1. ORGANIZATION EFFECTIVENESS & CHANGE MANAGEMENT BM-301- MBA 3RD SEMESTER 2. Unit I An Overview of Concepts of Organizational Change , Effectiveness and Development Chapters:-1,4,14 3. Chapter 1 Organization Effectiveness Organizational Effectiveness, being broad term, is also used to denote organizational Success It is the extent to which an organization achieves its goals with the given resources and means. 4. Definitions An organization is said to be effective if it is able to achieve its goals- S.P. Robbins Effectiveness is commonly referred to as the degree to which predetermined goals are achieved. Efficiency refers to the economical manner in which goal oriented operations are carried out- something of an input/output ratio- Jackson,Morgan, and Palillo. 5. ORGANIZATIONAL EFFICIENCY ORGANIZATIONAL EFFECTIVENESS 1. Measurable 1. Difficult to Measure(Multidimensional) 2. Criterion Internal Life of the Organization, Economic and Technical 2. Criterion External Life of the Organization, Broad Aspects 3. Narrow concept- sub part of Organizational Effectiveness 3. Broad concept encompasses efficiency 4. Actual 4. Futuristic 6. Effectiveness is a very broad concept as it considers the survival prospects of the organization, which are not determined solely by the efficiency of the internal system. Effectiveness considers the organization environment interface and also takes care of the human aspect of the organization. It is desirable that an effective organization should also be efficient. 7. Organizational effectiveness is expressed by the following factors 1. Production 2. Quality 3. Efficiency 4. Flexibility 5. Satisfaction 6. Competitiveness 7. Development 8. Survival 8. APPROACHES TO EFFECTIVENESS There are four main approaches to attain/measure effectiveness. A. Goal Attainment approach B. Systems Theory Approach C. Strategic Constituency Approach D. Behavioural Approach 9. Goal Attainment approach In Present Competitive era, without Effectiveness , existence itself is impossible for Organizations. The Goal Approach has been practised since long. According to this approach, an organization exists to accomplish the goals set . { who will set goals for Individuals & Organizations } 10. In Management Concepts, a mission is set for the organization From the mission, organizational goals are derived The goals set should be attainable & realistic Goals must be within the Organizations capability Eg:- MBO; In service industry Budgeting,Cost- Benefit analysis,linear Programming,& Incentive pay system 11. Mission Statements of Reputed Companies Tata Steel Limited Tata Steel recognizes that while honest and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values. 12. Maruti Suzuki India Ltd To be the leader in the Indian automotive sector, creating customer delight and shareholder wealth Infosys Technologies Ltd To achieve our objectives in an environment of fairness, honesty , and courtesy towards our clients, employees , vendors, and society at large. 13. Tata Consultancy Services Ltd To help customers achieve their business objectives by providing innovative , best-in-class consulting, IT solutions, and services. Make it a joy for all stakeholders to work with us. 14. Goals Set in the OrganizationFUNCTION GOALS/OBJECTIVES SALES To Achieve 20 per cent growth during the current year over the previous year PRODUCTION To achieve 90 per cent of installed capacity PRODUCT To introduce two new products as identified by the marketing group HR To train specific groups for specific skills identified for achieving production and sales targets FINANCE To provide necessary financial resources for achieving the companys goals ADMIN To protect the assets of the company and monitor the sensitive transactions, which are conducive to achievements of companies goals 15. Basic activities determine the Organizational Effectiveness 1. Identification and procurement of various resources needed for the production 2. Efficient use of inputs 3. Production of tangible assets/services 4. Performance of various technical and administrative functions 5. Scanning the environment, identifying various factors which impact organization 16. 6. Developing growth oriented policies for production, finance,HR, R & D etc. 7. Market survey and modification of goals (if required) 8. Training and Development 9. Evaluation of Human Capital 10. Development of organizational culture, ethos, and climate 11. Ensuring quality of worklife 12. Maintaining an ideal worklife balance 17. Limitations of Goal Attainment Approach 1. It cannot be applied to organizations to intangible products. Ex:- Measuring the services provided by the transport agency( such as Railways), it cannot be measured in terms of quality but the same can be measured reasonably closer to reality by use of various scales. 18. 2. It is difficult to measure the performance of different units/sub units and individuals in a quantifiable manner. 3. Most of the organizations have dual objectives/goals which are in conflict with each other. Hence, Organizational Effectiveness cannot be measured. Ex:- Production Unit vs Marketing Unit 4. It is based on the consensus of all the employees. Usually the every member in the organization follow his own personal goals to large extent. 19. 5. Amitai Etzioni author of the article Two Approaches of organizational Analysis: A Critique and a Suggestion believes that goals , as ideal states, do not offer the possibility of realistic assessment,goals,as cultural entities, arise outside the organization as a social system and cannot arbitrarily be attributed as properties of the organization itself. 20. Systems Theory Approach 1. It is based on the open system model as applied to social system. 2. An organization is a system and is a part of the environmental supra system. 3. In this approach , the nature of interaction between the organization and the environment to determine its Organization effectiveness. 21. 4. In the systems theory, an organization remains effective as long as it uses its resources in an efficient manner and continues to contribute to the larger systems. ( B.P. Singh & T.N.Chopra, Organization Theory and Behaviour) 22. The organizations effectiveness is also dependent on optimizing the input process- output cycle in an efficient manner. It should be able to adjust with the external environmental systems and should contribute to the supra environmental system and thus be able to be progressive. Organizational effectiveness is a very vital system and all its elements should 23. Managers should have the skills to understand the nature of the environment and adapt to the social systems such as environment protection and fulfillment of social responsibilities. Organizations are effective when they are able to change the organization structure, and regroup the resources. Key Buzzwords - Incorporate changes in technology - Reorientation of organization policies - Flexibility and willingness to adapt to the 24. Criteria determine Organizational Effectiveness 1. Adaptability and ability to solve problems. 2. Ability and flexibility to react to change. 3. A sense of identity 4. Capacity to test reality accurately perceive and correctly interpret the properties of the environment. 5. State of integration among the sub- parts of the Organization to avoid cross-purpose working. 25. Limitations of Systems Theory Approach 1. Difference in Organizational Goals with operational goals. 2. Organizations survival depends on the ability of the manager to analyze, interpret, and cater for the environmental needs. 3. Creation of organizational systems to approach the environment with appropriate readiness to avoid conflict with operative and actual organizational objectives. 26. Strategic Constituency Approach The strategic constituencies that determine effectiveness are owners, managers, employees, customers, suppliers & The Govt. 27. The strategic approach integrates both the goal and systems approaches to effectiveness by viewing these approaches as special cases of multiple- constituency effectiveness. { Connollly T., Conlon E.J. and Deutsch S.J., Organizational Effectiveness: A Multiple Constituency Approach, Academy of Management Review} 28. Important Factors of Strategic Constituency Approach 1. Identify critical constituencies . Similar to systems approach in this method. 2. Prioritize the critical constituencies 3. Identify the expectations of various competing groups 4. Identify the environmental changes 5. Satisfying all the constituencies which are critical. Human element is very critical factor. 29. Behavioural Approach According to this, the extent to which individual and organizational goals are integrated affects the degree of organizational effectiveness. McGregor Douglas in his Book Leadership and Motivation :- True integration of goals , when all individuals share the organization goals. 30. Chapter 4:- Foundation of Organizational Development Salient points 1. Definitions 2. Features of Organizational Development 3. Objectives of Organizational Development 4. Organizational Development strategies for personal concern 5. Job Related interventions 31. Organizational Development strategies for personal concern Sensitivity Training Kurt Lewin(1945) introduced sensitivity Training as T-Groups or lab training. The method is used to train teams with the ultimate objective of organizational development. It envisages the formation of unstructured small groups. Group Interactions- learn- interpersonal dynamics 32. Target objectives 1. Individual attitudinal changes with help of groups 2. Understand human nature 3. Modify behaviour to suit a particular situation 4. Useful member of the team 33. Transactional Analysis Eric Berne first introduced TA in 1964. 1. Three Ego states in varying degrees in every individual a. Parent ego:- Superiority, Authority, judgemental b. Adult ego:- maturity, objectivity,logic and rationality c. Child ego:- dependent,impulsive, and rebellious nature of behaviour 34. Organization Change Change refers to any alteration that occurs in the overall work environment of an organization. It may relate to change in technology Organizational structure Working processes Work environment Organizational policy and Even the roles people play 35. Greiners change model Greiner has evolved a theory of change by considering growth as a factor for change. He has identified various problems at each stage of evolution. ( Five Stages) 1. Crisis of Leadership-Growth thru creativity 2. Crisis of Autonomy- Growth thru direction 3. Crisis of Control- Growth thru delegation 4. Crisis of Red tape- Growth thru coordination 36. Forces of Change An Organization is an open system that has to interact with the environment and is solely dependent on it. Any change in the environment makes it necessary for the organization to incorporate change in the internal systems, sub systems and processes. An Organization must interact with the external environment in order to survive. 37. Kurt Lewin Change process Kurt Lewin proposed the three- stage model of the change process for moving the organization from the present position to the changed position. Stage 1:- Unfreezing- Creating motivation and readiness to change Stage 2: Changing through Cognitive restructuring- Help the client see things,judge things and feel things in new view point. Stage 3: Refreezing- Help the client to integrate the new view point 38. Kellman Change process 1. Compliance:- Rewards & Punishments 2. Identification :- Role model and modifying the behaviour 3. Internalization:- Individuals thought processes change for new environmental adjustment. 39. Ronald Lippitt, J Watson & B Westley Change model Lewin 3 stage to 7 stage model Stage 1. Development of need for change Stage 2. Establishing relationship-client and change agent Stage 3. Diagnosis of the client systems problems Stage 4. Examination of alternative routes/goals Stage 5. Transformation of moving intentions into actual change efforts Stage 6. Generalization & refreezing stablization of change Stage 7. Achieving a terminal relationship 40. Change Agents Change agents are responsible for the change in individual behaviour. Change in human behaviour is acomplex phenomenon and it may require a number of strategies to make a desirable change They may be either the initiator of change or serve as a catalyst for such 41. Four types of change agents have been identified by Tichy, N. 1. Outside Pressures 2. Change from top management 3. Internal Organizational Development 4. Individual Level Change 42. Skills of Change Agent- Havelock & Shaskin identified ten factors about the skills that are required by the change agent. The change agent Help client system to solve organizational problems and bring about the change. HELP SCORES are abbreviation of ten skill factors HOMOPHILY,EMPATHY,LINKAGE, PROXIMITY,STRUCTURING,CAPACITY, OPENNESS,REWARD,ENERGY & 43. Factors which resist change Reasons for resistence Management of change JOB SECURITY PARTICIPATION AND INVOLVEMENT LACK OF COMMUNICATION COMMUNICATION & EDUCATION RAPIDITY & EXTENT OF CHANGE LEADERSHIP GROUP RESISTENCE NEGOTIATIONS & AGREEMENTS EMOTIONAL TURMOIL WILLINGNESS FOR THE SAKE OF GROUP LOSS OF POWER & CONTROL TIMING OF CHANGE, EMPOWERMENT TECHNOLOGY TRAINING & DEVELOPMENT NEW PRACTICES NEGOTIATIONS & CROSS CULTURAL CHANGE 44. ORGANIZATION CULTURE Edgar Schien defines culture as a pattern of basic assumptions invented, discovered or developed by given group as it learns to cope with its problems of external adoption and internal integration worked well enough to be considered valuable and therefore , to be taught to new members as a correct way to perceive, think and feel, in relation to those problems, 45. Wager III and Hollenbeck have defined organizational culture as the shared attitude and perceptions in an organization that are based on a set of fundamental norms and values, and help members understand the Organization 46. FUNCTIONS OF ORG. CULTURE1. It gives members an organizational identity 2. It facilitates collective commitment 3. It promotes systems stability 4. It shapes behaviour by helping members make sense of their surroundings 5. It provides a boundary 6. It helps organization members stick to conformity and expected mode of behaviour. 47. Levels of Culture Edgar Schein has identified three levels 1. Observable artifacts of culture 2. Shared value 3. Common assumptions 48. Organization Climate Bowditch & Buono said Organizational Culture is with the nature of belief and expectations about organizational life, While climate is an indicator of whether those beliefs and expectations are being fulfilled. 49. The following factors of org. culture 1. Selection process of the employees 2. Leadership style and approach to solve problems of the employees 3. Wage administration 4. Attitude to implement change & incorporate latest technology 5. Job description 6. Organizational structure and frequency to modify the same based on need 50. 7. Performance evaluation 8. Promotion policy and its implementation 9. Efforts involved in promoting creativity & innovations 10. Availability of resources for R & D 11. Organizational Values & promotion of culture 51. Richard M Hodgetts He classified the Organizational culture into two factors:- 1. OVERT Factors a. Hierarchy b. Goals of the organization c. Financial resources d. Skills & abilities of employees e. Technological state of the organization f. Performance standards adopted g. Efficiency measurement 52. 2. COVERT Factors a. Values b. Attitude c. Norms d. Feelings e. Interaction f. Supportiveness g. Satisfaction 53. Power Rosabeth Kanter says- Power is the ability to get things done. - Power is a tool & resource - Leaders use power as a means of attaining group goals. - Power is also used to control various activities of individuals and groups. 54. Bases of Power As per French & Raven 6 bases of power 1. Rewards 2. Coercive 3. Legitimate 4. Referent 5. Expert 6. Information 55. Politics Politics is a process whereby power is acquired and used to influence the behaviour of others. People play politics for power where Ethics Moral Values Organizational goals are little concern 56. Pfeffer defines Politics as those activities taken within organizations to Acquire, Develop and Use power & other resources to obtain Ones preferred outcome in a situation in which there is uncertainity or dissensus about choices. 57. Organizational Politics Miles has identified five major reasons that have strong influence on political orientation of organizations 1. Scarcity of resources 2. Non- programmed decisions 3. Ambiguous goals 4. Organizational change 5. External environment 58. Techniques Politics Mintzberg has suggested the following strategies to wield political power in the organizations:- 1. Cultivate right allies 2. Be Positive towards others 3. Reciprocity 4. Be Persuasive 5. Image Building 6. Control information 59. UNIT III The Process of Empowerment Organizational Learning Creativity and Innovation Conflict and Negotiation Inter group behaviour and Collaboration 60. Empowerment Empowerment is an effective management tool to achieve maximum potential of the employee. Max Weber concept of bureaucracy is no more valid now. Empowerment is the process of passing authority and responsibility to individuals at lower levels in the organizational hierarchy to enhance the feeling of self- efficacy and a sense of owning a job. 61. Factors favourable for Empowerment 1. Technology 2. Customers 3. Organizational Structure 4. Organizational Culture Why we need Empowerment:- To stimulate commitment & Innovation, To have Competitive edge, Flexible production system, To implement Change & stimulate decision making, 62. Process of Empowerment Dobbs suggests that four prerequisities of empowering people like 1. Participation 2. Innovation 3. Access to information 4. Accountability It is by multi-skilling, giving people more authority and full responsibility from the inception to completion of the job. Randolph said giving people the 63. Process of Empowerment Empowering O N E S E L F Demonstrating E M P O W E R M E N T Giving Mgt G U A R A N T E E S Taking R I S K S 64. ORGANIZATIONAL LEARNING(OL) OL has been associated with individuals. It involves identification of problems in an organization, Recommending and Implementing a solution by a specialist ( Change Agent) Evaluating transformation(Change) 65. Concept of OL It relates to behaviour modification and thereby achieving the resultant growth. The process is continuous and incremental in nature. 66. Elements of OL 1. Study of internal & external environment 2. Management of Knowlegde 3. Utilize existing talent , skills and experience of employee to achieve effeciency 4. Behaviour modification 5. Continuous process based on performance 67. Process of Organizational Learning Acquiring reflecting Systems/ Innovation/ Unfreezing Retaining- intergrating System/Implementation/Moving Using- adapting System/ Stabilization/ Refreezing 68. Factors contributing to successful Organizational Learning a. Leadership b. Planning & flexibility c. Teamwork & Mutual support d. Autonomy & Accountability e. Networking / Synthesizing 69. Creativity & Innovation Creative- Thinking Intrinsic task Motivation Expertise 70. Creativity It generates unique and novel responses to problems. Group is an Important resource for improving creativity in decision- making. Creative exercises Brainstorming Nominal groups Delphi method Decision making tools- MIS & DSS 71. Stages of Creative Thinking Five Stages 1. Preparation 2. Concentration 3. Incubation 4. Illumination 5. Verification 72. CORPORATE GOVERNANCE It is a system by which companies are run. It relates to the set of the incentives, safeguards and the dispute resolution processes that are used to control and coordinate the actions of the agents on behalf of the shareholders by the Board of Directors. Who appoint Board of Directors and Auditors. 73. Need for Better Corporate Governance The factors are as follows 1. Mismanagement 2. Promote Investment 3. Promotion of small investors and subsidiaries 4. National Growth 74. Structure of Corporate Governance It Includes 1. Board of Directors 2. Shareholders 3. Creditors 4. Employees 75. Structure of Company Board 1. Ownership Structure 2. Institutional Environment 3. Control 4. CEO 76. Conflict Resolution Model x axis- Assertiveness y-axis- Cooperative Behaviour Accommodating Collaborating Avoidance Competing Compromising 77. Cross Culture Dynamics What is Culture? -Collective Programme -Mind level -distinguishing factor -Between the members of one category to another. 78. Organizational Culture It is the collection of shared beliefs, values, stories, rituals, myths and a common language that foster the feeling of oneness 79. Culture also takes into account the invisible factors that influence the behaviour of organization members Learning of Culture? Through Experience and is shared. Passed from one generation to another and develops over time. 80. Levels of Culture Edger H. Schein in Organizational Culture, American Psychologist suggests a view of organizational culture based on distinguishing three levels of culture : 1.Artifacts 2. Creations