MG312 Exam Notes

Chapter 6 Organizational Development and Change

Self-Designing Organization

- This is a type of approach that assists members to translate corporate values and general
prescriptions for change into specific structures, processes and behaviors suited to their
situations.
- A growing number of researchers and practitioners have called for self-designing
organizations that have the built in capacity to transform themselves continually to
achieve high performance in today competitive and changing environments.

Chapter 7 Organisation development interventions: People and process

A model of Performance Management

- Performance management is an integrated process of defining, assessing and reinforcing

employee work behaviors and outcomes.
- Performance management includes practices and methods for goal setting, performance
appraisal and reward system, all of which work together to influence the performance of
individuals and work groups.
- Because performance management occurs in a larger organizational context, at least three
contextual factors determine how these practices affect work performance: business
strategy, workplace technology and employee involvement.
- High level of work performance tend to occur when goal setting, performance appraisal
and reward system are jointly aligned with the following organizational factors:
 Business strategy: This defines the goals and objectives that are needed if an
organisation is to compete successfully. Performance management needs to focus,
assess and reinforce member work behaviors towards those objectives, thus ensuring
that work behaviours are strategically driven.
  Workplace technology: This affects the decision as to whether performance
management practices4 should be based on the individual or the group. When
technology is low in interdependence and work is designed for individual jobs, goal
setting, performance appraisal and reward systems should be aimed at individual
work behaviours. Conversely, when technology is highly interdependent and work is
designed for groups, performance management should be aimed at group behaviours
 Employee involvement: Finally, the level of employee involvement in an
organization should determine the nature of performance management practices.
When organizations are highly bureaucratic with low levels of participation, goal
setting, performance appraisal and reward systems should be formalized and
administered by management and staff personnel. In high-involvement situations, on
the other hand, performance management should be heavily participative, with both
management and employees setting goals and appraising and rewarding performance.
In high-involvement plants, for example, employees tend to participate in all stages of
performance management. They are heavily involved in both designing and
administering performance management practices.
- Goal setting involves managers and subordinates establishing and clarifying employee
goals. Goal setting can affect performance in at least three ways: it influences what
people think and do as it focuses behaviour in the direction of the goals; goals energise
behaviour, motivating people to make an effort to achieve difficult goals that are
accepted; and, finally, goal setting leads to persistence in effort over time when goals are
difficult but achievable.
- Characteristics of goal setting
 Establishing challenging goals
The first element of goal setting concerns the establishment of goals perceived as
challenging, but which are realistic and will entail a high level of commitment. This
can be accomplished by varying goal difficulty and the level of employee
participation in the goal-setting process. Increasing the difficulty of employee goals,
‘stretch goals’ can increase their perceived challenge and enhance the amount of
effort necessary for their achievement.9 Thus, more difficult goals tend to lead to
increased effort and performance, as long as they can be regarded as feasible. When
 set too high, however, goals may lose motivational potential, and employees will give
up when failing to achieve them. Another aspect of establishing challenging goals is
to vary the amount of employee participation in the goal-setting process. Having
employees participate can increase motivation and performance, but only to the extent
that members set higher goals than those typically assigned to them. All three
contextual factors play an important role in establishing challenging goals. First, there
must be a clear ‘line of sight’ between the business strategy goals and the goals
established for individuals or groups. Second, employee participation in goal setting
is more likely to be effective if employee involvement policies in the organisation
support it. Third, when tasks are highly interdependent and work is designed for
groups, group-oriented participative goal setting tends to increase commitment.
 Clarifying goal measurement
The second element in the goal-setting process involves specification and clarification
of the goals. Employees tend to perform better when given specific goals than when
simply told to do their best, or when receiving no guidance at all. Specific goals
reduce ambiguity about expectations, and focus the search for appropriate behaviours.
To clarify goal measurement, objectives should be operationally defined. For
example, employees may agree to increase productivity by 5%, a challenging and
specific goal. Clarifying goal measurement also requires that employees and
supervisors negotiate the resources necessary for their achievement. These may
include time, equipment, raw materials or access to information. Contextual factors
also play an important role in the clarifying process. Goal specification and clarity can
be difficult in high-technology settings. The work is often uncertain and highly
interdependent. Increasing employee participation in the clarification of goal
measurement can give employees ownership of a non-specific but challenging goal.
Finally, the process of specifying and clarifying goals is extremely difficult if the
business strategy is unclear. Under these conditions, attempting to gain consensus on
the measurement and importance of goals can cause frustration and resistance to
change.
Chapter 9: Organisational transformation and change

Organisation transformation

 Transformational change can occur in response to or in anticipation of major changes in

the organisation’s environment or technology. In addition, these changes often are
associated with significant revision of the organisation’s business strategy, which, in turn,
may require modifying internal structures and processes as well as its corporate culture to
support the new direction. Such fundamental change entails a new paradigm for
organising and managing organisations. It involves qualitatively different ways of
perceiving, thinking and behaving in organisations.

When it will become necessary?

- Despite problems in changing corporate culture, large-scale culture change may be

necessary in certain situations: if the organisation’s culture does not fit a changing
environment; if the industry is extremely competitive and changes rapidly; if the
company is mediocre or worse; if the business is about to become a very large company;
or if the company is smaller and growing rapidly. Organisations facing these conditions
need to change their cultures to adapt to the situation or to operate at higher levels of
effectiveness. They may have to supplement attempts at culture change with other
approaches, such as managing around the existing culture and modifying strategy

What committed leadership contribute towards transformational change

- Burger U leadership team as champions of the new culture, and management at all levels
as committed agents of change
- At the outset of the change management process her challenge was threefold: (1) make
the six-store pilot program a success in 2013; (2) roll out brand culture change to the
remaining 11 stores no later than December 2014; and (3) work concurrently with the
consultants, head-office marketing and promotions team, and store managers to monitor
 sales, attract new customers, retain existing ‘high value’ customers and brand advocates,
and ensure that the sales targets set by the BB Group board were achieved for 2014–15.

Explain the relationship between organisational culture and organisational effectiveness.

- Organisational culture includes the pattern of basic assumptions, values, norms and
artefacts shared by organisation members. It influences how members perceive, think and
behave at work.
- Organizational effectiveness is defined as a concept to measure the efficiency of an
organization in meeting its objectives with the help of given resources without putting
undue strain on its employees. It is about how the company can produce the target quota
of products, how efficient its process is, and how much waste is produced.

Identify any two approaches ‘change agents’ may use to diagnose organisational culture.

- The behavioral approach

This method of diagnosis emphasises the surface level of organisational culture – the
pattern of behaviours that produce business results.63 It is among the more practical
approaches to culture diagnosis because it assesses key work behaviours that can be
observed.64 The behavioural approach provides specific descriptions about how tasks are
performed and how relationships are managed in an organization
- The competitive values approach
This perspective assesses an organisation’s culture in terms of how it resolves a set of
value dilemmas
commonly collects diagnostic data about the competing values with a survey designed
specifically for that purpose.66 It provides measures of where an organisation’s existing
values fall along each of the dimensions. When taken together, these data identify an
organisation’s culture as falling into one of the four quadrants: clan culture, adhocracy
culture,67 hierarchical culture and market culture. For example, if an organisation’s
values are focused on internal integration issues and emphasise innovation and flexibility,
it manifests a clan culture. On the other hand, a market culture characterises values that
are externally focused and emphasises stability and control.
- The deep assumption approach
 Diagnosing organisational culture at the deep assumptions level poses at least three
difficult problems for collecting pertinent information. First, culture reflects the more or
less shared assumptions about what is important, how things are done and how people
should behave in organisations.

Organizational culture includes four major elements existing at different levels of awareness:

- 1 Artefacts. Artefacts are the highest level of cultural manifestation.53 They are the
visible symbols of the deeper levels of culture, such as norms, values and basic
assumptions. Artefacts include members’ behaviours, clothing and language; and the
organisation’s structures, systems, procedures and physical aspects, such as decor, space
arrangements and noise levels. At Nordstrom, a high-end retail department store in the
United States, the policy and procedure manual is rumoured to be one sentence: ‘Do
whatever you think is right.’ In addition, stores promote from within; pay commissions
on sales to link effort and compensation; provide stationery for salespeople to write
personal notes to customers; and expect buyers to work as salespeople to better
understand the customer’s expectations. By themselves, artefacts can provide a great deal
of information about the real culture of the organisation because they often represent the
deeper assumptions. The difficulty in their use during cultural analysis is interpretation;
an outsider (and even some insiders) has no way of knowing what the artefacts represent,
if anything.
- Norms. Just below the surface of cultural awareness are norms guiding how members
should behave in particular situations. These represent unwritten rules of behaviour.
Norms generally are inferred from observing how members behave and interact with each
other. At Nordstrom, norms dictate that it’s okay for members to go the extra mile to
satisfy customer requests and it’s not okay for salespeople to process customers who
were working with another salesperson.
- 3 Values. The next-deeper level of awareness includes values about what ought to be in
organisations. Values tell members what is important in the organisation and what
deserves their attention. Because Nordstrom values customer service, the sales
representatives pay strong attention to how well the customer is treated. Obviously, this
value is supported by the norms and artefacts.
- 4 Basic assumptions. At the deepest level of cultural awareness are the taken-for-granted
assumptions about how organisational problems should be solved. These basic
assumptions tell members how to perceive, think and feel about things. They are
nonconfrontable and non-debatable assumptions about relating to the environment and
about human nature, human activity and human relationships. For example, a basic
assumption at Nordstrom is the belief in the fundamental dignity of people; it is morally
right to treat customers with extraordinary service so that they will become loyal and
frequent shoppers.

Chapter 10: Change in Chaotic and unpredictable environment

Worldwide organisations can be defined in terms of three key facets.

- First, they offer products or services in more than one country and actively manage
substantial direct investments in those countries
- Second, worldwide businesses must balance product and functional concerns with
geographic issues of distance, time and culture. American tobacco companies, for
example, face technological, moral and organisational issues in determining whether to
market cigarettes in less-developed countries, and if they do, they must decide how to
integrate manufacturing and distribution operations on a global scale
- Third, worldwide companies must carry out coordinated activities across cultural
boundaries using a wide variety of personnel, including expatriates, short-term and
extended business travellers and local employees. Workers with different cultural
backgrounds must be managed in ways that support the overall goals and image of the
organization.

The global strategic orientation

This orientation exists when the need for global integration is high but the need for local
responsiveness is low. The global orientation is characterised by a strategy of marketing
standardised products in different countries. It is an appropriate orientation when there is
little economic reason to offer products or services with special features or locally available
options. For example, manufacturers of office equipment, consumer goods, computers and
semiconductors, tyres and containers can offer the same basic product in almost any country.
Characteristics of the global design

The goal of efficiency dominates this orientation. Production efficiency is gained through
volume sales and a small number of large manufacturing plants; managerial efficiency is
achieved by centralising product design, manufacturing, distribution and marketing decisions

The multinational strategic orientation

This strategic orientation exists when the need for global integration is low, but the need for
local responsiveness is high. It represents a strategy that is conceptually quite different to the
global strategic orientation.

Characteristics of the multinational design

A multinational strategy is characterised by a product line that is tailored to local conditions

and is best suited to markets that vary significantly from region to region or country to
country. At American Express, for example, charge card marketing is fitted to local values
and tastes. The ‘Don’t leave home without it’ and ‘Membership has its privileges’ themes
seen in Australia and the United States had to be translated to ‘Peace of mind only for
members’ in Japan because of the negative connotations of ‘leaving home’ and ‘privilege’

The transnational strategic orientation

This orientation exists when the need for global integration and local responsiveness are both
high. It represents the most complex and ambitious worldwide strategic orientation and
reflects the belief that any product or service can be made anywhere and sold everywhere.23

Characteristics of the transnational design

The transnational strategy combines customised products with efficient and responsive
operations; the key goal is learning. This is the most complex worldwide strategic orientation
because transnationals can manufacture products, conduct research, raise capital, buy
supplies and perform many other functions wherever in the world the job can be performed
optimally. They can move skills, resources and knowledge to regions where they are needed
The transnational orientation combines the best of global and multinational orientations and
adds a third attribute – the ability to transfer resources both within the organisation and
across national and cultural boundaries. Otis Elevator, a division of United Technologies,
developed a new programmable elevator using six research centres in five countries: a US
group handled the systems integration; Japan designed the special motor drives that make the
elevators ride smoothly; France perfected the door systems; Germany created the electronics;
and Spain produced the small-geared components.24 Other examples of transnational
companies include General Electric (GE), Asea Brown Boveri (ABB), Motorola, Electrolux
and Hewlett-Packard.