutting only made matters worse by destroying customer service and employee loyalty. Continental executives Gordon Bethune and Greg Brenneman applied the following change management strategy: Communication. Bethune and Brenneman constantly communicated their “Go Forward” strategic plan to save the airline. Go Forward covered four cornerstones: market, financial, product, and people. Bethune and Brenneman also worked alongside baggage staff and other employees, discussing their go forward plan while performing the front-line work. The company also posted news of the change process on bulletin boards, in weekly voice mails from Bethune, and in monthly open house meetings with employees. Training. There were no apparent training programs to change Continental airlines. Bethune and Brenneman argued that employees already knew their jobs, but lacked the opportunity and strategy to put their skills and knowledge to use. However, Continental introduced new goals (such as on-time departures) and used Department of Transportation monthly measures as feedback on how well the company performed on these performance metrics. Employee Involvement. Bethune and Brenneman collected the “Thou Shalt not” manual – the guidebook on what employees are not allowed to do – and publicly burned them in the parking lot. Then Bethune and Brenneman told employees to make customer service happen. Coercion. Fifty-one of the 60 executives were replaced within a couple of months. Bethune and Brenneman stated that it is difficult for people who get a company into a mess to get them out. Moreover, the executives who made these mistakes for so long would not be trusted by employees to lead them into the future. Along with these strategies, Continental introduced rewards that aligned employees with the company’s new strategic goals. Rather than reduce costs, Continental was going to improve service. Thus, employees were each paid $65 for each month that Continental placed in the top five airlines for on-time service, according to the Department of Transportation. In change management, rewards relate to introducing systems and structures to “refreeze” the desired conditions. Bethune and Brenneman also brought about rapid change by hiring senior executives (replacing those fired) with competencies and values that were more aligned with the Go Forward plan. References: G. Brenneman, “Right Away and All at Once: How We Saved Continental,” Harvard Business Review, September-October 1998, pp. 162-79; T. Kennedy, “Confidence returns with Continental's strong comeback,” Minneapolis Star Tribune, February 1, 1998, p. 1A SELF-ASSESSMENT: ARE YOU TOLERANT OF CHANGE? Purpose This exercise is designed to help students understand how people differ in their tolerance of change. Background Some people are naturally less comfortable than other people with the complexity and uncertainty of change. This self assessment provides an estimate of how tolerant people are of change. Students are asked to read each of the statements and circle the response that best fits their personal belief. They then use the scoring key to calculate their results. This self-assessment is completed alone so that students rate themselves honestly without concerns of social comparison. However, class discussion will focus on the meaning of tolerance of change, how this scale might be applied in organizations, and the limitations of measuring tolerance of change in work settings. Feedback for the Tolerance of Change Scale This measurement instrument is formally known as the “tolerance of ambiguity” scale. The original scale, developed 50 years ago, has since been revised and adapted. The instrument presented here is an adaptation of these revised instruments. People with a high tolerance for ambiguity are comfortable with uncertainty and new situations. These are characteristics of the hyper fast changes occurring in many organizations today. This instrument ranges from 10 to 70, with higher scores indicating a higher tolerance for change (i. e. , higher tolerance for ambiguity). The table at the right indicates the range of scores for high, medium, and low tolerance for change. These norms are estimates from recent studies using some or all of these items. Tolerance for Change Score Interpretation 50-70 You seem to have a high tolerance for change 30-49 You seem to have a moderate level of tolerance for change. 10-29 You seem to have a low tolerance for change. Instead, you prefer stable work environments. Solution Manual for Organizational Behavior: Emerging Knowledge, Global Reality Steven McShane, Mary Von Glinow 9780077862589, 9781259280634, 9781259562792, 9780071077989