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Chapter 9: Communication IBM and virtual social worlds (www.secondlife.com) for events, white-board brainstorming, mentoring, new employee orientation, simulations and rehearsals, software development Communication: the sharing of information between two or more people to achieve a common understanding about an object or situation (thus, communication does not end with the message sent) Encoding: the process whereby a sender translates the information he or she wishes to send in a message Communication Medium / Communication Channel: the manner in which a message is conveyed Decoding: the process whereby a receiver perceives a sent message and interprets its meaning Feedback: the process whereby a receiver encodes the message received and sends it or a response to it back to the original sender o Communication that includes feedback is referred to as two-way communication

Organization Communication Organizational Communication: the patterns and types of communication that occur at the organizational and unite levels. Purpose = facilitate the achievement of the organizations goals Communication networks affect coordination, innovation, and performance Overall, reasonably dense networks with some degree of leader centrality tend to be the most effective consistent w/ high involvement management Sparse Networks: a communication network in which most or all network members communicate with only a few other members o Creates an opportunity for brokerage where one or more members of a network act as a conduit or go-between for information exchanges between members without direct ties o Wheel, Y, Circle Dense Networks: a communication network in which most or all network members communicate with many other members o Well-connected network: Density score of .80 (16 connections among 5 ppl divided by 20 possible connections) Centralized Networks: a communication network in which one or a few network members dominate communications o Wheel and Y simple tasks due to efficiency, speed, and accuracy Decentralized Networks: a communication network in which no single network member dominates communications o Circle and Well-connected network complex tasks Communication w/I organizations can occur in any of three directions: downward, upward, horizontally Downward Communication: communication that flows from superior to subordinate o Necessary to provide job instructions, info on organization policies, and performance feedback o Disadvantage lower-level managers and associates often complain about the lack of information on goals and changes being made in the organization Upward Communication: communication that flows from subordinate to superior

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Necessary to provide feedback on downward communication and to provide ideas and information o Can be difficult to achieve in an effective way; can be costly o Departmental meetings, open-door policies, suggestion boxes, attitude surveys, participation in decisions, grievance procedures, exit interviews Horizontal Communication: communication that takes place between and among people at the same level o Face-to-face conversations, phone conversations, and e-mail o boundary-spanning positions 360-degree feedback o Problems: retaliations, politically motivated to either overrate or underrate o

Interpersonal Communication Interpersonal Communication: direct verbal or nonverbal interaction between two or more active participants. Formal Communication: communication that follows the formal structure of the organization (e.g., superior to subordinate) and entails organizationally sanctioned information o Drawback can be slow Informal Communication: communication that involves spontaneous interaction between two or more people outside the formal organization structure; Ex. Peers on their coffee break o Benefit enables managers to reach more members than the formal one; can help build solidarity and friendship among associates o Drawback rumors and gossip Rumors: unsubstantiated information of universal interest Gossip: information that is presumed to be factual and is communicated in private or intimate settings not specifically work related reduces associates focus on work, ruins reputations, creates stress, lead to legal problems

Communication Media o Richness the amount of information a medium can convey. Depends on: 1) Availability of feedback 2) Use of multiple cues 3) Use of effective language 4) Extent to which the communication has a personal focus

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Effective managers will use richer media as the message becomes more equivocal Equivocal messages are those that can be interpreted in multiple ways Managers will use richer media when the message is important and when they feel the need to present a positive self-image Organizational norms that indicate which types of communication media are desirable

Communication Technology Problem: information overload, leak private or secret information to an unintended audience w/ unintended consequences

Nonverbal Nonverbal communication: communication that takes place without using spoken or written language, such as communication through facial expressions, tone of voice, personal appearance, contact or touch, mannerisms 60 to 90% of all interpersonal communication is nonverbal o Three Categories: (1) Body Language (2) Paralanguage (3) Gestures Body Language kinesics facial expressions, hands, arms, legs, posture Paralanguage how something is said tone of voice, pitch of voice, silence Gestures signs used to convey specific meanings okay sign with fingers Leaky Behaviors are those that we cannot control Nonverbal can provide a form of feedback Can reveal whether a person is lying

Organizational Barriers to Effective Communication 1) Information Overload May escape information or prioritize it 2) Information Distortion Unintentional distorting due to honest mistakes or time pressure; Intentional distortion due to competition 3) Jargon Specialists in two different fields 4) Time Pressures 5) Cross-Cultural Barriers Expatriate managers may fail in their international assignments Lack of language fluency, broader lack of cultural fluency Internationally sold products: Advertisement slogans, names for products Cultural Fluency: the ability to identify, understand, and apply cultural differences that influence communication Language fluency is necessary for cultural fluency but is not enough by itself 6) Network Breakdowns Interference in flow of communication Breakdowns involving communication

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Individual Barriers to Effective Communication Individual factors are the most commonly cited barriers to effective communication 1) Differing Perceptions When the sender has one perception of a message and the receiver has another caused by differing frames of reference 2) Semantic Differences Semantics: refers to the meaning people attach to symbols, such as words and gestures 3) Status Differences Can result from both organizational and individual factors 4) Consideration of Self-Interest Forecasts of future activity, performance standards, and recommendations on capital budgets are often used in determining the managers compensation managers sometimes provide info that is in their self-interest; incomplete data 5) Personal Space Differs among individuals, genders, and across cultures 6) Poor Listening Skills The receiver must listen in order to hear and understand the senders message Managers listen with about 25% efficiency

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Overcoming Communication Barriers

Communication Audit: an analysis of an organizations internal and external communication to assess communication practices and capabilities and to determine needscan be conducted in-house or by external consulting firms o Often are used to ascertain the quality of communication and to pinpoint any deficiencies in the organization o Examine the organizations communication philosophy and objectives, existing communication programs, communication media, quantity and quality of personal communications, and employee attitudes toward existing communications Communication Climate: associates perceptions regarding the quality of communication within the organization o Influences the extent to which associates identify with their organization o Mutual trust exists between senders and receivers, communication credibility is present, and feedback is encouraged, managers should encourage a free flow of downward, upward, and horizontal communication Improve Interpersonal Communication: o Know Your Audience me to me to me communication (Scudder) such communication assumes that others share your frame of reference and, in the absence of feedback, that people interpret the message as you intend it; know audience, their experience, frames of references, and motivations o Select an Appropriate Communication Medium various communication media differ in richness; follow-up complex/important info with e-mail after face-to-face interaction o Regulate Information Flow and Timing discarding information of marginal importance and conveying only significant information o Encourage Feedback Related to Understanding to ensure that the received message is interpreted as intended, feedback from the recipient is necessary Ask to repeat what they have heard; Promote and cultivate feedback; Reward those who provide feedback & use feedback received (thank them); Respond to feedback o Listen Actively listening is not passive; must consciously listen to others Stop talking, Pay attention, Listen empathetically, Hear before evaluating, Listen to whole message, Send feedback

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Chapter 10: Decision Making by Individuals and Groups Decisions: choices of actions from among multiple feasible alternatives

Decision Making Process

Define the Problem problems are typically gaps between where we are today and where we would like to be tomorrow Identify Criteria exactly what is important in solving the problem; determine what info the decision maker needs to collect in order to evaluate alternatives and help her explain the choice that she ultimately makes Gather and Evaluate Data better understand the decision context and to discover specific alternatives that might solve the problem. Decision maker cannot choose an alternative that has not been considered Decision maker cannot choose an alternative that is better than the best alternative on list List and Evaluate Alternatives assess each alternative using each criterion Select Best Alternative choose alternative that seems to best satisfy the criteria Implement and Follow-Up monitor the results to ensure that the adopted alternative solved the problem; may determine that the chosen alternative did not work, a new problem must be solved

Optimal v. Satisfactory Decisions Effective Decision: one that is timely, acceptable to those affected by it, and satisfactory in terms of the key decision criteria Satisficing Decisions: satisfactory rather than optimal decisions (Boundedly Rational Decisions) o Two important reasons people often make satisfactory decisions rather than optimal: 1) Do not have the capability to collect an process all of the information relevant for a particular decision lack time and other resources 2) Tendency to choose the first satisfactory alternative discovered

Individual Decision Making Decision making is a cognitive activity that relies on both perception and judgment

Decision-Making Styles

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Jungs Theory: an individuals predispositions can affect the decision process at two critical stages (1) the perceiving of information (2) the judging of alternatives

1. Gathering Information Requires perceptual processes Sensing: a decision style focused on gathering concrete information directly through the senses, with an emphasis on practical and realistic ideas o Such a person believes in experience and typically wants to focus on rules and regulations, step-by-step explanations, and fact checking; develop factual database o See themselves as practical and realistic; enjoy the information-gathering stage o Most appropriate for jobs where routine decisions are typical Intuition: a decision style focused on developing abstractions and figurative examples for use in decision making, with an emphasis on imagination and possibilities o Dislike details and the time required to sort and interpret them; perceive info in large chunks (holistic, integrated abstractions) o Decisions often based on imagination; Creativity comes from inspiration rather than concentrated effort o May better cope with rapid change and crisis situations o Most appropriate for jobs where novel decisions and a need for creativity are common When a high level of ambiguity exists, few or no precedents exists, facts are limited, facts dont clearly indicate which way to go, time is limited and there is pressure to make the right decision 2. Evaluating Alternatives There is no fixed relationship between a persons information-gathering style and his judgment style Thinking: a decision style focused on objective evaluation and systematic analysis o Use an impersonal, rational approach to arrive at their judgments o Objective, analytical, logical, and firm o Concerned with principles, laws, and objective criteria o Easy to critique the work/behavior of others, uncomfortable dealing w/ peoples feelings o Able to discipline and reprimand people, even fire them if necessary o Firm and seem detached and impersonal to subordinates o Conservative in their decisions Feeling: a decision style focused on subjective evaluation and the emotional reactions of others o Emphasize the maintenance of harmony in the workplace o Judgments are influenced by their own or others personal likes and dislikes o Subjective, sympathetic, and appreciative in their decisions o Give more weight to maintaining a friendly climate in the work group than to effective task achievement 3. Using Decision Styles Mind-stretching techniques: can be helpful in addressing the problem of limited styles by extending ways of thinking about situations and broadening the decision styles used Six Thinking Hats: the de Bono Group, exercise in class Brain Dominance Technique: Hermann International

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Degree of Acceptable Risk Risk exists when the outcome of a chosen course of action is not certain Risk-Taking Propensity: willingness to take chances o Low-risk propensity may collect and evaluate more information o High-risk propensity must avoid making decisions with too little information Reference Point: a possible level of performance used to evaluate ones current standing o Can be a goal, a minimum acceptable level of performance, the average performance level of others

Cognitive Biases Cognitive Biases: mental shortcuts involving simplified ways of thinking o Although are harmless and save time, they often cause problems Confirmation Bias: a cognitive bias in which information confirming early beliefs and ideas is sought while potentially disconfirming information is not sought o Individuals subconsciously seek only information that supports their early thinking Ease-of-Recall Bias: a cognitive bias in which information that is easy to recall from memory is relied upon too much in making a decision o Easily recalled information may be misleading or incomplete o May not be indicative of the overall situation (ex. Performance appraisals) Anchoring Bias: a cognitive bias in which the first piece of information that is encountered about a situation is emphasized too much in making a decision o Even when decision makers acquire a wide range or additional information (thereby avoiding the confirmation bias), initial information can still have too much influence. Sunk-Cost Bias: a cognitive bias in which past investments of time, effort, and/or money are heavily weighted in deciding on continued investment o Reluctant to walk away from past investments, preferring to build on them and make them successful o Decision makers should treat a past investment as a suck cost and focus on the future costs and benefits of continued investments o Sunk Cost a cost that is unrecoverable and irrelevant

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Moods and Emotions Moods: affective states corresponding to general positive or negative feelings disconnected from any particular event or stimulus o Individuals in positive moods seem to neglect the details of decision situations poor outcomes when such details are crucial o Individuals in positive moods seem to exhibit more breadth in ideas considered, which can create more exploration, less conservatism, more creativity, and perhaps more risk taking o Positive moods overall performance was lower than those in bad moods because details mattered in the trading context Emotions: affective states corresponding to specific feelings, such as anger, that tend to be associated with particular events, people, or other stimuli o Regret is an aversive emotion involving self-blame that comes from unwanted outcomes avoiding in the future a choice that has led to a poor outcome o Self-management this reaction to regret can protect the ego of the decision maker o Anger may cause decision makers to be less effective gatherers and evaluators of information; May lead to lower perceived risk unwanted decision consequences, particularly in comparison to the effects that other negative emotions have on perceived risk (fear)

Group Decision Making Pitfalls 1) Groupthink Groupthink: a situation in which group members maintain or seek consensus at the expense of identifying and debating honest disagreements; increases the likelihood of a poor decision o Focusing too much attention on censuses, especially early in a decision process, can result in a faulty decision o Most likely occurs when a group that has a positive image is under threat (tough competitor) o Eight Specific Symptoms: 1- Self-Censorship remain quiet during group discussions and avoid issues that might upset the group 2- Pressure to any group member who expresses opinions that threaten group consensus 3- Unanimity members quiet are assumed to be in agreement 4- Rationalization complex rationales that discount information that conflict w/ their thinking 5- Invulnerability group members ignore any dangers, become overly optimistic and take unwarranted risks; overestimate collective wisdom 6- Mindguards shield the group from any facts, criticisms, or evaluations that may alter the illusion of unanimity and invulnerability 7- Morality talk about the morality of what they are doing and the immorality of opposing views; ignore ethical and legal issues 8- Stereotypes develop negative stereotypes of other people and groups

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Self-censorship

Stereotypes

Pressure

Morality

Unanimity

Mindguards

Rationalization

Invulnerability

2) Common Information Bias Common Information Bias: a bias in which group members overemphasize information held by a majority or the entire group while failing to be mindful of information held by one group member or a few members o Defeats the availability of unique information, ideas, and perspectives brought to the process by individual group members 3) Diversity-Based Infighting Diversity-Based Infighting: a situation in which group members engage in unproductive, negative conflict over differing views o Instated of creating rich discussions and insight, diverse ideas can create ill will and fractured groups o Fix this by formal brainstorming procedures and the formal use of devils advocacy 4) Risky Shift Risky Shift: a process by which group members collectively make a more risky choice than most or all of the individuals would have made working alone o Involves diffusion of responsibility no single person can be blamed if the decision turns out poorly, they can shift the blame entirely to others (the group) Group Decision Making Techniques 1) Brainstorming Brainstorming: a process in which a large number of ideas are generated while evaluation of the ideas is suspended o Groups do not do as well as individuals brainstorming alone o Overcoming problems of standard group brainstorming: Brain-Writing: write down all of their ideas, placed on a flipchart or whiteboard by pooling the written remarks (removing oral to a written approach and anonymity and less distractions) Electronic Brainstorming (EBS): computer stations in front of them, enter ideas into a database, projected onto a large screen anonymity, remove oral, less distractions

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2) Nominal Group Technique Nominal Group Technique: a process for group decision making in which discussion is structured and the final solution is decided by silent vote o Eliminates a great deal of interaction among group members; better than brainstorming o Four Procedural Rules: 1- Write down ideas silently, no discussion 2- Present one idea to the group; second idea after the first round; repeated until done 3- Ideas recorded on blackboard for projection, then discussion clarify and evaluate 4- Silent and independent vote or ranking of choices 3) Delphi Technique Delphi Technique: a highly structured decision-making process in which participants are surveyed regarding their opinions or best judgments o Do not meet face-to-face o Most common approach respond to a questionnaire about the issue of interest responses are summarized and results are fed back to the group given a second opportunity to respond and may or may not change their judgments o May feel constrained by the particular set of questions posed o When members of the group are geographically dispersed Brainstorming, Nominal group technique, Delphi technique = more concerned w/ increasing the number of ideas generated Dialectical inquiry and Devils advocacy = concerned with directly improving the quality of the final solution, help group find best choice; both use constructive conflict; however can result is lower levels of group satisfaction 4) Dialectical Inquiry and Devils Advocacy Dialectical Inquiry: a group decision-making technique that relies on debate between two subgroups that have developed different recommendations based on different assumptions o Requires group members to develop two distinct points of view; debate of the two opposing sets of recommendations and assumptions maximizes constructive conflict Devils Advocacy: a group decision-making technique that relies on a critique of a recommended action and its underlying assumptions o Requires the group to generate only one set of assumptions and a single recommendation, which are then critiqued by the devils advocate

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Individual v. Group Decision Making Associate Involvement in Managerial Decisions The correct level of involvement depends on the nature of the decision problem itself Vroom-Yetton Method: requires the manager first to diagnose the problem situation and then to determine the extent to which associates will be involved in the decision-making process o Optimal extent of involvement depends on the probable effect participation will have on: (1) the quality of the decision, (2) the acceptance or commitment subordinates exhibit when implementing the decision, (3) the amount of time needed to make the decision o When a group decision approach is to be used (Type GII), the manger must determine how much agreement should exist within the group

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Value of Individual v. Group Decision Making Group decision making should increase the number of ideas generated and improve the evaluation of alternatives generally produce better decisions a) Time groups take more time to reach a decision. Options: make decision alone, use group for advice only, use already existing group to minimize the arrangement time, use majority-decision rule rather than unanimity, used the nominal group technique b) Cost group decision costs more than individual; time costs money c) Nature of the Problem group have more info and ideas than single individual; however, groupthink, information bias, diversity-based infighting, and risky shift; but devils advocacy can help overcome these negative social forces d) Satisfaction and Commitment group decision making increases individual satisfaction and commitment e) Personal Growth group decision making ideal opportunity for personal growth

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Chapter 11: Groups and Teams Synergy: an effect wherein the total output of a team is greater than the combined outputs of individual members working alone

Groups and Teams Defined Group: two or more interdependent individuals who influence one another through social interaction Team: groups of individuals working toward specific goals or outcomes; 1. two or more people 2. with work roles that require them to be interdependent, 3. who operate within a larger social system (the organization), 4. performing tasks relevant to the organizations mission, 5. with consequences that affect others inside and outside the organization, 6. and who have membership that is identifiable to those on the team and those not on the team.

Formal and Informal Groups Formal Groups: groups two which members are formally assigned (faculty department, highway crew, assigned project team for class) Informal Groups: groups formed spontaneously by people who share interests, values, or identities (fantasy football league, Happy Hour on Friday afternoon with group of employees) Identity Groups: groups based on the social identities of members (Hispanic, female, Catholic) Virtual Teams: teams in which members work together but are separated by time, distance, or organizational structure benefits = they allow people who are physically separated to work together but less effective than face-to-face teams in many instances o Trust can be slower to develop o Members rely on communication channels that are less rich than face-to-face misunderstandings are more likely to occur o More difficult for virtual teams to develop behavioral norms o Easier for some members to be free riders causing frustration among other members

Functional Teams: teams are distinguished by the type of work they do & the purpose they serve o Production teams produce tangible products (team of restaurant chefs) o Service teams engage in repeated transactions with customers (Starbucks baristas)

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Management teams managers who coordinate the activities of their respective units (senior management teams) o Project teams associates (from different functional areas or org. units) who temporarily serve as teams to complete a specific project (new-product development teams) o Advisory teams formed to advise the organization on certain issues ( disability groups advise on technical aspects of various products) Self-Managing Teams: o

Team Effectiveness Knowledge Criteria Affective Criteria Outcome Criteria Is the Team Needed? Factors Affecting Team Effectiveness Process Loss: the difference between actual and potential team performance that is caused by diverting time and energy into maintaining the team as opposed to working on substantive tasks

Team Composition Team Orientation: the extent to which an individual works well with others, wants to contribute to team performance, and enjoys being on a team Roles: expectations shared by group members about who is to perform what types of tasks and under what conditions Task Roles: roles that require behaviors aimed at achieving the teams performance goals and tasks

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Socioemotional Roles: roles that require behaviors that support the social aspects of the organization Destructive Individual Roles: roles involving self-centered behaviors that put individual needs and goals ahead of the team Norms: informal rules or standards that regulate the teams behavior Divisible Tasks: tasks that can be separated into subcomponents Unitary Tasks: tasks that cannot be divided and must be performed by an individual Maximization Tasks: tasks with a quantity goal Optimization Tasks: tasks with a quality goal Interpersonal Cohesion: team members liking or attraction to other team members Task Cohesion: team members attraction and commitment to the tasks and goals of the team Social Facilitation Effect: Improvement in individual performance when others are present Social Loafing: a phenomenon wherein people put forth less effort when they work in teams than when they work alone Punctuated Equilibrium Model (PEM): a model of team development that suggests that teams do not go through linear stages but that team formation depends on the task at hand and the deadlines for that task.

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Chapter 12: Conflict, Negotiation and Power Conflict: a process in which one party perceives that its interest are being opposed or negatively affected by another party Dysfunctional Conflict: conflict that is detrimental to organizational goals and objectives Functional Conflict: conflict that is beneficial to organizational goals and objectives Personal Conflict: conflict that arises out of personal differences between people, such as differing values, personal goals, and personalities Substantive Conflict: conflict that involves work content, tasks, and task goals Procedural Conflict: conflict that arises over how work should be completed

Conflict Escalation: the process whereby a conflict grows increasingly worse over time Negotiation: a process through which parties with different preferences and interests attempt to agree on a solution Distributive Bargaining: a strategy that: (1) involves a competing, win-lose approach and (2) tends to be used when one partys goals are in direct conflict with the goals of another party Integrative Bargaining: a strategy that: (1) involved a collaborative, win-win approach and (2) tend to be used when the nature of the problem permits a solution that is attractive to both parties

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Attitudinal Structuring: activities aimed at influencing the attitudes and relationship of the negotiating parties Power: the ability to achieve desired outcomes Legitimate Power: power derived from position; also known as formal authority Reward Power: power resulting from the ability to provide other with desired outcomes Coercive Power: power resulting from the ability to punish others Expert Power: power resulting from special expertise or technical knowledge Referent Power: power resulting from others desire to identify with the referent Strategic Contingencies Model of Power: a model holding that organizational units and people gain power by being able to address the major problems and issues faced by the organization

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Chapter 12: Organizational Politics Organizational Politics: behavior that is directed toward furthering ones own self-interests without concern for the interests of well-being of others o Goal is to exert influence on others Organizational politics is a fact of life in most organizations. Political behavior can be carried out through a wide range of tactics. The extent to which a politician is successful in achieving his or her own goals depends on political skill Coalition: a group whose members act together to actively pursue a common interest Upward Political Influence refers to individual or group influence on those in a superior position, such as their manager Lateral Politics refers to attempts to influence targets at the same hierarchical level Downward Influence refers to attempts to influence those lower down in the hierarchy

Political Tactics: Rational Persuasion using logical arguments or factual information to persuade targets that the persuaders request will result in beneficial outcomes Consultation requires getting the target to participate in the planning or execution of whatever the politician wants accomplished. Personal Appeal focuses on the targets loyalty or affection (ex. Reminds targets about how he has always supported their ideas) Ingratiation makes the target feel good by flattering or helping him Inspirational Appeal used to generate the enthusiasm and support of targets by appealing to their important values and ideals Exchange a person volunteers a favor in order to gain a favor in return. Old axiom, Ill scratch your back if youll scratch mine. Coalition people w/ common interests join together to pursue their interests; Ex. represented by ethnic and minority group members who band together to promote organizational diversity Legitimizing making a request seem legitimate or official; saying this is how management wants it done. Pressure threats, nagging, or demands as a means of influencing targets Extraverts are likely to use inspirational appeals and ingratiation, whereas people high on conscientiousness are most likely to use rational appeals Political Skill: the ability to effectively understand others at work and to use this knowledge to enhance ones own objectives affects the successful use of political tactics o Can be positive, but only if sued to achieve the appropriate goals (of the organization and not oneself)

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Chapter 13: Organizational Structure and Culture Organizational Structure: work roles and authority relationships that influence behavior in an organization Organizational Culture: the values shared by associates and managers in an organization

Fundamental Elements of Organizational Structure Essentially, an organizations structure is a blueprint of the reporting relationships, distribution of authority, and decision making in the organization Hierarchy: the reporting relationships depicted in an organization chart

Structural Characteristics Structural Characteristics: the tangible, physical properties that determine the basic shape and appearance of an organizations hierarchy (indirectly affect behavior) the shape of a hierarchy is determined by its height, spans of control, and type of departmentalization Height: the number of hierarchical levels in an organization, from the CEO to the lower-level associates tall hierarchies often create communication problems, information flow is slowed and distorted, employees are unclear on appropriate actions and behaviors, lower satisfaction and commitment; tall hierarchies are more expensive Span of Control: the number of individuals a manger directly oversees o Broad spans have advantages: 1) result in shorter hierarchies thereby avoiding communication and expense problems 2) promote high-involvement management b/c managers have difficulty micromanaging people when there are larger numbers of them 3) allow for more initiative by associates o It has been argued that a CEOs span of control should not exceed six people

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Departmentalization: the grouping of human and other resources into units, typically based on functional areas or markets o Functional Form of Departmentalization resources related to a particular functional area are grouped together Advantages: Deep specialized knowledge in each functional area and economies of scale within functional areas Weaknesses: managers and associates in each functional department can become isolates from those who work in other departments (harms coordinated action and causes slow responses to major industry changes that require two or more functional areas to work together) lateral relation mechanisms can overcome this weakness

Divisional Form of Departmentalization organization has multiple products or services or operates in multiple geographical areas can group its resources into divisions FedEx implemented a divisional structure Benefits: 1) Better coordination among individuals in functional areas people tend to be closer to one another and fewer barriers (formal or informal) to direct communication 2) Rapid response and managers in the various functional areas coordinate more effectively, response times are often faster 3) Tailoring to the different product/service or geographical markets Drawbacks: 1) lack of collaboration across the product/service or geographic markets 2) diseconomies of scale within functional areas

Hybrid: some functional areas divided across divisions, while others remain intact at the corporate level, for cost reasons

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Network: many or most functional areas are outsourced to other organizations (homebuilders). Chief benefit: allowing a firm to focus on what it does best while outsourcing the rest. Quality control can be an issue and coordination of internal and external efforts

Structuring Characteristics Structuring Characteristics: the policies and approaches used to directly prescribe the behavior of managers and associates includes centralization, standardization, formalization, and specialization Centralization: the degree to which authority for meaningful decisions is retained at the top of an organization top-level managers retain most authority, leaving less for mid- and lower-level managers and very little for associates ~not consistent w/ high-involvement management Standardization: the degree to which rules and standard operating procedures govern behavior in an organization when high, managers and associates are expected to follow prearranged approaches to their work, and their behavior is very predictable ~ reduced opportunities for individual initiative, creativity, and self-directed collaboration w/ others inside and outside the org. Formalization: the degree to which rules and operating procedures are documented on paper or in company intranets closely related to standardization Specialization: the degree to which associates and managers have jobs with narrow scopes and limited variety

The Modern Organization Structural = Organic = Learning = Boundaryless o Fewer management levels, broader spans of control, lesser amounts of centralization, standardization, formalization, and specialization; the flexible approach provides freedom for lower-level managers and associates to think for themselves Structuring = Mechanistic = Nonlearning = Traditional Modern organizations tend to favor organic structures closely aligned with high-involvement mgt

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Factors Affecting Organizational Structure Factors that should be considered in designing the structure of the firm include strategy, external environment, internal technology, and organizational size A) The Role of Strategy Corporate Strategy Corporate Strategy: the overall approach an organization uses in interacting with its environment. The emphasis is placed on growth and diversification focus on orgs stockholders and other critical external constituents oriented toward growth, diversification, or both Growth: relates to increases in sales as well as associates and managers almost all types of orgs use growth as a measure of success o Growth can be achieved through internal development or by external acquisition acquisition is often a faster method of achieving growth, but carries some risk o Internal-growth strategy firms are likely to have larger marketing and research and development (R&D) departments, authority for decisions is decentralized to the heads of these departments o External acquisition the firms are likely to have the more well-developed financial and legal functions required to analyze and negotiate acquisitions Diversification: related to the number of different product lines or service areas in the organization o Primary reason firms diversify is to reduce overall risk by decreasing dependency on one or a few product markets can also diversify the geographic markets they serve by entering new foreign markets

>95% of annual sales come from 1 product 70-94% of sales come from 1 product <70% of sales come from 1 product <70% of sales come from any 1 product

Most companies following a diversification strategy move on to become related-product firms As firms become more diversified, the more they should adopt the divisional form they should develop divisions for each of their end-product businesses Holding Company: structure used by large, highly diversified unrelated-product firms in which the operating divisions are extremely autonomous U-form organizations: (unitary) firms with functional structures M-form organizations: (multidivisional) firms with divisionalized structures

Business Strategy

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Business Strategy: how a firm competes for success against other organizations in a particular market o Necessary to ensure effective competitive actions in the different markets in which a firm intends to operate (ex. Maintaining low internal costs as a basis for low prices offered to customers; product/service differentiation) A more advanced form of the divisional structure, strategic business units (SBUs) are sometimes used for more complex firms B) The Role of the Environment

Environment and Basic Structure Environmental Uncertainty: the degree to which an environment is complex and changing; uncertain environments are difficult to monitor and understand related to the type of structure an organization utilizes
Organic Lower-level managers and employees must think for themselves

High Uncertainty

Low Uncertainty

Less Organic Mid- and senior-level managers create rules and procedures to follow

Environment and Integration Slack Resources: an integration technique whereby a department keeps more resources on hand than absolutely required in order to reduce the need for tight communication and coordination with other departments Self-Contained Tasks: an integration technique whereby a department is given resources from other functional areas in order to reduce the need to coordinate with those areas Information Technology: an overall set of tools, based on microelectronic technology, designed to provide data, documents, and commentary as well as analysis support to individuals in an organization. Lateral Relations: elements of structure designed to draw individuals together for interchanges related to work issues and problems.

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C) The Role of Technology Technology and Structure: A Manufacturing Framework Mass Customization: a manufacturing technology that involves integrating sophisticated information technology and management methods to produce a flexible manufacturing system with the ability to customize products for many customers in a short time

Technology and Structure: A Broader Framework D) The Role of Organizational Size

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Ambidextrous Organization: an organization structure that balances formalization and standardization to help to achieve efficiency and flexibility Socialization: a process through which an organization imparts its values to newcomers Cultural Audit: a tool for assessing and understanding the culture of an organization Subcultures: in the organizational context, group that share values that differ from the main values of the organization Values: abstract ideals that relate to proper life goals and methods for reaching those goals

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End (Goal) Values

Prosperity Stimulating Achievement World peace Harmony Equality Security Freedom Happiness Inner peace Love National security Pleasure Religion Self-respect Social respect Friendship Wisdom

Means (Behavior) Values

Ambition Open-mindedness Competence Cheerfulness Cleanliness Courageousness Forgiving Helpfulness Honesty Imagination Independence Intelligence Rationality Affection Obedience Courtesy Responsibility Self-discipline

Chapter 14: Organizational Changes and Development Aspiration-Performance Discrepancies: gaps between what an individual, unit, or organization wants to achieve and what it is actually achieving Life-Cycle Forces: natural and predictable pressures that build as an organization rows and that must be addressed if the organization is to continue growing

Changes in Top Management: involve the replacement of top management team members who retire or depart the company for other reasons Planned Change: a process involving deliberate efforts to move an organization or a unit from its current undesirable state to a new, more desirable state

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Unfreezing: a phase in the change process in which leaders help managers and associates move beyond the past by providing a rationale for change, by creating guilt and/or anxiety about not changing, and by creating a sense of psychological safety concerning the change Transforming: a phase in the change process in which leaders help to implement new approaches by providing information that supports proposed changes and by providing resources and training to bring about actual shifts in behavior Refreezing: a phase in the change process in which leaders lock in new approaches by implementing evaluation systems that track expected behaviors, by creating reward systems that reinforce expected behaviors, and by ensuring that hiring and promotion systems support the new demands

Resistance to Change: efforts to block the introduction of new approaches. Some of these efforts are passive in nature, involving tactics such as verbally supporting the change while continuing to work in the old ways; other efforts are active in nature, involving tactics such as organized protests and sabotage Procedural Justice: in the context of organizational change, the perceived fairness of the change process DADA syndrome: a sequence of stages Denial, Anger, Depression, and Acceptance through which individuals can move or in which they can become trapped when faced with unwanted change

Organization Development (OD): a planned organization-wide continuous process designed to improve communication, problem solving, and learning through the application of behavioral science knowledge

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T-Group Training: group exercises in which individuals focus on their actions, how others perceive their actions, and how other generally react to them; participants often learn about unintended negative consequences of certain types of behavior Team Building: a process in which member of a team work together and with a facilitator to diagnose task, process, and interpersonal problems within the team and create solutions Survey Feedback: data obtained from questionnaires; managers receive the data for their units and are expected to hold unit meetings to discuss problems

Training: a process used in OD to help managers and associates to gain skills and capabilities needed to accomplish tasks in their jobs Job Redesign: enlargement or enrichment of jobs; enrichment is the better method to enhance motivation for effective problem solving, communication, and learning Management By Objectives (MBO): a management process in which individuals negotiate task objectives with their managers and then are held accountable for attainment of those objectives Supplemental Organizational Processes: processes in which associates and/or managers have on going meetings for the purpose of understanding and addressing important problems

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Exploitative Learning: learning how to more effectively use current knowledge Exploratory Learning: creating new knowledge and being innovative