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Organizational Behavior Course Summary Marc Delingat delingat@yahoo.com http://www.geocities.com/delingat
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Marc Delingat Organizational Behavior Course Summary Module 6: Understanding Work Group Dynamics and Group-Based Problem Solving Group Structure and Definition A group within the organization is defines as two or more employees that: 1. interact with each other, 2. perceive themselves as sharing several common interests or goals, and 3. come together or are brought together to achieve a meaningful organizational activity. If formal assignment mechanisms are used to assign membership in groups the resulting groups are called formal groups. Informal groups are groups of employees that come together voluntarily for a common purpose, which may or may not be work related. Formal groups have the following characteristics: • Two or more members • Prescribed interaction patterns • Purpose(s) started in meaningful organizational terms • Members are aware of the formal groups existence and their involvement in it Work groups can be either task groups which work together on a series of related activities or command groups which exercise authority within the organization. Characteristics of successful use of project teams to find solutions to organizational problems: • The life span of the typical project team is kept short. • Membership is always voluntary; thereby the projects have to be perceived as interesting an motivating so that people want to join. • The project team is put together quickly without a formal selection process. • Follow up to the suggested solution is swift as close ties with higher management are formed. • Support staff is not assigned to the project team. Team members should develop expertise in gaining organizational support. • Communication and Project Documentation are informal so that the projects focus stays with the problem and does not shift to creating a paper trail. The central aspect of joining groups and organizations is the individual’s belief, that membership creates a pathway to the satisfaction of important needs. The main factors why individuals want to join groups are as follows: 1. Interpersonal attraction is defined as a set of factors that lead to the conclusion that members share similar and highly desirable characteristics a. Proximity b. Physical attraction c. Attitude, value, and/or belief similarity d. Economic and social similarity e. Race and gender similarity Page 2 of 37
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Marc Delingat Organizational Behavior Course Summary f. Perceived ability of others 2. Activities of the group 3. Goals of the group The composition of a group may be homogeneous or heterogeneous with respect to member traits. Heterogeneity of a group is a prime supporter of high-quality group decision making. It has two effects: it creates more conflict and increases the group’s potential problem-solving capacity. The cohesiveness of a group is defined as: 1. Attraction to the group, including resistance to leaving it 2. High morale exhibited by members 3. Strong coordination of member effort Managers can raise cohesiveness by: • controlling the work group composition • matching the group’s task to the characteristics and qualification of the members in the group • keeping the group size relatively small • providing clarity on goals and activities • institutionalizing the role of disturbance handler in heterogeneous groups to facilitate agreement and establishing ground rules for handling conflicts • creating the group perception of a common enemy • carefully timing positive group feedback around group performance successes In order for work groups to be high performers in areas valued by organizations the level of cohesiveness needs to be high and the performance goals for the group are aligned with the organizations performance goals. Common properties of workgroup norms: 1. Norms streamline and summarize the influence process to make the workgroup more efficient at policing member behavior. 2. Norms apply to member behavior and not their thoughts. 3. Norms develop for those behaviors that influence levels of member effort and group goals. 4. Group norms develop over time and are resistant to change. 5. Some members have more rights to deviate from work group norms than other members do. Page 3 of 37
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Marc Delingat Organizational Behavior Course Summary Best Practices for work group norms and conformity If a group’s critical thinking process is suspended because of high cohesiveness and conformity, groupthink is present. The following is a list of indicators that groupthink might be present: 1. The illusion of invulnerability 2. Collective rationalization (group members are collectively oblivious to indicators that could spell trouble) 3. Mindguards (group has self-appointed guards who sift through and eliminate unwanted negative external information) 4. Belief in inherent morality of the group 5. Negative stereotyping of the opposition 6. Direct pressure applied to dissenters 7. Self-censorship 8. Illusion of unanimity (each member mistakes the silence of others as agreement) How to safeguard against groupthink: 1. The leader assigns the role of the critical evaluator on a rotating basis to members of the group. 2. Influential members should not pre-specify solutions or methods for reaching solutions. 3. Leaders might have subgroups (or individuals) arrive at their own conclusion first before polling the entire group. Page 4 of 37
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Marc Delingat Organizational Behavior Course Summary 4. At intervals, outside experts might provide guidance to the group. 5. When group decision-making deals with competitive organizations, sessions should be devoted to exploration of warning signs and possible forms of retaliation. 6. After the group has made its decision, a “second chance” meeting to provide a forum for expressing doubts should be held. Aspects of group structure The group structure is defined as the arrangement of roles or positions within the group. Positional status refers to the rank of a position in a work group and is expressed in the amount of responsibility for managing the group and the group’s hierarchy of authority. Personal status is the rank, standing, or prestige of the individual in the work group. Group size influences several aspects of a group: • As a group size increases the range of abilities, talents and aptitudes of members for task accomplishment increases • Larger groups provide for more opportunity to meet interesting colleagues as well as the opportunity for more anonymity. • As work group size increases the opportunity for direct participation decreases and some members might become reluctant to voice their concerns in a larger group. • As work group size increases the opportunity for internal conflict increases. The following diagram shows the relationship between group size, performance, and process losses: The following summarizes observations about group sizes: • 2-3 member groups can make members very anxious about their high performance visibility • 2-5 member groups are better able to reach consensus than large groups • 4-5 member groups foster greater member satisfaction than middle or large size groups • 5-11 member groups tend to make more accurate decisions than groups outside that size range Page 5 of 37
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Marc Delingat Organizational Behavior Course Summary • 11 or more member groups generate more ideas but as size increases beyond 20 members the mean performance per member starts to decline. Group Dynamics The following figure shows the stages of work group development: Forming Storming Norming Performing Test and Orientation Conflict and Cohesion and Interdependence and Organization Information Exchange problem-solving Composition of the Developing rules for Preventing groupthink Expanding the task group handling conflict and other processes focus Smoothing entry into the Filling the leadership managing high Maintaining the norms group for all members position cohesiveness as membership changes Creating purpose and sustaining a task focus sense of urgency Forming is the group phase-in during which the members move from a personal to a groups focus. Members wrestle with identifying important behaviors, assessing skills, abilities, etc. of members, discussing the goals and motives of members, and assessing the degree of commitment in the group. Storming is the phase during which members may become more assertive in their opinions about the group’s purposes, methods and norms because they are accumulating more knowledge about the work group. Member dissatisfaction with the current leader may surface and the leader may be replaced. If teams conclude that they are better off reaching their goals on their own, the group will never get past this stage. Norming: As interpersonal conflict subsides and the work group’s normative structure emerges. During the Performing stage, the actual performance is close to potential performance because the group is minimizing its process losses. Brainstorming, Nominal Group Technique, Delphi Technique Brainstorming is a technique for generating ideas, not for evaluating them. It does not require accountability for the idea, so creativity is more abundant and less inhibited. Brainstorming procedure and rules 1. Assemble the work group and appoint a session leader 2. Define the purpose and/or problem (ideas, strategies, solutions, alternatives, etc.). 3. Set a time limit for the session. 4. Select a recording method 5. Review the rules of brainstorming: • Break down complex problems into problems specific enough to be brainstormed. • Any suggestion or idea can be proposed by any member at any time. • Ideas must be generated as quickly as possible. • Use ideas already suggested to spawn new ones. Page 6 of 37
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Marc Delingat Organizational Behavior Course Summary • Criticisms or evaluations are not allowed during the ‘brainstorming period’. • Lengthy explanations or discussions are to be postponed. • The more suggestions the better. • The session runs for the allotted time or until no more ideas are • forthcoming. • Idea evaluation is separate from and follows idea generation. • Do not use brainstorming as a substitute for individual thinking. The nominal group technique (NGT) separates idea generation from evaluation; it lessens the influence of dominant individuals in the group, ensures the systematic movement towards aggregation of votes to a preferred outcome, and is usually experienced by group members as satisfying. NGT procedure: 1. The question under study is posted in front of the group whose members silently generate ideas in writing without looking at the work of others or discussing the question (5 to 10 minutes). 2. The session facilitator goes around the table and asks each participant to read one idea from his or her notes. This idea is recorded in some way. In a round-robin fashion, all participants present their ideas for recording until all are shown. 3. Each idea recorded is discussed in the order it appeared. The session facilitator reads each item and asks the participants if there are any questions or points needing clarification. 4. Each member records the ideas on 3’×5’ cards and rank orders them secretly from 1 to n. The mean average rankings are used as a basis for the group’s decision. The NGT process can end here or the decision may be refined through discussion and rewording. The voting patterns can be analyzed and reasons can be examined to see if more accurate decisions can be made. 5. A final vote is taken in the same way as in step 4. This vote closes the decision loop so members experience closure to the NGT process. The Delphi Technique can be used for decision making when the group can not meet. Members may not know other members of the group. This technique also eliminates the effect of dominant personalities and member status in the group. Delphi procedure: 1. Each group member independently and anonymously records comments, suggestions and solutions to the problem facing the group. 2. All the data generated in step 1 are sent to a centrally located individual who is responsible for data compilation and reproduction. 3. Each member receives a copy of all written comments from other members. 4. Members generate feedback on other members’ comments, and all second round feedback is written down and sent to the centrally located individual. 5. Steps 3 and 4 are repeated as many times as necessary to reach consensus. Maintenance and Task Activities Groups spend time on task and maintenance related activities. The following guidelines help to minimize the process loss in the group: • Define work groups tasks and problems carefully • Do not jump to idea evaluation before idea generation has created numerous alternatives • Avoid groupthink Page 7 of 37
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Marc Delingat Organizational Behavior Course Summary • Manage the norms of the group by making values rewards contingent on high-quality group performance • Make group level rewards contingent on the group’s contribution to work unit success Forming Storming Norming Performing Test and Orientation Conflict and Cohesion and Interdependence and Organization Information Exchange problem-solving Maintenance Activities Task Activities Intergroup Behavior Management and Performance Groups interact with each other due to the following reasons: • Interdependence • Information flow • Integration Interdependence refers to the frequency and quality of the interaction between the groups. If the groups have a high level of uncertainty (tasks unclear and/or highly complex), the information requirements rise rapidly. If the number of interacting groups rises together with task uncertainty, the information requirements escalate. If integration requirements between the different groups are low, they can become highly differentiated and develop their own methods and forms of communication. Integration requirements generally rise with an increase in task uncertainty. When and if a company switches from a hierarchical to a delayered structure with self-directing teams, the above factors can cause major obstacles in successfully making the change in the organizational structure. The following pathways can help in developing effective intergroup relations: • Create rules and procedures to ensure communication and cooperation between groups for tasks requiring cooperation. • In order to foster better understanding between the groups, members might be exchanged temporarily. • Formally creating a position (linking role) designed as overseeing and linking the groups. • Using task-forces to temporarily create a group filling the linking role. • Due to a need for fast decision-making, organizational security, or intergroup conflict the groups might benefit from decoupling them (potentially just temporarily). Page 8 of 37
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Marc Delingat Organizational Behavior Course Summary Social Loafing Theoretical reasons for social loafing: • Equity of effort (“no one is working hard, why should I”) • Loss of personal responsibility (“no one will miss me in the large group”) • Reduced effort caused by reward sharing (“everyone is paid the same, why should I put in the extra effort”) • Co-ordination complexity in larger groups (“we are all stepping on each others feet”) How to manage social loafing: • Focus on the interesting and important aspects of the task to increase the level of job involvement of group members. • Assure group members that their individual contributions are identifiable and significant. • Tell group members that they should not tolerate inadequate effort or performance from group members. • Tell them that they should expect to have their performance evaluated. • Ensure that some portion of rewards received by group members is dependent on their performance. Deciding upon the extend of participation in decision making The Vroom-Yetton-Jago normative decision model lists the following forms of decision making: AI: A manager makes a decision alone, using the information currently available. This is the most authoritarian, boss-centered style of decision-making. AII: A manager seeks information from subordinates or group members and then makes a decision. Employees may or may not be aware of the problem before the manager takes a decision. CI: A manager explains the problem to his subordinates in a one-to-one format. The manager takes a decision which may or may not reflect the ideas of his subordinates. CII: A manager explains the problem at hand to his subordinates in a group format. The manager takes a decision which may or may not reflect the ideas of his subordinates. GII: A manager explains the problem to his subordinates in a group format. With the manager, the group makes a final decision. Page 9 of 37
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Marc Delingat Organizational Behavior Course Summary Group Conflict Management Group Conflict can be seen as either dysfunctional and unhealthy to the organization or as a by- product of organizational life that is unavoidable but manageable. The following methods can be used to deal with conflict: Avoidance: this is usually a short-run, damage control strategy. It is used when • the issue is trivial, • there is no chance of satisfying the concern, • the cost of disruption outweigh the benefits of resolution, • people need to calm down to gain perspective, and • gathering information is more important than action Accommodating: should be selected when • a manager decides he is wrong and shows reasonableness, • an issue is more important to others than it is to the decision maker, • to cut losses when in a loosing argument, • the goal of harmony is more important than the potential benefit of the resolution, or • employees can benefit from learning from their mistakes. Page 10 of 37
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Marc Delingat Organizational Behavior Course Summary Forcing: should be selected when • emergency conditions require decisive action, • the issues is extremely important and unpopular actions have to be implemented, • the company is at stake and the decision maker knows he is right, or • an organized opposition would take advantage of non-competitive behavior. Compromising: should be used when • the decision maker believes that her goals are important but insisting on them in not worth the potential disruption caused by other, more forceful measures, • the opponent has equal power and is committed to mutually exclusive goals, • a temporary solution is needed for a complex issue, • time pressure dictates a quick resolution, or • serve as a backup when collaboration has not worked. Collaboration: both parties are involved in solving the problem permanently through mutual commitment to the solution. Usually these steps are followed: • Define the problem and share the facts (rather than make emotional appeals and distort facts). • State the problem in specific terms before searching for solutions. • Once facts are collected, focus on them instead of focusing on the disagreement. • Conduct non-judgmental discussion of the facts and the problem. • Collaborate on alternatives which lead to the best mutual solution rather than those alternatives which lead to solutions favoring one party’s interests. • Develop criteria for measuring the quality and acceptability of the proposed solutions, agree on them, and present the solutions for criteria review before one is selected. • Define all agreements as tentative until all facets of the conflict have been addressed. Thus, there is no implementation of any agreement until both parties are convinced they can support the solution. Module 7: The Influence Processes in Organizations: Power, Politics, Leadership and Entrepreneurship Types of power and how to obtain it Power is the ability to influence someone else. It is the capacity to modify employee behavior in a desired manner while being able to avoid having one’s own behavior modified in undesirable ways. Power has the following characteristics: 1. It can only be wielded in a relationship which other people depend upon in some way. It has no meaning outside of human relationships. 2. Individuals can learn to wield power effectively 3. power can flow in any direction in an organization Authority is the right to order or ask others to do what you want them to do. Influence is the process of affecting the thoughts, feelings, and behavior of others. Interpersonal power can be classified in the following ways: Page 11 of 37
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Marc Delingat Organizational Behavior Course Summary • Reward power is the capacity to exert influence by providing positive outcomes and preventing negative outcomes. It is often used to back up legitimate power. • Coercive power is the capacity to exert influence by the use of punishment and threat. Again, it often supports legitimate power. • Legitimate power is the capacity to direct the behavior of others due to one’s position in the organizational hierarchy. • Referent power is based on the extend to which the power-holder is well-liked and admired by others. Referent power is important in interpersonal relations because it is based on interpersonal attraction and is much more personal than either reward or coercive power. • Expert power represents power gained through the possession of expert knowledge that is valued in the organization. In order to ensure that power is used ethically, one should ask oneself the following three questions: 1. Does the behavior produce a good outcome for all internal and external stakeholders? 2. Does the behavior respect the rights of all stakeholders? 3. Does the behavior treat all stakeholders equitably and fairly? How do employees obtain power? • Building an image of success. • Creating obligation in others (quid pro quo). • Identifying with powerful people. • Giving excellent performance. • Limiting access to information, • Controlling supplies, resources. • Developing a network. • Reorganizing the job (refers to taking on new responsibilities, adding objectives and tasks to one’s work) • Taking risks and being creative • Being a knowledge worker (gaining more knowledge to solve a given set of organizational problems) • Manipulating rules (that is sticking to processes and procedures when they are helpful and trying to change rules when they further the acquisition of power) • Controlling personnel decisions • Controlling financial resources • Managing your boss The following factors influence the ‘power’ of a subunit or organizational group: 1. Scarcity 2. Uncertainty 3. Centrality 4. Absence of Substitutes Page 12 of 37
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Marc Delingat Organizational Behavior Course Summary The following table shows a way to classify and define political activity in companies. Acceptable results Unacceptable results t Power is used to achieve The organization’s rules ne sanctioned outcomes. No are being followed to me se political activity is achieve undesirable g v do occurring and legitimate outcomes a or h na p te outcomes are pursued M pa m The pursuit of acceptable This situation is the most tn s results using flagrant form of political e ev m or questionable methods activity in organizations. eg p d Its users must become a p oh n a- t skilful in mastering the art a si e of covering their tracks. M d m Politics Whistle-blowing behavior occurs when an individual believes the organization is violating his instrumental or terminal values, or the law. Thus, whistle-blowing means that the individual informs a reporter, police officer, government official or other influential individual about an assumed injustice, irresponsible organizational action or violation of the law. The behavior bypasses the organization’s hierarchy of authority. High-level managers are usually infuriated if they learn about the whistle-blowing. Line versus staff conflict refers to the inherent disputes which must arise when staff units are created in the organization. Staff experts have specialized knowledge which can greatly improve the quality of line management decisions. Line managers fear the encroachment of staff experts in their line authority. Both line and staff personnel practice 1. withholding information, 2. gaining access to powerful executives, 3. building better images and 4. increasing centrality. Sponsorship and coalition-building are forms of counterinsurgency used by individuals to gain the favor of powerful individuals. The employee attaches himself to someone (or to a group) which is gaining power in the organization. The only rules governing this political behavior are: 1. stay personally loyal to the sponsor or department, 2. follow the orders of the sponsor, 3. stay in the background to let the sponsor have all the credit and 4. show gratitude. Insurgency or resisting authority is often characterized by ‘following the letter of the law’, or interpreting and enforcing policies in a manner unintended by management. Managing your manager Employees often make the following two mistakes about their relationship with their superior: The manager already knows everything he needs to know and also knows all possible alternatives for decision making. This attitude limits the options to aid one’s manager in participatory decision making. Base your work relationship with your manager on: Page 13 of 37
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Marc Delingat Organizational Behavior Course Summary a) both of your needs for achievement and decision-making styles; b) well-understood expectations; c) keeping your boss informed, d) dependability and honesty, e) documented performance and f) selective use of your boss’s time and resources. Management and Leadership The following items highlight the ten most common roles a manager plays. They fall in three categories: Interpersonal relationship maintenance Figurehead/chief: Testifies in court and at regulatory hearings. Cuts ribbons and opens new offices/facilities. Leader/encourager: Gives pep talks and holds open meetings with workers and staff. Passes out awards and honors. Hires and fires. Liaison/linking pin: Presides over industry trade group or professional society/certification group Informational (generation and transmission of data and knowledge) Monitor/surveyor: Reads industry reports and meets with vendors Distributor: Holds meetings, writes memos and sends e-mail Advocate/spinmeister: Makes speeches, meets with the press, grants interviews Decisional (deciding and controlling) Creator/entrepreneur: Scans and detects new ideas/product innovations/ industry trends Crisis controller: Acts quickly in a dilemma and makes decisions to limit perceived damage Resources distributor: Sets and manages the budget in relation to the firm’s strategic plan Mediator/negotiator: Solves work stoppages/grievances and disputes with vendors and distributors Research in to leadership can be broadly categorized in to the • trait approach (the leader himself has some influence on the outcome of work and the success of the organization), the • behavioral approach (stresses the importance of the constancy and predictability of leader’s behavior across leadership situations), and the • situational approach (the leader’s traits and behaviors are considered in terms of the situation that she confronts). In studying the effectiveness of established leaders, the following broad list of traits stand out: Logical thinking traits refers to: • putting ideas into simpler form, • persuading others and • explaining things in unique ways. Persistence traits refers to • treating setbacks as small mistakes, • working long hours and • trying to succeed against formidable odds. Page 14 of 37
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Marc Delingat Organizational Behavior Course Summary Empowerment traits highlight • getting people excited about goals, • being energetic and enthusiastic and • making subordinates believe they can achieve excellence. Self-control traits involve • working under heavy pressure, • remaining even-tempered and • resisting intimidation by powerful people. The trait approach fails to take into account the situation in which leadership occurs. It does not answer the question: “Do great leaders make great situations or do great situations make great leaders?” The behavioral approach stresses that they key to understanding great leadership is in understanding the behavior that influences employee’s performance and satisfaction. This approach stresses two main behaviors: Initiating structure refers to leader behaviors which focus on group goal attainment by stressing: • work procedures, • planning, assigning tasks, • clarifying work roles, • supervising subordinates and • asking for results. Consideration refers to those leader behaviors which exhibit • approachability, • supportiveness, • maintenance of high morale in the work group, • concern for group welfare and • maintenance of a collaborative work atmosphere. Situational leadership theories Fiedler’s contingency theory proposes that leader behavior interacts with the favorableness of the situation to determine the level of group effectiveness. Some situations are more or less favorable and they require different leader behaviors. Leaders are measured on their assessment of the relationship to their least preferred co-worker on several bipolar scales (e.g. pleasant – unpleasant, warm – cold, etc.). A leader with a high LPC score is relations oriented, a leader with a low LPC score is task oriented. The situational favorableness has three dimensions: 1. Relationship between the leader and the members of the group refers to the quality of work group atmosphere which results in loyalty, supportive relations and trust between the leader and his subordinates. 2. Task structure refers to the clarity of the group’s work and the extent to which members understand the goals of the group’s work. 3. Position power is the leader’s legitimate authority to tell others what to do. Page 15 of 37
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Marc Delingat Organizational Behavior Course Summary Leader-member Good Poor relationship Task Structure Structured Unstructured Structured Unstructured Position Power Strong Weak Strong Weak Strong Weak Strong Weak High Situation Favorableness Low Most Effective Task Oriented Leader Relationship Oriented Leader Task Oriented Leader Leader Orientation The relations-oriented leader is most effective when the situation is moderately favorable or unfavorable. When the leadership situation is highly favorable, it is not stress inducing; therefore it is possible for the task oriented leader to behave in a relations oriented manner. However, when the work group faces a crisis in performance and the situation is therefore highly unfavorable, the work group needs strong, focused leadership (at which the task oriented leader excels). In the middle positions which vary from slightly favorable to slightly unfavorable the leader is faced with shoring up leader–member relations which is the strength of the relations oriented leader. How can leaders change the situation that they face? 1. Tinkering with relationships at work • Spend more or less time with subordinates including lunch and after-hours socializing • Request certain people for group membership or assignments • Volunteer to supervise or work with troublesome group members • Transfer certain group members • Get additional rewards to improve morale • Listen to employees’ concerns and offer personal advice 2. Modifying task structure • Give the group creative challenges with no constraints on methods • Provide more standardized assignments • Divide the work into smaller, more specialized units 3. Modifying position power • Rely on discipline to constrain troublesome team members • Require that all information and group decisions are reviewed by upper management • Delegate more authority to group members (empowerment) House’s path-goal theory is concerned with situations that cause various leader behaviors to be most effective. The main job of the leader in this theory is the clarification of pathways between subordinates’ performance and the rewards they value. This theory is a transactional theory of Page 16 of 37
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Marc Delingat Organizational Behavior Course Summary leadership, that is, it specifies how a leader exchanges rewards for performance and effort from subordinates. The behaviors which the leader must develop are described below: • Directive behaviors. These are behaviors such as work planning, setting performance standards, clarifying work expectations and giving instructions. • Supportive behaviors. Leader behaviors which are friendly, supportive, caring and considerate. • Participative behaviors. Using subordinate’s ideas in problem-solving. • Achievement-oriented behaviors. Setting goals for subordinates and expecting them to achieve them. Under this theory a leader analyzes a subordinate’s characteristics like task abilities and need for achievement as well as environmental factors such as task clarity, routineness, and challenge. The leader then has to match his behavior to the interplay of subordinate characteristics and environmental factors. Leaders use rewarding and punishing behavior in four different ways: 1. Performance contingent reward behavior: Using praise, recognition and affirmation contingent on employee job performance. This behavior has proven to result in higher employee performance and satisfaction. 2. Contingent punishment behavior: Using reprimands and punishment contingent on insufficient employee job performance. It is not clear that this behavior achieves changes to the lack of employee’s performance. 3. Non-contingent reward behavior: Using rewards independent of performance. 4. Non-contingent punishment behavior: Using punishment or reprimands independent of the performance of the employee. This type of behavior has a strong negative effect on employee performance and satisfaction. Entrepreneurship What sets an entrepreneur apart from a manager in a large corporation and a small business owner: Sexton and Bowman-Upton argue that dissatisfaction with the status quo and the ability to recognize an opportunity, exploit it and make a business grow set the entrepreneur apart. Entrepreneurship can be defined as a process of opportunity recognition followed by a plan to exploit the opportunity. Dimension of Entrepreneurs tend to … Administrators tend to … Behavior Creating value- • Spot opportunities • Control the flow of resources added strategies • Radically change the firm • Make incremental changes in • Exhibit self-confidence methods • Believe in the firm’s capabilities • Efficiently use the firm’s current resources Taking • External product and process • Separate personal beliefs about decisions opportunities are closely linked to the external opportunities and personal value that change is valuable change (change is not always and meaningful good) • Flat structures best keep the firm • Checks and balances are more flexible and fluid (cross-training is a important than rapid decision- Page 17 of 37
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Marc Delingat Organizational Behavior Course Summary must) making Tackling • Minimize risk by leasing or renting • Own equipment and facilities problems in the facilities and equipment and add capacity only when firm • Always be prepared to add capacity capital costs are manageable. Using • Keep salaries low and use ISPs to • Develop and maintain merit- incentives retain talented employees based reward systems • Use bonus and individual and team • Periodic salary surveys to levels ensure competitive pay A typical entrepreneur: • Is tenacious and makes sacrifices • Pursues achievement • Is directive • Assumes personal responsibility • Solves problems • Appreciates novelty • Has an internal locust of control • Tolerates ambiguity • Takes calculated risks • Handles failure How do organizations encourage entrepreneurial employees and innovation? • Each innovation in an organization begins with an idea champion that generates an idea and retains responsibility for developing the idea in the organization. • For each idea champion there needs to be a sponsor who nurtures the new concept and applies organizational resources to the increasingly disruptive and expensive development of the idea. • For the new concept to succeed, the organization must have employees who occupy the role of orchestrator or godfather who handles all of the political obstacles surrounding the commercialization of the product, service, etc. • Large organizations might also need to create horizontal co-ordination mechanisms which protect innovation teams from outside influences (greenhouses) Page 18 of 37
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Marc Delingat Organizational Behavior Course Summary Module 8: Organizational Design and New Forms of Service-Driven Organizations Organizational Design Organizational Mechanistic Organic Organizational Organizational Design Issues Design Design Division of Labor High Degree of work specialization Low Distribution of Low Degree of specialization High authority delegation delegation Departmentali- High Degree of work uniformity Low zation Uniformity Uniformity Span of Control Few Number of subordinates Many Division of Labor is the degree of job specialization in a firm. It is the specific tasks and work methods of an employee’s job. Division of labor results in specialization and it is the primary source of increasing marginal productivity in work units. Delegation of authority is a manager’s decision about how much authority to give to a subordinate. When delegating authority managers loose some degree of control but gain the advantage of leveraging the subordinates skills and expertise. This allows the manager to take on more complicated tasks. When receiving authority a subordinate is able to acquire management skills. Gaining authority can be a powerful motivator (intrinsic reward) which raises subordinates’ effort levels. Delegation of authority should always follow the following principles: 1. For each responsibility delegated to a team or a subordinate, an equal amount of authority must be given. 2. All decisions should be delegated to the lowest organizational level possible, i.e., to the level at which employees or self-directed teams who know what to do can act responsibly on behalf of the firm. 3. Managers just get involved when an exception to the work routine of the team or subordinate occurs (management by exception). 4. Managers should not only tell the team what to do but also check in to make sure that the subordinate knows how to complete the task. 5. The subordinate’s responsibility to his superior is absolute and superiors cannot escape responsibility for the performance of their subordinates. Departmentalization refers to how work activities are grouped together. Departmentalization is the logical grouping of work activities to create divisions, branches, units, etc. in a company. Companies can be grouped in many different ways: Page 19 of 37
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Marc Delingat Organizational Behavior Course Summary • Functional design established workgroups based on the function that they perform in the company • Territorial design establishes work groups based on a geographic area • Product divisional design establishes the work groups based on products of the company • Matrix design overlays a project or product design on a functional design. The principal advantages of the functional design are noted below. • The structure is a logical reflection of the firm’s functions. • It is based on specialization (i.e., the purchasing department has expertise in buying all the components and materials which go into production) which is efficient. • It is efficient because individuals in functional departments learn to speak a common language (accounting, purchasing, quality control, and so on). • It minimizes the extent of duplication of effort. • Training of employees is narrowed and simplified. • It facilitates tight control and the legitimate authority of the chain of command is reinforced. Disadvantages of functional design: • Overspecialization can take place and this can narrow the business viewpoints in functional departments. • The development of managers is limited to their functional areas. • Coordination between departments can weaken. • Employees identify more strongly with their departments than with the culture of the firm. • The chief executive may be overburdened. • Managers may fail to develop a strong focus on customers, products or markets. The principal advantages of the territorial design are the following: • It tailors work units to the particular features of customers in a given region, i.e., British, Japanese, American, and French. • It provides an excellent training ground for managers as they are assigned to different regions. • It provides an excellent basis for the career development of managers (movement from field operations to company headquarters). • It creates work units that are highly responsive to specialized customer needs. There are a few disadvantages which occur in the territorial form of departmentalization: • There is a danger of duplication of effort across departments serving various territories or regions. • The company must be able to hire general managers who are capable of handling several functions such as production, sales and human resources. The principal advantages of the product divisional design are as follows: • It provides adaptability and flexibility in meeting the needs of customers and the company’s ability to manage a set of related products. • External changes can be detected more readily and understood in product-relevant terms. Page 20 of 37
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