Organizational Design Structures PDF

Contents stakeholders ethics knowledge and decision making designing organizations challenges organization culture and change organizational design structures What is an organization? Group of people structured and coordinated in order to achieve value creation and they are linked to the...

Contents stakeholders ethics knowledge and decision making designing organizations challenges organization culture and change organizational design structures What is an organization? Group of people structured and coordinated in order to achieve value creation and they are linked to the external environmental. How do organisations create value? providing a service Selling a product Transforming resources from input to output: how good I am at creating outputs at the conversion stage and then at the output stage? So, the value takes places at three stages: input, conversion and output. I create value for the customers, internal forces (workers, managers, ecc), external forces such as other business, shareholders. Organizational environment: the set of forces that operate beyond an organisation’s boundaries but affect its ability to acquire and use resources to create value. Different ways to create value: external resources approach: the company’s ability to secure scarce and valued skills and resources from outside the organisation ◦low cost of inputs ◦obtain high quality inputs of raw materials and employees internal system approach: how efficient I am in converting input in output, how effectively a company functions and operates ◦cut decision-making time ◦increase rate of production technical approach: convert skills and resources into goods and services efficiently ◦increase product quality ◦reduce number of defects and production costs How does the VSM create value? creating knowledge for students but also for the companies create smart people create a lot of graduation (quantity issue Why do organisations exist? to exploit specialisation and Labour division ◦Adam Smith: the theory of Labour division. The advantages of Labour division are: more speed and quality, find better ways to do tasks, reduce costs for learning, reduce Labour costs, creates and requires differentiation in skills, knowledge and traits to use large-scale technology  ◦economies of scale: involve reductions in the average cost arising from increasing the scale of production for a single product type ◦economies of scope: involve lowering average cost by producing more types of products. to manage the Organizational environment ◦Grappa environment: there is no technical or procedural change, but there is a radical change of beverage’s image (status extension of category) to economise transaction costs ◦def: costs associated with negotiating, monitoring, and governing exchanges between actors. It takes time and effort, therefore organization try to minimise these costs. ◦decision-making costs: time and costs related to information sharing between organisational units ◦objectives-resources costs: time and costs related to objectives identification ◦change: costs related to internal tensions to exert power and control ◦on people behaviours and performance ◦hierarchy, Standardisation, relations What is organisation design? Design means to make or draw plans for something, is the art of making plans or drawings for something. Organisational theory: the study of how organisations function and how they affect and are affected by the environment in which they operate. organisational structure: the formal system of tasks and authority relationships that control how people are to cooperate and use resources to achieve the organisation’s goals. organisational design and change: the process by which managers select and manage various dimensions and components of organisational structure and culture so that an organisation can control the activities necessary to achieve goals organisational culture: the set of shared values and norms that controls organisational members’ interactions with each other and with people outside the organisation The relationship between strategy and organisation design There are a number of elements at play in an organisation that go beyond structure. It does not make sense to talk about an organization’s design without relating it to the organization’s goals or strategy. The organization design influences the formulation and implementation of the strategy. Key criteria for organisation design effectiveness: achieving objectives efficiency: minimizing resources and costs organizational justice: what is perceived as fair Organizations carry out activities to produce an output, whose value is higher than the costs faced to obtain it. To pursue it, it organizes its activities in an effective, efficient, and equal way. In doing so, it also competes with other organizations, and have mutual relationships with other stakeholders in the environment. BPR Organization design and change: what are the reasons to re-design organizations? Poor decisions making, lack of collaboration, unclear responsibilities, underutilized skills, ecc. Who are the organizational stakeholders? People who have an interest, claim, or stake in an organization, in what it does, and in how well it performs. Allocating Rewards The allocation of rewards, or inducements, is an important component of organizational effectiveness because the inducements offered to stakeholders now influence their motivation—that is, the form and level of their contributions—in the future. Managers must decide which inducements or rewards each group should receive. What are the appropriate rewards for a manager, a middle manager and an employee? NO CEO SHOULD EARN 1,000 TIMES MORE THAN A REGULAR EMPLOYEE Top Managers and Organizational Authority Authority: The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Hierarchy is a vertical ordering of organizational roles according to their relative authority. Board of directors elected by shareholders to oversee managers’ performance and exercise control Top-management team: A group of managers (Corporate managers) who report to the CEO and COO. Provides direction, planning, strategy, goals, policies for the entire organization, and manage the relationships with the environment General managers and Middle managers: a group of managers reporting to the top management team – divisional or functional managers responsible for implementation and coordination at the departmental level Line Managers (Middle Management): have direct responsibility for the production of goods and services. Staff Managers: who are in charge of a specific organizational function – support and service. The CEO The CEO’s role is responsible for setting the organization’s goals and designing its structure selects key executives to occupy the topmost levels of the managerial hierarchy determines top management’s rewards and incentives controls the allocation of scarce resources such as money and decision-making power among the organization’s functional areas or business divisions his/her actions and reputation have a major impact on inside and outside stakeholders’ views of the organization and affect the organization’s ability to attract resources from its environment Competing Goals: Shareholders vs Managers The Shareholders are the owners of an organization’s accumulated wealth or capital have first claim on the value it creates. Manager's job is to maximize the organization’s return on the resources and capital invested in the business BUT goals of managers and shareholders may be incompatible. Short term approach Risk adverse Agency An agency relation arises whenever one person (the principal) delegates decision-making authority or control over resources to another (the agent). The agency problem – moral hazard - information asymmetry: shareholders or principals are at an information disadvantage compared with top managers - conflict of interests: the agent has an incentive to pursue goals and objectives that are different from the principal’s Self-dealing: the conduct of corporate managers who take advantage of their position in an organization to act in their own interests. Solving the agency problem Governance Mechanism for information asymmetry: monitoring and implementation of a code of ethics Incentives for conflict of interest: stock options and promotion tournaments Stakeholders not shareholders Global stakeholder society, ‘‘where companies are expected to be accountable not only to shareholders for financial performance, but to stakeholders for their wider economic, environmental and societal impacts’’ (Wade, 2006) From: Influencing followers to achieve group/ organizational goals that reflect excellence defined as some kind of higher-level effectiveness To: Building and cultivating sustainable and trustful relationships to different stakeholders inside and outside the organization and to co-ordinate their action to achieve common objectives, business sustainability and legitimacy and ultimately to help to realize a good (i.e., ethically sound) and shared business vision. Top managers and organizational ethics Ethics are moral principles that govern individuals’ or groups' behaviours (Oxford Dictionary). Ethical dilemma - When people must decide whether or not they should act in a way that benefits someone else, even if it harms others and isn’t in their own interest. How are companies and their managers to decide what is ethical and so act appropriately toward other people and groups? LAW Laws specifies what people and organizations can and cannot do (societally determined legal realm) Neither laws nor ethics are fixed principles , cast in stone, which do not change over time There are other sources : there can be behaviors that are unethical but legal Ethics: help people determine moral responses to situations in which the best course of action is unclear. guide managers in their decisions about what to do in various situations. help managers decide how best to respond to the interests of various organizational stakeholders. Managers might be in a difficult situation because they have to balance their interests and the interests of the “organization” against the interests of other stakeholder groups. What determines whether a decision is ethical? utilitarian model: An ethical decision is the one that produces the greatest good for the greatest number of people How do managers decide on the relative importance of each stakeholder group? moral rights model: An ethical decision is the one that best maintains and protects the fundamental rights and priviledges of the people affected by it. For example, ethical decisions protect people’s rights to freedom, life and safety, privacy, free speech and freedom of conscience How do managers decide on the relative importance these fundamental rights? justice model: An ethical decision is the one that distributes benefits and harms among stakeholders in a fair, equitable, or impartial way How can managers be impartial and do not discriminate against people’s appearance or behavior? A simple approach to ethical dilemma A decision is probably acceptable on ethical grounds if a manager can answer “yes” to each of these questions: 1. Does my decision fall within the accepted values or standards that typically apply in the organizational environment? 2. Am I willing to see the decision communicated to all stakeholders affected by it—for example, by having it reported in newspapers or on television? 3. Would the people with whom I have a significant personal relationship, such as family members, friends, or even managers in other organizations, approve the decision? Why do organization need ethics? To avoid ethics scandals: Most Shameful Corporate Scandals, No. 1: Equifax Inc. The Equifax Inc. (NYSE: EFX) scandal was one of the largest data breaches in history. The credit-reporting firm exposed the personal details of up to 143 million U.S. customers – or nearly half of the U.S. population – earlier this year. Sensitive information such as social security numbers, credit cards numbers, birthdays, addresses, and in some instances, driver’s license numbers were all compromised in the hack. Even worse, some of the company’s top executives sold over $1.8 million worth of shares in the company just days after the breach was discovered. The public was not aware of the breach until more than six weeks later. The scandal prompted CEO Richard Smith to abruptly step down, and Equifax’s shares fell more than 30% in seven days. Ethics sources Societal ethics are codified in a society’s legal system, in its customs and practices, and in the unwritten norms and values that people use to interact with each other. Professional ethics are the moral rules and values that a group of people uses to control the way they perform a task or use resources. Individual ethics are the personal and moral standards used by individuals to structure their interactions with other people. Why Does Unethical Behavior Occur? Personal ethics: what you identify as right or wrong depends on the context in which you grow Self interest: weighing our personal interests against the effects of our actions on others External pressures: Increase the likelihood of engaging in unethical behaviors Designing an Ethical Structure and culture Build company goals/mission including ethics Set of standards of conduct Ethics officer and Committees Leaders as role models Design a system of incentives and punishments Make whistle-blowing (report an illegal act) an acceptable and rewarded activity Training Creation of an ethical corporate culture with the commitment at all levels of an organization. Differentiation Differentiation is the process by which an organization allocates people and resources to organizational tasks and establishes the task and authority relationships that allow the organization to achieve its goals. It is the process of establishing and controlling the division of labor (or degree of specialization) and the distribution of authority in the organization. horizontal differentiation: process of establishing the division of labour, how to group task into roles and roles into subunits ◦functions= specialised in input, group people with the similar skills, knowledge, toolf or techniques to do the job; ◦divisions= specialised in the output, consistes in a collection of functions; people have the same responsibilities or deal with a particular market or client vertical differentiation: the way an organization design the level of authority into an hierarchy (power to hold people accountable for their work and power of decision making) and creates reporting relationships to link organizational roles and subunits Centralising process allows to create better economies of scale! Why do we group people together -> to establish a system of common supervision, to share common resources, to create common measures of performance, to bond people together Consequence: subunit orientation = a tendency to view one’s role in the organization strictly from the prospective of the time frame, goals and interpersonal orientation of one’s subunit. Interdependence = what I do influences what another group is doing pooled: members share the same resources but are otherwise independent ◦standardisation of rules and process sequential: members work in series ◦Plans, programs reciprocal: each member receives inputs from and provides outputs to others ◦mutual adjustment and team work Criteria for grouping 1. Work flow interdependencies: group tasks so as to minimize coordination and communication costs. First, take care of the most difficult type of interdependence (reciprocal) 2. Specialization: When specialists are grouped together, they learn from each other and become more adept at their specialized work. They also feel more comfortable "among their own," with their work judged by peers and by managers expert in the same field. 3. Scale interdependencies: Groups may have to be formed to reach sizes large enough to function efficiently (e.g., factory maintenance, data-processing unit) 4. Social interdependencies: Groups are created to facilitate mutual support, social interaction and getting along Coordination Standardisation: coordinate activities upfront, before they actually happen, I create rules and processes before outcomes. Standardisation is the conformity to specific model. ◦processes: standard sequence of processes ◦output: standard result of the work ◦skills: standard training to perform the job ‣ rules = formal and written ‣ norms = common behaviour, not formalised -> may create inertia, toxic environment Authority Relation-based mechanism Standardization vs mutual adjustment Standardization is conformity to specific models or examples—defined by well-established sets of rules and norms—that are considered proper in a given situation. Standardized decision-making and coordination through rules and procedures make people’s actions routine and predictable. Mutual adjustment is the evolving process through which people use their current best judgment of events rather than standardized rules to address problems, guide decision making, and promote coordination. Norms and socialization Socialization is the process by which organizational members learn the norms of an organization and internalize these unwritten rules of conduct. Possible disadvantages of Norms: Although many organizational norms—such as always behaving courteously to customers and leaving the work area clean—promote organizational effectiveness, many do not. Inertia - Norms and change rules come to be internalized, that is, they become part of a person’s psychological makeup so that external rules become internalized norms. When this happens, it is very difficult for people to break a familiar rule and follow a new rule. Authority balancing centralization and decentralization Centralized: An organizational setup in which the authority to make important decisions is retained by managers at the top of the hierarchy ◦advantage: there is more control so the organization is kept focused on its goals ◦disadvantages: slow decision making and overloaded top managers Decentralized: An organizational setup in which the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy. ◦advantages: more flexibility and responsiveness; higher motivation and possibility to demonstrate one's skills ◦disadvantages: planning and coordination are more difficult; may loose control ot its decision- making process Relation-based mechanism Direct contacts: low cost but effective to certain extent Liaison: frequent problem and I decide on my own that there would be one person with the duty of coordinating issues with another person Task forces: group of people that relate to a specific problem in a short time frame Teams: group of people but without time frame and maybe more tasks Integrating roles: someone that coordinates all (high impact, high cost) hitdjustfordoingthis The Contingency Theory According to contingency theory, in order to manage its environment effectively, an organization should design its structure to fit with the environment in which the organization operates. A structure emerges, in part, to deal with the complexity of environmental demands and respond to various contingencies. ▪ Age of the company ▪ Size ▪ Technology ▪ Uncertainty of the environment ▪ Etc Uncertainty of the environment: Burn & Stalker CASE STUDY: NICE BOTTLES Problems: coordination ◦authority: too much centralization and overloaded manager ◦poor relation based mechanism poor sequencial and recirpocal interdependence poor differenciation Solutions: decentralized power, more authority and flexibility: create a middle management level in the hierarchy (from 2 levels to 3 levels). john retains the decision making power on strategy, relations with main stakeholders and long term goal power liasion: ask the design to respond in a certain way to a specific problem -> becuase the direct contact does not work enough standardize the production process: lower the variety of product as i know the ones more successful Functions: focused on input, group of people with same skills Authority and control FIAT Case Problem of leadership: too high centralization, risk aversion, behavioral inertia Direct supervision Directives and control from one hierarchical level to another one. control on behavior: question, probe, consult with the subordinates about the situation; ensure performance level and rules are followed motivate people: promote behaviors and create person-organization bond To control (coordinate and motivate) a firm: increase the number of managers used to monitor, evaluate and reward increase the levels in the managerial hierarchy The increase in the size of the managerial component in an organization is LESS THAN PROPORTIONAL to the increase in size of the organization as it grows. About the span of control: number of relationships a supervisors handles. When I supervise a person, I supervise a lot more of relationships. Main determinants of the span of control The number of relationships depends on the difficulty of the task, because it needs more time and effort to supervise it; on the interdependencies, it would be more difficult to handle the ones in which there is more communication needed Higher the complexity and interdependencies, the lower the span of control. Hierarchical levels: disadvantages The only reason why an organization should choose a tall structure over a flat structure is when it needs a high level of direct control and personal supervision over subordinates. How many levels I need? depend on how much control I need, how much direct control I apply the principles of minimum chain of command Communication becomes very slow, there could be distortion of informations, manipulation, lack of motivation, opportunism and bureaucratic costs. The principles of minimum chain of command Each function chooses the fewest number of hierarchical levels it needs to operate effectively and achieve its goals. Minimizing levels of hierarchy, through delayering. The level of vertical differentiation is affected by: the level of horizontal differentiation the level of decentralization: decentralization reduces the amount of direct supervision required the level of standardization: the more standardization, the less the need to rely on direct supervision the level of strength of the informal ties and relationships that exists between organized members Is a flat organization always decentralized? Flat means few vertical levels, but it does not mean decentralized organizations Advantages of flat organizations: less problem of communication, more speed in decision making, responsiveness to the market, not much direct supervision, more standardization Bureaucracy Is a form of organizational structure in which people can be held accountable for their actions because they are required to act in accordance with well specified rules and standard operating procedures -> standardization. authority coordination technical competence -> very strong specialization clearly specified authority relationships -> division of labour, very clear differentiation control and supervision of higher level -> high vertical differentiation, direct supervision rules, standardization and norms -> standardization of processes and control  put in writing -> high formality Benefits of this kind of solution: high efficiency, control and coordination lower transaction costs stability in the LR, because I separate the position from the person. If someone quits, it can be very easily replaced because of standardization. It is also easy to change leaders, as the position is just that and not a person Cons over-reliance on rules -> unresponsiveness to customers' needs lower motivation and commitment rigidity and inertia Decentralized trend Achieved by empowerment of the bottom levels and the employees -> give the people the authority to decide when and how to do their job, and also the authority to make important decisions and to be responsible for their outcomes. Self-managed teams -> a leader is not anymore necessary Work groups consising of people who are jointly responsible for ensuring that the team accomplish its goals and who are empowered to lead themselves. Not having a leader can really slow the processes and take more effort, when there isn't a common solution and people are not use to work in teams. But we can have more ideas and prospectives, and also be more motivated in participating. Technology is very important in sharing information also to the bottom levels -> better empowerment in the decision-making power. The introduction of digital tools has enabled the organizational structure to become not only flatter and decentralized, but also dispersed. Virtual teams: interdependent groups of individuals that work across time, space, and organizational boundaries with communication links that are heavily dependent upon advanced information technologies ◦adv: reduce costs, recruiting talent despite location, creativity and innovation due to heterogeneity ◦challenges: geographical and organizational distance, communication, heterogeneity, monitoring Agile The 4 laws of agile software development are kept in Agile Organizations 1. Individuals and interactions over processes and tools: - People as main characters of development process. 2. Working software over comprehensive documentation: - Streamlining documentation to not slow down the developer. 3. Customer collaboration over contract negotiation - The customer is engaged and collaborates  throughout the development process making easier to meet his needs. 4. Responding to change over following a plan - Continued development by adapting to consumers needs and providing additional value. From organizations as machines -> to organizations as organisms = living systems When to use Agile customer preferences and solution options change constantly close collaboration and rapid feedback are feasible. Customers know better what they want as the process progress problems are complex and solutions are unknown, and the scope is not clearly defined technology change 24/7 available new way of working: quick reaction, few coord meetings autonoums squads, multidisciplinary, different skills, but according to specific customer need one product owner, determines priorities not boss chapters and chapter leader for coordination and personal development tribe collection of squads, because we expect to manage the interdependences between squads, tribe leader ensures knowledge, budgets, priorities and coordination within the squad and interdependences with other tribes agile coach: going agile is a cultural change with flexible characteristics Structures Simple structure entrepreneurial structures: has the maximum authority, is in charge of almost everything ◦no intermediate hierarchical levels ◦limited specialization: i can to more things than one ◦limited authonomy, mainly based on direct supervision ◦adv: fast decision-making and reactiveness to change because power is centralized and the organization is flat; flexibility: low specialization and interchangible tasks ◦dis: overload due to dealing with everything; highlighly dependent from competencies, ability and health of one single person (entrepreneur) -> we have to share this knowledge ◦startups and small companies (SME) artisan structure: one person at the top, we expect strong ability from people, activities require widespread competencies and greater operational discretion ◦specific technical skills, often in contact with customers ◦the head of the organization cannot directly control ◦standardization... Functional structure -> more efficient, less responsive to different customer needs Divisional structure -> less efficient, more responsive to different customer needs Matrix structure -> combination of the two Functional structure: A design that groups people into separate functions or departments because they share common skills and expertise and they make use of the same resources As size grows they develop not only more functions but also more specialization within each function. adv: ◦economies of specialization -> efficient way of doing things ◦peer supervision ◦specialised communication and culture dis ◦communication between functions -> we have to find other coordination action ◦measurement -> relative value of the diff functions is very difficult to estimate, so it is difficult to allocate money ◦location -> delocate in different locations, it's messy with singular functions ◦customer -> If I have multiple type of customers, I cannot deal with them only using a singular function ◦strategic Divisional structure: Specialization on output – product, geographic area, market (depending on the specific control problem to be solved) Division manager responsible of P&L (Profit and Loss) Semi-autonomous -> the division is responsible for the profit and loss Decentralized power -> power to the managers Efficiency vs responsiveness-> respond better to the responsiveness Coordination issues related to the relationships between divisions Each division has its structure, usually a functional one. adv: ◦aims to be effective with its external focus on the product, customer, or region. ◦The divisional configuration is more market-responsive than the functional configuration. ◦Because the divisions are relatively autonomous, they can make decisions on their own, meet the needs of the marketplace in creative ways, and thus foster opportunity for growth dis: each division is relatively independent of the other in its operations and markets. The divisional configuration does not handle interdivisional dependencies well Divisional structure specialized on the output Product: ◦product division: retain some functions centralized because it doesn't make sense to divide them (ex. marketing function for all the types of Ikea's furniture) ◦multidivisional: replicate the same functions inside different divisions (ex. marketing functions inside every division). ‣ Products vary a lot so it doesn't make sense having centralized functions. ‣ Each division can have its own structure, is independent and self-contained (contains all the functions necessary) ‣ There are 3 levels of managers: corporate managers = oversee and integrate the activities between the diff divisions -> integrating roles; divisional and functional managers. ‣ adv: effectiveness, efficient allocation of capital (we can measure which division performs better), increased control, profitable growth, internal labour market (many diff possibilities  to grow either horizontally or vertical) ‣ dis: communication problems (tall structure), bureaucratic costs (a lot of costly managers), coordination problems between division -> transfer pricing within the same company (competition between division for the allocation of money) ◦product team: specialists grouped into product development teams together with specialist from other functions ‣ they have decision-making power ‣ We have more decentralization ‣ Compered to multidivisional structure we try to achieve more coordination and flexibility, more economies of specialization, less cost, fast decision-making giving ‣ Vice presidents retain overall functional control, but decision- making is decentralized to the team Area (Geography): different laws, regulations, infrastructures Market: Each division focuses on the need of a distinct customer group Autogrill Organizational Chart They centralized staff managers and functional managers. They also put together geography and business products -> mixed divisions Matrix structure Strategic relevance of different dimensions – tech / product / geographic areas. Allows to focus on different dimensions at the same time. High interdependence among functions. groups people and resources in two ways simultaneously: by function and by product two bosses (functional and product) because they report to two superiors: the product team manager and the functional manager. One of the manager cannot decide over the other one if they disagree flexibility: if i work for one product and the project ends, i can move the resources from one product to another It is a flat organization in which the team is the principal coordination mechanism Multidivisional matrix put together corporate and divisional managers Meta organizations An organization whose agents are themselves legally autonomous and not linked through employment relationships. group together to achieve system-level goal no formal authority = bargaining and collective action based on consensus self interest and conflict Network structure - reti d'impresa A cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority. Very complex as companies form agreements with many suppliers, manufacturers, and distributors. more flat and decentralized need mutual adjustment and direct contact the managers need contact within and between activities (internal and external contact) CASE STUDY 1. Internal system approach -> focus on innovation 2. Coordination mechanism: mutual adjustment, direct contact, teams, centralized authority 3. Flat structure: quick communication, share knowledge 4. Poor differentiation, overloaded managers and ambiguity of roles (no job description) 5. Differentiate and verticalize the structure, standardization processes, horizontal diff (allocating tasks to roles), divisional structure with centralized functions (product division) 6. Limitations of a functional structure: A. emergence of a silos perspective B. poor communication and coordination between functions C. limited responsiveness to the market as the products and markets have developed: hierarchical levels and segmented roles hinder the company's ability to adapt quickly to the market demand D. complexity in managing diverse markets 7. Solution: divisional or matrix structure. A. create divisions based on products or markets -> market responsiveness B. enhance communication and coordination between functions (more direct contact, team work, integrating roles in order to oversee inter-departmental alignment) 8. Benefits: A. enhanced agility: high responsiveness to markets demand B. preservation of specialization: functional expertise remains intact while cross-divisional collaboration improves C. reduced silos: a matrix approach would forces interaction across teams D. best alternative would be the matrix structure as it combines the strengths of functional and divisional systems, ensuring specialization, market focus and coordination between both functions and divisions Silos prospective: refers to a way of thinking or operating within an organization where different departments, teams, or functions work independently and focus only on their own objectives, without considering or collaborating with other parts of the organization. This can lead to a lack of communications, inefficiencies, and misalignment with overall organizational goals. Creating and managing Organizational Culture Culture eats strategy for breakfast. Culture is the set of shared values and norms that shapes and control organizational members' interactions with each other and with people outside the organization. An organization’s culture thus consists of the end states that the organization seeks to achieve (its terminal values) and the modes of behavior the organization encourages (its instrumental values) The influence of national culture: The values and norms of different countries affect organizational culture What is the role of national culture? The differences between national culture influence people's behavior. Corporate culture transmission: how do organizations transmit their culture? socialization: integrating, onboarding people into the organizational culture ceremonies, language and stories: it's a way of transmitting values; how people dress and behave materiality: organizational/offices layout, space tells you something The ability of an organization’s culture to motivate employees and increase organizational effectiveness is directly related to the way in which members learn the organization’s values. The role of organizational culture Culture has pervasive (tells you a lot) effects on a firm because a firm's culture not only defines who its relevant employees, customers, suppliers, and competitors are, but it also defines how a firm will interact with these key actors (Louis, 1983). When properly aligned with personal values, drives, and needs, culture can unleash tremendous amounts of energy toward a shared purpose and foster an organization’s capacity to thrive. Culture is a powerful differentiator when strongly aligned with strategy and leadership. CSR: Corporate Social Responsibility One very important consequence of the values and norms of its culture is an organization’s stance with regard to social responsibility. Social responsibility refers to a manager’s duty or obligation to make decisions that nurture, protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole. Social responsibility regards: supply chain: monitoring program, centralized testing of use of chemicals products environment: abolition of all the materials that are difficult to recycle community: restoration of cultural/artistic works, purchase of equipment for scientific reseach Approaches to CSR:  obstructionist: doasn't care about it defensive: i stay within the law accommodative: i agree, but i don't do anything proactive: i do something CSR investments Employees, customers and shareholders expect more from brands and increasingly consider environmental, social and governance factors (ESG). "ESG-oriented investments are now the fastest growing area in financial markets“ (Toby Usnik). Organizational change The process by which organizations move from their present state (AS IS) to some desired future state (TO BE) to increase their effectiveness. Digital transformation: AI social media/mobile automatization -> robotics Why organizations invest in digital technology? new efficiencies customer experience and outcomes new business models new work structures and ways of working Important -> agile thinking: clear vision and cultivate a digital culture to use transparent communication. If I want to introduce something new I need to experiment with small groups and then scale up. There is also a need of reskilling the workforce and attract talents also by utilizing flexible workforce. I also need to open collaboration beyond the organizational boundaries to share and exploit data within the ecosystem -> reinforce the data management lifecycle (know what and how to analyze these datas, i need also to predict)...... Change type due to impact evolutionary change: little by little revolutionary change: drastic, sudden, impactful Factors that influence the type of change: size, impact (how far is out to be state), timing (how long it needs), investment, goals (corporate change or just group of people), change agent (top or middle management). Resistances to change As human being we create habits. Resistance can happen at different levels: organizational: cultural, mechanistic structure, silos prospective, power and conflict (what am I gaining?) group: groups norms and roles, too much cohesiveness (lead to inertia), groupthink individual: avoidance of uncertainty and insecurity, loose of human capital, lack of skills of change management Lewin's Status quo: resistance forces and driving force are equal We need to minimize the restricting forces and push he driving forces in order for something to happen. Approaches to change socio-technical: jointly optimize the technical change with social norms total quality management: everyone is envolved, focuses on customers needs, ongoing constant effort by all members in the company to find way of doing thing better. Strong commitment, use of quality circles (meetings and communication) -> Toyota business process reingeenering: radical redesign of processes to make them efficient flexible teams: substitute one another if needed, people that can be transferred Three-step Change Process 1. unfreezing: make people aware of the need of change and why; identify clear vision of the future and share it; identify the obstacle and remove them 2. change 3. refreezing: institutional change, the new behavior is the new habit -> to avoid people go back to old habits ING CASE STUDY: CHANGE 1. Driving Forces Toward Change Changing Customer Expectations: The need to adapt to digital channels and provide seamless, omnichannel customer experiences shaped by digital leaders like Google and Spotify. Technological Advancements: The rise of agile frameworks in technology companies highlighted a better way to improve speed, collaboration, and innovation. Market Competitiveness: Staying ahead in a competitive landscape by improving time-to-market, employee engagement, and productivity. Cultural Shifts: A need to foster an empowered and collaborative organizational culture, breaking down silos and reducing bureaucracy. 2. Is It an Evolutionary or Revolutionary Change? The change at ING is revolutionary: The organization underwent a complete overhaul of its structure, abandoning traditional hierarchy and adopting agile squads and tribes. Employees had to reapply for roles based on mindset and cultural fit rather than solely on expertise, indicating a drastic cultural shift.  This transformation involved significant changes to processes, roles, governance, and even physical office layouts, emphasizing its groundbreaking nature. 3. The Three-Step Process of Change (Unfreezing, Change, Refreezing) Unfreezing: Recognizing the need for change due to evolving customer demands and digital disruption Building a vision for agility Breaking down silos and traditional hierarchies Change: Implementing the agile model, forming multidisciplinary squads and tribes. Redefining roles, governance, and performance metrics to align with the new system. Adopting new practices like daily stand-ups, quarterly business reviews, and open office spaces to support collaboration Introduction of self-steering teams in operations and call centres Refreezing: Embedding the new agile culture through onboarding programs, peer-to-peer hiring, and ongoing training. Measuring progress with metrics like employee engagement, time-to-market, and customer satisfaction. Continuously evolving the agile framework based on feedback to ensure its sustainability. To be New structure: agile Customer centric New people model: collaboration, different way of behaving Strong integration of IT Knowledge & decision making Process of responding to a problem by searching for alternatives solutions and then selecting one. Three main steps on decision making: Identify the problem Looking for alternatives (different conserve of action)  Evaluate the alternatives, try to find the best one, then implement it The step that organizations forgot to do is check at the end wether the alternative works or not. Programmed decisions: routine, frequent, follow a standardised process Non programmed decisions: novel and unstructured, I have to figurate it out 1. Rational model of decision making “The optimal decision maximises the expected utility”. Assumptions of this model: decision makers have all the info we need, they can make the best decision, they all agree on which is the best decision -> does not work this way. 2. Carnegie model BUT People have bounded rationality: most of the time we make decision without all of the info (it’s time consuming finding all the info); we also have a cognitive limitation, which impedisce us to always find the optimal solution. -> we don’t look for the optimal solution, we look for the one that sufficiently satisfies us. -> that solution will not be satisfactory for everyone, so we have to compromise 3. The unstructured model (Mintzberg) Decision making process is not linear at all in the real world. This model recognises uncertainty in the environment. 4. The garbage-can model Unstructured process to the extreme. Sometimes we find solutions to problems that don’t exist. This happens because we misidentified the problem, we may loose the point of the decision making. You pick something out from the garbage can and implement as the solution, but it is not right. Organizational learning Issues: exploration: try out something new ◦to be in a spot of competitive advantage, to exit the comfort zone ◦more risk ◦Avoid the problem of becoming obsolete ◦Long term innovation exploitation: leverage something that we already have and know ◦short term productivity: do better now what we already know to do ◦Immediate reliability, no uncertainty ◦Less risky Both are relevant and should be pursued at the same time. Factors that reduce learning over time extreme standardisation: may sometimes rule out non programmed decisions cognitive limitations: doing from my perspective can be really different from another’s, our decision making can be strongly biased Strategies for Organizational learning listening to dissenters = people that don’t agree with you -> get new info and have someone challenge what you think Devil’s advocates and dialectical inquiry: institutionalise dissenters, you ask someone to officially challenge your ideas, someone that analyse different scenarios  Wheel configuration: decreases org learning because all managers refer to the ceo, who is the only one learning smt Circle configuration Experimenting: try out from little to bigger extend Teams: ◦challenge frames and assumption we take for granted ◦Underline emergent new info