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MacDonald. INP3004/MAN3360 Dr. Steve. Organizations and Organizational Change. Organizational Research Macro vs Micro Levels. Macro level – Organizational level

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inp3004 man3360 dr steve


INP3004/MAN3360Dr. Steve

Organizations and Organizational Change

organizational research macro vs micro levels
Organizational Research Macro vs Micro Levels
  • Macro level – Organizational level
    • Study what makes one organization more successful than another in terms of it’s structure, hierarchy, upper management strategies and policies, history, etc.
  • Micro level – Individual level
    • Study worker productivity, satisfaction, communication between workers, etc.
  • Macro vs Micro research - Very little empirical data at macro level due to difficulty of conducting this type of research
    • Sample size, cooperation, # of orgs w/ variable of interest.
    • Talk in terms of Organizational Theory
organizational theories
Organizational Theories
  • Classical Theory
  • Neo-Classical Theory
  • Systems Theory
classical theory components
Classical TheoryComponents

Classical Theory – Highly structured, bureaucratic approach to organizations

  • Four Components of classical theory
  • Differentiated Activities – Organizations divided by function, but rely on relationships between functions
    • Ex: Research, Personnel, Finance, Marketing, etc.
  • People – Though Orgs consist of activities and tasks, people run the show
    • Ex: Communicate, perform tasks, report to superiors
  • Cooperation toward a goal – People must cooperate to reach common org goal
    • Ex: Make profit to continue operation, provide quality product/services, etc.
  • Authority – Supervisor-subordinate relationships
    • Ex: Manager tells worker what to do and how to do it
classical theory principles
Classical TheoryPrinciples
  • Four Principles of Classical Theory that guide four components
  • Functional Principle – Division of labor (Horizontal) – departments are set up so that people in each dept perform similar work
    • Allows one manager to supervisor many similar tasks
  • Scalar Principle – Chain of command – (Vertical) structure of org such that each level has it’s own level of responsibility
    • each worker has only one supervisor to report to
  • Line/Staff Principle – Differentiates between personnel
    • Line – responsible for meeting org goals – production, engineers, faculty, etc.
    • Staff – support line’s activities – personnel dept, quality control, admin, custodial, etc.
  • Span of Control – Number of subordinates under each mgr
    • Flat – each worker has more autonomy
    • Tall – more authority to supervisors
functional vs scalar principles

Scalar Principle

Vertical Structure

Functional Principle

Horizontal Structure

Functional vs Scalar Principles
neo classical theory
Neo-Classical Theory

Neo-classical theory – softer version of classical theory based on following challenges to bureaucracy:

  • Differentiated activities – some orgs allow people to get involved in many different activities
    • Less specialization
  • People – people are interchangeable, rules aren’t
    • When someone leaves org, the position usually remains
  • Cooperation toward a goal – Not everyone in org shares the same goal
    • Some might see profit as goal, others environmental concern
  • Authority– Supervisors do not always direct subordinate performance
    • Current trend toward more autonomy and participative decision making
neo classical theory in comparison to bureaucracy
Neo-Classical Theoryin Comparison to Bureaucracy

Neo-classical theory:

  • More humanistic approach – uses psychological principles of behavior
  • Scalar principle need not be so rigid
  • Distinction between line and staff often blurred
  • Span of control size depends on several factors (no magic number)
    • Consider mgr’s ability, amount of supervision req’d, quality of workers, type of work, etc.
systems theory
Systems Theory

Systems Theory – developed to account for modern org’s need to adapt to changing environment

  • Treats org similar to biological system (Darwinian model)
  • Must consider org within the context of its relationship to the environment
  • Cannot study individual or small group behavior in isolation, all part of an interacting system affecting all other parts
systems theory1
Systems Theory

Five Parts to an Organizational System

  • Individuals – bring KSA’s & personalities to org
  • Formal Organization – system structure
  • Small Groups – made up of interrelating individuals
  • Status and Role – differences in status and role dictate behavior norms more so than the individual
  • Physical Setting – physical environment & technology
systems theory model
Systems Theory Model
  • Output Users
  • Consumers
  • Clients
  • Government
  • Non-consumers
  • Input Resources
  • Families
  • Banks
  • Environment
  • Material suppliers


  • Input
  • Human Resources
  • Financial Resources
  • Physical Resources
  • Materials
  • Information
  • Output
  • Products/Services
  • Satisfaction
  • Reputation
  • Profit/loss
  • Wages/Salaries
  • Taxes
  • Process
  • Organizational Structure
  • Admin Decision Making
  • Org policies, procedures
  • Production process
  • Org Climate
organizational structure coordinating mechanisms

Organization Complexity

Organizational StructureCoordinating Mechanisms
  • Mutual Adjustment – Informal communication between workers who adjust to one another
    • “You wash, I’ll dry”
  • Direct Supervision – One person tells the other what to do
    • Manager provides instruction to stock clerk
  • Standardization of Work Processes – Strict operating procedures w/little room for individual input on how
    • Routine assembly line work
  • Standardization of Work Output – Specify exact quality of product or service (quality control)
    • Every pizza tastes the same regardless of who made it
  • Standardization of Skills & Knowledge – Everyone doing a particular job gets the same training
    • Certified Public Accountants
mintzberg s basic parts to all organizations
Mintzberg’s Basic Parts to all Organizations











mintzberg s basic parts to all organizations1
Mintzberg’s Basic Parts to all Organizations
  • Operating Core – Individuals producing the goods or services
    • Production workers
  • Strategic Apex – Top level management responsible for overall effectiveness of the org
    • President, CEO, VPs, Top Mgrs
  • Middle Line – Connects apex to operating core, chain of command
    • Middle managers
  • Techno Structure – People who design the work, plan it, and train workers
    • Analysts, I/O psychologists, Human Factors specialists
  • Support Staff – Provides services to org to assist function, but not directly related to org mission
    • Custodial, mailroom, security
re organizing downsizing
Re-organizing & Downsizing

Restructure in response to environmental changes

  • Reorganize to change roles and authority hierarchy, rename, split, combine departments
  • Downsize or right sizing to layoff large numbers of workers

Sent packing






Laid off


Walking papers

reasons for downsizing
Reasons for Downsizing
  • Automation– machines do work of people
  • Obsolescence – positions become obsolete
  • Salary Expense – cut costs to survive by cutting salary

Pink Slip

who gets the axe
Who gets the Axe?
  • Strategic Apex?
    • Very high salaries, could save big $$
    • However, most responsibility, make big decisions
  • Operating core?
    • Lots of workers, perhaps don’t need as many
    • However, they make the products, low salaries don’t save that much $$
  • Middle line?
    • Can reorganize and eliminate many middle mgr jobs and fairly high salaries
  • Support Staff?
    • Can be contracted or leased out, save on senior salaries and benefits
  • Techno Structure?
    • In house advisors/analysts can be replaced with outside consultants that charge more, but only work when you need them
before downsizing
Before Downsizing

Total Salary = $1,400,000

after downsizing
After Downsizing

New Total Salary = $650,000

organizational social system
Organizational Social System

Social System – informal structure apart from the formal organizational structure

  • Three components
  • Roles – Expected behavior in a given position, related to the task
    • One person can be production worker and coach of company softball team
  • Norms – Acceptable behaviors w/in a group developed through experience and maintained by peer reinforcement and punishment
    • Dress, lunch breaks, topics discussed
  • Organizational Culture – Attitudes, behaviors, customs, and habits of organization
    • “The way we do things around here”
organization development
Organization Development
  • Organization Development (OD) – Change aspects of the organization (rather than job) to increase productivity, motivation, etc.
    • Uses psychological principles to improve org’s effectiveness.
    • Takes place throughout the org from line worker to upper management
    • OD consultant like an Org Doctor
      • Diagnoses org’s problems
      • Prescribes a corrective intervention
      • Rechecks with follow-up evaluation
organization development components
Organization DevelopmentComponents
  • Change Agent – Usually a consultant educated in business or psychology
    • Capable of diagnosing org problems, developing ways to correct, and implementing the changes or instructing the org on how
  • Client – Org or individual or group
    • Ethical considerations – do not want to help managers at expense of employees even though mgr might be the client
  • Intervention – What change agent is paid to do (change program)
  • Giving more power and decision-making authority to employees within a context of less traditional managerial oversight

Spreitzer’s (1997) four dimensions of empowerment:

  • Meaning – Believing that what you do “matters”

e.g., being energized and passionate about your work

  • Competence – Sense of self-effectiveness

e.g., having the confidence to perform successfully

  • Self-determination – Behaviors initiated and regulated by one’s self

e.g., sense of responsibility and ownership of work

  • Impact – Belief that you can effect organizational outcomes

e.g., “making a difference”

how many psychologists does it take to change an organization
How many psychologists does it take to change an organization?
  • One, but it has to want to change.
  • Cannot change an org if you don’t understand:
    • What can be changed
    • What outcome you expect to accomplish
    • Those things that can affect the change
model of organizational change
Model of Organizational Change

Intervention Activity

Organizational Work Setting
















model of organizational change robertson porras
Model of Organizational Change(Robertson & Porras)
  • Organizational Work Setting – Four interacting components
  • Organizing Arrangements – structure, administrative system, reward systems
    • Ex: bureaucracy or open systems approach
  • Social Factors – org culture, norms, roles, management styles
    • Ex: formal or casual, personal or business relationships
  • Physical Setting – layout of building
    • Ex: factory, offices, cubicles
  • Technology – machines required to do job
    • Ex: computers, phones, tools, production line
model of organizational change robertson roberts porras
Model of Organizational Change(Robertson, Roberts, & Porras)
  • Individual Behavior – changes in the work setting affect worker behavior
    • Ex: New technology may frustrate workers affecting org culture and negatively impacting performance and satisfaction
  • Organizational Performance – if individuals work hard and cooperate, then org benefits
  • Individual Development – knowing one contributes to org’s success makes one feel better about self and org, thus providing motivation to work harder
overcoming organizational resistance to change
Overcoming Organizational Resistance to Change
  • Due to increased ambiguity in the environment and other undesirable effects, individuals often resist change in an organization
  • Dirks, Cummings, & Pierce (1996) used the concept of psychological ownership to understand why people promote or resist change
  • Three needs related to psychological ownership:

1. Self-enhancement: Individuals desire to maintain high levels of self-esteem

2. Self-continuity: Individuals attempt to maintain stability of their self over time

3. Control and efficiency: Individuals attracted to situations where control and efficiency are likely to occur

resistance to change
Resistance to Change
  • Three types of organizational change:

1. Self-initiated vs. imposed change:Individuals are more likely to accept self-initiated change (change seen as a result of their own choosing)

2. Evolutionary vs. revolutionary change:Evolutionary change is more likely to receive positive reactions as it is a gradual more comfortable change process

3. Additive vs. subtractive change:Additive change is often viewed more favorably, as the employees don’t feel as though they are losingsomething

  • Additional ways a consultant can ease concerns in a change situation:
    • educate about the reasons why change is needed
    • provide feedback sessions during the change interventions
organization development intervention activities
Organization DevelopmentIntervention Activities
  • Diagnostic – fact finding using tools such as interviews, records, observations, surveys
  • Intergroup – team building, conflict resolution, developing interpersonal and communication skills
  • Education & Training – improve KSAs
  • Coaching & Counseling – behavioral interventions, behavior modification, defining goals, encouraging empathy
  • Life & Career Planning – identify individuals’ life & career goals, plan ways to help achieve them
od intervention depends on client type of change and role of change agent
OD Intervention Depends on: Client, Type of Change, and Role of Change Agent

Total Org






Type of







Role of

Change Agent


change agent roles
Change Agent Roles
  • Acceptance – Allows clients to explore their own problems (Rogerian-like approach)
    • Active listening (hmm, uh huh)
  • Catalyst – Allows self discovery by client, but provides feedback
    • “If you think that’s the problem, then why?”
  • Confrontative – Probes clients and challenges their views providing supporting data
    • “You say you the guys on the line have gotten lazy, but their performance has actually improved over time”
  • Prescriptive – Doctor/patient-like relationship
    • “I think this is the problem and this is what you should try”
culture change
Culture Change
  • What is necessary for an org to change its culture (norms, beliefs)?
  • Strong leader – need a persistent leader to help employees who are resistant to change
  • Clear vision – vision of what the new culture is and how workers will be effected must be clear and gain commitment at all levels
  • New work procedures – can’t change if everything remains the same (how decisions are made, communication channels, policies)
  • Org must be open to learn – No one knows for sure what will happen, but must be willing to try
total quality management
Total Quality Management
  • Total Quality Management (TQM) or Total Quality Leadership (TQL)
    • OD intervention begun by W. Edwards Deming (American Physicist)
    • First adopted by Japanese business
    • Became popular in U.S. after success of Japan
    • Based on premise “Continuous Process Improvement”

Plan --> Do --> Check --> Act -->

total quality management1
Total Quality Management

How does it work?

  • Employee Involvement – gets everyone involved in decision making. How?
    • Sharing info – goals, org performance, mission
    • Develop knowledge – training at all levels
    • Reward org performance – rewards tied to org performance, not individuals
    • Redistribute power – more autonomy to workers
  • Quality Control – strive for consistent high quality
  • Customer Satisfaction – emphasis on client
  • Org Policies consistent with TQM – rewards for quality, not speed
re engineering

Re-engineering – 3 part approach to changing an org – tear down and make better

  • Identify org’s distinctive competencies – what does the org do best?
  • Assess Core Processes – determine which processes are working and which are remnants of past management
  • Re-organize horizontally by process - cut out unnecessary middle management (more autonomy to workers)
tqm vs re engineering
TQM vs. Re-engineering

TQM Re-engineering

  • Gradual improvement
  • Bottom-up:
    • participative decision-making in planning TQM and execution
  • Results in new processes
  • Drastic change
  • Top-down:
    • management decides how to re-engineer
  • Often results in downsizing
does od work
Does OD work?
  • Like therapy, a single dose is often not effective
  • Empirical findings
    • No change about 50% of the time
    • Negative change less than 10% of the time
    • Positive change about 40% of the time
    • Results similar to that of psychotherapy – with therapy many people still don’t get better, some do, very few get worse.