CIA Test Preparation Part I

Transcription

1 CIA Test Preparation Part I Study Unit Six: Control Aspects of Management June 2012

2 Agenda: Control Implications of Organizational Structures Control Implications of Leadership Styles Change Management Conflict Management

3 6.1 Control Implications of Organizational Structures Overview 1. Elements of an organization 1. Coordination of effort in a cooperative social arrangement 2. A common objective or purpose 3. Divisions of labor (efficient specialization) 4. A hierarchy of authority 2. If the organizational culture is strong, key values are intensely held and widely shared: 1. Substantial training is provided to achieve this high degree of acceptance, minimizing the need for formal, written policies

4 6.1 Control Implications of Organizational Structures Overview 3. Basic approaches to organizational design: 1. The traditional approach (also known as classical, structural, or formal) emphasizes such factors as authority, responsibility, tasks, hierarchy, and span of control The traditional approach to organizing prescribes relationships and then places people in them. Management s primary goal is profit 2. The behavioral approach emphasizes the limits, strengths, availability, and interests of the people available. Less deterministic than the traditional approach because group dynamics and the feelings of subordinates are included The job is designed for the person.

5 6.1 Control Implications of Organizational Structures Overview 3. Basic approaches to organizational design (Cont d): 3. The modern (contingency) approach, designs the organization for tis unique situation It combines classical and behavioral principles of organization: the job and the person must fit each other Classical theory assumed workers have only economic motives. The modern approach assumes they have multiple motives 4. An organizational must have unity of objective. Accordingly, the objectives of individuals must facilitate the achievement of the organization s objectives An organizational structure is effective if it contributes to unity of objective. An organizational structure is efficient if it does so with a minimum of waste.

6 6.1 Control Implications of Organizational Structures Relationships Authority: Right to direct and demand performance from others, including the right to determine the means and methods by which the work will be done. Responsibility: Obligation to perform In the classical view, this obligation is formally imposed by a superior and is inherent in any job In the behavioral view, responsibility must be delegated. Responsibility is successively divided and passed down. Accountability: Duty to account to superiors for the fulfillment of the responsibility. Accountability therefore relates to performance measurement.

7 6.1 Control Implications of Organizational Structures Span of Control A manager s span of control is the number of subordinates he supervises. A Factors in determining the span of control include: 1. Managers and employees preferences, skills, and experiences 2. The organizational culture 3. Tasks to be performed 4. Physical location 5. Established policies and procedures Span of control is largely determined by the choice of a tall or flat organizational hierarchy Tall organizational structure have many levels between top and bottom Faster and more effective at problem resolution: increased frequency of interaction between superior and subordinate and the greater order imposed by the hierarchy Flat organizational structures have relatively few levels from top to bottom Have the advantages of fast information flow from top to bottom of the organization and increased employee satisfaction

8 6.1 Control Implications of Organizational Structures Elements of Structure Differentiation Vertical differentiation: Depth of the hierarchy. More levels mean more complexity. Thus, information distortion will be more likely, coordination of management activities will be more difficult, and the response to change will be slower and less effective. Horizontal differentiation: Extent to which tasks require special skills and knowledge. As these become more diverse, communication and coordination become more difficult. Spatial differentiation: Geographical separation of operations Formalization: the extent to which job performance is standardized by job description and clear procedures that define how tasks are to be accomplished. Centralization: Concentration of authority in an organization and the degree and levels at which it occurs.

9 6.1 Control Implications of Organizational Structures Elements of Structure Relationship between environmental complexity and the organization s balance between differentiation and integration Differentiation: caused by the division of labor and technical specialization. Integration: Coordination of effort required for achievement of mutual objectives A hierarchy of authority A framework of rules Departmentation Formation of cross-functional groups Computer systems Liaison bodies Human relations training

10 6.1 Control Implications of Organizational Structures Elements of Structure Relationship between environmental complexity and the organization s balance between differentiation and integration A dynamic equilibrium exists between the tendencies of fragmentation and coordination Differentiation and integration are related to environmental complexity The higher the differentiation, the greater the obstacles to integration An unsuccessful organization in a complex environment is likely to be highly differentiated but poorly integrated

11 6.1 Control Implications of Organizational Structures Departmentation V. Matrix Structure By function: the most widely used method. The most common departments are selling, production, and finance By territory: favored by national or multinational entities and government agencies with scattered offices or plants By product: important for multiline, large-scale entities. By customer: permits a department head to manage service to a customer. This form of departmentation is found most often at middle levels Project departmentation: experimental or onetime activities

12 6.1 Control Implications of Organizational Structures Mechanistic & Organic Structures Mechanistic Structure Organizations focusing on a cost-minimization strategy through: tight control, extensive division of labor, high formalization and centralization Organic Structure Decentralized and has low complexity and formalization. It has an extensive information system, and employees participate in decision making. It tends to be flexible and adaptive.

13 6.1 Control Implications of Organizational Structures Mechanistic & Organic Structures Choice of structure is a function of the organization s fundamental strategy: Innovation: focuses on developing important new products or services An organic structure provides the flexibility for this strategy Cost-minimization: imposes tight controls over expenses and reduces product prices The mechanic structure is appropriate Imitation: not adopted by true innovators but by organizations that enter new markets only after smaller competitors have demonstrated the potential for success The organization that combines mechanistic and organic components.

14 6.1 Control Implications of Organizational Structures Mechanistic & Organic Structures Structure is also a function of the following: Size: Larger organization tend to be mechanistic because greater formalization is needed. Strategies also change as size changes. A growing organization often expands activities within its industry Technology: An organic structure may be best for coping with nonroutine technology because formalization is low Environment: The more stable the environment, the more mechanistic the organization. A mechanistic structure also is appropriate when the environment has little capacity for growth. Uncertainty: is a general environment factor Capacity Volatility Complexity

15 6.1 Control Implications of Organizational Structures Organizational Components Operating core: workers who perform the basic tasks related to production Strategic apex: top managers Middle line: managers who connect the core to the apex Technostructure: analysts who achieve a certain standardization Support staff: indirect support services

16 6.1 Control Implications of Organizational Structures Organizational Components Simple Structure: Low complexity and formality. Authority is centralized Machine bureaucracy: A complex, formal, and centralized organization that Performs highly routine tasks Groups activities into functional departments Has a strict chain of command Distinguishes between line and staff relationships Professional bureaucracy: A complex and formal but decentralized organization in which highly trained specialists have great autonomy.

17 6.1 Control Implications of Organizational Structures Organizational Components Divisional structure: Self-contained organization Characterized by substantial duplication of functions compared with more centralized structures. Adhocracy: Low complexity, formality and centralized. Vertical differentiation is low and horizontal differentiation is high.

18 6.1 Control Implications of Organizational Structures Centralization V. Decentralization Centralization: Concentration of authority in an organization and the degree and levels at which it occurs Decentralization: pushes significant decisions down and across the hierarchy Degree of decentralization will be greater if: More decisions are made lower in the management hierarchy Some important decisions are made lower in the management hierarchy More functions are affected by decisions made at lower levels Fewer approvals are required before implementation of a decision

19 6.1 Control Implications of Organizational Structures Organizational Components Degree of centralization or decentralization depends upon: Information Ability Timeliness Degree of coordination Significance of decision Morale Strategic Business Unit (SBUs): is a means of decentralization Independent business: not a supplier of the parent, encounters competition, a profit center, makes all important decision

20 6.1 Control Implications of Organizational Structures New Organizational Hour Glass Organization: A small group of middle managers coordinates a variety of lower-level, crossfunctional activities Empower technical specialists : lateral transfers, challenging work, training in new skills, pay-for-performance. Cluster Organization A group of team. Workers are multi-skilled and move among teams as needed. Network Organization Coordinate through adaptation Long-term, strategic relationship based on implicit contracts Virtual Organization Emphasis is on speed and constant and cross-function team

21 Key Concept: The elements of organizations are coordination of effort, a common purpose, divisions of labor, and a hierarchy of authority. A number of relationships are present in the structure of an organization, including authority, responsibility, and accountability. The elements of structure are differentiation, formalization and centralization Departmentation may be by function, customer, territory, product, or project. Matrix organization has horizontal and vertical lines of authority. Structures may be mechanistic or organic depending on the entity s structure, size, technology and environment. Organization components are the operating core, strategic apex, middle line, technostructure, and support staff. New types of organizations include the hourglass, cluster, network and virtual

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37 6.1 Control Implications of Organizational Structures New Organizational Hour Glass Organization: A small group of middle managers coordinates a variety of lower-level, crossfunctional activities Empower technical specialists : lateral transfers, challenging work, training in new skills, pay-for-performance. Cluster Organization A group of team. Workers are multi-skilled and move among teams as needed. Network Organization Coordinate through adaptation Long-term, strategic relationship based on implicit contracts Virtual Organization Emphasis is on speed and constant and cross-function team

38 Key Concept: The elements of organizations are coordination of effort, a common purpose, divisions of labor, and a hierarchy of authority. A number of relationships are present in the structure of an organization, including authority, responsibility, and accountability. The elements of structure are differentiation, formalization and centralization Departmentation may be by function, customer, territory, product, or project. Matrix organization has horizontal and vertical lines of authority. Structures may be mechanistic or organic depending on the entity s structure, size, technology and environment. Organization components are the operating core, strategic apex, middle line, technostructure, and support staff. New types of organizations include the hourglass, cluster, network and virtual

39 6.2 Control Implications of Leadership Styles Aspects of Leadership Management and Leadership Management: Arranging the work of others to achieve organizational objectives Leadership: A special type of management. It is the act or process of influencing, inspiring, and guiding people so they will strive willingly toward the achievement of group objective through common effort. Power Legitimate or position power Reward power Expert power Referent or charismatic

40 6.2 Control Implications of Leadership Styles Leadership Theory Classic Management Theory Authority, decision making, and responsibility all may be decentralized in the organization to some extent. Based on belief that leadership qualities are inherent, not developed. Leadership effectiveness composes of intelligence, maturity, social participation and interest, socioeconomic status. Emotional Intelligence of leaders: social skills, judgment, maturity and emotional control

41 6.2 Control Implications of Leadership Styles Leadership Theory Style of leadership Autocratic: manager dictates all decisions to the employees. This is considered the classical approach to leadership. Relies on treats and punishment and do not trust employees. Consultative: manager considers employees views but still makes the decisions. Participative (democratic): employees provide definite input in decision making, and the manager must include their views in decisions. Employees are encouraged to grow on the job and be promoted. Free-rein (laisser-faire): employees make their own decisions. Bureaucratic: manager does everything according to procedures or policies. If no policy covers a situation, the manager refers to the next higher level.

42 6.2 Control Implications of Leadership Styles Situational Leadership Contingency Theory Position Power: function of the formal authority structure. Task structure: how clearly and carefully members responsibilities for various tasks are defined. Leader-member relations: reflect the extent to which group members are willing to follower a leader. Task-motivated style: most effective when the situation is very favorable or very unfavorable. Relationship-motivated style: most effective in middle, less extreme situations, when favorable and unfavorable factors are mixed.

43 6.2 Control Implications of Leadership Styles Situational Leadership Situational Leadership Theory Selling Leadership style: explains decisions and provide opportunity for clarification (high task and high relationship) Telling Leadership style: provides specific instructions and closely supervises performance (high task and low relationship) Participating Leadership style: encourages the sharing of ideas and facilitates decision making (low task and high relationship) Delegating Leadership style: turns over responsibility for decisions and implementation (low task and low relationship)

44 6.2 Control Implications of Leadership Styles Situational Leadership Path-Goal Theory (Motivation) Leaders should motivate employees by clarifying their understanding of work goals, the relationship of achieving goals and rewards and how the goals may be achieved. Leaders should increase payoffs, define the path to success, remove obstacles, and increase the chances of individual satisfaction. Environment and subordinate affect the relationship between leadership and outcomes Leadership Style: Directive: lets employees know what is expected, schedules work to be done, and gives specific guidance on tasks Supportive: friendly and shows concerns for employees needs. Participative: consults with employees and uses their suggestions before making a decision. Achievement-oriented: a facilitator who sets challenging goals and expects employees to perform at their highest level.

45 Key Concept: Leadership is the act or process of influencing, inspiring, and guiding people so they will strive willingly toward the achievement of group objectives through common effort. A modern traitist approach to leadership is based on the emotional intelligence of leaders, that is, their social skills and judgment, maturity, and emotional control Styles of leadership are emphasized in behavioral approach. The personal background of the manager and the personalities and backgrounds of the employees supervised are factors. These styles have been characterized as (1) authorization (2) democratic (3) free-rein (4) consultative (5) bureaucratic

46 Key Concept (Cont d): According to contingency theory, people become leaders not only because of personality attributes, but also because of various situational factors and the interaction between the leaders and the situation. The contingency theory model has three dimensions: position power, task structure, and leadermember relations. According to situational leadership theory, the appropriate leadership style depends on the followers maturity. Path-goal theory emphasizes motivation. It combines the research on initiating structure and consideration with expectancy theory.

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52 6.3 Change Management Change management is important to all organizations. An appropriate balance between change and stability is necessary if an organization is to thrive. Organization change is conducted through change agents Type of change: Culture change: change in attitudes and mindset Product change: change in a product s physical attributes and usefulness to customers Structural change: change in an organization s systems or structures

53 6.3 Change Management Resistance Organizational and procedural changes often are resisted by the individuals and groups affected: Misunderstandings or lack of needed skills Lack of trust, or conflicts with, management Emotional reactions when change is forced Bad timing Insensitivity to employees needs Perceived threats to employees status or job security Dissolution of tightly knit work groups Interference with achievement of other objectives

54 6.3 Change Management Resistance Methods of coping with resistance: Prevention through education and communication Participation in designing and implementing a change Facilitation and support through training and counseling Negotiation by providing a benefit in exchange for cooperation Manipulation of information or events Co-operation through allowing some participation but without meaningful input Coercion

55 6.3 Change Management Models for Planned Change Kurt Lewin s process model: Unfreezing: diagnosis stage. It involves choosing a change strategy, preparing employees for the change, and offsetting resistance. Change is the intervention in the status quo Refreezing: makes the change relatively permanent so that old habits will not reassert themselves.

56 6.3 Change Management Continuous change process model Force for change accumulate Organization recognizes that a problem exists and defines it Problem is submitted to the organization s problem-solving process Change is implemented Success in implementation is measured and evaluated.

57 6.3 Change Management Organizational Development (OD) Characteristics of OD Change must be planned and deliberate Change must actually improve the organization. Changes forced by regulatory requirements or changes that merely attempt to follow management trends and fads are not included. The change must be implemented using the findings of the behavioral sciences, such as organizational behavior and group psychology. Objective of OD Deepen the sense of organizational purpose and align individuals with it Promote interpersonal trust, communication, cooperation, and support Encourage a problem-solving approach Develop a satisfying work experience Supplement formal authority with authority based on expertise Increase personal responsibility Encourage willingness to change

58 Key Concept: Effective change management is important because an appropriate balance between stability and change is necessary if an organization is to thrive OD is planned, fundamental change using behavioral science techniques in a systematic way. The three stages of Kurt Lewin s process model are unfreezing, change, refreezing.

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64 6.4 Conflict Management Good Conflict and Bad Conflict Conflict is a process resulting in the perceptions of two parties that they are working in opposition to each other in ways that result in feelings of discomfort and/or animosity Conflict may be beneficial because it encourages self-criticism, creativity, and necessary change Ambiguous or threatening communications Hiring outsiders with different values, managerial styles, attitudes, and background Designating an individual to argue against the majority opinions of the group Restructuring the organization to disrupt the status quo

65 6.4 Conflict Management Response to Conflict Problem solving: resolves the conflict by confronting it and removing its causes. Smoothing: a short-term avoidance approach Forcing: occurs when a superior uses his/her formal authority to order a particular outcome. Superordinate goals: overriding goals of the entity to which subunit and personal goals are subordinate. Compromise: negotiation Competition: parties goals are incompatible and interactions are important to achieving goals. Expanding resources: resolves conflicts that result from scarcity Avoidance: non-action Accommodation: willingness of one party to the conflict to place another s needs and concern above their own. Interest-based bargaining: interests underlying the positions may be both conflicting and compatible.

66 6.4 Conflict Management Effective Negotiation Negotiation is a decision-making process among interdependent parties who do not share identical preferences Effective negotiation emphasizes: Win-win attitude Seeking mutual benefit and satisfaction Best Alternative to a negotiated agreement (BETNA) The acceptable minimum outcome if a negotiator cannot obtain the desired result Avoid accepting an unfavorable agreement or rejecting a favorable agreement

67 6.4 Conflict Management Overcoming Resistance Attempt to determine the reason behind the resistance Stop the meeting and address the other party s concerns privately Restate the negotiator s position regarding the issue Research the other party to determine its views and requirements

68 Key Concept: Conflict is a process resulting in the perceptions of two parties that they are working in opposition to each other in ways that result in feelings of discomfort and/or animosity Negotiation is a decision-making process among interdependent parties who do not share identical preferences Managers may address competitive conflicts in the following ways Problem solving Smoothing Forcing Appeal to superordinate goals Compromise Expanding resources Avoidance Accommodation

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74 Thank you Alisa Glankwamdee, CIA pangalisa@gmail.com Mobile: