BUS208: Principles of Management

9a. Identify and understand various organizational structures

The changing environment of organizations creates the need for newer forms of organizing.

Matrix structures are a cross between functional and product-based divisional structures. They facilitate information flow and reduce response time to customers but have challenges because each employee reports to multiple managers.

Boundaryless organizations blur the boundaries between departments or the boundaries between the focal organization and others in the environment. These organizations may take the form of a modular organization, strategic alliance, or self-managing teams.

1. Modular organization, in which all nonessential functions are outsourced. This format's idea is to retain only the value-generating and strategic functions in-house, while the rest of the operations are outsourced to many suppliers.
2. Strategic alliances constitute another form of boundaryless design. In this form, similar to a joint venture, two or more companies find an area of collaboration and combine their efforts to create a beneficial partnership for both parties.

Learning organizations institutionalize experimentation and benchmarking. In learning organizations, experimenting, learning new things, and reflecting on new knowledge are the norms. Simultaneously, there are many procedures and systems in place that facilitate learning at all organization levels.

 

9b. Explain methods of organizational control

The degree to which a company is centralized and formalized, the number of levels in the company hierarchy, and the type of departmentalization the company uses are key elements of its structure. These elements of structure affect the degree to which the company is effective and innovative, and employee attitudes and behaviors at work. These elements come together to create mechanistic and organic structures.

Mechanistic structures are rigid and bureaucratic and help companies achieve efficiency. These structures are highly formalized and centralized. Communication tends to follow formal channels, and employees are given specific job descriptions delineating their roles and responsibilities. Mechanistic organizations are often rigid and resist change, making them unsuitable for innovativeness and taking quick action. These forms have the downside of inhibiting entrepreneurial action and discouraging individual initiative on the part of employees.

Organic structures are decentralized, flexible, and aid companies in achieving innovativeness. These structures have communication lines that are more fluid and flexible. Employee job descriptions are broader, and employees are asked to perform duties based on the organization's specific needs at the time and their own expertise levels. Organic structures tend to be related to higher levels of job satisfaction on the part of employees.

Reactions to organizational change may take on many forms. They range from resistance to compliance to enthusiastic support of the change, with the latter being the exception rather than the norm.

Active resistance is the most negative reaction to a proposed change attempt. Those who engage in active resistance may sabotage the change effort and be outspoken objectors to the new procedures. Passive resistance involves being disturbed by changes without necessarily voicing these opinions. Instead, passive resisters may dislike the change quietly, feel stressed and unhappy, and even look for a new job without necessarily bringing their concerns to the attention of decision-makers. Compliance, however, involves going along with proposed changes with little enthusiasm. Enthusiastic support are defenders of the new way and actually encourage others around them to give support to the change effort as well.

Organizations change in response to changes in the environment and in response to the way decision-makers interpret these changes. When it comes to organizational change, one of the biggest obstacles is resistance to change. When done too frequently, it can exhaust employees. Some of the main reasons for resistance to change are:

1. Disrupted Habits
2. Personality
3. Feelings of Uncertainty
4. Fear of Failure
5. Personal Impact of Change
6. Prevalence of Change
7. Perceived Loss of Power

 

9c. Evaluate effective methods of change in 21st-century management trends

Effective change effort can be conceptualized as a three-step process in which employees are first prepared for change. Change is implemented, and finally, the new behavioral patterns become permanent. According to emerging contemporary views, it can also be seen as a continuous process that affirms the organization's organic, ever-evolving nature.

Lewin's 3 Step Model of Planned Change assumes that change will encounter resistance. Therefore, executing change without prior preparation is likely to lead to failure. Instead, organizations should:

1. Unfreezing Before Change - making sure that organizational members are ready for and receptive to change.
   • Communicate your plan for change
   • Develop a sense of urgency
   • Build a coalition
   • Provide support
   • Allow employees to participate
2. Change - executing the planned changes
   
   • Continue to provide support
   • Create small wins
   • Eliminate obstacles
3. Refreezing - involves ensuring that change becomes permanent, and the new habits, rules, or procedures become the norm.
   • Publicize success
   • Reward change adoption
   • Embrace continuous change 

To build future successful companies, organizations must be better suited for human beings. Original management processes and models did not consider the importance of us as human beings. We no longer live in that world. People can change; they are adaptable and resilient.

Gary Hamel is an author and management expert. (Hamel, Gary. 2011. "Reinventing Management for the 21st Century". University of Phoenix's Distinguished Guest Video Lecture Series.) He believes that the single most important invention of the last 100 years is management. Management must be reinvented because organizations face three major challenges that they have not faced before: rapid and exponential changes in the marketplace (hyper-competition) require organizations to innovate every day and the idea that knowledge is a commodity that must be newly created for competitive advantage.

Successful companies will be the ones that will change their models of management more quickly than their competition. To advance management practices, companies must have aspirations, be contrarian, and understand that new ideas come from the fringe. The Web's deep values – openness, meritocracy, flexibility, and collaboration – should be adopted for new management practices in organizations. Old management practices were designed for different purposes. New practices must consider the importance of human beings. All businesses should take on the task of being management innovators for the future.

 

9d. Assess the role of technology in the future of management

There is continued evidence that as companies in today's business world take the time to recognize their employees' value and consider employee needs, companies are more profitable in the long term. Despite many companies' attempts at new management approaches, most organizations still employ the traditional models of hierarchy, organizational structure, strategic planning, and organizational control. While following models pervasive throughout the business world may not induce innovation or increased competitive advantage, these models tend to feel safe. They can be justified based on past results.

There are several reasons organizations continue to use traditional management models.

1. Comfort – Traditional models of management are comfortable and familiar. Introducing a new model generally requires support for how that model might be successful.
2. Power – The current models of management enable those at the top to retain their positions of power. When people join an organization, they generally have personal goals of achieving promotions and rising to higher levels in the organization. Changing an organization's management structure would change the hierarchical order, resulting in individuals potentially losing their positions of authority and power. Employees would not accept a new structure willingly, so traditional models continue to remain in place.
3. Certainty – New models bring an atmosphere of uncertainty to an organization. People tend to function automatically in familiar structures and do not like to be faced with new methods or approaches. When a new management model is put into place, employees may be required to learn different skills; new technology might be used; new employees might be hired, etc. All of these changes upset the status quo and create an unfamiliar environment. As a result, employees may not be equipped to handle new issues that arise out of the new structure and will seek solutions from older models. People like to have certainty in their lives and will turn to those habits time and time again.
4. Common Systems – Companies follow examples of other companies within their industry. It is challenging for one company to change while all other organizations in that field stay the same. Will the new company be viewed as being innovative and modern? Or, will the company be viewed as a renegade and end up losing customers and employees?

Within all of the possible changes to management methods, some basics of management should remain the same. To be effective, companies must still:

1. Make plans – a plan identifies the goals an organization seeks to achieve and provides a methodology for achieving those goals. A plan provides a strategy and a means of determining if objectives have been met.
2. Lead – employees must know what is expected of them. They must also be given feedback on their progress.
3. Evaluate – plans must be monitored to determine if progress is being made. Contingencies should be available for inevitable problems or setbacks.

To help ensure the success of new methods, an organization should research practices that have been successfully put into place by other organizations, make sure that all participants can see the benefits of the new structure, roll out the plan in waves rather than implementing throughout the entire enterprise, and allow time for adjustments in the process.

 

The Future of Work

Dr. Malone describes work in the future as increasingly decentralized, flexible, and – consequently – innovative (Malone, 2004). Malone outlines three decentralized organizational structures that he sees emerging in the future:

1. Loose Hierarchies – This type of organizational structure includes managers and formal structures but delegates many decisions to the lower levels of an organization. In this way, ground-level employees are empowered to make day-to-day organizational decisions without going through a formal chain of command.
2. Democracies – This type of organizational structure consists of individual cooperatives that vote several times a year to make major decisions and elect board members. The cooperatives actually own the overall organization, as opposed to the organization owning the individual cooperatives. Members of the cooperative can choose to leave at any time, enabling them to exercise ultimate control over their business.
3. External Markets – This type of organizational structure outsources different functions within the organization to an external market. The organization assembles these external markets to complete specific projects and disassemble them once a project is completed. This model aims to allow the best operators of certain specialized skills to be used for those specific functions. This model is sometimes referred to as contracting.