Organization Size, Life Cycle & Decline PDF

Organization Size, Life Cycle & Decline Ch 9 Content Organization Size: Is Bigger Better? Organizational Life Cycle Organizational Size, Bureaucracy, and Control Bureaucracy in a Changing World Bureaucracy versus Other Forms of Control Organizational Decline and Downsizing Design Essen...

Organization Size, Life Cycle & Decline Ch 9 Content Organization Size: Is Bigger Better? Organizational Life Cycle Organizational Size, Bureaucracy, and Control Bureaucracy in a Changing World Bureaucracy versus Other Forms of Control Organizational Decline and Downsizing Design Essentials  1. Pressure for growth Organization Compete on a global scale Invest in new technology Size: Is Control distribution Guarantee access to markets Bigger Stay economically healthy Better? Power & increased revenues Attractive for quality employees What size organization is better to compete in a fast-changing global environment? Wal-Mart after Hurricane Katrina Size was never THE strategy Giant companies are “built for optimization, not innovation” “Big-company/small- company hybrid” Royal Dutch/Shell 10% of the division’s research budget for “crazy” ideas. Stages of Life Cycle Development 1. Entrepreneurial stage Org is born Emphasis is on creating a product or service Surviving in the marketplace Devote entrepreneur´s full energies Org is informal and nonbureaucratic Long working hours Growth comes from creativity Crisis: Need for leadership 2. Collective stage Clear goals and direction hierarchy of authority job assignments Hiring skilled executives Members feel part of a collective Informal Communication Crisis: Need for delegation 3. Formalization stage Rules, procedures & control systems. Formal communication Decentralization to improve coordination Top managers focus on strategy while middle managers on operations Incentive system Crisis: Too much red tape 4. Elaboration stage New sense of collaboration and teamwork Social control and self-discipline Work within bureaucracy Simplify formal systems Org spit into divisions Crisis: Need for revitalization Organizational Characteristics during the Life Cycle Max Weber Bureaucracy Org more efficient a & rational Bureaucracy could be GREAT Most efficient possible system of organizing Allowing organizational activities to be predictable Clear tasks Sensible mechanism for supervision and control People are hired based on technical competence Memory and continuity over time Allows work to be conducted fairly, efficiently, and according to established rules. How to overcome the problems of bureaucracy in rapidly changing environments? Innovative structural solutions Temporary structures to respond to an emergency or crisis To maintain the efficiency and control benefits of bureaucracy yet prevent the problem of S L O W response 3 Organizational control strategies Organization Decline A condition in which a substantial, absolute decrease in an organization’s resource base occurs over time What are the causes? 1. Organizational atrophy 2. Vulnerability 3. Environmental decline or competition  Atrophy occurs when organizations grow 1) Organizational older and become inefficient and overly atrophy bureaucratized. when org takes success for granted, becomes attached to practices and structures that worked in the past, and fails to adapt to changes in the environment  Inability to prosper in its environment. 2) Vulnerability Happens to small companies that are not yet fully established. unable to define the correct strategy to fit the environment and are vulnerable to shifts in consumer tastes  Environmental decline refers to 3) Environmental decline reduced energy and resources or competition available to support an organization. Thus, the organization has to either scale down operations or shift to another domain. Model of decline stages Blinded stage The first stage of decline is the internal and external change that threatens long- term survival and may require the organization to tighten up. The organization may have excess personnel, lack of harmony with customers. Leaders often miss the signals of decline at this point, and the solution is to develop effective scanning and control systems that indicate when something is wrong. With timely information, alert executives can bring the organization back to top performance.  Denial occurs despite signs of deteriorating performance. Leaders may try to persuade employees that all is well. “Creative accounting” may make things look fine during this period. The solution is to take prompt action to realign the organization with the environment. Leadership actions may include new problem- solving approaches, increasing decision-making participation, and Inaction stage encouraging expression of dissatisfaction to learn what is wrong. Faulty Action stage Facing serious problems, and indicators of poor performance cannot be ignored. Failure to adjust to the declining spiral at this point can lead to organizational failure. Major changes is required like retrenchment, including downsizing personnel. A major mistake at this stage decreases the organization’s chance for a turnaround.  Crisis stage Organization still has not been able to deal with decline effectively and is facing a panic. may experience chaos, efforts to go back to basics, sharp changes, and anger. The only solution is major reorganization. Such as replacing top administrators and revolutionary changes in structure, strategy, and culture, are necessary. Workforce downsizing may be severe. Dissolution stage This stage of decline is irreversible. The organization is suffering loss of markets and reputation, the loss of its best personnel, and capital depletion. The only available strategy is to close down the organization in an orderly fashion and reduce the separation trauma of employees. ‫مع السالمه باي باي‬ Donwsizing Implementation Intentionally reducing the size of a company’s workforce 1. Communicate more, not less. 2. Provide assistance to displaced workers. 3. Help the survivors thrive  Rumors can be much more damaging than Communicate open communication. Managers should more, not remember that it is impossible to less. “overcommunicate” during turbulent times. Remaining employees need to know what is expected of them, whether future layoffs are a possibility, and what the organization is doing to help co-workers who have lost their jobs.  The organization has a responsibility to help Provide displaced workers cope with the loss of their assistance to jobs and get reestablished in the job market. displaced counseling services for both employees and their families can ease the trauma associated workers. with a job loss. allow employees to leave with dignity, giving them an opportunity to say goodbye to colleagues and meet with leaders to express their hurt and anger.  “Layoff survivor syndrome” Many people Help the experience guilt, anger, confusion, and sadness survivors after the loss of colleagues, and leaders should acknowledge these feelings. Survivors also thrive might be concerned about losing their own jobs, lose confidence in company management, and grow depressed. It is key to help developing coping skills such as flexibility, curiosity, and optimism Model of decline stages Donwsizing Implementation Intentionally reducing the size of a company’s workforce 1. Communicate more, not less. 2. Provide assistance to displaced workers. 3. Help the survivors thrive