Chapter 6 Reinforcing New Behaviors MULTIPLE CHOICE

Chapter 6 Reinforcing New Behaviors MULTIPLE CHOICE 1. is designed to surface any misalignment that may exist between patterns of internal behavior and a desired new strategy. a. People alignment b. Diagnosis c. Structural design d. Technology change (b: Easy; p. 125) 2. Structural, system and technology changes should be the change process. a. placed at the very beginning of b. placed in the middle of c. placed at the end of d. used to drive (c: Moderate; p. 137) 3. refers to the manner in which employees are subdivided into units and divisions as a way of focusing their efforts on the required activities of the company. a. Organization redesign b. People alignment c. Functional structure d. Horizontal structure e. Organizational structure (e: Easy; p. 127) 4. refers to a structure meant to reinforce focus on the functional or technical tasks of the organization. a. Functional structure b. Horizontal structure c. Vertical structure d. Dynamic structure (a: Moderate; p. 128) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 85

5. Functional structures focus on both individuals and units in their contribution to the organization s tasks. As such, which of the following does functional structure bring to the organization? a. discipline and efficiency to an operation b. helping the organization achieve efficiencies of operation c. standardization of offerings d. all of the above e. both A and B (d: Difficult; p. 128) 6. Which of the following is NOT a liability of functional structures? a. reduced innovation b. slow response to environmental changes c. confusing reporting lines d. low coordination across functions e. all of the above (c: Difficult; pp. 129-130) 7. is when all activities associated with a particular product or family of products is brought together in a divisional unit. a. Functional structure b. Divisional structure c. Dynamic structure d. Vertical structure e. Horizontal structure (b: Moderate; p. 130) 8. Which of the following structures could be used as a divisional option, particularly when a company is multinational? a. functional structure b. divisional structure c. dynamic structure d. vertical structure e. geographical structure (e: Moderate; p. 131) 9. enhance coordinated focus on the marketplace but make integration across highly autonomous divisional units difficult to achieve. a. Functional structures b. Divisional structures c. Dynamic structures d. Vertical structures e. Geographical structures (b: Moderate; p. 131) 86 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

10. Which of the following is NOT a liability of divisional structures? a. increased cost of functional duplication b. potential for functional silos within divisions c. lack of coordination across product lines d. confusing reporting lines e. all of the above (d: Moderate; p. 132) 11. Which of the following is correct when both divisional and functional structures exist in an overlapping fashion, allowing for dual focus? a. functional structure b. divisional structure c. matrix structure d. vertical structure e. geographical structure (c: Moderate; p. 132) 12. Which of the following is NOT a liability of matrix structures? a. potentially confusing chain of command b. high failure rate c. potential for ambiguity, tension and conflict d. problematic coordination between functions and products e. all of the above (d: Difficult; p. 133) 13. focuses employees on the interrelated activities of the value chain. a. Functional structure b. Divisional structure c. Matrix structure d. Vertical structure (e: Difficult; p. 134) 14. Effective change implementation, in fact, calls upon structural intervention not to change but to new patterns of behavior that have been created through earlier-stage interventions. a. reinforce; drive b. drive; reinforce c. return; reinforce d. reinforce; return (b: Difficult; p. 137) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 87

15. A key design feature of horizontally linked structures is: a. market-focused employee groupings. b. extensive training for technical expertise. c. cross-functional teams. d. performance-based incentives. (c: Moderate; p. 135) 16. Structural change should be part of which stage in Lewin s change theory? a. unfreezing b. change c. refreezing d. implementation (c: Easy; p. 137) 17. When structural change occurs early in a change process, employees are likely to be: a. confused by the purpose of the change. b. unsure about the new competencies that are required. c. unwilling or unable to make changes in their behavior. d. A and B only e. A, B, and C (e: Moderate; p. 138) 18. In the U.S., most pay-for-performance plans use a(n) level of aggregation. a. individual b. group c. team d. organization e. high (a: Easy; p. 139) 19. raise(s) base salary based on performance. a. Salary raise b. Bonus c. Incentives d. Merit pay e. both B and C (d: Moderate; p. 138) 88 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

20. refer(s) to an organizational pay system that offers regular but onetime payouts on the basis of performance. a. Commission b. Wages c. Incentive bonuses d. Merit pay (e: Moderate; p. 138) 21. refer(s) to an employee who earns all or part of a wage based on number of units produced. a. Piece rate b. Commission c. Bonus d. Incentives e. Merit pay (a: Easy; p. 139) 22. What are the challenges in regards to pay-for-performance for individual incentives? a. control over outcomes b. relationship between rewards and performance c. significance of the incentive d. valid evaluation of performance e. all of the above f. A, B and D only (e: Moderate; p. 139) 23. Organizations call upon performance bonuses to enhance the effectiveness of teams, but the bonus may undermine collaboration between teams. a. individual b. unit c. team-based d. divisional e. company s overall (c: Moderate; p. 140) 24. refers to a reward external to the individual and provided by the organization. a. External reward b. Extrinsic reward c. Intrinsic reward d. Internal reward (b: Moderate; p. 142) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 89

25. Employee praise is a good example of an reward. a. external b. extrinsic c. intrinsic d. internal (b: Moderate; p. 142) 26. is a positive outcome naturally associated with a behavior. a. External reward b. Extrinsic reward c. Intrinsic reward d. Internal reward e. None of the above (c: Moderate; p. 142) 27. The best way to use bonuses in a change effort is to: a. announce them ahead of time so people can work to earn them. b. provide them after the fact as a reinforcement. c. use them randomly to boost morale. d. bonuses should not be used because of the negative impact of extrinsic rewards on motivation and creativity. (b: Difficult; p. 143) 28. What are the choices when introducing new technology in an organization? a. to use the technology to automate existing processes b. to use new technology to support transformed behaviors c. to use technology to support future customers d. either A or B (d: Moderate; p. 147) 29. Technology refers not just to the actual hardware but also to: a. the processes of human behavior required to convert raw material into finished offerings. b. turn raw data into actionable information that can guide behaviors. c. the processes and interactions of human behavior required to convert raw material into finished offerings. d. both A and B e. both B and C (e: Difficult; p. 145) 90 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

30. Organizations will not be able to call on intrinsic motivation unless: a. employees have participated in a salary survey. b. incentives are sufficiently meaningful to create change. c. employees feel that they are being paid equitably. d. the organizational environment is supportive. (c: Difficult; p. 143) 31. Introducing a new incentive plan early in the change implementation: a. risks negative consequences. b. can create an immediate, long-lasting effect on behavior. c. effectively combines intrinsic and extrinsic motivation. d. creates involvement in the change effort. e. all of the above (a: Easy; p. 144) 32. Which of the following is a key consideration in using technology to create change? a. the use of technology to automate existing processes b. the use of technology to transform existing processes c. the proper timing for the introduction of new technology d. all of the above e. B and C only (d: Difficult; pp. 145-146) 33. is a belief on the part of employees that their pay is fair and equitable, and is a prerequisite for intrinsic motivation. a. Pay equity b. Bonus c. Incentives d. Merit pay e. both B and C (a: Moderate; p. 143) TRUE / FALSE 34. Organizational structure refers to the formal manner in which employees are subdivided into units and divisions as a way of focusing their effort on the required tasks of the company. (True: Easy; p. 127) 35. In all organizations, the efforts of employees need to be focused on one important issue: the functional or technical tasks required to achieve the desired outcomes of the organization. (False: Moderate; p.127) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 91

36. Organizational structures are a way to focus the activities of employees. (True: Easy; p. 127) 37. Leaders call on functional structures to focus both individuals and units on their contribution to the organization s tasks. (True: Moderate; p. 128) 38. Functional structures facilitate integration across functional units but make the development of technical skills and expert knowledge on the part of employees difficult to achieve. (False: Moderate; p. 129) 39. As organizations move beyond the small, start-up stage, they are likely to adopt a simple divisional structure. (False: Moderate; p. 128) 40. Functional structure refers to a way of reinforcing behaviors that respond to the marketplace. All activities associated with a particular product or family of products are brought together in a divisional unit. (False: Moderate; p. 129) 41. Another divisional option, particularly for multinationals, is to adopt a geographically focused structure. (True: Moderate; p. 131) 42. The object of the divisional structure, whether it is focused on products, customer groups, or geographic locations, is to reinforce a market-focused strategy. (True: Moderate; p. 130) 43. Leaders must choose between a functional orientation on technical efficiencies or a focus on marketplace responsiveness. (False: Moderate; p. 127) 44. Leaders opt for a divisional structure in order to reinforce a strategy that emphasizes efficiencies and depth of technical know-how and experience. (False: Moderate; p. 130) 45. Matrix structures help support dual focus on technical expertise and marketplace responsiveness but will only be successful in organizations that can manage ambiguity, tension and conflict effectively. (True: Easy; p. 133) 46. Functional silos are characteristic features of functional structures but do not exist in divisional structures. (False: Moderate; p. 132) 92 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

47. Cross-functional teams can be used to achieve linkages across the various and interdependent activities of an organization s value chain. (True: Moderate; p. 135) 48. Horizontally linked structures focus employees on the interrelated activities of the value chain. (True: Easy; p. 134) 49. When structural change occurs early in a change process, employees can be confused by its purpose, unsure of what new competencies are being required, and unwilling or unable to make appropriate alterations in behavioral patterns. (True: Moderate; p. 138) 50. Most jobs can be individually isolated and precisely measured without taking into account complex interdependencies. (False: Easy; p. 141) 51. Bonuses based on the overall performance of the organization make a symbolic statement recognizing the shared purpose and responsibility of all employees and organizational units. (True: Moderate; p. 141) 52. New technologies can be introduced as a way to support desired behavioral changes. (True: Easy; p. 146) ESSAY QUESTIONS 53. Describe the advantages and disadvantages of a matrix structure. Matrix structures are complex organizational structures that use a dual focus, combining both functional and divisional groupings. The major advantage of such an approach is that it potentially combines the efficiency of a functional focus with the market responsiveness of a divisional focus, allowing for both specialization and innovation. Because many organizations operate in complex and dynamic environments, a complex and dynamic structure such as the matrix is a requirement. However, using matrix structures effectively is not easy. One disadvantage of a matrix structure is the dual reporting relationship. If one is a market analyst housed in product line C, who is your boss: the manager of product line C or the head of marketing? The answer, of course, is: both. In order to achieve the desired complexity of focus, one will be reporting to and expected to be responsive to both simultaneously. The notion of dual reporting relationships violates one of our most deeply held assumptions about the desirability of a clear and unified chain of command in organizations. (Difficult; pp. 132-133) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 93

In addition, matrix structures will be most effective in organizations that can manage ambiguity, tension and conflict. This may take some training and changes in the reward structure of the organization. 54. What is the concept of value chain? How does it relate to organizational structures? The advent of sophisticated information technology and the geographic dispersion of technological excellence and knowledge have encouraged organizations to focus on their value chain. Organizations develop competitive advantage and create shareholder wealth through an interdependent sequence of activities known as the value chain. The value chain also can be defined as the separate activities, functions, and business processes that are performed in designing, producing, marketing, delivering, and supporting a product or service. Horizontally linked structures use cross-functional teams to achieve linkages across the various and interdependent activities of their value chain. Zara, e.g., uses value-chain teams to radically reduce the time-to-market for its new products. (Difficult; pp. 134-135) 55. What is the concept of pay for performance (PP)? What are some examples? Pay for performance devotes at least some portion of an individual s pay (ranging anywhere from 3 percent to multiples of 100 percent) to measurable performance outcomes. Pay for performance is often referred to as variable pay because employees receive more money if they or their team, unit, division, or even company perform well than they would if performance had been poor. Pay for performance can take one of two forms: merit pay, which raises base salary based on performance, and incentive bonuses, which offers regular but one-time payouts on the basis of performance. Bonuses do not alter base salary. Substandard performance the following year can reduce or eliminate the bonus. Most organizations select a mix of performance pay in order to shape employee behavior. General Electric, for example, calls for a blend of different bonuses to motivate executives, as indicated in the following company statement: Salary and Bonus; Stock Options and Stock Appreciation Rights; Restricted Stock Unit; and Long-Term Performance Awards. Organizations seek a mix of rewards in order to help ensure alignment between employee behaviors and their strategic goals. (Moderate; pp. 138-140) 56. What are some alternatives to individually-based pay-for-performance? In team-based pay-for-performance plans, teams can share a performance bonus equally or allocate to individual members based on an evaluation of their contribution. Teambased bonuses enhance team performance, although the effect is relatively weak. A 94 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

caveat is in order, however. Team-level bonuses can hurt collaboration among and between teams. (Moderate; p. 140) Organization-level incentives often supplement or replace individual- and team-based payfor-performance plans. Here, employees receive bonuses based on the overall performance of the organization, as a symbolic statement recognizing the shared purpose and responsibility of all employees and organizational units. One way to do this is through stock options. (Moderate; p. 141) 57. Identify and explain different forms of individual pay-for-performance plans. - Piece rate: Employee earns all or part of a wage based on number of units produced. - Commission: Salesperson earns all or part of a wage based on number of units sold. - Merit pay: Employee earns raise to base wage based on performance evaluation. - Bonus: Employee earns extra payment based on performance. (Easy; p. 141) 58. Explain five factors that may undermine effectiveness of individual pay-forperformance plans. a. Performance appraisals are inherently subjective, with supervisors evaluating subordinates according to their own preconceived biases. b. Emphasize individual rather than group goals that may lead to dysfunction conflict in the organization. c. Encourage a short-term orientation (the performance period being evaluated) at the expense of long-term goals. d. Merit pay raises become an annuity on which employees continue to draw regardless of future performance. e. The often lengthy time lag between actual performance and reward undermines perceived connection between the two. f. Many jobs cannot be individually isolated and precisely measured without taking into account complex interdependencies. g. Pay differentials between performance levels tend to be relatively small and therefore of questionable behavioral value. h. Actual payout of program often determined by organizational factors beyond the control of individual employees and only indirectly related to actual performance. (Moderate; p. 141) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 95

59. Explain the concept of divisional structure and some of its benefits. As organizations grow in both size and complexity, they often renew their strategy to focus on achieving greater external focus. Most typically, they turn to a divisional structure as a way of reinforcing behaviors that respond to the marketplace. All activities associated with a particular product or family of products are brought together in a divisional unit. The object of the divisional structure, whether it is focused on products, customer groups, or geographic locations, is to reinforce a market-focused strategy. Product divisions and SBUs pay close attention to the expectations and needs of customers for their particular offerings, while geographic divisions can attend to the special requirements and habits of the customers in their regions. It is precisely that focused attention on the external marketplace that, it is hoped, allows companies organized divisionally to meet the challenge of coordination faced by functionally structured companies. By concentrating on a clearly defined and understood market segment, divisions seek to win by offering new products and services. Rapid responsiveness to shifting market realities is the goal. (Moderate; pp. 130-131) Scenario-Based Questions You are the new CEO of a major HR firm, offering specialized HR services to organizations wishing to outsource all or part of their HR functions. In the past, the firm has been structured into several divisions, including Compensation, Recruitment, Training and Development, and Legal Services. You have learned a lot from Spector s approach to organizational change and have been faithfully applying the different concepts, beginning of course with mutual engagement and shared diagnosis. As part of Step 1, Organization Redesign, you successfully piloted cross-functional teams and a new focus on customer service which has now been rolled out as the strategic directive for the entire firm. In Step 2, you worked to ensure that employees and managers were trained in the newly identified skills and competencies, and in Step 3, you did some essential people alignment, including movement, removal and replacement of people in key positions. Now your main task is to ensure that you have the right structures, systems and technologies in place to reinforce the new behaviors. 60. Looking at the success of the pilot projects, you decide that a new structure is in order. Option 1 is a structure in which different units offer full HR services clients based on their location. This structure would be called: a. functional. b. divisional. c. hybrid. d. matrix. e. horizontal. (b: Difficult; p. 131) 96 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

61. Option 2 is structure focus employees on the interrelated activities of the supply chain. This structure would be called: a. functional. b. divisional. c. hybrid. d. matrix. e. horizontally-linked (e: Difficult; p. 134) 62. In the past, your HR consultants all worked on salary and bonus, with the amount of the bonus based on total billable hours for the year. In light of your new strategic direction, what would be the best way to use monetary incentives? a. retain the existing system too much change at once is not good. b. use a mixture of individual, team and organizational rewards. c. use a team-based reward system to encourage collaboration. d. use an organization-based reward system to symbolize the importance of the strategic move. e. switch to a commission-based system (b: Difficult; pp. 138-142) 63. In order to ensure the effectiveness of the new reward system, which of the following criteria is most important? a. develop new systems to simply the process b. ensuring pay equity c. ensuring everyone received the same amount, to reduce jealousy d. developing a pay grade system is sticking to it (b: Difficult; p. 143) 64. In light of the strategic importance of team collaboration, you decide to offer a $3,000 end-of-year Team Spirit award to the employee who, according to peer ratings, has made the most significant contribution to collaborative relations in the organization. In order to get the most benefit out of this award, you should: a. announce the establishment of the award at the beginning of the year, so that people can work toward it. b. announce the award in the middle of the year. c. not announce the award at all keep it private and confidential so as not to embarrass anyone. d. announce the award and its recipient as a surprise feature of the end-of-year holiday party. (d: Difficult; p. 143) Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 97