Organizational Behavior VI & VII

Organizational Behavior
And Design
(Unit VI & VII)
Fesseha Afewerk (Ast. Prof.)

Addis Ababa University
School of Commerce
June 2018
1
Unit VI Conflict and Negotiation
6.1 Causes and outcomes of conflict

6.2 Managing conflict and strategies
6.3 communications
6.4 Negotiation strategies and
mistakes
2
Unit Learning Objectives
• After studying this chapter you should be able to:
– Define conflict.
– Differentiate between the traditional, human relations,
and interactionist views of conflict.
– Outline the conflict process.
– Define negotiation.
– Contrast distributive and integrative bargaining.
– Apply the five steps in the negotiation process.
– Show how individual differences influence negotiations.
– Assess the roles and functions of third-party negotiations.
– Describe cultural differences in negotiations.
3
Conflict Defined
• A process that begins when one party perceives
that another party has negatively affected, or is
about to negatively affect, something that the
first party cares about
– That point in an ongoing activity when an interaction
“crosses over” to become an interparty conflict
• Encompasses a wide range of conflicts that
people experience in organizations
– Incompatibility of goals
– Differences over interpretations of facts
– Disagreements based on behavioral expectations
4
Conflict …
• Two or more interdependent parties who perceive incompatible
goals, scarce resources, and interference from others in
achieving that goal (Hocker & Wilmot, 1995)
• Competition between interdependent parties who perceive that

they have incompatible needs, goals, desires, or ideas (Van Slyke,
1999)
• The interaction of interdependent people who perceive

opposition of goals, aims, and values, and who see the other
party as potentially interfering with the realization of these goals
(Putnam & Poole, 1987)
5
Conflict…
 Conflict occurs whenever:

– Disagreements exist in a social situation over
issues of substance.
– Emotional antagonisms cause frictions between
individuals or groups.
6
Conflict…
 Types of conflict.
– Substantive conflict.
• A fundamental disagreement over ends or goals to be
pursued and the means for their accomplishment.
– Emotional conflict.
• Interpersonal difficulties that arise over feelings of
anger, mistrust, dislike, fear, resentment, etc.
7
Conflict…
 Levels of conflict.
– Intrapersonal conflicts.
• Actual or perceived pressures from incompatible goals
or expectations.
• Approach-approach conflict.
• Avoidance-avoidance conflict.
• Approach-avoidance conflict.
8
Conflict…
 Levels of conflict — cont.

– Interpersonal conflict.
• Occurs between two or more individuals who are in
opposition to one another.
– Intergroup conflict.
• Occurs among members of different teams or groups.
9
Conflict…
 Levels of conflict — cont.

– Interorganizational conflict.
• Occurs in the competition and rivalry that characterize
firms operating in the same markets.
• Occurs between unions and organizations employing
their members.
• Occurs between government regulatory agencies and
organizations subject to their surveillance.
• Occurs between organizations and suppliers of raw
materials.
10
Conflict…
 Functional (or constructive) conflict.

– Results in positive benefits to individuals, the
group, or the organization.
– Likely effects.
• Surfaces important problems so they can be addressed.
• Causes careful consideration of decisions.
• Causes reconsideration of decisions.
• Increases information available for decision making.
• Provides opportunities for creativity.
11
Conflict…
 Dysfunctional (or destructive) conflict.

– Works to the disadvantage of individuals, the
group, or the organization.
– Likely effects:
• Diverts energies.
• Harms group cohesion.
• Promotes interpersonal hostilities.
• Creates overall negative environment for workers.
12
Stages of conflict
– Conflict antecedents .
• Set the conditions for conflict.
– Perceived conflict.
• Substantive or emotional differences are sensed.
– Felt conflict.
• Tension creates motivation to act.
– Manifest conflict.
• Conflict resolution or suppression.
• Conflict aftermath.
13
Transitions in Conflict Thought
• Traditional View of Conflict
– The belief that all conflict is harmful and must be
avoided
– Prevalent view in the 1930s-1940s
• Conflict resulted from:
– Poor communication
– Lack of openness
– Failure to respond to employee needs
14
Continued Transitions in Conflict
Thought
• Human Relations View of Conflict
– The belief that conflict is a natural and inevitable
outcome in any group
– Prevalent from the late 1940s through mid-1970s
• Interactionist View of Conflict
– The belief that conflict is not only a positive force
in a group but that it is absolutely necessary for a
group to perform effectively
– Current view
15-15
Forms of Interactionist Conflict
• Functional Conflict
– Conflict that supports the goals of the group and
improves its performance
• Dysfunctional Conflict
– Conflict that hinders group performance
16
Types of Interactionist Conflict
• Task Conflict
– Conflicts over content and goals of the work
– Low-to-moderate levels of this type are FUNCTIONAL
• Relationship Conflict
– Conflict based on interpersonal relationships
– Almost always DYSFUNCTIONAL
• Process Conflict
– Conflict over how work gets done
– Low levels of this type are FUNCTIONAL
17
6.1 Causes and outcomes of conflict
 Causes of conflict.
– Vertical conflict.
• Occurs between hierarchical levels.
– Horizontal conflict.
• Occurs between persons or groups at the same
hierarchical level.
– Line-staff conflict.
• Involves disagreements over who has authority and
control over specific matters.
18
Causes of conflict…
 Causes of conflict — cont.

– Role conflicts.
• Occur when the communication of task expectations
proves inadequate or upsetting.
– Work-flow interdependencies.
• Occur when people or units are required to cooperate
to meet challenging goals.
19
How can conflict be
managed successfully?
– Domain ambiguities.
• Occur when individuals or groups are placed in
ambiguous situations where it is difficult to determine
who is responsible for what.
– Resource scarcity.
• When resources are scarce, working relationships are
likely to suffer.
20
How can conflict be
managed successfully?
– Power or value asymmetries.
• Occur when interdependent people or groups differ
substantially from one another in status and influence
or in values.
21
Causes Conflict…
• Four Events that precipitate interpersonal conflict
– REBUFFS
• Failure to respond to appeal for desired action
– ILLEGITIMATE DEMANDS
• Unjust or extreme request
– CRITICISMS
• Unfavorable or demeaning verbal or nonverbal act
– CUMULATIVE ANNOYANCES
• Repetition of instances that crosses tolerance threshold
• Five Factors that favor the development of conflict

– Frequency of Occurrence
– Goal Mutuality
– Goal-Path Uncertainty
– Attribution of Cause
– Negative Feelings
22
Outcomes of conflict
• Negative Consequences
– Less Effective
– Suboptimal Productivity
– Inhibited Cognitive Functioning
• Positive Consequences
– Identify and Better Understand Issues
– Clarify Issues
– Creative Solutions
23
Factors Influencing Conflict
• Content Related vs. Personal
• Size of Conflict
• Rigidity of the Issue
• Power Differences
• Individual Personalities, Traits, and Dispositions
24
Effects of Various Dimensions of Conflict
DIFFICULT TO
DIMENSION RESOLVE EASY TO RESOLVE
The issue itself A matter of principle Simply dividing up
something
Size of the stakes Large Small
Continuity of Single transaction Long-term
interaction relationships
Characteristics of Disorganized, with Cohesive, with
participants’ “groups” weak leadership strong leadership
Involvement of third No neutral third party Trusted, prestigious,
parties available neutral third party
available
Source: Adapted from Greenhaigh, L. Managing conflict. In R. J. Lewicki, D. M. Saunders, and J.
W. Minton (eds.), Negotiation, 3rd ed. Boston: Irwin/McGraw-Hill, 1999, 7.
25
Primary Levels of Conflict
Within Organizations
Intrapersonal (within an individual)

Interpersonal (between individuals)
Intragroup (within a group)
Intergroup (between groups)
26
Levels and Types
of Conflict
Level of conflict Type of conflict
Organization Within and between organizations
Group Within and between groups
Individual Within and between individuals
27
Levels and Types
of Conflict (Cont.)
• Intraorganization conflict
– Conflict that occurs within an organization
– At interfaces of organization functions
– Can occur along the vertical and horizontal
dimensions of the organization
• Vertical conflict: between managers and subordinates
• Horizontal conflict: between departments and work
groups
28
Levels and Types
of Conflict (Cont.)
• Intragroup conflict
– Conflict among members of a group
– Early stages of group development
– Ways of doing tasks or reaching group's goals
• Intergroup conflict: between two or more
groups
29
Levels and Types
of Conflict (Cont.)
• Interpersonal conflict
– Between two or more people
– Differences in views about what should be done
– Efforts to get more resources
– Differences in orientation to work and time in
different parts of an organization
30
Levels and Types
of Conflict (Cont.)
• Intrapersonal conflict
– Occurs within an individual
• Threat to a person’s values
• Feeling of unfair treatment
• Multiple and contradictory sources of socialization
• Related to the Theory of Cognitive Dissonance and
negative inequity
31
Levels and Types
of Conflict (Cont.)
• Interorganization conflict
– Between two or more organizations
– Not competition
– Examples: suppliers and distributors, especially
with the close links now possible
32
Sources of Conflict in Organizations (Cont.)
• Some representative latent conflict

– Scarce resources: money, equipment, facilities
– Organizational differentiation: different
orientations in different parts of organization
– Rules, procedures, policies: behavioral guides
that can cause clashes
– Cohesive groups: value and orientation
differences among groups
33
Sources of Conflict in Organizations (Cont.)
• Some representative latent conflict (cont.)

– Interdependence: forces interaction
– Communication barriers: shift work and jargon
– Ambiguous jurisdictions: areas of authority not
clearly defined
– Reward systems: reward different behavior in
different parts of the organization
Sales on commission; manufacturing rewarded

for meeting schedules. Communication differences.
34
Basic Types of Intrapersonal Conflict
 Approach–approach conflict
 An individual must choose among alternatives, each of which is
expected to have a positive outcome
 Avoidance–avoidance conflict
 An individual must choose among alternatives, each of which is
expected to have a negative outcome
 Approach–avoidance conflict
 An individual must decide whether to do something that has
both positive and negative outcomes
35
Conditions that Increase the Intensity of Intrapersonal Conflict
Several realistic alternatives are available for

handling the conflict
The positive and negative consequences of the
alternatives are roughly equal
The source of conflict is important to the individual
36
Role Episode Model
Role Senders Focal Person

* Role * Role * Perception * Response
expectations messages of messages * Coping
* Perceptions * Role and efforts
of focal pressures pressures * Compliance
person’s * Role
behaviors conflict
* Evaluations * Role
ambiguity
Source: Based on Kahn, R. L., et al. Organizational Stress: Studies in Role Conflict
and Ambiguity. New York: John Wiley & Sons, 1964, 26.
37
Types of Role Conflict
Intrasender role conflict

Different messages and pressures from a single
member of the role set are incompatible
Intersender role conflict

Messages and pressures from one role sender oppose
those from one or more other senders
38
Types of Role Conflict…
Interrole conflict
Role pressures associated with membership in one
group are incompatible with those stemming from
membership in other groups
Person–role conflict
Role requirements are incompatible with the focal
person’s own attitudes, values, or views of acceptable
behavior
39
Behaviors for Coping with
Role Ambiguity
Initiating aggressive action
Withdrawing
Approaching the role sender or senders to attempt

joint problem solving
40
Sources of Interpersonal Power
 Reward power
 An individual’s ability to influence others’ behaviors by
rewarding them
 Coercive power
 An individual’s ability to influence others’ behaviors by
punishing them
 Legitimate power
 A manager’s ability to influence subordinates’ behavior because
of the manager’s formal position in the organization
41
Sources of Interpersonal Power…
 Expert power
 An individual’s ability to influence others’ behaviors because of
recognized competencies, talents, or specialized knowledge
 Referent power
 An individual’s ability to influence others’ behaviors as a result
of being respected, admired, or liked
42
The Conflict Process
• Stage I: Potential Opposition or Incompatibility
– Communication
• Semantic difficulties, misunderstandings, and “noise”
– Structure
• Size and specialization of jobs
• Jurisdictional clarity/ambiguity
• Member/goal incompatibility
• Leadership styles (close or participative)
• Reward systems (win-lose)
• Dependence/interdependence of groups
– Personal Variables
• Differing individual value systems
• Personality types
43
Stage II: Cognition and Personalization
• Important stage for two reasons:
1. Conflict is defined
• Perceived Conflict
– Awareness by one or more parties of the existence of
conditions that create opportunities for conflict to arise
2. Emotions are expressed that have a strong
impact on the eventual outcome
• Felt Conflict
– Emotional involvement in a conflict creating anxiety,
tenseness, frustration, or hostility
44
Stage III: Intentions
• Intentions
– Decisions to act in a given way
– Note: behavior does not always accurate reflect intent
• Dimensions of conflict-handling intentions:
– Cooperativeness
• Attempting to satisfy
the other party’s
concerns
– Assertiveness
• Attempting to satisfy
one’s own concerns
45
Stage IV: Behavior
• Conflict Management
– The use of resolution and stimulation techniques
to achieve the desired level of conflict
• Conflict-Intensity Continuum
46
6.2 Managing conflict and strategies
Conflict Management Model
• Maintain conflict at functional levels
– Not complete elimination
– Reducing to functional levels
– Increasing dysfunctionally low conflict
– Choose desired level of conflict based on
perceived conflict requirements
– Varies in different parts of an organization
– Manager’s tolerance for conflict plays a role
47
Conflict Management Model…
Organizational Product or Fast-changing

culture service environment
Perceived conflict requirements
Desired conflict level
48
Dysfunctionally Normal Dysfunctionally

low conflict high conflict
Increase Decrease
conflict conflict
49
• Symptoms of dysfunctionally high conflict
– Low trust
– Information distortion
– Tension/antagonism
– Stress
– Sabotage of organization’s product or service
50
• Symptoms of dysfunctionally low conflict
– Deny differences
– Repress controversial information
– Prohibit disagreements
– Avoid interactions
– Walk away from conflict episode
51
Reducing Conflict
– Lose-lose methods: parties to the conflict
episode do not get what they want
– Win-lose methods: one party a clear winner;
other party a clear loser
– Win-win methods: each party to the conflict
episode gets what he or she wants
52
Increasing Conflict
• Increase conflict when it is dysfunctionally
low
– Heterogeneous groups: members have
different backgrounds
– Devil’s advocate: offers alternative views
– Organizational culture: values and norms that
embrace conflict and debate
53
Indirect conflict management approaches
– Reduced interdependence.
– Appeals to common goals.
– Hierarchical referral.
– Alterations in the use of mythology and scripts.
54
Indirect conflict management approaches…
 Reduced interdependence.
– Used for adjusting level of interdependency when
work-flow conflicts exists.
– Options.
• Decoupling.
• Buffering.
• Linking pins.
55
 Appeals to common goals.

– Focusing the attention of potentially conflicting
parties on one mutually desirable goal.
– Helping parties to recognize their mutual
interdependence.
– Can be difficult to achieve if:
• Prior performance is poor.
• Parties disagree over how to improve performance.
56
 Hierarchical referral.
– Makes use of the chain of command for conflict
resolution.
– Problems with hierarchical referral.
• May not result in true conflict resolution.
• Possibility of inaccurate diagnosis of causes of conflict,
resulting in only superficial resolution.
• Superiors may attribute conflict to poor interpersonal
relationships.
57
 Alterations in the use of mythology and

scripts.
– Scripts are behavioral routines that become part
of the organization’s culture.
– Scripts prescribe ways of dealing with conflict.
58
Direct conflict management approaches
 Direct conflict management approaches are based on

the relative emphasis that a person places on
assertiveness and cooperativeness.
– Assertiveness.
• Attempting to satisfy one’s own concerns.
• Unassertive versus assertive.
– Cooperativeness.
• Attempting to satisfy the other party’s concern.
• Uncooperative versus cooperative.
59
Direct conflict management approaches…
 Avoidance.
– Unassertive and uncooperative.
– Downplaying disagreement.
– Failing to participate in the situation and/or

staying neutral at all costs.
60
 Accommodation or smoothing.
– Unassertive and cooperative.
– Letting the other’s wishes rule.
– Smoothing over differences to maintain superficial

harmony.
61
 Compromise.
– Moderate assertiveness and moderate
cooperativeness.
– Working toward partial satisfaction of everyone’s
concerns.
– Seeking acceptable rather than optimal solutions
so that no one totally wins or loses.
62
 Competition and authoritative command.

– Assertive and uncooperative.
– Working against the wishes of the other party.
– Fighting to dominate in win/lose competition.
– Forcing things to a favorable conclusion through
the exercise of authority.
63
 Collaboration and problem solving.

– Assertive and cooperative.
– Seeking the satisfaction of everyone’s concerns by
working through differences.
– Finding and solving problems so everyone gains as
a result.
64
 The issue of “who wins?”

– Lose-lose conflict.
• Occurs when nobody gets what he or she wants.
• Avoidance, accommodation or smoothing, and
compromise are forms of lose-lose conflict.
– Win-lose conflict.
• One part achieves its desires at the expense and to the
exclusion of the other party’s desires.
• Competition and authoritative command are forms of
win-lose conflict.
65
 The issue of “who wins?” — cont.

– Win-win conflict.
• Both parties achieve their desires.
• Collaboration or problem solving are forms of win-win
conflict.
66
Reducing Conflict
– Lose-lose methods: compromise
– Win-lose methods: dominance
– Win-win methods: problem solving
67
Reducing Conflict (Cont.)
• Win-win methods
– Problem solving: find root causes
– Integration: meet interests and desires of all
parties
– Superordinate goal: desired by all but not
reachable alone
68
Reducing Conflict (Cont.)
• Win-lose methods
– Dominance
• Overwhelm other party
• Overwhelms an avoidance orientation
– Authoritative command: decision by person in
authority
– Majority rule: voting
69
Reducing Conflict (cont.)
• Lose-lose methods
– Avoidance
• Withdraw, stay away
• Does not permanently reduce conflict
– Compromise
• Bargain, negotiate
• Each loses something valued
– Smoothing: find similarities
70
Conflict Resolution Techniques
– Problem solving – Bringing in outsiders
– Superordinate goals – Restructuring the
– Expansion of resources organization
– Avoidance
– Appointing a devil’s
– Smoothing
advocate
– Compromise
– Authoritative command
– Altering the human
variable
– Altering the structural
variables
– Communication
71
Interpersonal Conflict Handling Styles
 Avoiding Style
 Unassertive and uncooperative
 Forcing Style
 Assertive and uncooperative
 Accommodating Style
 Unassertive and cooperative
 Collaborating Style
 Assertive and cooperative
 Compromising Style
 Intermediate level of assertive and cooperative behaviors
72
When Should the Avoiding Style Be
Used to Handle Interpersonal Conflicts?
The issue is of minor or passing importance

Insufficient information to effectively deal with
the conflict
Low power relative to the other party
Others can more effectively resolve the conflict
73
When Should the Forcing Style Be
Emergencies requiring quick action
Unpopular actions must be taken for long-term
organizational effectiveness and survival
Self-protective action is needed
74
When Should the Accommodating Style Be
Need to defuse a potentially explosive emotional

conflict situation
Short-run need to keep harmony and avoid
disruption
Conflict is primarily based on personality and
cannot be easily resolved
75
When Should the Collaborating Style Be
High level of cooperation is needed

Sufficient parity exists in power of conflicting
parties
Potential for mutual benefits, especially over long
run
Sufficient organizational support to take the time
and energy for collaboration
76
When Should the Compromising Style Be
Agreement enables each party to be better off, or at

least not worse off, than without an agreement
Achieving a total win–win agreement is not possible
Conflicting goals block agreement on one person’s
proposal
77
Stage V: Outcomes
• Functional • Dysfunctional
– Increased group performance – Development of discontent
– Improved quality of decisions – Reduced group effectiveness
– Stimulation of creativity and – Retarded communication
innovation
– Reduced group cohesiveness
– Encouragement of interest
and curiosity – Infighting among group
members overcomes group
– Provision of a medium for goals
problem-solving
• Creating Functional Conflict
– Creation of an environment
for self-evaluation and – Reward dissent and punish
change conflict avoiders
78
Negotiation
• Negotiation (Bargaining)
– A process in which two or more parties exchange
goods or services and attempt to agree on the
exchange rate for them
– The process of making joint decisions when the parties
involved have different preferences.
– Workplace disagreements arise over a variety of matters.
79
Negotiation goals and outcomes.
– Substance goals.
• Outcomes that relate to content issues.
– Relationship goals .
• Outcomes that relate to how well people involved in
the negotiations and any constituencies they represent
are able to work with one another once the process is
concluded.
80
Effective negotiation
– Occurs when substance issues are resolved and

working relationships are maintained or improved.
– Criteria for an effective negotiation.
• Quality.
• Harmony.
• Efficiency.
81
Ethical aspects of negotiation
– To maintain good working relationships,

negotiating parties should strive for high ethical
standards.
– The negotiating parties should avoid being side
tracked by self-interests, thereby being tempted
to pursue unethical actions.
82
Organizational settings for negotiation
– Two-party negotiation.
– Group negotiation.
– Intergroup negotiation.
– Constituency negotiation.
83
Culture and negotiation
– Differences in negotiation approaches and

practices are influenced by cultural differences in:
• Time orientation.
• Individualism-collectivism.
• Power distance.
84
Basic negotiation strategies
 Distributive negotiation.
– Focuses on positions staked out or declared by the
conflicting parties.
– Parties try to claim certain portions of the existing pie.
 Integrative negotiation.
– Sometimes called principled negotiation.
– Focuses on the merits of the issues.
– Parties try to enlarge the available pie.
85
Basic negotiation strategies…
 Distributive negotiations
 Involve win–lose, fixed-amount situations wherein one
party’s gain is another party’s loss
 Negotiation that seeks to divide up a fixed amount of
resources; a win-lose situation
 Integrative negotiations
 Involve joint problem solving to achieve results benefiting both
parties
Negotiation that seeks one or more settlements that
can create a win-win solution
86
Distributive negotiation
– The key questions is: “Who is going to get this

resource?”
– “Hard” distributive negotiation.
• Each party holds out to get its own way.
– “Soft” distributive negotiation.
• One party is willing to make concessions to the other
party to get things over.
87
Distributive negotiation — cont.
– Bargaining zone.
• The range between one party’s minimum reservation
point and the other party’s maximum reservation point.
• A positive bargaining zone exists when the two parties’
points overlap.
• A positive bargaining zone provides room for
negotiation.
88
Integrative negotiation
– The key questions is: “How can the resource best

be utilized?”
– Is less confrontational than distributive
negotiation, and permits a broader range of
alternative solutions to be considered.
– Opportunity for a true win-win solution.
89
Integrative negotiation — cont.
– Range of feasible negotiation tactics.

• Selective avoidance.
• Compromise.
• True collaboration.
90
 Gaining truly integrative agreements rests on:

– Supportive attitudes.
– Constructive behaviors.
– Good information.
91
 Supportive attitudes.
– Integrative agreements require that each party
must:
• Approach the negotiation with a willingness to trust the
other party.
• Convey a willingness to share information with the
other party.
• Show a willingness to ask concrete questions of the
other party.
92
 Constructive behaviors.
– Reaching integrative agreements depends on the
negotiator’s ability to:
• Separate the people from the problem.
• Focus on interests rather than positions.
• Avoid making premature judgments.
• Keep alternative creation separate from evaluation.
• Judge possible agreements on an objective set of
criteria or standards.
93
 Good information.
– Each negotiation party must know what he/she
will do if an agreement can’t be reached.
– Each party must understand the relative
importance of the other party’s interests.
94
Distributive versus Integrative
Bargaining
Bargaining Characteristic Distributive Bargaining
Integrative Bargaining
Goal Get all the pie you can Expand the pie
Motivation Win-Lose Win-Win
Focus Positions Interests
Information Sharing Low High
Duration of Relationships Short-Term Long-Term
95
Basic Types of Negotiation
Attitudinal structuring
The process by which conflicting parties seek to
establish desired attitudes and relationships
Intraorganizational negotiations
Involve sets of negotiators representing different
groups, and each set of negotiators tries to build
consensus for agreement to resolve intragroup
conflict before dealing with the other group’s
negotiators
96
Matrix of Negotiated Outcomes
STRATEGY OF PERSON A
Integrative Distributive
Outcome: Outcome:
Great for Person A Mediocre for Person A
Terrible for Person B Mediocre for Person B
Outcome: Outcome:
Good for Person A Terrible for Person A
Good for Person B Great for Person B
Integrative Distributive
STRATEGY OF PERSON B
Source: Adapted from Anderson, T. Step into my parlor: A survey of strategies and
techniques for effective negotiation. Business Horizons, May-June 1992, 75.
97
Bargaining Tactics and the Bargaining Zone
• Distributive Tactics
– Make an aggressive first offer
– Reveal a deadline
• Integrative Tactics
– Bargain in teams
– Put more issues on the table
– Don’t compromise
98
The Negotiation Process
• BATNA
– The Best Alternative To a Negotiated Agreement
– The lowest acceptable value (outcome) to an
individual for a negotiated agreement
• The “Bottom Line” for negotiations
99
Disputes and Negotiation
• Bargaining as Compromise
– Participants negotiate mutually shared rules and then
cooperate within these rules to gain a competitive
advantage over opponent
– Bargaining and Negotiation are interchangeable
– Organizational Responses (Disputing Process Instrument (DPI) Morrill
& Thomas, 1992)
• Aggressiveness - expense of others
• Authoritativeness - resources of social position
• Observability visible to social audience
– Seven Conflict Behaviors (DPI)
100
Individual Differences in Negotiation
Effectiveness
• Personality Traits
– Extroverts and agreeable people weaker at distributive
negotiation – disagreeable introvert is best
– Intelligence is a weak indicator of effectiveness
• Mood and Emotion
– Ability to show anger helps in distributive bargaining
– Positive moods and emotions help integrative bargaining
• Gender
– Men and women negotiate the same way, but may experience
different outcomes
– Women and men take on gender stereotypes in negotiations:
tender and tough
– Women are less likely to negotiate
101
Conflict Styles
• Strategy Effectiveness
– Adapt to the Situation
– Be Fair and Objective
– Appropriate and Effective Communication
– Mutual Awareness
– Open-minded Attitudes
– Willingness to Ignore Power Issues
– Problem-Solving Procedures
102
Characterizing Conflict Styles
• 5 Basic Conflict Styles
– Withdrawing (Avoiding)
– Smoothing (Accomodating)
– Forcing (Dominating; Competing)
– Confronting (Collaborating, Problem Solving, Integrating)
– Compromising
• Ethical Climate Determines Effectiveness of Conflict Style
– Formal Procedures / Rules
– Concern for other, self, and issue
103
Third-Party Negotiations
• Four Basic Third-Party Roles
– Mediator
• A neutral third party who facilitates a negotiated solution by using
reasoning, persuasion, and suggestions for alternatives
– Arbitrator
• A third party to a negotiation who has the authority to dictate an
agreement.
– Conciliator
• A trusted third party who provides an informal communication link
between the negotiator and the opponent
– Consultant
• An impartial third party, skilled in conflict management, who
attempts to facilitate creative problem solving through
communication and analysis
104
strategies involved in negotiation
 Third-party roles in negotiation.

– Arbitration.
• A third party acts as a “judge” and has the power to
issue a decision that is binding on all disputing parties.
– Mediation.
• A neutral third party tries to engage the disputing
parties in a negotiated solution through persuasion and
rational argument.
105
Key Tasks for a Mediator
Ensuring mutual motivation
Achieving a balance in situational power
Coordinating confrontation efforts
Promoting openness in dialogue
Maintaining an optimum level of tension
106
Common negotiation pitfalls
– The myth of the fixed pie.

– The possibility of escalating commitment.
– Negotiators often develop overconfidence in their
positions.
– Communication problems can cause difficulties
during a negotiation.
• Telling problem.
• Hearing problem.
107
6.3 communications
• Understanding conflict is critical to
communication success
• Communication constitutes the essence of
conflict in that it undergirds the formation of
opposing issues, frames perceptions of the felt
conflict, translates emotions and perceptions
into conflict behaviors, and sets the stage for
future conflicts (Putnam & Poole, 1987)
108
Communication as Negotiation
• Transformational power that transcends
notions of technical and instrumental
rationality
• Participants define the conflict and its
environment
• Rationality and Effectiveness (and
Appropriateness) help define many aspects of
organizational life
109
Communication as Negotiation…
• First, understand the factors contributing to conflict
• Next, we identify the methods for resolving conflict
Two Forms of Conflict Resolution
• Distributive Conflict Resolution
• Winning through the use of negative behaviors
• Disagreement to prevent others from reaching their goals
• Serves personal needs and goals at the expense of others
• Conflict as WIN lose
110
Communication as Negotiation…
• Integrative Conflict Resolution
• Foster cooperation and shared solutions
• Modifying ideas, bargaining for an acceptable
compromise
• Search for solutions and provide support for others
• Cooperative and not mutually exclusive
• Objective is to share values, highlight common
objectives, and help achieve consensus
• Transition from distributive to integrative conflict
resolution occurs when the need to accomplish a
common goal is recognized.
111
Ethical Issues in
Conflict in Organizations
• Tolerance for conflict
– Manager with a high tolerance for conflict; keeps
conflict levels too high for subordinates
– Should such managers reveal their intentions
about desired conflict levels?
– Full disclosure: subordinates could leave the
group if conflict levels became dysfunctionally
stressful
– Ethical question applies equally to newly hired
employees
112
Ethical Issues in
Conflict in Organizations (Cont.)
• Deliberately increasing conflict is an effort to
guide behavior in a desired direction
– Subtle methods of increasing conflict (forming
heterogeneous groups) connote manipulation
– Full disclosure: manager states his intention to
use conflict to generate ideas and innovation
– If people are free to join a group or not, the
ethical issue likely subsides
113
Ethical Issues in
• Experiencing intrapersonal conflict
– Requests to act against one's moral values
– Observing behavior that one considers unethical
• Reduce intrapersonal conflict
– Report unethical acts
– Transfer to another part of the organization
– Quit
114
Ethical Issues in
• Different cultures place different values on
conflict
– Optimal conflict levels vary among countries
– Lower levels conflict in collectivistic countries than
individualistic countries
Should managers honor such values even if their home

country values support higher levels of conflict?
115
Summary
• Conflict can be constructive or destructive
• Reduce excessive conflict by using:
– Competition
– Collaboration
– Avoidance
– Accommodation
– Compromise
• Integrative negotiation is a better long-term
method
116
Individual Assignment on Conflict Management
Due Date Dec. 25, 2016
117
Unit VII Organizational Structure,
Culture and Change
7.0 Introduction
7.1 Mechanistic and organic organizations
7.2 Elements of Organizational Structure
7.3 Organizational design and culture
7.4 Change management
118
Unit Objectives
1. Define key elements of organizational structure, including both
structural and structuring dimensions.
2. Explain how corporate and business strategies relate to
structure.
3. Explain how environment, technology, and size relate to
structure.
4. Define organizational culture, and discuss the competing-values
cultural framework.
5. Discuss socialization.
6. Describe cultural audits and subcultures.
7. Explain the importance of a fit between individual values and
organizational culture.
119
7.0 INTRODUCTION
• An organization is a collection of people
working together in a coordinated and
structured fashion to achieve one or more
goals.
• Organizations are strongly influenced by the
people that form part of them.
• Organizations can take in part of the
personality of the people within them and
their attitudes, perceptions and behaviors
affect how an organization will operate.
120
INTRODUCTION …
An organizational structure consists of

activities such as task allocation, coordination
and supervision, which are directed towards the
achievement of organizational aims.
Introduction…
• ‘Organizing’ is a subject of the larger activity of
‘managing’. it is the process by which the structure of an
organization is created & maintained.
• The word “organization” may be used to refer to the
process of organizing, the structure that evolves out of
this process and the processes/activities that take place
within it.
• All activities involving two or more persons entails the
formation of an organization.
Organizational Structure
• Organizational Structure
– The formal arrangement of jobs within an organization.
• Organizational Design
– A process involving decisions about six key elements:
1.Work specialization
2.Departmentalization
3.Chain of command
4.Span of control
5.Centralization and decentralization
6.Formalization
Organizational Structure…
• Organizational Architecture
– The organizational structure, control systems,
culture, and human resource management
systems that together determine how efficiently
and effectively organizational resources are used.
Designing Organizational Structure
• Organizing
– The process by which managers establish working
relationships among employees to achieve goals.
– Formal system of task and reporting relationships
showing how workers use resources.
• Organizational design
– The process by which managers make specific
choices that result in a particular kind of
organizational structure.
7–125
The Basic Tasks of Organization
Achieving high levels of productivity requires SPECIALIZATION
Specialization by individuals necessitates COORDINATION
For coordination to be effective requires COOPERATION
But goals of employees == goals of owners

THE AGENCY PROBLEM
THE ORGANIZATIONAL CHALLENGE:

To design structure & systems that:
 Permit specialization
 Facilitate coordination by grouping individuals & link
groups with systems of communication, decision
making, & control
 Create incentives to align individual & firm goals
ORGANIZATION DESIGN
Organization design is the process of deciding how

organizations should be structured and function
ORGANIZATION DESIGN
The overall aim of organization design is to

optimize the arrangements for conducting the
affairs of the business or function and thus
achieve the 'best fit' between the structure
and what the business or function is there to
do
The Meaning of
Organizational Design
• Organization Design
– A dynamic process controlling outcomes and
process
Organizational Design…
Organizational Design - the process of

constructing and adjusting an organization’s
structure to achieve its goals.
the linking of
departments and
jobs within an
organization
Key Organizational Design
Processes
The process of deciding
how to divide the work
in an organization
Four Dimensions
• Goal orientation
• Time orientation
• Interpersonal orientation
• Formality of structure
Horizontal
Differentiation
• The degree of differentiation between

organizational subunits
• Based on employee’s specialized knowledge,
education, or training
Vertical
Differentiation
• The difference in authority and responsibility

in the organizational hierarchy
• Greater in tall, narrow organizations than in
flat, wide organizations
Spatial
Differentiation
• Geographic dispersion of an organization’s

offices, plants and personnel
• Complicates organizational design, may
simplify goal achievement or protection
The process of coordinating
the different parts
of an organization
• Designed to achieve unity among individuals

and groups
• Supports a state of dynamic equilibrium -
elements of organization are integrated,
balanced
Vertical
Integration
• Hierarchical referral
• Rules and procedures
• Plans and schedules
• Positions add to the organization structure
• Management information system
Horizontal
Integration
• Liaison roles
• Task forces
• Integrator positions
• Teams
• Management’s Role
– Redesign: needs change as organization's needs
change
• Management’s Role
• Building blocks of organization are arranged to
improve effectiveness and adaptive capacity
– Authority
– Responsibility
– Accountability
– Information
– Rewards
• When a design should be reconsidered
– Severe performance problems
– Change in environment that affects internal
policies
– New programs or product lines
– Leadership change
Why Are There Different Types of
Organizations?
• Depending on what the product or service is, the
management has to structure the organization to
met the customer’s needs.
• Two universal (one best way) perspectives of OD

– Bureaucratic model & Behavioral model
Symptoms of Structural Weakness
• Delay in decision Overloaded hierarchy; information

making funneling limited to too few channels
• Poor quality
Right information not reaching
decision making right people in right format
• Lack of innovative
response to changing No coordinating effort
environment
• High level of conflict Departments work against each
other, not for organizational goals
Symptoms of Structural Weakness…
• Inattention to Organizational Health
• Prioritizing Consensus
• Not Answering the Key Questions — six critical
questions: 1. why do we exist? 2. How do we behave?
3. What do we do? 4. How will we succeed? 5. What is
most important, right now? 6. Who must do what?
• Hiring the Wrong People — “Bringing the right people
into an organization, and keeping the wrong ones out, is
as important as any activity that a leadership team
must oversee.”
• Ineffective Meetings
145
Essential Elements of Organization Design
• Organization
– A group of people working together to attain common
goals.
• Organizational Goals
– Objectives that management seeks to achieve in pursuing
the firm’s purpose.
• Strategies
– Specific action plans that enable the organization to
achieve its goals and thus its purpose.
Organization Structure
– The system of task, reporting, and authority relationships
within the organization.
• Structure – the form and function of the organization’s activities
and how these parts fit together
• Organization Chart
– A diagram showing all people, positions, reporting
relationships, and lines of formal communication.
Classic Views of Structure: The
Universal Approach
• In the universal approach to organization design
(also called the classical organization theory),
prescriptions or propositions are designed to work in
any circumstance.
• It prescribes the “one best way” to structure the
jobs, authority, and reporting relationships of the
organization, regardless of factors such as the
organization’s external environment, the industry,
and the type of work to be done.
Contingency Approaches to
• Under the contingency approach to organization
design, the desired outcomes for the organization
can be achieved in several ways.
• The contingency factors include the:
– Strategy of the organization
– Technology
– Environment
– Organization’s size
– Social system within which the organization operates
The Structural-Imperatives Approach
Contingency Factors
• Strategy
– The plans and actions necessary to achieve organizational
goals.
• Size
– Generally, larger organizations have a more complex
structure than smaller ones in that large size is associated
with greater specialization of labor, a larger span of
control, more hierarchical levels, and greater formalization.
– Organizational downsizing aims to reduce the size of
corporate staff and middle management to reduce costs.
Contingency Factors (continued)
• Technology
– The mechanical and intellectual processes that transform
inputs into outputs.
– Although many different ways to evaluate and measure
technology are available, there is general agreement that
technology is a very important determinant of organization
design.
• Environment
– Everything outside the boundaries of the organization,
including people, other organizations, economic factors,
objects and events.
Contingency Factors (continued)
• General Environment
– Includes the broad set of dimensions and factors within
which the organization operates, including the:
• Political-legal factor
• Sociocultural factor
• Technological factor
• Economic factor
• International factor
• Task Environment
– Includes specific organizations, groups, and individuals
who influence the organization.
Aspects of the Environment
• Environmental Uncertainty
– When managers have little information about
environmental events and their impact on the organization
• Environmental Complexity
– The number of environmental components that impinge
on organizational decision making
• Environmental Dynamism
– The degree to which environmental components that
impinge on organizational decision making change
Mechanistic and Organic Designs
• Mechanistic Structure
– Primarily hierarchical, interactions and communications
typically are vertical, instructions come from the boss,
knowledge is concentrated at the top, and loyalty and
obedience are required to sustain membership
• Organic Structure
– Set up like a network; interactions and communications
are horizontal, knowledge resides wherever it is most
useful to the organization, and membership requires a
commitment to the organization’s tasks
Mintzberg’s Coordinating Mechanisms
• Henry Mintzberg described five methods of
coordinating the actions of organizational
participants:
1. Mutual adjustment
2. Direct supervision, and standardization of
3. Input skills
4. Work processes
5. Outputs
Mintzberg’s Five Coordinating Mechanisms
Source: Henry Mintzberg, The Structuring

of Organizations: A Synthesis of the
Research. 1979, p.4. Reprinted by
permission of Prentice Hall, Inc.,
Englewood Cliffs, N.J. Used with
permission.
Mintzberg’s Structural Forms
• Structural Forms
– Simple Structure
• Little specialization or formalization; power and decision making
are concentrated in the chief executive
– Machine Bureaucracy
• Highly specialized and formalized, and decision making is usually
concentrated at the top
– Professional Bureaucracy
• Characterized by horizontal specialization by professional areas of
expertise, little formalization, and decentralized decision making
Mintzberg’s Structural Forms…
• Structural Forms (continued)
– Divisional Structure
• Divided according to the different markets served; horizontal and
vertical specialization exists between division and headquarters,
decision making is divided between headquarters and divisions,
and outputs are standardized
– Adhocracy
• Decision making is spread throughout the organization, power
resides with the experts, horizontal and vertical specialization
exists, and there is little formalization
Matrix Organization Design
• Matrix Design
– Combines two different designs to gain the benefits of
each; typically combined are a product or project
departmentalization scheme and a functional structure.
– This structure has the capacity for flexible and coordinated
responses to internal and external pressures because
members can be reassigned from one project to another
as demands for their skills change.
Approaches to Organizational Design
• Bureaucracy: Based on a Legitimate and
Formal System of Authority
• Behavioral Model
• Strategy and Organization Designs
• Organizational Functions
161
Organization Design Options
Virtual Design
Complex
Network Design
Environmental
Multinational Design
Factors
Multidivisional Design
Product Design
Place Design
Simple Functional Design
Pooled Technological Factors Reciprocal

6
Organic and Mechanistic
Design Features
 Hierarchy of authority
 Centralization
 Division of labor
 Rules
 Procedures
 Impersonality
 Chain of command
 Unity of command
 Span of control
10
Designing Organizational Structure
• Organizational structure: Formal system of task and
reporting relationships that coordinates and motivates
organizational members so that they work together to
achieve organizational goals
• Organizational design: Process by which managers make
specific organizing choices that result in a particular kind
of organizational structure
7-
Factors Affecting Organizational Structure
7-
Determinants of Structure
• The Organizational Environment
– The quicker the environment changes, the more
problems face managers.
– Structure must be more flexible (i.e., decentralized
authority) when environmental change is rapid.
• Strategy
– Different strategies require the use of different
structures.
• A differentiation strategy needs a flexible structure, low
cost may need a more formal structure.
• Increased vertical integration or diversification also
requires a more flexible structure.
Chandler: Structure follows strategy
• Technology
– The combination of skills, knowledge, tools,
equipment, computers and machines used in the
organization.
– More complex technology makes it harder for
managers to regulate the organization.
• Organizations utilizing complex technology require a
flexible structure to be managed efficiently.
• Organizations utilizing routine technology can be more
readily managed using a formal structure.
• Organizations with high employee interaction
requirements need a flexible structure.
Types of Technology
• Small Batch Technology
– Small quantities of one-of-a-kind products are
produced by the skills of the workers who work
together in small groups.
• Appropriate structure is decentralized and flexible.
• Mass Production Technology
– Automated machines that are programmed to
make high volumes of standard products.
• Formal structure is the best choice for workers who
must perform repetitive tasks.
• Human Resources
– Highly skilled workers whose jobs require working
in teams usually need a more flexible structure.
– Higher skilled workers (e.g., CPA’s and doctors)
often have internalized professional norms.
• Managers must take into account all four
factors (environment, strategy, technology and
human resources) when designing the
structure of the organization.
Organization Structure Issues
• How to group tasks into individual jobs.
• How to group jobs into functions and
divisions.
• Coordinating functions and divisions.
• Allocating authority.
• Types of integrating mechanisms.
Grouping Tasks Into Jobs: Job Design
• Job Design
– The process by which managers decide how to divide tasks
into specific jobs.
Enhance specification and
• Division of Labor independence
– Splitting the work to be performed into particularly
impersonal tasks and assigning tasks to individual workers.
– The appropriate division of labor results in an effective and
efficient workforce. Internal cohesion and
• Job Simplification external decoupling
– Reducing the tasks each worker performs: too much
simplification results in boredom.
Job Design
• Job Enlargement Increase the width of task
– Increasing the number of tasks for a given job by
changing the division of labor.
– The intention is to reduce boredom and fatigue by
increasing variety of tasks performed.
• Job Enrichment Increase the depth of task
– Increasing the degree of responsibility a worker
has over a job.
• Intended to increase worker involvement and self-
discretion.
• Requires a flexible organizational structure to allow
employees to act flexibly and creatively.
Forms of work coordination
• Informal communication
– sharing information
– high media-richness
– important in teams
• Formal hierarchy
– direct supervision
– common in larger firms
– problems  costly, slow, less popular with young staff
• Standardisation
– formal instructions
© AAP Image/Dave Hunt
– clear goals/outputs
– training/skills
Coordinating Functions and Divisions:
Allocating Authority
• Authority
– The power to hold people accountable for their
actions and to make decisions concerning the
use of organizational resources.
• Hierarchy of Authority
– An organization’s chain of command, specifying
the relative authority of each manager.
• Span of Control: refers to the number of workers a
manager manages.
Authority vs. responsibility vs. accountability
Allocating Authority …
• Span of Control
– The number of subordinates who report directly to a
manager.
• Line Manager
– Managers in the direct chain of command who have
authority over people and resources lower down.
– Primarily responsible for the production of goods or
services.
• Staff Manager
– Managers who are functional-area specialists that give
advice to line managers.
Elements of organisational structure
Department- Span of
alisation control
Organisational
structure
elements
Formalisation Centralisation
Span of control
• Number of people directly
reporting to the next level
• Assumes coordination through
direct supervision
• Wider span of control possible
when
– used with other coordinating
methods
– subordinates’ tasks are similar
– tasks are routine
• Flatter structures require wider
span (if same number of people
in the firm)
17
8
Forces for (de)centralisation
Centralisation
• Organisational crises
• Management desire for control
• Increase consistency, reduce costs
• Complexity  size, diversity

• Desire for empowerment
Decentralisation
Mechanistic vs organic structures
Mechanistic Organic
• High formalisation • Low formalisation
• Narrow span of control • Wide span of control
• High centralisation • Low centralisation

Org environment and structure
Dynamic Stable
• Steady conditions,
• High rate of change
predictable change
• Use organic structure
• Use mechanistic structure
Complex Simple
• Many elements (such as • Few environmental
stakeholders) elements
• Decentralise • Less need to decentralise
Org environment and structure...
Diverse Integrated
• Variety of products,
• Single product, client,
clients, locations
location
• Divisional form aligned
• Don’t need divisional form
with the diversity
Hostile Munificent
• Competition and resource • Plenty of resources and
scarcity product demand
• Use organic structure for • Less need for organic
responsiveness structure
A continuum of organizational design alternatives: from
bureaucratic to adaptive organizations.
183
Simultaneous “loose-tight” properties of
team structures support efficiency and
innovation.
184
The Organizational Life Cycle
Birth Youth Maturi Decli

ty ne
185
Major issues in subsystems design
 Mechanisms for achieving subsystem integration:

– Rules and procedures
– Hierarchical referral
– Planning
– Direct contact
– Liaison role
– Task forces
– Teams
– Matrix organizations
186
Effects of departmentalisation
• Establishes work teams and supervision
structure
• Creates common resources, measures of

performance, etc
• Encourages informal communication

among people and subunits
SUCCESSFUL ORGANIZATION DESIGN
• Obtain top management support
• Avoid piecemeal, uncoordinated change initiatives
• Achieve substantive employee involvement
• Invest in communications with external
stakeholders
• Involve HR professionals closely
• Maintain effective project management
disciplines
• Build skilled change management teams
(Whittington and Molloy, 2005)
CONDUCTING ORGANIZATION REVIEWS
Organizational reviews can be conducted in the following
stages:
1. An analysis of the existing arrangements
2. A diagnosis of the problems and issues facing the
organization
3. The choice of how the business should be designed or
revised
4. A plan to implement any revisions to the structure
Organizational Structure of Management
An organizational structure lays the foundation for how a company
operates. It is a set of policies and rules that determines:
• How an organization controls and delegates tasks and
responsibilities
• How decisions are made and implemented throughout every part
of an organization
• How information flows within an organization
• Depending upon a company's needs, there are several
organizational structures that can be used. Some common
examples include the flat organizational structure, the functional
organizational structure, the product organizational structure,
and the geographical organizational structure. Let's take a look at
these four structures in more detail.
190
CONDUCTING ORGANIZATION REVIEWS
Organizational reviews can be conducted in the following
stages:
1. An analysis of the existing arrangements
2. A diagnosis of the problems and issues facing the
organization
3. The choice of how the business should be designed or
revised
4. A plan to implement any revisions to the structure
Organizational Structure and Culture
The formal system of work roles and

Organizational authority relationships that govern
Structure how associates and managers
interact with one another.
Involves the values and norms

Organizational shared by managers and associates
Culture that influence behavior. It is a
powerful force in organizations.
192
Change management
The process, tools and techniques to manage the people-side of

change to achieve the required business outcome.
193
ORGANIZATIONAL DESIGN AND CULTURE
“Adaptability and values set the tone”

• What are the trends in organizational design?
• What is the nature of organizational culture?
194
What Is Organizing?
• Organizing
– Arranging the activities of the enterprise
in such a way that they systematically
contribute to the enterprise’s goals.
195
• Organizational structure refers to the

formalized arrangement of interaction
between and responsibility for the tasks,
people, and resources in an organization
196
Depicting the Organization
• Organization Chart
– A chart that shows the
structure of the
organization including
the title of each
manager’s position and,
by means of connecting
lines, who is accountable
to whom and who has
authority for each area.
197
Organization Chart
Information Services Group
Knowledge Architecture Manager
Knowledge Architecture Lead Search/Systems Lead Design Lead
Customer Liaison Developer Assistant Designer
Developer
Cataloger
Systems Admin
Cataloger
Taxonomy Designer
198
Organization Design and
Structure
• Organization design
– A process in which managers develop or change
their organization’s structure
• Work specialization
– A component of organization structure that
involves having each discrete step of a job done by
a different individual rather than having one
individual do the whole job
199
• Defines how job tasks are formally
––Divided
––Grouped
––Coordinated
• Six key elements
––Work specialization
––Departmentalization
––Chain of command
––Span of control
––Centralization & decentralization
––Formalization
• Controls, coordinates & motivates employees
200
Stages of Organizational
Development
• Simple structure
– An organization that is low in specialization and
formalization but high in centralization
• Functional structure
– An organization in which similar and related
occupational specialties are grouped together
• Divisional structure
– An organization made up of self-contained units
201
Stages of Organizational
Development (cont’d)
• Matrix structure
– An organization in which specialists from functional
departments are assigned to work on one or more projects
led by a project manager
• Team-based structure
– An organization that consists entirely of work groups or
teams
• Boundaryless organization
– An organization that is not defined or limited by
boundaries or categories imposed by traditional structures
202
7.1 Mechanistic and organic organizations
• Mechanistic organization
– The bureaucracy; a structure that is high in
specialization, formalization, and centralization
• Organic organization
– An adhocracy; a structure that is low in
specialization, formalization, and centralization
• Structure follows strategy
203
Burns and Stalker
204
Comparison between Mechanistic and
Organic Forms
FEATURE MECHANISTIC ORGANIC
Task definition Rigid & highly Flexible; less

specialized specialized
Coordination Rules & directives Mutual adjustment.l

& control imposed from the top Cultural control
Communication Mainly vertical Horizontal & vertical
Commitment To immediate superior To the organization & its

& loyalty goals & values
Environmental Stable with low tech- Dynamic, ambiguous,

context nological uncertainty high technological
uncertainty
Factors Affecting Structure
Corporate
Growth
Strategy
Diversification
206
Diversification Strategy and Structure
Diversification Structure
Single product Functional
Dominant product (few products) Functional
Dominant product (several products) Divisional
Related product Divisional
Unrelated product Divisional
Unrelated product Holding Company
207
Business Strategy
How a firm competes for success against other
organizations in a particular market.
• Low cost/low price
• Product/service differentiation
• Supporting structure including strategic business units
– SBUs
208
Environment and Integration
Lateral
Relations
Information Processing
Increasing Richness of
Information
Technology
Self-Contained
Tasks
Slack
Resources
Increasing Implementation Complexity

209
Alternative Lateral Processes
Direct Contact Liaison Roles
Matrix Designs Taskforces
Lateral
Processes
Managerial
Teams
Linking Roles
Integrating Roles
210
Technology and Structure
Mass Production
Technology
Process
Small-Batch
Technology
Manufacturing Production
Technology
Mass
Customization
211
Technology and Structure
Task Variability Task Analyzability
Routine Craft
Four categories
of technology
Engineering Nonroutine
212
Organizations and Technology
Engineering Non-Routine
Specialized Research and

High
Engineering Development
Task Variability
Consulting Firm Firm
Routine Craft
Low Mass-Production
Public School
Firm
High Task Analyzability Low

213
7.2 Elements of Organizational
Structure
– Chain of command • Departmentalization
– Span of control – Functional
– Authority – Divisional
– Power • Product
– Responsibility • Customer
• Geographic
• Process
214
Organizational Structure: Control
• Chain of command
– The management principle that no person should report to more than
one boss
• Span of control
– The number of subordinates a manager can direct efficiently and
effectively
• Authority
– The rights inherent in a managerial position to give orders and expect
them to be obeyed
• Responsibility
– An obligation to perform assigned activities
• Power
– An individual’s capacity to influence decisions
215
The Minimum Chain of Command
• Managers should carefully evaluate:
– Do the organization have the right number of
middle managers?
– Can the structure be altered to reduce levels?
• Centralized and Decentralized of Authority
– Decentralization puts more authority at lower
levels and leads to flatter organizations.
• Works best in dynamic, highly competitive
environments.
– Stable environments favor centralization of
authority.
Chain of Command
217
Internal coordination
Integrating Mechanisms
7–218 Figure 7.9

Externally cooperative linkage
Strategic Alliances and Network Structures
• Strategic Alliance
– An agreement in which managers pool or share
firm’s resources and know-how with a foreign
company and the two firms share in the rewards
and risks of starting a new venture.
• Network Structure:
– A series of strategic alliances that an organization
creates with suppliers, manufacturers, and
distributors to produce and market a product.
– Network structures allow firms to bring resources
together in a boundary-less
7–219
organization.
Tall And Flat Organizations, And The
Span Of Control
• Span of Control
– The number of subordinates reporting directly to a
supervisor.
• Wide spans: larger number of direct reports.
• Narrow spans: fewer number of direct reports.
• Tall vs. Flat Organizations
– Tall organizations: more management layers and more
hierarchical controls.
– Flat organizations: fewer management layer and
decision making closer to the customer.
220
Tall and Flat Organizations
• Tall structures have many levels of authority
and narrow spans of control.
– As hierarchy levels increase, communication gets
difficult, creating delays in the time being taken to
implement decisions.
– Communications can also become garbled as it is
repeated through the firm.
• Flat structures have fewer levels and wide
spans of control.
– Structure results in quick communications but can
lead to overworked managers.
Types of Organizational Authority
• Line authority
– The position authority (given and defined by the
organization) that entitles a manager to direct the
work of operative employees
• Staff authority
– Positions that have some authority (e.g.,
organization policy enforcement) but that are
created to support, assist, and advise the holders
of line authority
222
Authority Versus Power
223
Types of Power
Power based on one’s position in
Legitimate the formal hierarchy
Coercive Power based on fear
Power based on the ability to

Reward distribute something that others
value
Power based on one’s expertise,

Expert special skill, or knowledge
Power based on identification

Referent with a person who has resources
or traits
224
Checklist 7.1
Principles of Delegation
 The manager can delegate authority but cannot
delegate responsibility.
 Clarify the assignment.
 Delegate, don’t abdicate.
 Know what to delegate.
 Specify the subordinate’s range of discretion.
 Authority should equal responsibility.
 Make the person accountable for results.
 Beware of backward delegation.
225
Departmentalization
• Functional
– The grouping of activities by functions performed
• Product
– The grouping of activities by product produced
• Customer
– The grouping of activities by common customers
• Geographic
– The grouping of activities by territory
• Process
– The grouping of activities by work or customer flow
226
Organizing Departments by Function
• Functional Departmentalization
– A form of organization that groups a company’s
activities around essential functions such as
manufacturing,
sales, or finance.
227
Functional Departmentalization
228
Organizing Departments by Self-
Contained Divisions/Purposes
• Product Departmentalization
– Grouping departments around a firm’s products
or services, or each family of products or
services; also referred to as a “divisional”
organization.
• Customer Departmentalization
– Self-contained departments are organized to
serve the needs of specific groups of
customers.
229
Divisional Organization
for a Pharmaceuticals Company
230
Customer Departmentalization,
Grayson Steel Company
231
Organizing Departments by Self-
Contained Divisions/Purposes (cont’d)
• Marketing-channel Departmentalization
– Departments focus on particular marketing
channels, such as drugstores or grocery stores.
• Geographic (Territorial)
Departmentalization
– Separate departments are established for each
of the territories in which the enterprise does
business.
232
Marketing Channel
Departmentalization
233
Divisional Organizations
Facilitate Coordination
234
Checklist 7.2
Functional vs. Divisional Organizations
 Functional Organization Advantages
1. It is simple, obvious, and logical.
2. It fosters efficiency.
3. It can simplify executive hiring and training.
4. It can facilitate the top manager’s control.
 Functional Organization Disadvantages
1. It increases the workload on the executive to
whom the functional department heads report.
2. It may reduce the firm’s sensitivity to and service
to the customer.
3. It produces fewer general managers.
235
Checklist 7.2 (cont’d)
 Divisional Organization Advantages
1. The product or service gets the single-
minded attention of its own general
manager and unit, and its customers may
get better, more responsive service.
2. It’s easier to judge performance.
3. It develops general managers.
4. It reduces the burden for the company’s
CEO.
236
Checklist 7.2 (cont’d)
 Divisional Organization Disadvantages
1. It creates duplication of effort.
2. It may diminish top management’s
control.
3. It requires more managers with general
management abilities.
4. It can breed compartmentalization.
237
Creating Matrix Organizations
• Matrix Organization
– An organization structure in which employees are
permanently attached to one department but also
simultaneously have ongoing assignments in
which they report to project, customer, product,
or geographic unit heads.
238
Matrix Organization Departmentalization
239
Matrix Organizations
Advantages Disadvantages
• Access to expertise. • Confusion of
• Stability of permanent command.
department • Power struggles and
assignments for
employees. conflicts.
• Allows for focus on • Lost time in
specific projects, coordinating.
products, or • Excess overhead for
customers. managing matrix
functions.
240
Departmentalization in Practice: A Hybrid
• Why mix the types of departmentalization?

– Hierarchical considerations
• The relationship of top level departments to their subsidiary
departments.
– Efficiency
• Product, customer, and territorial departments tend to result
in duplicate sales, manufacturing, and other functional
departments.
– Common sense
• Departmentalizing is still more an art than a science.
241
e.g. The New Summer Tour Organization
242
Network-based Organizations
• Organizational Network
– A system of interconnected or cooperating
individuals.
• Informal Networks
– Communication pathways and relationships
between individuals in an organization that do not
necessarily conform to the formal chain of
command and communication networks of an
organization.
243
Network-based Organizations (cont’d)
• Formal Organizational Network
– A recognized group of managers or other
employees assembled by the CEO and the other
senior executive team, drawn from across the
company’s functions, business units, geography,
and levels.
• Electronic Organizational Networks
– Networking through technology-supported
devices such as e-mail, video-conferencing, and
collaborative computing software like Lotus Notes.
244
Formal vs. Social Structure
Rarely do the
communication patterns
match the formal
structure
Cross, Rob. A bird's-eye view: Using social network analysis to

improve knowledge creation and sharing. IBM Executive strategy
report 04Jun2002 http://www-
1.ibm.com/services/us/index.wss/xs/imc/a1001262
245
Network-based Organizations (cont’d)
• Team-Based Organizations
– Team
• A group of people committed to a common purpose, set of
performance goals, and approach for which they hold themselves
mutually accountable.
• Horizontal Corporations
– A structure that is organized around customer-oriented
processes performed by multidisciplinary cross-functional
teams rather than by formal functional departments.
246
The Horizontal Corporation
Source: John A. Byrne,

“The Horizontal
Corporation,” Business
Week, 20 December
1993, p. 80.
247
Checklist 7.3
Building Horizontal Organizations
 Make responsibilities overlap. Design individual jobs
as broadly as possible, and keep the number of job
titles to a minimum.
 Base rewards on unit performance to emphasize the
importance of working together.
 Change the physical layout to promote collective
responsibility. Let people see each other’s work.
 Redesign work procedures, provide computer
terminals, use the e-mail network, and make sure
managers are available.
248
How to Create a Horizontal
Corporation
Source: Source: Reprinted from the December 20, 1993, issue of Business Week by special
permission. Copyright © 1993 by the McGraw-Hill Companies, Inc.
249
Other Organization Types
• Federal Organization
– An organization in which power is distributed between a
central unit and a number of constituents, but the central
unit’s authority is intentionally limited.
• Virtual Organization
– A temporary network of independent companies that use
information technology to share skills, reduce costs, and
provide access to one another’s markets.
– Its success depends on each of the individual firms’
responsibility and self-interest to accomplish the network’s
purpose.
250
Effect of Technology on Structure
251
When Organizing:
Always Keep Your Goals in Mind
• Business environments are in a constant state of
change.
• An organization’s strategy must be adapted to
changes in its competitive environment.
• Structure follows strategy.
– Strategic change creates the need for restructuring the
organization to acquire new and different knowledge,
skills and abilities.
252
Checklist 7.3
What Determines Organization Structure
 Environment. Fast-changing environments require
organic structures; slowly changing environments favor
mechanistic structures.
 Technology. Unit and continuous production processes
favor organic structures. Mass production processes
favor mechanistic structures.
 Goals. Ask, “What are the main goals we want to
achieve via this organization?”
 Pros and cons. Each approach to departmentalization
has pros and cons.
 Logic and common sense.
253
What Are Learning Organizations?
1. Adopt an organic, networked organizational form.
2. Encourage their employees to learn and to confront
their assumptions
3. Have employees who share a common vision
4. Have the capacity
• to adapt to unforeseen situations
• to learn from their own experiences
• to shift their shared mindsets
• to change more quickly, broadly, and deeply than ever
before.
254
Abolishing Organizational Boundaries
• Boundaryless Organization
– An organization in which management strips
away the “walls” which typically separate
organizational functions and hierarchical
levels, through
the widespread use of
teams, networks, and
similar structural
mechanisms.
255
The Four Organizational Boundaries That
Matter
Source: Reprinted by permission of Harvard Business Review. “The Four Organizational Boundaries that Matter,” from “The
New Boundaries of the Boundaryless Company,” by Larry Hirschorn and Thomas Gilmore, May–June 1992. Copyright © 1992
by the President and Fellows of Harvard College. All rights reserved.
256
Managing Learning Organizations
• How to Streamline Organizational Decision Making
– Downsize
– Reduce management layers
– Establish miniunits
• How to Cultivate Employees’ Personal Mastery
– Provide continuous learning opportunities.
– Foster inquiry and dialogue.
– Establish mechanisms to ensure that the organization is
continuously aware of and can interact with its
environment.
257
Challenges in Organization
• Merging separate organizations with different
structures
• Changing an existing organization to meet external or
internal changes in conditions
• Conflicts between departments or groups
• Interdependence between organizational units
• Centralization vs. decentralization
258
Methods for Achieving Coordination
• Mutual Adjustment • Appoint Staff Assistants
– Achieving coordination • Appoint Liaisons
through face-to-face
interpersonal interaction. • Appoint Committees
• Use Rules and Procedures • Organize Independent
Integrators
• Standardize
– An individual or a group
• Exercise Direct that coordinates the
Supervision: Use the activities of several
Chain of Command interdependent
departments, but is
• Divisionalize independent of them.
259
Managing Organizational Conflict
• Line–Staff Conflict
– Disagreements between a line manager and
the staff manager who is giving him or her
advice.
• How to Organize to Reduce Interunit
Conflict
– Appeal to power and
the chain of command
– Reduce interdependence
– Exchange personnel
260
Types of Interdependence
Source: Based on James Thompson, Organizations in Action (New York:

McGraw-Hill, 1967), Chapter 2.
261
Centralization and Decentralization
• Centralization
– A function of how much decision-making
authority is pushed down to lower levels in an
organization; the more centralized an
organization, the higher the level at which
decisions are made
• Decentralization
– The pushing down of decision-making authority to
the lowest levels of an organization
262
Decentralize?
• Decentralized Organization
– Organizational authority for most departmental
decisions is delegated to the department heads.
– Control for major companywide decisions is maintained
at the headquarters office.
• Decentralization Rules:
– Decentralize decisions that affect only one division or
area and that would take a long time for upper
management to make.
– Centralize decisions that could adversely affect the
entire firm and that upper management can fairly
quickly and easily.
263
Problems With Size
• “There is a fairly common perception that large organizations tend to
behave much less “intelligently” than their size suggests. They often
lose the decisiveness seen in small groups and may seem "stupid" to
people within them who work with ideas and knowledge.”
• “There appears to be a fundamental upper limit on the average per

capita decision rate that an organization can sustain, depending
inversely on the organization's entropy. If the limit is broached,
impaired productivity among knowledge managers may result and
large organizations may be disadvantaged when performing
knowledge-intensive tasks that require efficient use of intellectual
capital.”
Janow, R. Shannon “Entropy and Productivity: Why Big Organizations Can Seem Stupid”. Analytic Solutions Group, LLC. 2/28/2004
http://physics.njit.edu/~janow/Paper20040228njit.pdf
264
Hammer vs. Deming
• What tradeoffs did Deming and Hammer make in
their approaches to designing organizations?
• Did you notice who was given power in Deming’s
approach vs. Hammer?
• What is driving NYNEX to make changes in their
organization structure?
• What component of the organization is hardest to
change?
• Do you see the same issues arising in the “War at
Work” article?
265
Types of Organizational Designs
• Organizational designs fall into two categories,
traditional and contemporary.
• Traditional designs include simple structure,
functional structure, and divisional structure.
• Contemporary designs would include team
structure, matrix structure, project structure,
boundaryless organization, and the learning
organization. I am going to define and discuss
each design in order to give an understanding of
the organizational design concept.
266
I. Traditional Designs
1. Simple Structure
A simple structure is defined as a design with low
departmentalization, wide spans of control, centralized
authority, and little formalization. This type of design is very
common in small start up businesses. For example in a
business with few employees the owner tends to be the
manager and controls all of the functions of the business.
Often employees work in all parts of the business and don’t
just focus on one job creating little if any departmentalization.
In this type of design there are usually no standardized
policies and procedures. When the company begins to expand
then the structure tends to become more complex and grows
out of the simple structure.
267
I. Traditional Designs…
2. Functional Structure
A functional structure is defined as a design
that groups similar or related occupational
specialties together. It is the functional
approach to departmentalization applied to
the entire organization.
268
I. Traditional Designs…
3. Divisional Structure
A divisional structure is made up of separate,
semi-autonomous units or divisions. Within one
corporation there may be many different
divisions and each division has its own goals to
accomplish. A manager oversees their division
and is completely responsible for the success or
failure of the division. This gets managers to
focus more on results knowing that they will be
held accountable for them. 269
II. Contemporary Designs
1. Team Structure
A team structure is a design in which an organization is made
up of teams, and each team works towards a common goal.
Since the organization is made up of groups to perform the
functions of the company, teams must perform well because
they are held accountable for their performance. In a team
structured organization there is no hierarchy or chain of
command. Therefore, teams can work the way they want to,
and figure out the most effective and efficient way to perform
their tasks. Teams are given the power to be as innovative as
they want. Some teams may have a group leader who is in
charge of the group.
270
II. Contemporary Designs…
2. Matrix Structure
A matrix structure is one that assigns specialists from different
functional departments to work on one or more projects. In an
organization there may be different projects going on at once.
Each specific project is assigned a project manager and he has
the duty of allocating all the resources needed to accomplish the
project. In a matrix structure those resources include the
different functions of the company such as operations,
accounting, sales, marketing, engineering, and human resources.
Basically the project manager has to gather specialists from each
function in order to work on a project, and complete it
successfully. In this structure there are two managers, the project
manager and the department or functional manager.
271
3. Project Structure
A project structure is an organizational structure in
which employees continuously work on projects. This
is like the matrix structure; however when the
project ends the employees don’t go back their
departments. They continuously work on projects in
a team like structure. Each team has the necessary
employees to successfully complete the project. Each
employee brings his or her specialized skill to the
team. Once the project is finished then the team
moves on to the next project.
272
4. Autonomous Internal Units
Some large organizations have adopted this
type of structure. That is, the organization is
comprised of many independent decentralized
business units, each with its own products,
clients, competitors, and profit goals. There is
no centralized control or resource allocation
273
5. Boudaryless Organization
A boundaryless organization is one in which its design is not defined by, or
limited to, the horizontal, vertical, or external boundaries imposed by a
predefined structure. In other words it is an unstructured design. This structure
is much more flexible because there is no boundaries to deal with such as chain
of command, departmentalization, and organizational hierarchy. Instead of
having departments, companies have used the team approach. In order to
eliminate boundaries managers may use virtual, modular, or network
organizational structures. In a virtual organization work is outsourced when
necessary. There are a small number of permanent employees, however
specialists are hired when a situation arises. Examples of this would be
subcontractors or freelancers. A modular organization is one in which
manufacturing is the business. This type of organization has work done outside
of the company from different suppliers. Each supplier produces a specific piece
of the final product. When all the pieces are done, the organization then
assembles the final product. A network organization is one in which companies
outsource their major business functions in order to focus more on what they
are in business to do.
274
6. Learning Organization
A learning organization is defined as an organization that has
developed the capacity to continuously learn, adapt, and change.
In order to have a learning organization a company must have
very knowledgeable employees who are able to share their
knowledge with others and be able to apply it in a work
environment. The learning organization must also have a strong
organizational culture where all employees have a common goal
and are willing to work together through sharing knowledge and
information. A learning organization must have a team design
and great leadership. Learning organizations that are innovative
and knowledgeable create leverage over competitors.
275
Consists of three key elements:
1. Designates formal reporting relationships

– number of levels in the hierarchy
– span of control
2. Groupings of:
– individuals into departments
– departments into the total organization
3. Design of systems for

– effective communication
– coordination
– integration across departments
276
7.3 Organizational design and culture
• Organizational Design
– The process of configuring organizations to meet environmental challenges
• Span of Control
– The number of persons directly reporting to a manager
277
Organizational Design - the process of

constructing and adjusting an organization’s
structure to achieve its goals.
the linking of
departments and
jobs within an
organization
Key Organizational Design
Processes
The process of deciding
how to divide the work
in an organization
Four Dimensions
• Goal orientation
• Time orientation
• Interpersonal orientation
• Formality of structure
Horizontal
Differentiation
• The degree of differentiation between

organizational subunits
• Based on employee’s specialized knowledge,
education, or training
Vertical
Differentiation
• The difference in authority and responsibility

in the organizational hierarchy
• Greater in tall, narrow organizations than in
flat, wide organizations
Spatial
Differentiation
• Geographic dispersion of an organization’s

offices, plants and personnel
• Complicates organizational design, may
simplify goal achievement or protection
The process of coordinating
the different parts
of an organization
• Designed to achieve unity among individuals

and groups
• Supports a state of dynamic equilibrium -
elements of organization are integrated,
balanced
Vertical
Integration
• Hierarchical referral
• Rules and procedures
• Plans and schedules
• Positions add to the organization structure
• Management information system
Horizontal
Integration
• Liaison roles
• Task forces
• Integrator positions
• Teams
Formalization - the degree Centralization - the degree
to which the organization to which decisions are
has official rules, made at the top of the
regulations and procedures organization
Hierarchy of Specialization -
Authority - the degree to
the degree of which jobs are
vertical
Basic narrowly
differentiation Design defined and
across Dimensions depend on
levels of unique
management expertise
Complexity - the degree to Standardization - the

which many different types degree to which work
of activities occur in the activities are accomplished
organization in a routine fashion
Machine Bureaucracy -
Simple Structure - a a moderately
centralized form of decentralized form of
organization that organization that
emphasizes the upper emphasizes the
echelon & direct technical staff &
supervision standardization of
Structural work processes
Configurations
of
Adhocracy - a Professional
Organizations
selectively Bureaucracy -
decentralized a decentralized
form of Divisional Form - a form of
organization that moderately decentralized organization that
emphasizes the form of organization emphasizes the
support staff & that emphasizes the operating level
mutual adjustment middle level & & standardization
among people standardization of outputs of skills
Five Structural Configurations of Organization
Structural Prime Key Part of Type of
Configuration Coordinating Organization Decentralization
Mechanism
Simple Direct Upper Centralization
Structure Supervision Echelon
Machine Standardization Technical Limited

Bureaucracy of Work Staff Horizontal
Processes Decentralization
Professional Standardization Operating Vertical &
Bureaucracy of Skills Level Horizontal
Decentralization
Divisionalized Standardization Middle Limited Vertical
Form of Outputs Level Decentralization
Adhocracy Mutual Support Selective

Adjustment Staff Decentralization
Size Technology
Contextual Variables -
a set of characteristics that
influences the organization’s
design processes
Strategy
& Goals Environment
Size
Basic Design Small Large

Dimensions Organizations Organizations
Formalization Less More

Centralization High Low
Specialization Low High
Standardization Low High
Complexity Low High
Hierarchy of authority Flat Tall
Technology
Technological
Interdependence -
the degree of interrelatedness
of the organization’s various
technological elements
Relationship Between
Technology and Basic Task Variability
Design Dimensions Few Exceptions Many Exceptions
Problem Analyzability Ill-defined & Craft Nonroutine

Unanalyzable 1. Moderate 1. Low
2. Moderate 2. Low
3. Moderate 3. Low
4. Low moderate 4. Low
5. High 5. High
6. Low 6. Low
Well-defined & Routine Engineering
Analyzable 1. High 1. Moderate
2. High 2. Moderate
Key 3. Moderate 3. High
1 Formalization 4 Standardization 4. High 4. Moderate
2 Centralization 5 Complexity 5. Low 5. Moderate
3 Specialization 6 Hierarchy-Authority
6. High 6. Moderate
Environment - anything outside the boundaries
of an organization
Task environment - the elements of an
organization’s environment that are related to
its goal attainment
Environmental uncertainty - the
amount and rate of change
in the organization’s
environment
Environment
Strategic Dimension Predicted Structural
Characteristics
Innovation--to understand Low formalization
and manage new processes Decentralization
and technologies Flat hierarchy
Market differentiation--to Moderate to high complexity
specialize in customer Moderate to high
formalization Moderate centralization
preferences
Cost control--to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Strategy Integrative Framework of

Structural & Strategic Dimensions
& Goals
The Relationship
Context of the organization
among Key Correct size
Organizational Current technology
Design Perceived environment
Current strategy & goals
Elements
Influences how manager perceive structural needs
Structural dimensions
Level of formalization
Level of centralization
Level of specialization
Level of standardization
Level of complexity
Hierarchy of authority
Which characterize the organizational processes
Differentiation & Integration
Which influence how well the structure meets its
Purposes
Designate formal
lines of authority
Designate formal
information-
processing patterns
Which influence how well the structure fits the
Context of the organization

Forces Reshaping Organizations
• Life cycles in organizations - the differing
stages of an organization’s life from birth to
death
• Globalization
• Changes in Information Processing
Technologies
• Demands on Organizational Processes
• Emerging Organizational Structures
Structural Roles of Managers Today
versus Managers of the Future
Roles of Managers Today Roles of Future Managers
1. Strictly adhering to boss 1. Having hierarchical
-employer relationships relationships subordinate
2. Getting things done by 2. Getting things done by
giving orders negotiating
3. Carrying messages up 3. Solving problems and
and down the hierarchy making decisions
4. Performing a set of tasks 4. Creating the job through
according to a job description entrepreneurial projects
5. Having a narrow functional 5. Having a broad cross-
focus functional collaboration
6. Going through channels, 6. Emphasizing speed &
one by one by one flexibility
7. Controlling subordinates 7. Coaching one’s workers
Four Symptoms of Structural
Weakness
• Delay in decision Overloaded hierarchy; information
making funneling limited to too few channels
• Poor quality
Right information not reaching
decision making right people in right format
• Lack of innovative
response to changing No coordinating effort
environment
• High level of conflict Departments work against each
other, not for organizational goals
Paranoid Depressive
Dysfunctional
Personality/Organization
Combinations
Schizoid Dramatic
Compulsive
Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and
guide behavior, is shared by some subset of organization members and is
taught to all new members of the company.
Key factors that affect culture development

– Technology
– Environment
– Geographical location
– Reward systems
– Rules and procedures
– Key organizational members
– Critical incidents
Organizational design and culture…
• Decentralization
– Top management allows lower levels to make many decisions
• Empowerment
– Gives people the freedom to do their jobs as they think best
• Delegation
– The process of entrusting work to others
Three Steps in Delegation
1. Assign responsibility—explain task and expectations to others.

2. Grant authority—allow others to act as needed to complete task.
3. Create accountability—require others to report back, complete
task.
303
• Bureaucracy
– Emphasizes formal authority, rules,
order, fairness and efficiency
• Mechanistic Designs
– Are bureaucratic, using a centralized
and vertical structure
– perform best in stable environments
with mostly routine and predictable
tasks.
• Organic Designs
– are adaptive using a decentralized and
horizontal structure
– perform best in change environments
requiring adaptation and flexibility.
304
305
• Differentiation
– The degree of difference between subsystems in an
organization
• Integration
– The level of coordination between subsystems in an
organization
• Process Reengineering
– Increase operating efficiency by reducing unnecessary
work steps and streamlining work processes.
306
• “A pattern of basic assumptions that the group
learned as it solved its problems of external
adaptation and internal integration, that has
worked well enough to be considered valid
and, therefore, to be taught to new members
as the correct way to perceive, think and feel
in relation to those problems.”
Edgar Schein, 1992
307
Artifacts – symbols of
culture in the physical
and social work environment
Values
Espoused: what members of Levels of
an organization say they value Organizational
Enacted: reflected in the way
Culture
individuals actually behave
Assumptions – deeply held

beliefs that guide behavior and tell
members of an organization how
to perceive and think about things
308
Artifacts – symbols of Organizational Culture
culture in the physical Visible, often not
and social work environment decipherable
Values
Espoused: what members of Greater level
an organization say they value of awareness
Enacted: reflected in the way
individuals actually behave
Assumptions – deeply held Taken for granted,

beliefs that guide behavior and tell Invisible, Preconscious
members of an organization how
to perceive and think about things
309
Types of Artifacts
• Personal Enactment
• Ceremonies and Rites
• Stories
– About the boss
– About getting fired
– About relocating
– About promotions
– About crisis situations
– About status considerations
• Rituals
• Symbols
310
Developing Organizational Culture
Shared
Values
Reinforcing Organizational Norms

Outcomes Culture
Individual and
Group Behavior
311
Types of Organizational Culture
Clan Adhocracy
Discretion
Flexibility/
Leadership Leadership
Mentors and Coaches Entrepreneurs and
Innovators
Effectiveness Effectiveness
Cohesion and Morale Creativity and Innovation
Hierarchy Market
Stability/Control
Leadership Leadership
Monitors and Organizers Hard Drivers and
Competitors
Effectiveness Effectiveness
Efficiency and Order Goal Achievement and
Winning
Internal Focus/Integration External Focus/
Differentiation
312
Cultural Socialization
A process through which an organization imparts its
values to newcomers
Context Content
Social
Dynamics
313
Person-Organization Fit
Types of personal goals

that one ought to have
Values
Abstract ideals that End-Means Dimension
relate to proper life
goals and methods for
reaching those goals. Types of behaviors that
one ought to use in
reaching those goals
314
Types of Personal Values
End Means
(Goal) (Behavior)
Values Values
315
Functions of Organizational Culture
• Culture provides a sense of identity to members and

increases their commitment to the organization
• Culture is a sense-making device for organization
members
• Culture reinforces the values of the organization
• Culture serves as a control mechanism for shaping
behavior
316
Understanding
Antecedents Organizational Organizational Group & Social
Culture Structure & Processes
• Founder’s values Practices • Socialization
• Observable artifacts
• Industry & business • Reward systems • Mentoring
environment
• National culture • Organizational • Decision
• Espoused values making
• Senior leaders’ design
vision and behavior • Group
• Basic assumptions dynamics
• Communication
Collective • Influence &
Attitudes & empowerment
Organizational • Leadership
Behavior
Outcomes
• Work attitudes
• Effectiveness
• Job satisfaction
• Innovation &
stress • Motivation
317
Types of Cultures
• Constructive
– Valuing members, self-actualizing, affiliative, and
humanistic/encouraging normative beliefs (expected behavior or
conduct)
• Passive-defensive
– Approval-oriented, traditional and bureaucratic, dependent and
nonparticipative, punish mistakes but ignore success
• Aggressive-defensive
– Confrontation and negativism are rewarded, nonparticipative,
positional power, winning valued, competitiveness rewarded,
perfectionistic
318
Constructive Culture
Normative Organizational
Beliefs Characteristics
Achievement Goal and achievement

oriented
Self-actualizing Value self-development and

creativity
Participative, employee
Humanistic-
centered, and supportive
encouraging
High priority on constructive interpersonal
Affiliative
relationships, and focus on work group
satisfaction
319
Passive Defensive Culture
Approval Avoid conflict, strive to be
liked by others, and
approval oriented
Conventional Conservative, bureaucratic,
and people follow the rules
Dependent Nonparticipative, centralized decision

making, and employees do what they are
told
Avoidance Negative reward system and Defensive avoid
accountability
320
Aggressive-Defensive Culture
Oppositional Confrontation and
negativism rewarded
Power Nonparticipative, take

charge of Defensive
subordinates, and
responsive to superiors
Winning is values and a
Competitive
win-lose approach is used
Perfectionistic, persistent, and hard working

Perfectionistic
321
Organizational Culture Research
Suggests:
1) Organizational culture correlated with employee
attitudes and behavior
2) Congruence between an individual’s values and
the organization’s values associated with
organizational commitment, job satisfaction,
intentions to quit, and turnover
3) Organizational culture did not predict a
company’s financial performance
4) Mergers frequently failed due to incompatible
cultures
322
Theories on the relationship
between organizational culture
and performance
Strong Culture Perspective

Fit Perspective
Adaptive Perspective
323
Strong Culture
an organizational culture with a consensus
on the values that drive the company and
with an intensity that is recognizable even
to outsiders
324
Strong Cultures Facilitate Performance
BECAUSE
• They are characterized by goal
alignment
• They create a high level of motivation
because of shared values by the members
• They provide control without the
oppressive effects of bureaucracy
325
Fit Perspective
a culture is good only if it fits the industry or
the firm’s strategy
326
Fit Perspective
Three particular industry characteristics affect culture:
1.Competitive environment
2.Customer requirements
3.Societal expectations
327
Adaptive Culture
an organizational culture that encourages
confidence and risk taking among employees,
has leadership that produces change, and
focuses on the changing needs of customers
328
Adaptive vs. Nonadaptive Cultures
329
Most Important Elements
in Managing Culture
• What leaders pay attention to

• How leaders react to crises
• How leaders behave
• How leaders allocate rewards
• How leaders hire and fire individuals
330
Organizational Socialization
• Phase 1: Anticipatory
• Phase 2: Encounter
• Phase 3: Change and acquisition
331
Organizational Socialization Process
332
Phases Perceptual and

Social Processes
1) Anticipatory  Anticipating realities about

the organization and the
socialization new job
learning that  Anticipating organization’s
occurs prior to needs for one’s skills and
abilities
joining the  Anticipating organization’s
organization sensitivity to one’s needs
and values
333

Social Processes
2) Encounter  Managing lifestyle-versus-

work conflicts
values, skills,  Managing intergroup role
and attitudes conflicts
start to shift as  Seeking role definition and
new recruit clarity
discovers what  Becoming familiar with task

and group dynamics
the
organization is
truly like
334

Social Processes
3) Change and  Competing role demands

are resolved
acquisition  Critical tasks are mastered
recruit masters  Group norms and values are
skills and roles internalized
and adjusts to
work group’s
values and
norms
335
Outcomes of Socialization
Newcomers who are successfully socialized

should exhibit:
– Good performance
– High job satisfaction
– Intention to stay with organization
– Low levels of distress symptoms
– High level of organizational commitment
336
How cultures are embedded in
organizations
• Formal/public statements
• Physical Layout
• Slogans, co. lingo
• Mentoring, modeling
• Explicit rewards, promotion criteria
• Stories, legends, myths
• Processes and outcomes, measurement
• Workflow and systems
337
Mentoring
• Outcomes for Mentees

• Outcomes for Mentors
• Outcomes for Organizations
• Maintaining the Culture
338
Functions of Mentoring
• Career Functions
– Sponsorship
– Exposure-and-Visibility
– Coaching
– Protection
– Challenging
Assignments
• Psychological
Functions
– Role Modeling
– Acceptance-and-
Confirmation
– Counseling
– Friendship
339
Organizational Culture Inventory
Focuses on behaviors that help employees fit into
the organization and meet coworker expectations
Uses Maslow’s hierarchy of

needs to measure twelve
cultural styles
340
Kilmann-Saxton Culture-Gap Survey
Focuses on what actually happens in the
organization and the expectations of others
- Two underlying dimensions –

technical/human and time.
341
Interventions for Changing
342
Organizational culture
• Organizational culture is the personality of the

organization.
• Successful organizations tend to have strong
and positive cultures.
• The observable culture is what you see and
hear as an employee or customer.
• The core culture is found in the underlying
values of the organization.
343
Organizational Culture …
• Organizational Culture
– a system of shared values and beliefs that guides the behavior of
members
• Strong Cultures
– Are clear, well defined and widely shared among members
Characteristics of Successful and Strong Organizational Cultures
• Emphasize teamwork.
• Allow and support risk taking.
• Encourage innovation.
• Make well-being of people a top management priority.
• Strong cultures are clear, well defined, and widely shared
among members.
344
• Core Culture
– Beliefs and values shared by an organization
• Value-based Management
– communicates, models, and reinforces core values throughout the
organization.
Core Values at KPMG

• We lead by example.
• We work together.
• We respect the individual.
• We seek the facts and provide insight.
• We are open and honest in our communication.
• We are committed to our communities.
• Above all, we act with integrity. 345
• Observable Culture
– What you see and hear as you are walking around in an organization
346
MANAGEMENT TIPS
• S C O R E S—How to read an organization’s culture
– S - How tight or loose is the structure?

– C - Are decisions change oriented or driven by the
status quo?
– O - What outcomes or results are most highly valued?
– R - What is the climate for risk taking, innovation?
– E - How widespread is empowerment, worker
involvement?
– S - What is the competitive style, internal and
external?
347
Activity 1
• Can the organizational culture change?
– How?
• Where does the culture come from?
1.
2.
3.
• Does the culture look the same from the top
and from the bottom?
348
Activity 2
1. Consider an organization of which you are a member
or an associate. What is the structure in this
organization? Is it centralized or decentralized? Is it
organic and flexible? How would you change the
structure in this organization to make it more effective?
2. How would you describe the culture in the organization
discussed in question #1? How does the culture affect
members’ behavior in the organization?
3. When you become a manager, what type of culture will
you establish in your unit? What values do you want to
emphasize? Why?
349
7.4 Change management
350
Change management
The process, tools and techniques to manage
the people side of change to achieve the
required business results.
351
Organizational Change Management
• What is Organizational Change?
– It is generally considered to be an organization-wide

change, as opposed to smaller changes such as adding
a new person. (See first slide of this section for examples)
– It includes the management of changes to the

organizational culture, business processes, physical
environment, job design / responsibilities, staff skills /
knowledge and policies / procedures.
– When the change is fundamental and radical, one

might call it organizational transformation
352
• What provokes Organizational Change?
Examples:
– Management adopts a strategy to accomplish some

overall goal
– May be provoked by some major outside driving force,
e.g., substantial cuts in funding
– An Organization may wish to evolve to a different level
in their life cycle, e.g. from traditional government to
e-government
– Transition to a new chief executive can provoke
organization-wide change when his or her new and
unique personality pervades the entire organization
353
• Take a moment to think of an example of

organizational change that you have
experienced.
– Was it successful? Did it go smoothly?

– What were your feelings early on? Later?
– What did the people around you say about it?
354
• Why is Organization-wide Change difficult to

accomplish?
– Organizations go through four stages on the way to

achieving their strategic objective:
• Denial
• Resistance
• Exploration
• Renewal
355
– As the Organization works its way through these

stages, there can be a negative impact on Productivity.
This is referred to as the Productivity Dip and is
portrayed on the next slide.
356
Organizational Change
Management
357
– Minimizing the size and duration of this Productivity

Dip is dependent upon quickly creating acceptance to
the strategic plan and all that it entails.
– But gaining that acceptance is often a difficult process,
as some employees will, for various reasons, seek to
block the change
358
• Factors in Organizational Change
– Efforts by employees to block the intended change is

referred to as Resistance to Change.
– Resistance to Change has been defined as:
• ”...behavior which is intended to protect an
individual from the effects of real or imagined
change" - Alvin Sander, 1950
• ”...any conduct that serves to maintain the status
quo in the face of pressure to alter the status quo“
– Zaltman and Duncan, 1974
359
– Resistance is a natural and inevitable reaction in an

organization. You can expect it
– Resistance is sometimes hidden, so it may be necessary
to take active steps to find it
– There are many reasons for resistance; it is important
to understand it
– We manage resistance by working with people, and
helping them deal with their concerns
– There are many ways to build acceptance. It is
important to be flexible. But persist!
360
– The key to successful management of organizational

change lies in the people.
• They are the agents for successful transformation of

the organization.
• They determine the Return on Investment from this
process
– So let’s have a look at where Resistance to Change

comes from and how to best manage it
361
Activity
• Why people resist change?
362
Common Reasons for Resistance
• Self-interest
• Fear of the Unknown
• Conscientious Objection or Differing
Perceptions
• Suspicion
• Conservatism
363
Change = Motivation X Vision X
Next Steps
• Motivation – Some Good Reason to Give up
the Status Quo
• Vision – A Clear and Practical Vision of the
Desired Future State
• Next Steps – an Understanding of the Next
Steps Required to Progress Toward the Vision
• If One Is Missing, Little Change Will Take Place
364
• Resistance to Change
– Why people resist change:

• Resistance to change can be a defense mechanism caused by
frustration and anxiety
• Individuals may not be resisting the change as much as they
are resisting a potential loss of status, pay, comfort, or power
that arises from expertise
• In many case there is not a disagreement with the benefits of
the new process, but rather a fear of the unknown future and
about their ability to adapt to it, e.g. fear that one will not be
able to develop new skills and behaviors that are required in a
new work setting
365

• There may be resentment in disgruntled employees due to a
perceived unfairness of the change. This can be strong
enough to lead to sabotage.
• Some employees may see the change as a violation of
"personal compacts" management has with their employees.
This can involve elements of mutual trust, loyalty and
commitment and go very deep
• An employee may have a “competing commitment” that is
incompatible with the desired change
366
• An employee may be operating on the basis of a desire to

protect what they feel is the best interests of the
organization
• An employee may provoke insightful and well-intended
debate, criticism, or disagreement in order to produce better
understanding as well as additional options and solutions.
367
– The take-home message from all this is that there is no

simple explanation for Resistance to Change, and
therefore no simple way to circumvent it.
– Indeed, there are instances where an employees

“resistance”, although not in the plan, could result in
beneficial consequences
368
• How prevalent is Resistance to Change?
– It is generally acknowledged that in an average

organization, when the intention for change is
announced:
• 15% of the workforce is eager to accept it

• 15% of the workforce is dead set against it
• 70% is sitting on the fence, waiting to see what happens
369
• How can I best accomplish Organization-wide

Change?
– Since our interest here is in Management of

Organizational-wide Change, it can be helpful to re-
define Resistance to Change as “employees are not
wholeheartedly embracing a change that management
wants to implement" (Dent & Goldberg, 1999)
– This allows us to focus on gaining acceptance (a

positive) rather than on breaking down resistance (a
negative).
370
• How can I best accomplish Organization-wide

Change? The high-level view:
– Get senior management agreement (i.e. conflicting goals can kill
the project!)
– Identify a champion who can articulate the reasons for and
advantages of the change
– Translate the vision for change into a realistic plan and then carry
out the plan
– Involve people from every area of the organization
– Communicate. Communicate. Educate. Educate.
– Get organizational buy-in to the change
– Modify organizational structures so that they will sustain the
change
371
Primary reasons for change Management
• Manage resistance to change
• Increase probability of success
• Reduce transition time
372
Organizational change can be
represented as three states of change
Current Transition Future

state state state
How things are How to move How things will

done today? from current to be done
future? tomorrow?
373
The organization’s future state is actually
the collection of many individual future
states
Organization
Future
374
Consequences of not managing the
people side of change
• Lower productivity
• Passive resistance
• Active resistance
• Turnover of valued employees
375
people side of change…
• Disinterest in the current or future state

• Arguing about the need for change
• More sick days
• Change not fully implemented
376
people side of change…
• People finding work arounds

• People revert to the old way of doing things
• The change being totally scrapped
• Divides are created between ‘us’ and ‘them’
377
There are consequences of not managing the
people side of change
• Lower productivity
• Passive resistance
• Active resistance
• Turnover of valued employees
• Disinterest in the current or future state
• Arguing about the need for change
• More people taking sick days or not showing up
• Changes not fully implemented
• People finding work-arounds
• People revert to the old way of doing things
• The change being totally scrapped
• Divides are created between ‘us’ and ‘them’
378
Change
“Organizations don’t change - people within
organizations change.”
Any business change

requires individuals to
do their jobs
differently to be
successful
379
The five building blocks of
successful change
Awareness of the need for change
Desire to participate and support the
change
Knowledge on how to change
Ability to implement required skills and
behaviors
Reinforcement to sustain the change
380
The ADKAR Model
Awareness of the need for change.
• What is the nature of the
change?
• Why is the change happening?
• What is the risk of not
changing?
381
The ADKAR Model
Desire to support the change.
• Personal motivation to
support the change
• Organizational drivers
to support change
382
The ADKAR Model
Desire Think about the change your
team is working on currently .
Write a number 1 – 5 on the

Post-It note to indicate your
Desire for this change.
383
The ADKAR Model
Knowledge on how to change.
• Knowledge, skills and
behaviors required during
and after the change
• Understanding how to
change
384
The ADKAR Model
Knowledge Think about the change your team
is working on currently .
Write a number 1 – 5 on the Post-It

note to indicate your Knowledge
needed to implement this change.
385
The ADKAR Model
Ability to implement new skills.
• Demonstrated ability to
implement the change
• Barriers that may inhibit
implementing the change
386
The ADKAR Model
Ability Think about the change your team is
working on currently .

note to indicate your Ability to
implement this change.
387
The ADKAR Model
Reinforcement to sustain the change.
• Mechanisms to keep the
change in place
• Recognition, rewards,
incentives, successes
388
The ADKAR Model
Reinforcement Think about the change your team
is working on currently .

note to indicate your feeling of
Reinforcement for this change.
389
Connecting ADKAR and the current,
transition and future states.
A D K A R
390
ADKAR Gap Model
Change
Confusion
Resistance
Fear/
Anxiety
Frustration
Backsliding
391
Developing corrective actions
with ADKAR
If the gap is: Corrective actions:
Awareness Management communicates about the

business reasons for change (why, risk of not
changing, drivers of change); Face-to-face
communications with immediate supervisors
about how the change impacts you directly is
what should occur
Desire Look for pockets of resistance and identify the

root cause; discuss your desire for resisting
the change
392
Developing corrective actions
with ADKAR
If the gap is: Corrective actions:
Knowledge Training on how to change and the skills
needed after the change
Ability On-the-job training and job aides to support

the new behaviors; Coaching by
supervisors; Troubleshooting
Reinforcement Messages by senior leaders and

supervisors that the change is here to stay;
Individual coaching sessions to identity
gaps
393
Applying ADKAR:
Not everyone moves through change
at the same pace
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394
Examples of changes organizations are
currently taking on

state state state
Ad hoc processes Documented and managed processes
Multiple, legacy systems One integrated database
Generalists in the call center Specialists in the call center
No web interface for suppliers Supplier website integrated into supply chain
Two different companies Merged organization
395
In reality, there are both organizational and
individual future states

Organization
state state state
How I do my job How I will do my job after the

today change is implemented
Individual Current Transition Future

state state state
396
The organization’s future state is actually the
collection of many individual future states
Individuals
Organization Current Transition Future

state state state

state state state
Future
state Current Transition Future
state state state

state state state
Documented and managed processes
One integrated database Current Transition Future

state state state
Specialists in the call center
Supplier website integrated into supply chain Current Transition Future

state state state
Merged organization
397
Change management perspectives
• Individual • Organizational
perspective perspective
– Understanding how one – The tools that project

person makes a change teams and managers
successfully have to support the
‘people side’ of change
398
The focus of change management is helping
individuals make their transition
Individuals
state state state
Change management drives project
success by supporting individual Current
state
Transition
state
Future
state
transitions required by organizational
projects and initiatives Current
state
Transition
state
Future
state
399
Managing individual change with ADKAR ®
• ADKAR describes the key®
building blocks for

ADKAR Model ®
successful change
– Personal or professional
Awareness
Desire
• Success with change Knowledge
requires all elements of the Ability
ADKAR Model to be ®
Reinforcement ®
present © 2012 Prosci and Bill Cigliano
Reference: Hiatt, J. ADKAR: A model for change in business, government and our community, Learning Center Publications, 2006.
ADKAR is a registered trademark of Prosci. All Rights Reserved.
ADKAR and “Awareness Desire Knowledge Ability Reinforcement” are a registered trademarks of Prosci, Inc. All rights reserved.
400
Phase 1 – Preparing for change
• Understanding the
nature of the change
• Understanding the
groups being changed
• Creating the right
sponsorship model and
coalition
• Identifying risks
• Developing special
tactics
401
Phase 2 – Managing change
• Communication plan
• Sponsor roadmap
• Training plan
• Coaching plan
• Resistance mgmt plan
402
Phase 3 – Reinforcing change
• Compliance audit reports

and employee feedback
• Corrective action plans
• After action review
• Transition management
403
Connecting individual and organizational
change management
Change Individual phases
management of change
tools (ADKAR®)
Communications Awareness
Sponsor roadmap Desire
Coaching Knowledge
Resistance management Ability
Training Reinforcement™
404
Who is involved in managing change
• The change management

resource on a project plays
Senior leaders Project team the role of enabler
– The conductor of the
orchestra
– The director of the play
Change
management • Effective change
management requires
involvement and action by
many in the organization
Managers and
Employees
supervisors
405
Senior leaders
• Why is this group important?

– Active and visible sponsorship is identified as the
top contributor to overall project success in
Prosci’s five benchmarking studies
Senior leaders Project team – Senior leaders are one of two preferred senders
of messages about change
Change • What is this group’s role?

management – Participate actively and visibly throughout the
project
– Build the needed coalition of sponsorship with
peers and other managers
Managers and
supervisors
Employees – Communicate the business messages about the
change effectively with employees
406
Managers & supervisors

– Managers and supervisors are the other
preferred sender of messages about change
– This group has a unique and well-developed
Senior leaders Project team relationship with the employees being impacted
by the change

management – Communicate the personal messages about the
change with their direct reports
– Conduct group and individual coaching sessions
Managers and – Identify, analyze and manage resistance
Employees
supervisors – Provide feedback to the rest of the change
management ‘gears’
407
Employees

– Employees will ultimately make changes to how
they do their day-to-day work
– Their acceptance and use of the solution
Senior leaders Project team determines the success of the project and the
ongoing benefit derived from the change
–
management – Seek out information related to the business
reasons for change and the personal impact of
the change
– Provide feedback and reaction to the change
Managers and
Employees and the change management efforts
supervisors
– Take control of the personal transition (using an
individual change management model like
ADKAR)
408
Project team

– The project team designs and develops the
‘change’ – they are the ones who introduce new
processes, systems, tools, job roles and
Senior leaders Project team responsibilities
– This group provides much of the specific
information about the change to the other
‘gears’
Change
management
• What is this group’s role?
– Provide timely, accurate and succinct
information about the change (or project)
Managers and
Employees – Integrate change management activities into
supervisors
project management plans and activities
409
Change management is like project
management
• However, it is the ‘people side’ of change
• Both aim to deliver value to the business by

supporting initiatives and projects
410
Change management and
project management
Technical side
Project management of the project

state state state
People side of
Change management
the project
411
Comparing processes
• Project management • Change management

– Initiation – Organizational:
– Planning • Preparing for change
– Executing • Managing change
– Monitoring and controlling • Reinforcing change TM
– Closing – Individual:
• Awareness
• Desire
• Process groups defined in the Project
Management Institute’s PMBOK® • Knowledge
• Ability
• Reinforcement®
412
Comparing tools
• Project management • Change management

– Statement of work – Individual change model
– Project charter – Readiness assessment
– Business case – Communication plans
– Work breakdown structure – Sponsorship roadmaps
– Budget estimations – Coaching plans
– Resource allocation – Training plans
– Schedule – Resistance management
– Tracking – Reinforcement
413
The right amount
• How much project • How much change
management is needed? management is needed?
– Depends on the complexity – Depends on the amount of

and degree of change to disruption created in
processes, systems, individual employees’ day-to-
organization structure and job day work and the
roles organization attributes like
culture, value system and
history with past changes
414
Integrating change management and
project management activities
• Project management and change management

activities are most effective when they are
integrated
• Unfortunately, in many instances change

management is an add-on after the project has
experienced obstacles
415
Problem or
opportunity
Planning
Business
improvement Design
steps
Development
Implementation
416
Assessments
Team and
sponsors
Change
Communications management
process
Coaching and
feedback
Resistance
management
417
Business
improvement
steps
Change
management
process
418
Business
improvement
steps
Change
management
process
419
Best Practice - Change
Management
420
# 1: Develop a Compelling Vision
• How Things Will Be Better With the Change

• More Than Sloganeering
• Leaders and Change Agents Need Their Own
Individual Visions and Need to Know How That
Fits Into the Organization’s Vision
• People Need to See How They Fit Into That
Vision
421
# 2: Change Is a Journey, Not a
Blueprint
• Develop Detailed, Multi-dimensional Plans
– Change Description
– Business Objectives
– Human Objectives
– Key Role Map
– Vision
– Detailed Activities, Resources, Timelines
– Measurements
• Recognize That This Is a Journey
– Will Need to Adapt Plan As Needs Change
422
Warning: Need to Balance “Preparing For”
and “Implementing”
• There Is a Need to Develop a Comprehensive

Plan for the Change
• There Is a Need to Get the Organization Ready
for the Change
• But If It Takes Too Long, People Lose Interest
and Motivation
• So, Plan for Short Projects That Will Engage
the People
423
# 3: Understand and Own the Past
• The Past Bounds Future Success
• Identify Critical Success Factors From
Previous Successful Changes in the
Organization
– Surveys
– Interviews
– Lessons Learned Sessions
• Acknowledge Past Failures
– Explicitly Plan on Countermeasures
424
# 4: Build a Strong, Committed
Management Coalition
• At All Levels Within the Organization
• Teach Them Their Job
– Establish a Clear Vision
– Articulate That Vision
– Communicate With the Affected Groups
– Focus Energies on Their Direct Reports
– Monitor Progress
– Eliminate Obstacles
– Recognize and Reward Short-term Wins
– Stick With It for the Long Haul 425
# 5: Identify All the People Who Are
Affected or Who Need to Be Involved
• Create a Key Role Map of the Formal Organization
– Sponsors (at All Levels)
– Change Agents
– Targets
• Augment With Identification of Informal Organization Key
People (Understand Why They Have This Influence)
– Opinion Shapers
– Gate Keepers
– Idea Champions
• Develop an Understanding of Their
– Level of Influence
– Level of Commitment to the Change
426
# 6: Analyze Their Readiness for Change
• Assess the Organization on Their Readiness for This Particular
Change
– Surveys
– One-on-One Discussions
• Understand Where People Are
– Early Adopters
– Late Adopters
– Laggards
• Are There Outside Organizations That Are Influencers?
• Understand Their Frames of Reference and Develop
Communication Strategies
427
# 7: Start Where People Are Most
Receptive
• Avoid the Dedicated Resistors, Focus on Early
Adopters (About 20% of the Population)
• Helps to Get Some Early Wins
428
# 9: People Don’t Resist Their Own Ideas
• Get People Involved Early in the Planning

• Even If They Can’t Plan “What”, They Can Plan
“How”
• They Are Changed by the Act of Participating
in Planning the Change
• Surfaces Resistance Early and Can
Potentially Manage It
429
# 10: Manage the Driving Forces As Well As
the Restraining Forces
What Forces Affect Your Change Project?
Driving forces – Dealing only with this Restraining forces - personal

side will immediately generate psychological defenses or group norms
counterforces embedded in the organizational or
community culture.
Changes at the Top Career-based organization
Powerful external influences Low turnover
Powerful leader Success
Acceptance of need to change Stable environment
Externally focused Criteria of success not visible
Crisis of opportunity Lack of clear authority
430
# 11: Establish a Darn Good
Reason to Change
• Substitute One Fear for Another

– Make the Anxiety Associated With
Not Changing Greater Than the Anxiety
of Changing
– Intentionally Create Disorder
• Remove the Mechanisms That Allow People to Stay the
Same
431
# 12: Say It Once, Say It Twice, and Say It Again
• Keep It Simple – No Jargon

• Use Language of the People
• Use Storytelling
• Use Different Mediums
– Memos
– Group Meetings
– Stories in Newsletters
– One-on-one Meetings
– (Have Different Levels of Impact)
• Change Style of Communication Depending Upon
– Where You Are in the Change
– Who You Are Communicating With
• Walk the Talk, Be Honest
432
# 13: But Monitor the Communications
Eclipse
Memo From Director General to Manager:
Today at 11 O'clock There Will Be a Total Eclipse of the Sun. This Is When the Sun Disappears
Behind the Moon for Two Minutes. As This Is Something That Cannot Be Seen Every Day, Time
Will Be Allowed for Employees to View the Eclipse in the Car Park. People Should Meet in the Car
Parking Area at Ten to Eleven, When I Will Deliver a Short Speech Introducing the Eclipse, and
Giving Some Background Information. Safety Goggles Will Be Made Available at a Small Cost.
Memo From Manager to Department Head:

Today at Ten to Eleven, All Staff Should Meet in the Car Parking Area. This Will Be Followed by a
Total Eclipse of the Sun, Which Will Disappear for Two Minutes. For a Moderate Cost, This Will
Be Made Safe With Goggles. The Director General Will Deliver a Short Speech Beforehand to
Give Us All Some Background Information. This Is Not Something That Can Be Seen Every Day.
Memo From Department Head to Floor Manager:

The Director General Will Today Deliver a Short Speech to Make the Sun Disappear for Two
Minutes in an Eclipse. This Is Something That Can Not Be Seen Every Day, So People Will Meet in
the Car Parking Area at Ten or Eleven. This Will Be Safe, If You Pay a Moderate Cost.
Memo From Floor Manager to Supervisor:

Ten or Eleven Staff Are to Go to the Car Parking Area, Where the Director General Will Eclipse
the Sun for Two Minutes. This Doesn't Happen Every Day. It Will Be Safe, but It Will Cost You.
Memo From Supervisor to Workers:

Some Workers Will Go to the Car Parking Area Today to See the Director General Disappear. It
Is a Pity This Doesn't Happen Every Day!
433
**Contributed to Swenny's E-mail Funnies by Ajay Ambastha, Mumbai, India
# 14: Encourage the Heart
• In Terms That Have Meaning to Individuals

and Teams
– Ask Them What a Reward Would Look Like to
Them
• Highly Visible
• Reward Throughout the Change, Not Just at
the End
434
# 15: Show Results – Early and Often
• Plan for Goals (Long and Near Term) That Are
Measurable, Tangible and Clear
– Explicitly Tied to Vision
• Not a Count of Activities
– # Of People Trained in CMMI
– # Of Procedures Written
• Performance Results That Matter to Customers,
Employees or Shareholders
– Reduction in Delivered Defects
– Reduction in Cycle Time
– Reduced Escaped Defects Resulting in Reduced Rework
435
# 16: Prepare for “Implementation Dip”
• Things Often Get Worse Before They Get

Better
• Increase the Communication
– Change the Medium and Words
– Focus on What Is Ahead
– Provide As Much Information As Possible
• Allow Resistance to Surface and Manage It
436
# 17: Validate the Feelings of People
• Resistance Can Be at Systemic or Behavioral

Level
– Systemic – Lack of Appropriate Knowledge,
Information, Skills and Managerial Capacity
(Cognitive)
– Behavioral – Reactions, Perceptions and
Assumptions (Emotional)
• Acknowledge the Pain of Changing
437
# 18: Deal With the Four “F’s of Loss and Change”
• Letting Go of Familiar Past (Perhaps a

Romanticized View)
• Confronting Feelings About an Uncertain Future
• Dealing With Loss of Face
• Redesigning a Focus on New Realities
• Working on These in Public, Facilitated Forums
Allows People to Constructively Express Their
Anxiety and Anger and Helps to Reduce Passive-
Aggressive Inertia and Sabotage
438
# 19: Don’t Resist Resistance
• Resistance Is
– Inevitable
– A Natural Function of Change
– Manageable
• Resistance Is Not
– Necessarily Logical
– A Sign of Disloyalty
– To Be Taken Personally
– A Sign That the Change Project Is Out of Control
439
# 20: Facilitate, Rather Than Just Train
• Train Managers As Facilitators for the Change

– Helps Them to Demonstrate Active Commitment
to the Change
– Can Immediately Reinforce the Training on the Job
• Trainers Are Generally Not Held Accountable
for Achieving Results
• Development and Delivery Are Much Less
Important Than Group Dynamics and the
Perception That Leadership Is Interested
440
# 21: Use a Variety of Mediums to
Build Competency in the Change
• Study Groups
• “On-the-Dash” Coaching
• Web-based
• Classroom Training
441
# 22: Recognize Every Person Is a
Change Agent
• Educate Leaders of the Change As Well As the
Targets of Their Roles in the Change
– To Be Open to Change
– To Anticipate Change, Not Just React to It
– To Accept That Change Causes Stress and to
Developing Coping Mechanisms
442
# 23: Change Agents Must Be Able
to Work With Polar Opposites
• Simultaneously Pushing for Change While Allowing

Self-learning to Unfold
• Being Prepared for a Journey of Uncertainty
• Seeing Problems As Sources of Creative Resolution
• Having a Vision, but Not Being Blinded by It
• Valuing the Individual and the Group
• Incorporating Centralizing and Decentralizing Forces
• Being Internally Cohesive, but Externally Oriented
• Valuing Personal Change Agency As the Route to
System Change 443
• Summary
– Organizational Change Management is “all of the

actions required for an organization to understand,
prepare for, implement and take full advantage of
significant change”.
– The goals of Change Management are:

• The successful design, implementation, measurement and
maintenance of an organization’s change initiative
• Enhancement of their on-going capacity for managing change
444
• Summary
– Enterprise Transformation is driven by an underlying

strategy that organizes and energizes People to
understand, embrace and make full use of new Process
and Technology
– Degree of success of this endeavor is measured by the

level and nature of the Business Impact achieved
445
Conclusion
• Change management focuses on the ‘people side’ of
organizational change
• Change management involves both an individual and an
organizational perspective
• Change management requires action and involvement by
leaders and managers throughout the organization
• Change management and project management are both tools
that support project benefit realization – project management
is the ‘technical’ side and change management is the ‘people’
side
• Change management is most effective when it is launched at
the beginning of a project and integrated into the project
activities
446
Organizational Politics
• Organizational politics are informal, unofficial,
and sometimes behind-the-scenes efforts to sell
ideas, influence an organization, increase power,
or achieve other targeted objectives. Politics has
been around for millennia. Aristotle wrote that
politics stems from a diversity of interests, and
those competing interests must be resolved in
some way. “Rational” decision making alone may
not work when interests are fundamentally
incongruent, so political behaviors and influence
tactics arise. 447
Organizational Politics…
• Politics are a part of organizational life,
because organizations are made up of
different interests that need to be aligned.
448
Individual and organizational antecedents can both
lead to political behavior.
449
The Organizational Life Cycle
– Startup (or Birth)
– Growth Phase. This is sometimes divided into an early growth
phase (fast growth) and maturity phase (slow growth or no
growth). However, maturity often leads to
– Organizational Decline. When in decline, an organization will
either undergo:
– The Renewal Phase. Sometimes great leaders can change the
course of the ship.
– Death
• Each of these phases present different management and
leadership challenges that one must deal with.
450
Reasons For Decline
Too much Debt 28%
Inadequate Leadership 17%
Poor Planning 14%
Failure to Change 11%
Inexperienced Management 9%
Not Enough Revenue 8%
451
Organizational Renewal
• A a rigorous program to change and
transform the organization’s culture assumes,
though, that one has enough
transformational leaders to change the status
quo. Without the right type of leadership, the
organization will likely spiral down to
bankruptcy.
452
• There are many causes to an organization
prospering or declining. Organizational decline
is not inevitable. The good news is most of
those factors are within the control of the
organizations senior executives.
453

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Organizational Behavior

Fesseha Afewerk (Ast. Prof.)

6.1 Causes and outcomes of conflict

• Competition between interdependent parties who perceive that

• The interaction of interdependent people who perceive

 Conflict occurs whenever:

 Levels of conflict — cont.

 Levels of conflict — cont.

 Functional (or constructive) conflict.

 Dysfunctional (or destructive) conflict.

 Causes of conflict — cont.

• Five Factors that favor the development of conflict

Intrapersonal (within an individual)

Organization Within and between organizations

Group Within and between groups

Individual Within and between individuals

• Some representative latent conflict

• Some representative latent conflict (cont.)

Sales on commission; manufacturing rewarded

Several realistic alternatives are available for

Role Senders Focal Person

Intrasender role conflict

Intersender role conflict

Initiating aggressive action

Approaching the role sender or senders to attempt

Organizational Product or Fast-changing

Perceived conflict requirements

Desired conflict level

Dysfunctionally Normal Dysfunctionally

 Appeals to common goals.

 Alterations in the use of mythology and

 Direct conflict management approaches are based on

– Failing to participate in the situation and/or

– Smoothing over differences to maintain superficial

 Competition and authoritative command.

 Collaboration and problem solving.

 The issue of “who wins?”

 The issue of “who wins?” — cont.

The issue is of minor or passing importance

Emergencies requiring quick action

Unpopular actions must be taken for long-term

organizational effectiveness and survival

Self-protective action is needed

Need to defuse a potentially explosive emotional

High level of cooperation is needed

Agreement enables each party to be better off, or at

– Occurs when substance issues are resolved and

– To maintain good working relationships,

– Differences in negotiation approaches and

– The key questions is: “Who is going to get this

– The key questions is: “How can the resource best

– Range of feasible negotiation tactics.

 Gaining truly integrative agreements rests on:

Motivation Win-Lose Win-Win

Focus Positions Interests

Information Sharing Low High

Duration of Relationships Short-Term Long-Term

 Third-party roles in negotiation.

Ensuring mutual motivation

Achieving a balance in situational power

Coordinating confrontation efforts

Promoting openness in dialogue

Maintaining an optimum level of tension

– The myth of the fixed pie.

Organizational Behavior VI & VII

Organizational Behavior VI & VII