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22-2-2015Dr. J.P.C. (Coen) RigteringOrganizational Design and CultureIntroduction to Strategy and Organization (ECB1SO)

Presentation | 22-2-2015Spreker21900 1950 2000WoodwardBurns & StalkerPerrowLawrence & LorschFrederik TaylorHenri FayolMax WeberChildScheinPeter & WatermanMartin Universal proces approachesContingency and environmental determinismStrategic ChoiceCultural approaches to managementForecastingPredicting what might happen in the futurePlanningCourse of action to meet the expected demandsOrganizingAllocating separate task to departments, units and individualsCoordinatingMaking sure that tasks are integrated and people work togetherControllingMonitoring the progress

Key principles of efficiencyFunctional division of work, hierarchical relationships, control, low span of control, and closely prescribed roles.

Henri Fayol and classical management theory22-2-20153Introduction to Strategy and Organization

Max Weber and the rational bureaucracy22-2-20154Introduction to Strategy and Organization

Authority can be based upon superior knowledge and qualificationsAuthority can be based upon the position itselfIdeal type characteristics of a bureaucracy22-2-20155Introduction to Strategy and OrganizationWebers ideas1. Activities required for the purpose of the organization are distributed in a fixed way.2. Recording

3. Abstract rules that apply to particular cases4. Conduct task in spirit of formalistic impersonality5. It constitutes a career6. Bureaucracy leads to efficiencyInfluence on modern organizations1. Formal job descriptions, job titles, specialization and horizontal division of labor2. Administration and formally recording decisions3. Universalism, rules apply to everybody4. No favoritism or impartial decision making5. Recruitment and meritocracy6. Means to end structureHenry Mintzberg (1970), bureaucratic mechanismsManagerStafEmployeeEmployeeManagerStafEmployeeEmployee1. Mutual adaptation2. Direct supervisionManagerStafEmployeeEmployee3. Input skills4. Work processes 5. OutputStandardizationThe displacement of goals22-2-20157Introduction to Strategy and OrganizationRule > exception to rule > new ruleRepresentative bureaucracyWorker goals and organizational goals are the same, rules benefit both groupsPunishment centered bureaucracyRules benefit one party (usually the managers) Mock bureaucracyNo party has interests in the rulesAvoid unpleasant aspects of bureaucracy and justify this in terms of larger goals (see Peter Blau)How do supervisors deal with formal rules?Work to rule, strategy versus flexibility

The most suitable organizational structure depends (is contingent) upon the technology being used or the environment in which the firm operates.Contingency approaches22-2-20158Introduction to Strategy and OrganizationOverview different studies22-2-20159Introduction to Strategy and OrganizationAuthorContingencyResultWoodwardTechnologyIf technical complexity increases, a lower span of control and more monitoring improves performance.PerrowTechnologyIf the organizations tasks and technology are more routine, bureaucratic structures improves firm performanceBurns & StalkerOperating environmentMechanistic (bureaucratic) structures work better in stable environments and organic (flat / little tasks specialization) structures perform better in unstable environments.Lawrence & LorschOperating environmentWhen environmental uncertainty increases firms have to vertically and horizontally differentiate themselves in order to effectively respond to demands by different sub-environments. This, in turn, increases the amount of integration (coordination) that is needed. In a contingency approach, the environment puts forth requirements to which the organization has adaptStrategic choice theory holds that managers can decide which organizational structure the firm will haveDeterminist versus Strategic Choice22-2-201510Introduction to Strategy and Organization22-2-201511BASIC ASSUMPTIONSHow does the firm compete?Collaboration or competition?Who should make decisions?Can employees be trusted?Are employees creative?VALUESRespectGroupworkTrustInnovationBe the bestManager decidesRespectauthorityARTEFACTSSloganBuildingHerosSymbolsImageLanguageManagement theories see an organizational culture as something that a firm has, is integrated (similar throughout the firm), can be managed and should be managed

Social scientists see a culture as something that is established, heavily fragmentized (differs from department to department) and is tolerated by management

Can a firm create a strong culture?22-2-201512Introduction to Strategy and OrganizationCulture has no clear relationship with organizational performance, because it is not inherently bad or good. Strong cultures may support organizational performance, but limits organizational change because cultures are very difficult to change.12

The proces of socializationHeineken traineeship (finance track)Work in all the main departments (Heineken NL, Heineken International, Vrumana)Team of mentors (line manager, management developer, personal mentor)Heineken Finance Academy (communication training, time management training and Heineken introduction program)Selection (letter/CV, 3 interviews and external assessment)

13Introduction to Strategy and Organization

Enginering a strong culture

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Analysis ZapposBasic assumptionValuesArtifacts?OpennessPlease visit our head officeCustomer loyalty (repeat purchases) leads to firm performanceCustomer service is keyMake time for the customer

Change name call center365 day return policyEasy return policyStory lifetime spendingWOW our customerNew record longest telephone callNumber call center easy to find on the websiteAll employees first work at the call centerCulture/employees build the brand (and culture therefore leads to firm performance)Fun / happiness at the workplaceAchievements more important than qualificationsCulture more important than qualificationsBook and bus tourStory CFOHow do you WOW the workforceSeparate interview for culture fitOffer $ 2.000,-

See you next week!