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OB-UNIT-V-Foundations-of-Organizational-Behaviour.pdf

Discusses the foundations of Organization System - namely Organizational Structure, Organizational Culture, & Organizational Climate. Detail discussion on types organizational structures, building and sustaining organizational culture, distinction between culture and climate

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The
Organization
System
Srinivasa Rao V, AUSIB
Individuals & Groups
in Organization
Agenda
➔ Organizational Structure
An organizational structure defines how
job tasks are formally divided, grouped,
and coordinated..
➔ Organizational Culture
Organizational culture refers to a system
of shared actions, values, and beliefs that
develops within an organization and
guides the behavior of its members.
➔ Organizational Climate
Organizational climate refers to the
shared perceptions organizational
members have about their organization
and work environment.
Point Counterpoint
And regulation entails
organizational effectiveness, a
chain of command, and a structure
for logistical support.
~ Sun Tzu
Basic philosophy, spirit and drive of an
organization have far more to do with
its relative achievements than do
technological or economic resources,
organizational structure, innovation and
timing.
~ Marvin Bower
Point Counterpoint
In business, organization is an
absolute necessity, not an
alternative.
~ Larry Burkett
... people are capable of more than their
organizational positions ever give them
the tools or the time or the opportunity
to demonstrate.
~ Rosabeth Moss Kanter
Organizational Structure
Mintzberg defined
organizational structure as “the
sum total of the ways in which
it divides its labour into distinct
tasks and then achieves
coordination among them”.
According to him,
organizational structure is the
framework of the relations on
jobs, systems, operating
process, people and groups
making efforts to achieve the
goals.
Jennifer and Gareth have defined
organization structure as the
formal system of task and reporting
relationships that controls,
coordinates and motivates employees
so that they cooperate and work
together to achieve an organisation’s
goals.

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OB-UNIT-V-Foundations-of-Organizational-Behaviour.pdf

  • 2. Individuals & Groups in Organization
  • 3. Agenda ➔ Organizational Structure An organizational structure defines how job tasks are formally divided, grouped, and coordinated.. ➔ Organizational Culture Organizational culture refers to a system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members. ➔ Organizational Climate Organizational climate refers to the shared perceptions organizational members have about their organization and work environment.
  • 4. Point Counterpoint And regulation entails organizational effectiveness, a chain of command, and a structure for logistical support. ~ Sun Tzu Basic philosophy, spirit and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation and timing. ~ Marvin Bower
  • 5. Point Counterpoint In business, organization is an absolute necessity, not an alternative. ~ Larry Burkett ... people are capable of more than their organizational positions ever give them the tools or the time or the opportunity to demonstrate. ~ Rosabeth Moss Kanter
  • 6. Organizational Structure Mintzberg defined organizational structure as “the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them”. According to him, organizational structure is the framework of the relations on jobs, systems, operating process, people and groups making efforts to achieve the goals. Jennifer and Gareth have defined organization structure as the formal system of task and reporting relationships that controls, coordinates and motivates employees so that they cooperate and work together to achieve an organisation’s goals.
  • 7. Organizational Structure Hold and Antony: Structure is not a coordination mechanism and it affects all organizational process. Organizational structure refers to the models of internal relations of organization, power and relations and reporting, formal communication channels, responsibility and decision making delegation is clarified. Stephen Robbins: An organizational structure defines how job tasks are formally divided, grouped, and coordinated. Managers need to address six key elements when they design their organization’s structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.
  • 8. Organizational Structure Key Design Questions and Answers for Designing the Proper Organizational Structure
  • 9. Early in the twentieth century, Henry Ford demonstrated that work can be performed more efficiently if employees are allowed to specialize. Every Ford worker was assigned a specific, repetitive task such as putting on the right- front wheel or installing the right- front door. By dividing jobs into small standardized tasks that could be performed over and over, Work Specialization Ford was able to produce a car every 10 sec, using employees who had relatively limited skills.
  • 10. Today, we use the term work specialization , or division of labor, to describe the degree to which activities in the organization are subdivided into separate jobs. The essence of work specialization is to divide a job into a number of steps, each completed by a separate individual. In essence, individuals specialize in doing part of an activity rather than the entirety. Work Specialization
  • 11. Work Specialization [division of labour] divides the jobs into smaller activities. These activities are then grouped together for effective coordination. Organizing work by grouping similar tasks along with the people, and resources is formally known as horizontal specialization, The resultant work units are called departments. Departmentation
  • 12. This process in which division of labor followed by grouping of similar activities that establishes specific work units within an organization is also called departmentation. Some of the principal bases for grouping employees & resources into departments are common tasks, products, geography, and process. Departmentation
  • 13. Tasks Organizational units can be created around common tasks. This usually means grouping together employees who do the same job – thus, a firm might create a machine shop, a maintenance department, a secretarial pool, and a sales office. Bases for Departmentation Processes A process is a sequence of interlinked activities. An organization may be viewed as a set of processes: the product development process, the manufacturing process, the sales and distribution process, and so on. A process may correspond closely with an individual product, or a process may be dominated by a single task. Functional organizations tend to combine task-based and process- based grouping.
  • 14. Products Where a company offers multiple products, these can provide a basis for structure. In a department store, departments are defined by products: kitchen goods, toiletries, ready-to- eat/cook foods, and so on. ITC comprises of three main product groups: tobacco, FMCG, & agri- products. Bases for Departmentation Geography Where a company serves multiple local markets, organizational units can be defined around these localities. Banks offering retail banking services have branches across the geographical locations, regional offices, & zonal offices. Same is the case with some of the retail chains.
  • 15. Chain of Command Two related concepts are authority and unity of command. Authority refers to the legitimate power of a managerial position to give orders and expect them to be obeyed. The principle of unity of command helps preserve the concept of an unbroken line of authority. It says a person should have one and only one superior to whom he or she is directly responsible. The chain of command is an unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom and shows how executives, managers, and supervisors are hierarchically connected.
  • 16. Span of Control The number of individuals reporting to a supervisor is called the Span Of Control. Span of control is important because it largely determines the number of levels and managers an organization has. All things being equal, the wider or larger the span, the more efficient the organization.
  • 17. Centralization & Decentralization Decentralization is the degree to which the authority to make decisions is delegated to managers at lower levels who are the closest to the action. Centralization is the degree to which the authority to make decisions is restricted to managers at higher levels of an organization’s hierarchy.
  • 18. Formalization & Standardization In a highly formal organization, the employee on the job has a minimal amount of discretion over what to do and when and how to do it. On the other hand, where formalization is low, job behaviors are relatively unprogrammed, and employees have a great deal of freedom to exercise discretion in their work. Formalization refers to the written documentation of rules, policies, and procedures to guide behavior and decision making. Beyond substituting for direct management supervision, formalization is often used to simplify jobs. Written instructions allow individuals with less training to perform comparatively sophisticated tasks.
  • 19. Formalization & Standardization Standardization eliminates the possibility of employees engaging in alternative behaviors, by removing the need for employees to consider alternatives. Standardization is the degree to which the range of allowable actions in a job or series of jobs is limited so that actions are performed in a uniform manner. It involves the creation of guidelines so that similar work activities are repeatedly performed in a similar fashion.
  • 20. On the basis of the alternative approaches to grouping tasks and activities [Departmentation], we can identify three basic organizational forms: the functional structure, the multidivisional structure, and the matrix structure. Alternative Structural Forms
  • 21. Thus, in any industrial organization, specialized functions like manufacturing, marketing, finance and human resource management constitute as separate units of the organization. All activities connected with each such function are placed in the same unit. As the volume of activity increases, sub-units are created at lower levels in each unit and the number of persons under each manager at various levels get added. Functional Organization When units and sub-units of activities are created in organization on the basis of functions, it is known as functional structure. This results in the interrelated positions taking the shape of a pyramid.
  • 22. Grouping together functionally similar tasks is conducive to exploiting scale economies, promoting learning and capability building, and deploying standardized control systems. Since cross-functional integration occurs at the top of the organization, functional structures are conducive to a high degree of centralized control by the CEO and top management team. Once a functionally organized company expands its product range, coordination within each product area becomes difficult. Functional Organization
  • 23. Functional Organization [ A PARTIAL ORGANIZATION CHART FOR A STATE UNIVERSITY ]
  • 24. Divisional Organization In divisional organizations individuals and resources are grouped by products, services, territories, or customers. The product-based, multidivisional organizational structure first emerged during the 20th century in response to the coordination problems caused by diversification. The key advantage of divisionalized structures — whether product based or geographically based — is the potential for decentralized decision making. In divisionally structured organizations business level strategies and operating decisions are made at the divisional level, while the corporate headquarters concentrates on corporate planning, budgeting, and providing common services.
  • 25. Divisional Organization The large, divisionalized corporation is typically organized into three levels: the corporate center, the divisions, and individual business units, each representing a distinct business for which financial accounts can be drawn up and strategies formulated. A divisional pattern is often used to meet diverse external threats and opportunities. The major advantages of the divisional pattern are its flexibility in meeting external demands, spotting external changes, integrating specialized individuals deep within the organization, and focusing on the delivery of specific products to specific customers.
  • 26. Divisional Organization [SOURCE: BASED ON INFORMATION IN GENERAL ELECTRIC ANNUAL REPORT, 2001]
  • 28. Matrix Organization Matrix organizational structure is a combination of functional and divisional structures wherein an individual is assigned to more than one type of work unit. Matrix organization combines the advantages of both the functional, and the divisional structures - the technical specialization and the responsiveness, respectively. The schematic on the next slide shows the basic matrix arrangement for an aerospace program. Note the functional departments on one side and the project groups on the other. Workers and supervisors in the middle of the matrix have two bosses — one functional and one project.
  • 29. Matrix Organization Matrix structure is ideally suited to advertising agencies, aerospace firms, research and development laboratories, construction companies, hospitals, government agencies, universities, management consulting firms, and entertainment companies. As organizations grow larger and more complex with respect to the number of products, functions, and locations - matrix structure affords control and coordination across all three dimensions.
  • 32. Modern Organization Structures In 1993, two of America’s most prominent scholars of organization announced: “. . . the new organizational revolution is sweeping one industry after another . . . quantum changes in manufacturing and computer-mediated communication technologies have given managers radical new options for designing organizations.” The new organizations featured “. . . flatter hierarchies, decentralized decision making, greater tolerance for ambiguity, permeable internal and external boundaries, empowerment of employees, capacity for renewal, self-organizing units, self- integrating coordination mechanisms.”
  • 33. Modern Organization Structures Accordingly, contemporary organizations have been experimenting and implementing new structural options with fewer layers of hierarchy, more autonomy, and more emphasis on opening the boundaries of the organization.  Virtual Organization, aka Modular, or Network Organization  Horizontal Organization  Adhocracy  Hybrid Structures  Circular Structure  Boundar-less Organization  Learning Organization  Hub and Spoke Structure
  • 35. “Organizational culture is the pattern of values, norms, beliefs, attitudes and assumptions that may not have been articulated but shape the ways in which people in organizations behave and things get done.” Organizational Culture
  • 36. The culture of an organization refers to the unique configuration of norms, values, beliefs and ways of behaving that characterize the manner in which groups and individuals combine to get things done. ~ Eldridge and Crombie Organizational Culture Culture is the commonly held beliefs, attitudes and values that exist in an organization. Put more simply, culture is ‘the way we do things around here’. ~ Furnham and Gunter
  • 37. Organizational Culture Dimensions of Organizational Culture: 1. Innovation and risk taking 2. Attention to detail 3. Outcome orientation 4. People orientation 5. Team orientation 6. Aggressiveness 7. Stability 1. Observed behavioral regularities 2. Norms 3. Dominant values 4. Management Philosophy 5. Rules 6. Organizational Climate Characteristics of Organizational Culture:
  • 38. Do Organizations have Uniform Cultures? Organizational culture represents a common perception the organization’s members hold. Therefore individuals with different backgrounds or at different levels in the organization to describe its culture in similar terms. Yet, most large organizations have a Dominant Culture and numerous Subcultures. A dominant culture expresses the core values a majority of members share and that give the organization its distinct personality. A subculture is a set of values shared by a minority, usually a small minority, of the organization’s members. Subcultures tend to develop in large organizations to reflect common problems or experiences members face in the same department or location.
  • 39. According to Edgar Schein, there are three levels of culture: artifacts, espoused beliefs and values, and underlying assumptions. Nature of Organizational Culture Observable Culture Shared Values Common Assumptions Artifacts represent the observable culture and include rituals, language, myths, dress, and the organization of space. Schein’s next level of culture is espoused values, or the values that are reported by management as core to the organization. The third level consists of the underlying assumptions of organizational life. These indicate why organizational members go about their day-to- day work lives as they do, and they are frequently deeply ingrained.
  • 40. An organization’s current customs, traditions, and general way of doing things are largely due to what it has done before and how successful it was in doing it. Therefore, the fundamental source of an organization’s culture are its founders. Creating & Maintaining Organizational Culture Free of previous customs or ideologies, founders have a vision of what the organization should be, and the firm’s small size makes it easy to impose that vision on all members. A strong leader who joins an organization as CEO can also usher in a new culture.
  • 41. How does Organizational Culture Develop? Creating & Maintaining Organizational Culture IV. External environment might stimulate the need for an internal ecosystem, and in turn establishing a culture within the organization. V. As the organization grows in size, and the members work for a long time and grow with it, a unique close-knit internal environment is created culminating in organizational culture. I. Leaders’ behaviour in various situations in the past is studied and understood to develop a culture. II. Live lessons learnt from critical incidents help build a culture to equip with better preparedness. III. The need of maintaining an effective working relationships among the members of the organization also results in creation of shared values and expectations.
  • 42. Once an organizational culture starts and begins to develop, there are a number of practices that help solidify the acceptance of core values and ensure that the culture maintains itself. Creating & Maintaining Organizational Culture The selection process, performance evaluation criteria, training and development activities, and promotion procedures ensure those hired fit in with the culture, reward those who support it, and penalize - or even expel - those who challenge it. Three forces play a particularly important part in sustaining a culture: 1. Selection practices, 2. the actions of top management, and 3. socialization methods.
  • 43. Creating & Maintaining Organizational Culture Socialization. The process by which the new employees are facilitated to adapt to the prevailing culture is known as Socialization. The socialization process consists of three stages: Selection. The explicit goal of the selection process is to identify and hire individuals with the knowledge, skills, and abilities to perform successfully. The selection criteria should also include a match between the candidate’s value system and that of the organization. Additionally, the selection process provide to the applicants, information about the organizational culture. Top Management. The actions of top management have a major impact on the organization’s culture. Through words and behavior, senior executives establish norms that filter through the organization about, for instance, whether risk taking is desirable, how much freedom managers give employees, what is appropriate dress, and what actions earn pay raises, promotions, and other rewards. (a) pre-arrival, (b) encounter, and (c) metamorphosis.
  • 44. Creating & Maintaining Organizational Culture
  • 45. Creating & Maintaining Organizational Culture Metamorphosis. Finally, to work out any problems discovered during the encounter stage, the new member changes or goes through the metamorphosis stage . Most research suggests there are two major “bundles” of socialization practices — formal vs informal, individual vs collective, sequential vs random, and fixed vs flexible. Pre-arrival. The pre- arrival stage recognizes that each individual arrives with a set of values, attitudes, and expectations about both the work and the organization. What people know before they join the organization, and how proactive their personality is, are critical predictors of how well they adjust to a new culture. Encounter. The new member enters the organization and confronts the possibility that expectations — about the job, co-workers, the boss, and the organization in general — may differ from reality. If expectations were fairly accurate, the encounter stage merely cements earlier perceptions. However, this is often not the case, and newcomers have to “learn the ropes” with the help of friends and co- workers.
  • 46. Organizational Climate As defined by Ivancevitch et al (2008), organizational climate is: ‘A set of properties of the work environment, perceived directly or indirectly by the employees, that is assumed to be a major force in influencing employee behaviour.’ According to Forehand and Gilmer, “Climate encompasses of a set of characteristics that define an organization, differentiate it from other organizations, are comparatively lasting over time and influence the behaviour of people in it.” “Organizational climate reflects a person’s perception of the company to which he belongs. It is a set of unique characteristics and features that are perceived by the employees about their company which serves as a major force in influencing their behaviour.”
  • 47. Organizational Climate Hellriegel and Slocum (1974) defined Organizational Climate as “a set of attributes which can be perceived about particular organization and / or its subsystems, and that may be induced from the way that organization and / or its subsystems deal with their members and environment”. Denison (1996) suggested that ‘culture’ refers to the deep structure of organizations, which is rooted in the values, beliefs and assumptions held by organizational members. In contrast, ‘climate’ refers to those aspects of the [internal] environment that are consciously perceived by organizational members.
  • 48. Operationalizing Organizational Climate Organizational Climate Understanding the concept of organizational climate is important as it captures the human experience in organizations – how organizations appear and feel to members. Also, it has been found that the shared perceptions can be associated with significant unit outcomes - specially when climate is operationalized in terms of strategic goals of the organization. Organizational climate can be described as employees' shared perceptions or experiences of the policies, practices, and processes of their workplace and the behaviours that get rewarded, supported, and predictable. This concept has become a very useful metaphor for thinking about and describing the social system within a company.
  • 49. Good Climate vs Bad Climate Organizational Climate ‘Bad’ results in dysfunctional outcomes:  Turnover  Stress  Sickness  Poor performance  Error Rate  Wastage  Accidents ‘Good’ Climate results in positive outcomes:  Job Satisfaction  Confidence in Management  Affective Commitment  Emotional Wellbeing  Faith in Organization  Performance
  • 50. Organizational Climate depends on many factors. Richard M Hodgetts has classified organizational climate into two factors as under: Overt Factors 1. Hierarchy 2. Goals of the organization 3. Financial resources 4. Skills and abilities of employees 5. Technological state of the organization 6. Performance standards adopted 7. Efficiency measurement Covert Factors 1. Values 2. Attitude 3. Norms 4. Feelings 5. Interaction 6. Supportiveness 7. Satisfaction Organizational Climate
  • 51. Organizational Culture and Climate Organizational Climate Organizational Culture includes deeply held values, beliefs and assumptions, symbols, heroes, and rituals. Organizational climate, on the other hand, is often defined as the recurring patterns of behaviour, attitudes and feelings that characterize life in an organization. While an organization culture tends to be deep and stable. Organizational climate tends to be more dynamic. Organizational climate and organizational culture are distinct concepts. Organizational culture is something that older employees usually try to pass on to younger employees and shape behaviours, structures, and perceptions.
  • 52. Thanks! Mob: +91 9704559369 E-mail: shrini.vempali@gmail.com
  • 53. Geert Hofstede, a Dutch Psychologist, developed a framework to understand how value differences across national cultures influence human behavior at work. Two additional dimensions of national culture were added as a result of continuing research to the original four in his framework.  Power distance is a culture’s acceptance of the status and power differences among its members.  Uncertainty avoidance is the cultural tendency to be uncomfortable with uncertainty and risk in everyday life.  Individualism vs collectivism is the tendency of members of a culture to emphasize individual self-interests or group relationships.  Masculinity vs femininity is the degree to which a society values assertiveness or relationships.  Long-term/short-term orientation is the degree to which a culture emphasizes long-term or short-term thinking.  Self-indulgence vs restraint is the level of tolerance shown by a society towards relatively free gratification of basic and natural human desires related to enjoying life and having fun. APPENDIX - I