Organization lektion 1

Why do we have organizations?

 By organizing themselves in smart ways people can achieve great things together.
 Many tasks in organizations can only be solved if people work together in clever ways –
give examples.
 An organization is a group of people intentionally organized to accomplish an overall,
common goal.
 The members of an organization are dependent on each other.
 A good organization will lead to (a higher) profit

Example of a hierarchy with an organization:

 Tasks are delegated downwards

 Responsibility increases when moving upward within the hierarchy
 The HR-department supports the organizations, like giving advice or recommendations, but
they cannot execute orders

 Two reasons why you should understand organisations:

 Working in the financial service industry, you are an employee, maybe with managerial
responsibilities. Perspective: Looking from the inside at the organization you are a part of
  Working in the financial service industry, you might need to analyse other organisations.
Organisations you will encounter professionally. Perspective: Looking from the outside
looking in on another business


What makes stakesholders within an organisation happy?

 Customers (value for money; products)
 Bank
 Shareholders (profit)
 Employees (salary, benefits, and a happy work environment)
 Society (sustainability, ethics)
 All of the above is inter-related

Taylor (an engineer) theory on scientific management:

 The ideal organisation works like a machine
 Jobs must be based on standardised methods (every worker should know exactly what to
do)
 Managers should use scientific methods to discover ways to optimize production
 Workers should be instructed and trained to follow the standardised "best ways" of
production
 Workers should be rewarded for efficiency (piece-rate = akkord løn)
 The employee is seen as a ‘cog’ in the machine’
Fuyol’s administrative theory:
 The theory focuses on rational principles for managing organisations
 The organisation is seen as a hierarchy with
- Clear division of labor
- Clear lines of authority
- Clear division of responsibility
- Unity of command – only one boss
The employees are seen as a professional fulfilling a specific work role in the hierarchy

Mayo, Human Relation

 Here the focus is on people in organisations
 People desire to be part of a supportive team that facilitates development and growth.
Therefore, if employees receive special attention and are encouraged to participate, they
perceive their work has significance, and they are motivated to be more productive,
resulting in high quality work
 Keyword: Motivation

How to solve organizational assignments (exam):

1) Theory
2) Apply the theory
3) Discuss problems
4) Solutions
Structure of the organization lection 2
The purpose of working with organizational structures and environment analysis is to be able to design
effective and more efficient organisations – who can achieve their goals with maximum utilization of their
resources.
External environment (kind of like PESTEL-model):

The external environment being simple/complex depends by how many of the ten factors above affect
the organization.
 E.g., a phone manufacturerer will be affected by many factors, technological developments,
demographics, industry (competitors), the economy (consumer confidence), the market (costumer
demands, finding new costumers) and the international factor (international competitors and the
risk of a take-over)
 E.g., a local hairdresser will be affected by a few factors only: Technology (equipment, new
methods), the market (costumer demand, fashion), and industry (competitors)
The external environment stable/dynamic is assessed by the degree of change in the ten factors:
 Many and unpredictable factors are defined as dynamic
o E.g., Fashion clothing is very dynamic, new developments and trends occur constantly, and
predicting sales a year ahead is difficult.
 Few and predictable factors are defined as stable
o E.g., Containership manufacturer, requirements and trend change slowly, the product
lifetimes and production are very long.
The external environment rich/poor is an assessment of resources available an organization has.
 Rich environment is when there is many suppliers wishing to supply, raw materials are unlimited
and you can choose between qualified employees etc.
 Poor environment occurs in two different situations: companies operating in poor
countries/regions or companies that are in fierce competition for scarce ressources.

Left side = speaks to organic structure

Right side = speaks to mechanistic structure
Dealing with environmental uncertainty:
 Formalisation – the amount of rules and standards
 Specialisation – the amount of division of labor
 Hierarchy (flat or deep; span of control), authority and responsibility
 Centralisation – when decisions are made by the managers.
 Decentralisation – when decisions are made by lower level employees.
 Professionalism – the amount of education/training
required to work in the organisation.
  Uncertainty can be limited with specialization
o A company that operates in a simple and stable environment can often reduce uncertainty
through closer monitoring and control, e.g., a packing factory.
 Uncertainty can be reduced by formalizing
o Example, a pharmaceutical company is highly formalized, a family restaurant less so.
o E.g., supermarkets using barcodes can record data of sales is a way of formalizing.
 Uncertainty can be reduced by establishing control over ressources
o A large organization with high tech production and performance culture will usually score
high on formalization, centralization, and specialization.
o A small organization where the tasks are carried out manually will be more specialized,
decentralized and score low on formalization.
Dependence between organizational members or units:

Mechanistic or organic structures:

 What is a characteristic of an organic organizational structure?
o An organic organizational structure is characterized by low centralization. Companies that
adopt this structure also have low complexity and low formalization.
 o Fx a family restaurant
 What is an example of an organic organizational structure?
o An example of a company that adopts an organic organizational structure is a small internet
start-up company.
o Small companies do not have complex processes. They also employ a horizontal approach
to communication where all employees communicate directly with each other and the
supervisors.
 What is a characteristic of a mechanistic structure?
o A mechanistic organizational structure is characterized by high centralization, complexity,
and formalization.
o Fx healthcare, universities, and governmental organizations.
o The mechanistic organizational structure is the most common business structure and is
typically used in a manufacturing environment
o On the other hand, an organic organizational structure is characterized by low
centralization, low formalization, and low complexity.
 What is the difference between an organic and a mechanistic organization?
o A mechanistic organizational structure has a well-defined hierarchy of power. However, in
an organic organization, the hierarchy of authority is loosely defined.
 Organic structure works best when uncertainty is high
 Mechanic structure works best when uncertainty is low

 Matrix organization where members are drawn from different geographical divisions (locations)

Summary of organizational structure:

Groups and teams lection 3
 A group is a more general term for a collection of people.
 A team is a group that has been put together for a purpose.
A well-designed group can achieve better results working together towards a common goal than if they
worked separately.

Primary groups
 Are the main group for the individual, it is there where the most interaction takes place – it is often
family or close friends.
Formal groups
 Are formed deliberately for a purpose, for instance within a department
Reference groups
 Are groups the individual strives to be a part of, for instance an employee who dreams of becoming
a manager and thus joining that management group.
Informal groups
 Arise spontaneously through a common interest, for instance smokers banding together during
smoking breaks. Characteristic for the group is that it does not appear on the organizational chart,
yet it may be a type of a group that a company can cultivate, for instance shared culture.
Organisational groups:
Functional groups
 Are groups or teams that represent the same area within a company, e.g. a sales department, HR.
The advantage is that the group represent the same area and create expert skills.
 Functional groups are an opportunity for the company to concentrate on specific knowledge,
thereby gaining an competitive advantage.
Cross-functional groups:
 Are groups or teams from different areas or functions within the organization working together
towards a common goal.
 Useful if there is a problem/task that needs to be highlighted from many different angles.
 A disadvantage can be a lengthy decision-making process and cooperation issues.
An IT company in Philippines, went from a high hierarchy with a mechanistic structure, to a flat hierarchy
with teams working together and executing decisions together. The bottom-line improved significantly, got
rid of the bureaucracy and excessive formality.
 Weaknesses are balanced out, and common strengths are enhanced.
 Another example is Jyske bank versus Danske bank – look at the differences in their bottom line.

Team/group composition:
 A group with simple tasks and focus on efficiency will often consist of homogenous people (similar
minded/backgrounds)
 A group with complex tasks then heterogenous skills/backgrounds may be necessary.

Robbins & Judge (2009) model for creating a high-performance team:

What can teams do for your organization:
 Teams can make the organisation more agile.
 Teams can work autonomously and save on managment ressources.
 Teams can help the larger organisation make changes.
 Teams can innovate and learn as they try new things on a small scale.
 Teams can represent diverse parts of an organisation.
 Teams can compete against other teams and strive for high performance.
 Teams can give individual team members a feeling of social belonging.
 Teams can make the organisation more stable and ressilient as members help each other.

Team development over time, Tuckman (1965 model):

Forming:
 In this stage, most team members are
positive and polite. Some are anxious, as
they haven't fully understood what work
the team will do. Others are simply excited
about the task ahead.
Storming:
  Next, the team moves into the storming phase, where people start to push against the boundaries
established in the forming stage. This is the stage where many teams fail.
 Storming often starts where there is a conflict between team members' natural working styles.
People may work in different ways for all sorts of reasons but, if differing working styles cause
unforeseen problems, they may become frustrated.

Norming:
 Now that your team members know one another better, they may socialize together,
and they are able to ask one another for help and provide constructive feedback.

Performing:
 The team reaches the performing stage, when hard work leads, without friction, to
the achievement of the team's goal. The structures and processes that you have set
up support this well.

Adjourning:
 Many teams will reach this stage eventually. For example, project teams exist for only
a fixed period, and even permanent teams may be disbanded through organizational
restructuring.

Personality and motivation, chp. 4 lesson 4

 Personality refers to individual differences in characteristic patterns of thinking, feeling and
behaving.
 Personality is partly innate (medfødt) and partly learned in social contexts.
 Personality can be seen as something that has an impact on individual’s behavior and
organisational outcomes
Myer Briggs Type indicator:
Motivation:
Herzberg focuses on job motivation:

 If two people comparing their jobs – social comparison.

 For instance, the feeling of injustice if when conducting a social comparison of the two jobs, you
hear about better perks and incentives than what you have at your current job – could ruin
motivation.

Organisational culture, cph. 7 lesson 5

1. Artefacts
a) These are the “visible” symbols of the culture. It can include anything from clothing styles
to posters on the wall to the volume of speech
2. Values
a) These are the “espoused” values – often found on company websites and also the area
which has the greatest chance of being disconnected from reality.
3. Fundamental values
a) The organizations follow certain practices which are not discussed often but understood on
their own. Such rules form the third level of the organization culture.
The cultural web:
Management and the HR departments, cph. 5&6 lesson 6
The modern manager:

Difference between management and leadership:

 Leadership is a virtue of leading people through encouraging them. Management is a process of
managing the activities of the organisation.
 In leadership, principles and guidelines are established, whereas, in the case of management,
policies and procedures are implemented.
 Leadership brings change. On the other hand, Management brings stability.

Transactional leader:
 A transactional leader has a short-term orientation and is concerned with performance and
efficiency with the tasks that the organisation currently has.
o The transactional leader gets what is expected from the employee and in return gets a
reward
Transformational leader:
 A transformational leader is visionary and has a long-term orientation. The leader’s concern is how
to navigate in changes to obtain a better future for the organisation.
McGregor’s theory of managers’ attitude towards employee’s:
Theory X:
 Theory X approach tend to have several tiers of
managers and supervisors to oversee and direct
workers.
 Authority is rarely delegated, and control remains
firmly centralized.
Theory Y:
 Theiry Y managers have an optimistic opinion of
their people, and they use a decentralized,
participative management style.
 This encourages a more collaborative, trust-based relationship between managers and their team
members.

Managers powerbase:
 Power to reward
o The manager can pay and give perks
 Reference power
o Subordinates want to be like the manager
 Expert power
o The manager is more knowledgeable
 Power through others
o The manager has access to other powerful people
 Power to coerce
o The manager can give orders
 Legitimate power
o The manager has a higher position in the hierarchy
 Information power
o The manager has access to information that is not accessible for others
 Group power
 o The manager has support from others in the group

Kurt Lewin’s model of three leadership styles:

Authoritarian leadership
 approach means higher staff turnover, but depending on the tasks perhaps higher productivity
Democratic leadership
 tends to be the most effective, but decision making could become slow
Laissez-Faire leadership
 could develop a hostile environment in the workplace as co-workers fight for power, but could
work well for a highly skilled team and self-motivated team, but often this leadership is detrimental
for productivity.
The managerial grid (Blake and Mouton):

Situational leadership (Tannenbaum and Schmidt):

 No leadership style is right in all situations

 Tannenbaum and Schmidt's model is oriented notably towards decision-making and ignores other
aspects of leadership. Examples:
o The leader of an inexperienced army platoon under enemy fire will tend to be more
effective at the left on the chart.
o The head of a product innovation team, under no great pressure, leading an experienced
and capable group, will tend to be more effective acting at the right of the chart.
Situational leadership (Hersey and Blanchard):

Organisational design lesson 11

Dimensions of organizational structure
 Formalisation – rules and standards
 Specialisation – division of labor
 Hierarchy (flat or deep; span of control), authority and responsibility
 Centralisation – where are decisions made
 Professionalism – level of education and training
We can assess the organisational effectiveness in three different ways.
 Ressource-based efficiency – the organisation’s capability to aquire ressources.
 Process-based efficiency – the organisation’s capability to run smooth processes.
 Objective-based efficiency – the organisation’s capability to obtain it’s goals
(e.g. profit, growth, market share, and also sustainability)
Successful company:
They must have a good organizational design, they’ve been good at accessing ressources.
Exam repetition lesson 12
Your task is to deal with problems in the case, make up assumptions about
problems if it isn’t clear from the case.