Unit 5 Determine the Focus and Direction of Improvement.

Unit 5

Determine the Focus and Direction of Improvement

Unit Objectives:

1. To discuss several approaches to determine the focus and direction of improvement.

2. To discuss relevant classical management theories to implement improvement; and

3. To introduce emerging strategies of improvement.

Approaches to determine focus & direction of improvement

There are several approaches that may be used to determine the focus and direction of improvement in organization.

The approaches include (a) the key organizational components

approach (Leavitt, H,.J,, 1964) and (b) the systems theory approach (Bartol,

K.M. and Martin, D.C., 1994).

Other approaches: The classical Management Theories

The classical management theories include:

1. bureaucratic theory, 2. human relations theory, and 3. contingency theory. 4. Theory Z

Emerging Strategies of Improvement

Emerging strategies of improvement such as:

1. customer-oriented/driven strategy, and

2. process-oriented Strategy These two will be dealt in details in

separate units.

Key Organizational Components Approach

According to Leavitt (1964), significant changes and innovations usually involve alterations in one or more of these key components:

1. structure, 2. technology, 3. human resources and 4. culture (see exhibit 1).

Key Organizational Components Approach (Exhibit 1)

Technology

StructureHuman

Resources

Culture

Interrelated components

Since these components are somewhat interrelated, a change in one may create the need for adjustments or adaptations in others.

Structural Components Organization structure is the pattern

interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational goals.

Structure determines how division of work, responsibility, cooperation, consultation and decision levels need to be created in organizations.

Structural Components Structure includes such factors as the way

jobs are defined and clustered into work units and the various mechanisms used to facilitate vertical and horizontal communication (e.g., delegation and the use of interdepartmental teams).

Structure must be adapted as circumstances change, reorganization are common and results in continuous restructuring.

Structural Components Reorganizations influence change by

altering the pattern of interactions and coordination.

Research suggests that reorganizations representing a quantum change – a change that is both concerted and dramatic – tend to be more frequently associated with subsequent high performance than do piecemeal and incremental reorganization.

Technology Components

Technology involves 1. the knowledge, 2. tools, 3. machines, 4. equipment, and 5. work technique, used by an

organization in delivering its products or services.

Technology Components

Changes in technology are reflected both in major new products and services and in frequent improvements in current products and services.

Technological change is an important factor in international competition.

Technology Components

Technological innovations are also altering the work methods in organizations.

Technological changes often affect the number of employees required and the types of skills they need.

Human Resources Components

Bringing about improvement or change in individuals in the workplace is typically aimed at altering

1. the knowledge, 2. skills, 3. perceptions, and 4. behaviors needed to do the job more

effectively and efficiently.

Human Resources Components

Changing individual relies on training and development activities, supplemented by performance appraisal and reward systems that reinforce the needed behaviors.

Frequently, recruitment and selection systems must be adjusted to reflect the needs for individuals with differing skills.

Human Resources Components

Having individuals who possess the knowledge and skills required to handle changing circumstances takes careful planning.

Improvement/change in human resource systems are necessary to enhance the effectiveness of alterations made in other organizational components, such as structure and technology.

Culture Components

Organizational culture is a system of 1. shared values, 2. assumptions, 3. beliefs and 4. norms that unite members of the

organization.

Culture Components A number of organizations attribute their

success partly to distinctive cultures that are rooted in values articulated by strong founders and reinforced by subsequent leaders.

Some have made cultural changes based on such factors as visions of their leaders or threats to survival. For example from money-losing, little concern for customers, costs, or productivity to one that emphasizes customer focus, productivity, and initiatives

Culture Components The change in culture may be part of

the major changes that help the transformation.

Major organizational changes often require alterations in organizational culture.

A major change in one component tends to have implications for the others.

The Systems Theory Approach

The systems theory approach is based on the notion that organizations can be visualized as systems.

A system is a set of interrelated parts that operate as a whole in pursuit of common goals.

Exhibit 2: The Classic Systems Approach

According to the systems approach, an organizational system has three major components: input, process and output (see exhibit 2).

INPUT PROCESS OUTPUT

The Contemporary Systems Approach

However according to Bartol and Martin (1994) the expanded version of systems approach has four main components as follow:

1. inputs, 2. transformation processes, 3. outputs and 4. feedback (see Exhibit 3).

Exhibit 3: The Contemporary Systems Approach

INPUT TRANSFORMATIONPROCESSES

OUTPUT

FEEDBACK FROM ENVIRONMENT

RESOURCES:HumanMaterialsEquipmentFinancialInformational

MANAGERIAL &TECHNOLOGICALABILITIES:PlanningOrganizingLeadingControllingTechnology

OUTCOMES:Products & servicesProfit and losesEmployee growth andsatisfaction

INFORMATION ABOUTResultsOrganizational status

The Advantages of Systems Approach

The systems approach has a number of advantages:

First, it can analyze systems at different levels (individual, group, organization, society and supranational level).

Second, the systems view provides a framework for evaluating how well the various parts or components of an organization interacts to achieve a common goal.

The Advantages of Systems Approach

Third, it emphasizes that a change in one part of the system may affect other parts.

Fourth, the systems approach considers how a organization interacts with its environment – the factors outside the organization that can affect its operations. In order to consider the environment adequately, an organization needs to operate as an open system.

Open System Open system is a system that operates in

continual interaction with its environment. Through such interaction the system takes

in new inputs and learns about how its outputs are received by various important outside elements.

This open system received numerous feedback compared to a closed system.

Characteristics of Open System

Three major characteristics of open systems are

1. negative entropy, 2. differentiation, and 3. synergy.

Negative entropy:

It is the ability of the open systems to bring in new energy, in the forms of inputs and feedback from the environment, in order to delay or arrest decay over time (entropy).

Differentiation:

Is the tendency of open systems to become more complex.

The increased complexity usually stems from the addition of specialized units to handle particularly troublesome or challenging parts of the environment.

Synergy:

Is the ability the whole to equal more than the sum of its parts.

This means that an organization ought to be able to achieve its goal more effectively and efficiently than would be possible if the parts operated separately

Open System

According to the systems viewpoint, managers are likely to be more successful if they attempt to operate their units and organizations as open systems that are carefully attuned to the factors in the environment that could significantly affect them.

Determine the New Focus and Direction

Intended improvement strategies must be in line with its vision and purpose/mission.

In other words all improvement strategies must be aligned with its grand strategic plans.

For an organization, continuing to do the same things it has done in the pass may not help it survive, let alone be competitive in a dynamic, at time erratic and unpredictable business environment.

Introduction Even trying to do the same thing harder, or

fine-tuning it, may not pay off. Things have to be done differently.

Structures, processes, methods, and product technologies that were appropriate to the earlier market conditions may not be relevant to present or future markets.

These have to be replaced by new structures, processes, and methods relevant to changing times.

Introduction

Organizations may have to reset themselves on a different set of basic assumptions and business opportunities that relate to customer focus, competitive intelligence, its knowledge and competency base, innovativeness, a new products/services or markets.

Introduction

Designing a new state is possible if organization is clear as to what the new focus and direction of improvement.

That is, it needs to be clear about its intended improvement and it should be in line or aligned with its grand strategic plans.

Introduction

It has to examine its current strength and weaknesses in the

context of opportunities, threats, and dynamism of the business environment,

while identifying what should be improved or changed and how, and determining the pace of improvement or change (see Exhibit 4).

KnowledgeSkillExperienceInformationFacilitiesMachinesToolsMaterialsSuppliesEnergies

INPUT

PROCESS

ProductBy-productsService

AREA OR FOCUS OF IMPROVEMENT

Work proceduresWork safetyReduce process time

QuantityQuality of products, services & workDefect or error reductionValue-added product or serviceMeeting delivery schedules

OUTPUT

Employee education & trainingEmployee moraleCost reductionTechnology effeciencyQuality and cheaper materialsLess wastageInput quality assuranceLess energy, less pollution

DIRECTIONOF IMPROVEMENT OUTCOME

Individual Effectives-Job satisfaction-Performance-Personal developmentTeam Effectiveness-Quality of work life-PerformanceOrganizational Effectiveness-Performance-Productivity-Stakeholder satisfaction-Customer satisfaction

Vision

Mission

Align With Strategic Plan

Fee

db

ack

fro

m E

nvi

ron

men

t

IntendedImprovement

Possible focus and direction of improvement are:

1. Responsiveness to environment changes

2. Management process and control strategy

3. Human resource strategy4. Structure and systems strategies5. Political strategy6. Outcome strategy

1. Responsiveness to environment changes

– be consumer – and – market – focused (providing better value to the customer).

2. Management process and control strategy – geared to policy considerations relating to

product, process and market. It is also geared towards improving intra-

organizational dynamics such as: 1. intra-and inter-unit coordination, 2. individual and group accountability, 3. distribution of benefits/resources, and 4. shaping or reorienting its information

management in line with the planned strategy.

3. Human resource strategy

– aimed at designing people-oriented strategies that involve employees and enable them to achieve the organization’s goals and objectives.

It helps them develop the knowledge, skills and behavior necessary for change implementation.

4. Structure and systems strategies

– organizations may have to redesign their structure, reorganization tasks, positions,

people, and systems for the speedy delivery of product or service which is of high customer value.

5. Political strategy – is to identify the external and

internal political realities influencing the organization. Conflicting interests, shifts in power balance, and coalitions/alliances among

individuals/groups often accompany significant organizational changes.

6. Outcome strategy

– focused on

individual, team and organizational effectiveness

and efficiency.

Classical Management Theory Approach The classical management theory includes

the following theories among others:1. Bureaucracy theory developed by Weber,

19472. Human relations theory developed by

Likert, 1961; McGregor, 1960 and Maslow, 1954 and others.

3. Contingency theory developed by Gilbreth, 1977; Lawrence and Lorsch, 1967; Trist, 1981; and Woodward, 1965.

4. Theory Z

Basic Assumption of Bureaucracy Approach

Bureaucracy approach emphasizes the need for organizations to operate in a rational manner, rather than, relying on the arbitrary whims of owners and managers.

Organizations operate more fairly and efficiently if there are rules and standardized procedures governing every conceivable situation.

Characteristics of Bureaucracy Theory Approach to bring Improvement

The following are the characteristics of bureaucracy approach:

1. Specialization of labor.2. Formal rules and procedures.3. Impersonality.4. Well-defined hierarchy (well-structured).5. Career advancement based on merit6. Slow respond to change

1. Specialization of labor

– jobs are broken down into routine well-defined tasks and members are extremely competent at their tasks.

2. Formal rules and procedures

– written rules and procedures specify the behaviors desired from members facilitate coordination and ensure uniformity.

3. Impersonality

– Rules, procedures, and sanction are applied uniformly regardless of individual personalities and personal considerations.

4. Well-defined hierarchy (well-structured)

– multiple levels of positions, with carefully determined reporting relationships among levels, provide supervision of lower offices by higher ones, a mean for handling exceptions, and the ability to establish accountability of actions.

Change is handled by creating new structure and new rules and ignoring the roles of individuals in dealing with change.

5. Career advancement based on merit

– selection and promotion is based on the qualifications and performance of members.

6. Slow respond to change

Slow respond to change

Basic Assumption of Human Relation Theory

The assumption of human relationship theory is that improving social relations in

organizations, understanding workers and managers as

human beings with social and emotional needs, and

improving interpersonal communication may cause organization to function more effectively and efficiently.

The Human Relation Approach: Basics Principles

The basic principles of the human relations approach are as follows:

1. Decentralization 2. Participatory Decision-Making 3. Concern for Developing Self-

Motivated Employees

Decentralization The strict notion of hierarchy employed

by classical management theorists is replaced with the idea that individual workers and functional areas (i.e., departments) should be given greater autonomy and decision-making power.

This requires greater emphasis on lateral communication so that coordination of efforts and resources can occur.

This communication occurs via informal communication channels rather than the formal, hierarchical ones.

Participatory Decision-Making Decision-making is participatory in the sense

that those making decisions on a day-to-day basis include line workers not normally considered to be "management."

The greater autonomy afforded individual employees -- and the subsequent reduction in "height" and increase in span of control of the organizational structure -- requires that they have the knowledge and ability to make their own decisions and the communication skill to coordinate their efforts with others without a nearby supervisor.

Concern for Developing Self-Motivated Employees The emphasis on a system of decentralized and

autonomous decision-making by members of the organization requires that those members be highly "self-motivated" (that is, able to set their own task-related goals and monitor their own performance in achieving them).

So one goal of managers in such an organization is to design and implement organizational structures that reward such self-motivation and autonomy.

Another is to negotiate working relationships with subordinates that foster effective communication in both directions.

Concluding Remark on the Human Relations approach Thus, the human relations approach

suggests changes in the structure of the organization

itself, in the nature of work, and in the relationship between

supervisor and subordinate. Each of these changes relies upon

assumptions about the individual, the organization, and communication.

Basic Assumption of The Contingency Theory

Contingency theory is a viewpoint that argues that appropriate managerial actions depends on the particular parameters of the situation (see Exhibit 5).

Exhibit 5: Contingency Theory Approach to Improvement

CONTI NGENCY THEORY

Appropriate action depends on situation and condition

SITUATION 1

SITUATION 2

SITUATION 3

The Contingency Theory

This theory holds that neither structure nor people are the determinants of organizational success.

Successful organizations develop their structures by studying and adapting to different situations.

Contingency Theory Approach to Improvement

Contingency theorists do not believe that one type of organization fits all environments.

Each organization must be sufficiently flexible to adapt to changing conditions.

Theory Z (Japanese Management) The Theory Z approach involves:1. giving workers job security; 2. including them in some decision making; 3. emphasizing group responsibility; 4. increasing quality; 5. establishing gradual advancement policies,

more informal controls and broader career paths;

6. and showing greater concern for employees’ work and nonwork well-being.

Other Emerging Strategies Two recent perspectives that have

gained attention over the recent years include:

1. A customer-oriented/driven strategy – Tenner and DeToro, 1992; and Harigopal, 2001.

2. A process-oriented Strategy – Tenner and DeToro, 1992; and Harigopal, 2001.