ORGANIZATION

EFFECTIVENESS &

CHANGE MANAGEMENT

BM-301- MBA 3RD

SEMESTER

Unit I

An Overview of Concepts of

Organizational Change , Effectiveness and

DevelopmentChapters:-1,4,14

Chapter 1

Organization EffectivenessOrganizational 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.

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.

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

Effectiveness is a very broad conceptas it considers the survival prospectsof the organization, which are notdetermined solely by the efficiency ofthe 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.

Organizational effectiveness is

expressed by the following

factors1. Production

2. Quality

3. Efficiency

4. Flexibility

5. Satisfaction

6. Competitiveness

7. Development

8. Survival

APPROACHES TO

EFFECTIVENESSThere are four main approaches to attain/measure effectiveness.

A. Goal Attainment approach

B. Systems Theory Approach

C. Strategic Constituency Approach

D. Behavioural Approach

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 }

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 Organization’s capability

Eg:- MBO; In service industry – Budgeting,Cost-Benefit analysis,linear Programming,& Incentive

pay system

Mission Statements of

Reputed CompaniesTata Steel Limited

Tata Steel recognizes that while honestand integrity are the essentialingredients of a strong and stableenterprise, profitability provides themain spark for economic activity.

Overall, the company seeks to scale theheights of excellence in all that it doesin an atmosphere free from fear, andthereby reaffirms its faith indemocratic values.

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.

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.

Goals Set in the

Organization FUNCTION 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 company’s goals

ADMIN To protect the assets of the company and

monitor the sensitive transactions, which are

conducive to achievements of companies goals

Basic activities determine the

Organizational Effectiveness1. 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

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 worklifebalance

Limitations of Goal Attainment

Approach1. 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.

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.

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.

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.

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”)

The organization’s 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

work in a synchronized manner.

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 change.

Criteria determine

Organizational Effectiveness1. 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.

Limitations of Systems Theory

Approach1. Difference in Organizational Goals with

operational goals.

2. Organization’s 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.

Strategic Constituency

ApproachThe strategic constituencies that

determine effectiveness are

owners,

managers,

employees,

customers,

suppliers &

The Govt.

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}

Important Factors of Strategic

Constituency Approach1. 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.

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.

Chapter 4:- Foundation of

Organizational DevelopmentSalient points

1. Definitions

2. Features of Organizational

Development

3. Objectives of Organizational

Development

4. Organizational Development

strategies for personal concern

5. Job Related interventions

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

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

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

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

Greiner’s 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

Crisis of philosophy-Growth thru

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.

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

Kellman Change process

1. Compliance:- Rewards &

Punishments

2. Identification :- Role model and

modifying the behaviour

3. Internalization:- Individual’s

thought processes change for new

environmental adjustment.

Ronald Lippitt, J Watson & B

Westley Change modelLewin 3 stage to 7 stage modelStage 1. Development of need for changeStage 2. Establishing relationship-client and

change agentStage 3. Diagnosis of the client system’s

problemsStage 4. Examination of alternative

routes/goalsStage 5. Transformation of moving intentions

into actual change effortsStage 6. Generalization & refreezing

stablization of changeStage 7. Achieving a terminal relationship

with client & change agent

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

change

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

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 &

SYNERGY

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

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”,

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”

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.

Levels of Culture

Edgar Schein has identified three

levels

1. Observable artifacts of culture

2. Shared value

3. Common assumptions

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.

The following factors of org.

culture1. 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

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

Richard M Hodgetts

He classified the Organizational culture into two factors:-

1. OVERT Factorsa. Hierarchyb. Goals of the organizationc. Financial resourcesd. Skills & abilities of employeese. Technological state of the organizationf. Performance standards adoptedg. Efficiency measurement

2. COVERT Factors

a. Values

b. Attitude

c. Norms

d. Feelings

e. Interaction

f. Supportiveness

g. Satisfaction

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.

Bases of Power

As per French & Raven 6 bases of

power

1. Rewards

2. Coercive

3. Legitimate

4. Referent

5. Expert

6. Information

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

Pfeffer defines Politics as those

activities taken within organizations to

Acquire,

Develop and

Use power & other resources to obtain

One’s preferred outcome in a situation

in which there is uncertainity or

dissensus about choices.

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

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

UNIT III

The Process of Empowerment

Organizational Learning

Creativity and Innovation

Conflict and Negotiation

Inter group behaviour and

Collaboration

Empowerment

Empowerment is an effective management

tool to achieve maximum potential of the

employee.

Max Weber – concept of bureaucracy is nomore valid now.

Empowerment is the process of passingauthority and responsibility to individualsat lower levels in the organizationalhierarchy to enhance the feeling of self-efficacy and a sense of owning a job.

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,

To promote Entrepreneurship

Process of Empowerment

Dobbs suggests that four prerequisitiesof 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 power to make decisions”

Process of Empowerment

Empowering O

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Demonstrating

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P

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W

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R

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Giving Mgt

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Taking

R

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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)

Concept of OL

It relates to behaviour modification and

thereby achieving the resultant

growth.

The process is continuous and

incremental in nature.

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

Process of Organizational

LearningAcquiring – reflecting Systems/

Innovation/ Unfreezing

Retaining- intergrating

System/Implementation/Moving

Using- adapting System/ Stabilization/

Refreezing

Factors contributing to

successful Organizational

Learninga. Leadership

b. Planning & flexibility

c. Teamwork & Mutual support

d. Autonomy & Accountability

e. Networking / Synthesizing

Creativity & Innovation

Creative-Thinking

Intrinsic task

MotivationExpertise

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

Stages of Creative Thinking

Five Stages

1. Preparation

2. Concentration

3. Incubation

4. Illumination

5. Verification

CORPORATE

GOVERNANCEIt 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.

Public? Shareholders?Govt?Company

Need for Better Corporate

GovernanceThe factors are as follows

1. Mismanagement

2. Promote Investment

3. Promotion of small investors and

subsidiaries

4. National Growth

Structure of Corporate

GovernanceIt Includes

1. Board of Directors

2. Shareholders

3. Creditors

4. Employees

Structure of Company Board

1. Ownership Structure

2. Institutional Environment

3. Control

4. CEO

Conflict Resolution Modelx axis- Assertiveness

y-axis- Cooperative Behaviour

Accommodating Collaborating

Avoidance Competing

Compromising

Cross Culture Dynamics

What is Culture?

-Collective Programme

-Mind level

-distinguishing factor

-Between the members of one category to another.

Organizational Culture

It is the collection of

shared beliefs,

values,

stories,

rituals,

myths and

a common language that foster the

feeling of oneness

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.

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

3. Values and basic assumptions