Management Chapter 7 & 8:Organizational Culture, structure, design, individual and Group decision making

2. Credibility

"How Believable Is the Information About the Situation?"

Stage 3: Evaluate Alternatives & Select a Solution—Ethics, Feasibility, & Effectiveness

(1) Is it ethical? (If it isn't, don't give it a second look.) (2) Is it feasible? (If time is short, costs are high, technology unavailable, or customers resistant, for example, it is not.) (3) Is it ultimately effective? (If the decision is merely "good enough" but not optimal in the long run, you might reconsider.)

Organizational Culture:

Edgar Schein, organizational culture, sometimes called corporate culture, is a system of shared beliefs and values that develops within an organization and guides the behavior of its members. "social glue" that binds members

Stage 2: Think Up Alternative Solutions—Both the Obvious & the Creative

Employees burning with bright ideas are an employer's greatest competitive resource. "Creativity precedes innovation, which is its physical expression," says Fortune magazine writer Alan Farnham. "It's the source of all intellectual property."

intuition has at least two benefits

It can speed up decision making It can be helpful to managers when resources are limited drawback: subject to the same biases as those that affect rational decision making

7. Centralization Versus Decentralization of Authority

Who makes the important decisions in an organization? That is what the question of centralization versus decentralization of authority is concerned with.

6. Authority, Responsibility, & Delegation: Line Versus Staff Positions

With authority goes accountability, responsibility, and the ability to delegate one's authority.

decision

a choice made from among available alternatives

Delphi technique

a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion.

Narrow Span of Control

a manager has a limited number of people reporting An organization is said to be tall when there are many levels with narrow spans of control.

Brainstorming

a technique used to help groups generate multiple ideas and alternatives for solving problems.

unity of command

in which an employee should report to no more than one manager

decision-making style

reflects the combination of how an individual perceives and responds to information.

The Vertical Hierarchy of Authority: Who Reports to Whom

the chain of command.

Stage 4. The Maturity Stage—Very Bureaucratic

the organization becomes very bureaucratic, large, and mechanistic. The danger at this point is lack of flexibility and innovation.

Integration: When Forces Pull the Organization Together

the tendency of the parts of an organization to draw together to achieve a common purpose.

1. Importance

"How High Priority Is This Situation?"

3. Urgency

"How Quickly Must I Act on the Information About the Situation?"

2. Relaxed Change

"Why Not Just Take the Easiest Way Out?" a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk. a form of "satisficing"

Four Ineffective Reactions

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Staff Position

Staff personnel have authority functions; they provide advice, recommendations, and research to line managers. indicated on the organization chart by a dotted line (usually a horizontal line).

1. Symbols

an object, act, quality, or event that conveys meaning to others.

prospect theory

suggests that decision makers find the notion of an actual loss more painful than giving up the possibility of a gain.

The Horizontal Specialization: Who Specializes in What Work

the different jobs or work specialization.

Delegation

the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy.

Imitators

who minimize their risks by copying market leaders, might use a mechanistic structure to maintain cost controls and an organic structure to mimic the industry's innovative directions.

1. Relaxed Avoidance

"There's No Point in Doing Anything; Nothing Bad's Going to Happen" a manager decides to take no action in the belief that there will be no great negative consequences.

4. Panic

"This Is So Stressful, I've Got to Do Something—Anything—to Get Rid of the Problem!" a manager is so frantic to get rid of the problem that he or she can't deal with the situation realistically. manager has completely forgotten the idea of behaving with "grace under pressure," of staying cool and calm.

Level 2: Espoused Values—Explicitly Stated Values & Norms

explicitly stated values and norms preferred by an organization employees frequently being more influenced by enacted values

2. The Environment: Differentiation Versus Integration—the Lawrence & Lorsch Model

forces that impelled the parts of an organization to move apart or to come together.

3. Market Culture: A Competitive Culture Valuing Profits Over Employee Satisfaction

has a strong external focus and values stability and control. driven by competition and a strong desire to deliver results Kia Motors

1. The Directive Style: Action-Oriented Decision Makers Who Focus on Facts

have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions. They are efficient, logical, practical, and systematic in their approach to solving problems. action oriented and decisive and like to focus on facts. In their pursuit of speed and results, however, these individuals tend to be autocratic, to exercise power and control, and to focus on the short run.

Nine Common Decision-Making Biases: Rules of Thumb, or "Heuristics"

heuristics (pronounced "hyur-ris-tiks")—strategies that simplify the process of making decisions. (1) availability, (2) representativeness, (3) confirmation, (4) sunk cost, (5) anchoring and adjustment, (6) overconfidence, (7) hindsight, (8) framing, and (9) escalation of commitment

Centralized Authority

important decisions are made by higher-level managers.

Decentralized Authority

important decisions are made by middle-level and supervisory-level managers. Decisions are also made more quickly, increasing the organization's flexibility and efficiency.

satisficing model

managers seek alternatives until they find one that is satisfactory, not optimal.

1. The Availability Bias: Using Only the Information Available

managers use information readily available from memory to make judgments.

4. The Behavioral Style: The Most People-Oriented Decision Makers

most people oriented enjoy social interactions in which opinions are openly exchanged. supportive, receptive to suggestions, show warmth, and prefer verbal to written information. lead behavioral types to adopt a wishy-washy approach to decision making and to have a hard time saying no

4. Hierarchy of Authority: The Chain of Command

or chain of command, is a control mechanism for making sure the right people do the right things at the right time.

5. Span of Control: Narrow (or Tall) Versus Wide (or Flat)

or span of management, refers to the number of people reporting directly to a given manager.

Innovative

prefer the flexibility and free flow of information of the organic structure

Stage 1: Identify the Problem or Opportunity—Determining the Actual Versus the Desirable

problems, or difficulties that inhibit the achievement of goals. opportunities—situations that present possibilities for exceeding existing goals. diagnosis—analyzing the underlying causes.

Authority

refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources.

8. The Framing Bias: Shaping How a Problem Is Presented

tendency of decision makers to be influenced by the way a situation or problem is presented to them.

6. The Overconfidence Bias: Blind to One's Own Blindness

the bias in which people's subjective confidence in their decision making is greater than their objective accuracy.

bounded rationality

the concept suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes. Herbert Simon

7. The Hindsight Bias: The I-Knew-It-All-Along Effect

the tendency of people to view events as being more predictable than they really are

Differentiation: When Forces Push the Organization Apart

the tendency of the parts of an organization to disperse and fragment. The more subunits into which an organization breaks down, the more highly differentiated it is.

9. The Escalation of Commitment Bias: Feeling Overly Invested in a Decision

whereby decision makers increase their commitment to a project despite negative information about it.

cost minimizers

who tend to tightly control costs, opt for the stability and efficiency of the mechanistic structure.

Risk propensity

willingness to gamble or to undertake risk for the possibility of gaining an increased payoff. competitiveness

Line Position

Line managers have authority to make decisions and usually have people reporting to them. indicated on the organization chart by a solid line (usually a vertical line).

contingency design

The process of fitting the organization to its environment

Stage 3. The Midlife Stage—Bureaucratic

a period of growth evolving into stability.

3. Heroes

a person whose accomplishments embody the values of the organization.

Stage 2. The Youth Stage—Prebureaucratic

a stage of growth and expansion.

Mechanistic Organizations: When Rigidity & Uniformity Work Best

authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. mechanistic design works best when an organization is operating in a stable environment.

tolerance for ambiguity.

indicates the extent to which a person has a high need for structure or control in his or her life.

incremental model

managers take small, short-term steps to alleviate a problem

Stage 1. The Birth Stage—Nonbureaucratic

the stage in which the organization is created.

1. Common Purpose: The Means for Unifying Members

unifies employees or members and gives everyone an understanding of the organization's reason for being.

3. Life Cycle: Four Stages in the Life of an Organization

. The four-stage organizational life cycle has a natural sequence of stages: birth, youth, midlife, and maturity.

FOUR FUNCTIONS OF ORGANIZATIONAL CULTURE

1. It Gives Members an Organizational Identity 2. It Facilitates Collective Commitment 3. It Promotes Social-System Stability 4. It Shapes Behavior by Helping Employees Make Sense of Their Surroundings

Disadvantages

A few people dominate or intimidate. Groupthink:occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation. Satisficing. Goal displacement: occurs when the primary goal is subsumed by a secondary goal.

3. Computer-Aided Decision Making

Chauffeur-driven systems—for push-button consensus. Group-driven systems—for anonymous networking

Four Types of Organizational Culture

Clan, Adhocracy, Market, & Hierarchy

Four Factors to Be Considered in Designing an Organization's Structure

Environment—mechanistic versus organic Environment—differentiation versus integration Life cycle Link between strategy and structure

Advantages

Greater pool of knowledge. Different perspectives Intellectual stimulation. Better understanding of decision rationale Deeper commitment to the decision.

Three Effective Reactions: Deciding to Decide

In deciding to decide, a manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps.

Stage 4: Implement & Evaluate the Solution Chosen

Successful Implementation For implementation to be successful, you need to do two things: Plan carefully and Be sensitive to those affected.

What factors affect the design of an organization's structure?

THE BIG PICTURE Four factors that should be considered when determining the best organizational structure involve whether an organization's environment is mechanistic or organic, whether its environment stresses differentiation or integration, where the organization is in its four-stage life cycle, and how its strategy can affect its structure.

3. The Confirmation Bias: Seeking Information to Support One's Point of View

The confirmation bias is when people seek information to support their point of view and discount data that do not. Though this bias would seem obvious, people practice it all the time.

How are for-profit, nonprofit, and mutual-benefit organizations structured?

The organizational structure of the three types of organizations—for-profit, nonprofit, and mutual-benefit—may be expressed vertically or horizontally on an organization chart.

Organizational Structure

a formal system of task and reporting relationships that coordinates and motivate an organization's members so that they can work together to achieve the organization's goals.

Level 3: Basic Assumptions—Core Values of the Organization

are not observable, represent the core beliefs that employees have about their organization—those that are taken for granted and, as a result, are difficult to change.

4. Rites & Rituals

are the activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life.

4. The Link Between Strategy & Structure

as they grow and their strategies become more ambitious and elaborate, so the structure changes to support those strategies. Most current strategy structures tend to reflect strategies of (1) cost minimization, (2) innovation, or (3) imitation.

Organic Organizations: When Looseness & Flexibility Work Best

authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. sometimes termed adhocracies because they operate on an ad hoc basis, improvising as they go along.

The Three Levels of Organizational Culture

(1) observable artifacts, (2) espoused values, and (3) basic assumptions

rational model of decision making

also called the classical model, explains how managers should make decisions; it assumes managers will make logical decisions that will be the optimum in furthering the organization's best interests.

3. Division of Labor: Work Specialization for Greater Efficiency

also known as work specialization, is the arrangement of having discrete parts of a task done by different people.

Responsibility

the obligation you have to perform the tasks assigned to you.

3. Defensive Avoidance

"There's No Reason for Me to Explore Other Solution Alternatives" a manager can't find a good solution and follows by (a) procrastinating, (b) passing the buck, or (c) denying the risk of any negative consequences. a posture of resignation and a denial of responsibility for taking action.

How an Organization's Culture & Structure Are Used to Implement Strategy

(1) organizational culture and (2) organizational structure

How Employees Learn Culture

(1) symbols, (2) stories, (3) heroes, and (4) rites and rituals

What Managers Need to Know About Groups & Decision Making

1. They Are Less Efficient 2. Their Size Affects Decision Quality 3. They May Be Too Confident 4. Knowledge Counts

How do people know when they're being logical or illogical?

Decision making, the process of identifying and choosing alternative courses of action, may be rational, but often it is nonrational. Four steps in making a rational decision are (1) identify the problem or opportunity, (2) think up alternative solutions, (3) evaluate alternatives and select a solution, and (4) implement and evaluate the solution chosen. Three examples of nonrational models of decision making are (1) satisficing, (2) incremental, and (3) intuition.

SEVEN RULES FOR BRAINSTORMING

Defer judgment. Build on the ideas of others. Encourage wild ideas. Go for quantity over quality. Be visual. Stay focused on the topic. One conversation at a time.

When I join an organization, what seven elements should I look for?

Edgar Schein: (1) common purpose, (2) coordinated effort, (3) division of labor, and (4) hierarchy of authority. others (6) authority, responsibility, and delegation, and (7) centralization versus decentralization of authority.

The Organization: Three Types

For-profit organizations. Nonprofit organizations. Mutual-benefit organizations.

Evaluation

Give it more time. Change it slightly. Try another alternative. Start over.

How do I work with others to make things happen?

Group decision making has five potential advantages and four potential disadvantages. There are a number of characteristics of groups that a manager should be aware of, as well as participative management and group problem-solving techniques.

You can use knowledge of decision-making styles in three ways:

Know Thyself Influence Others Deal with Conflict

Trying to be rational isn't always easy. What are the barriers?

Responses to a decision situation may take the form of four ineffective reactions or three effective reactions. Managers should be aware of nine common decision-making biases.

How do I find out about an organization's "social glue," its normal way of doing business?

The study of organizing, the second of the four functions in the management process, begins with a study of organizational culture, which exists on three levels. An organizational culture has four functions.

4. The Sunk-Cost Bias: Money Already Spent Seems to Justify Continuing

The sunk-cost bias, or sunk-cost fallacy, is when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it.

FACTORS THAT CAN HELP MAKE PARTICIPATIVE MANAGEMENT WORK

Top management is continually involved Middle and supervisory managers are supportive Employees trust managers Employees are ready Employees don't work in interdependent jobs PM is implemented with TQM( total quality management)

How do I decide to decide?

Your decision-making style reflects how you perceive and respond to information. It could be directive, analytical, conceptual, or behavioral.

The Organization Chart

a box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specializations. (1) the vertical hierarchy of authority—who reports to whom, and (2) the horizontal specialization—who specializes in what work.

Wide Span of Control

a manager has several people reporting An organization is said to be flat when there are only a few levels with wide spans of control.

2. Stories

a narrative based on true events, which is repeated—and sometimes embellished upon—to emphasize a particular value.

organization

a system of consciously coordinated activities or forces of two or more people Chester I. Barnard's classic definition

Nonrational models of decision making

descriptive rather than prescriptive: They describe how managers actually make decisions rather than how they should. Three nonrational models are (1) satisficing, (2) incremental, and (3) intuition.

Nonrational Decision Making

explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions.

2. Adhocracy Culture: A Risk-Taking Culture Valuing Flexibility

has an external focus and values flexibility. Google

1. Clan Culture: An Employee-Focused Culture Valuing Flexibility, Not Stability

has an internal focus and values flexibility rather than stability and control. Southwest Airlines Zappos

4. Hierarchy Culture: A Structured Culture Valuing Stability & Effectiveness

has an internal focus and values stability and control over flexibility apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. General Motors, UPS

3. The Conceptual Style: Decision Makers Who Rely on Intuition & Have a Long-Term Perspective

high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation. They take a broad perspective to problem solving and like to consider many options and future possibilities. ong-term perspective and rely on intuition and discussions with others to acquire information. They also are willing to take risks and are good at finding creative solutions to problems. However, a conceptual style can foster an indecisive approach to decision making.

consensus

occurs when members are able to express their opinions and reach agreement to support the final decision.

intuition

making a choice without the use of conscious thought or logical inference. stems from expertise—a person's explicit and tacit knowledge about a person, situation, object, or decision opportunity—is known as a holistic hunch.

Accountability

managers must report and justify work results to the managers above them. Being accountable means you have the responsibility for performing assigned tasks.

2. The Analytical Style: Careful Decision Makers Who Like Lots of Information & Alternative Choices

much higher tolerance for ambiguity and are characterized by the tendency to overanalyze a situation. People with this style like to consider more information and alternatives than those following the directive style. careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations.

Two Systems of Decision Making

one that is rational, analytical, and slow to act, and another that is emotional, impulsive, and prone to form and follow habits

Level 1: Observable Artifacts—Physical Manifestations of Culture

physical manifestations such as manner of dress, awards, myths and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees.

Value orientation

reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions.

enacted values

represent the values and norms actually exhibited in the organization.

electronic brainstorming

sometimes called brainwriting, in which members of a group come together over a computer network to generate ideas and alternatives.

2. Coordinated Effort: Working Together for Common Purpose

the coordination of individual efforts into a group or organization wide effort. The common purpose is realized through coordinated effort

Decision making

the process of identifying and choosing alternative courses of action.

participative management (PM)

the process of involving employees in (a) setting goals, (b) making decisions, (c) solving problems, and (d) making changes in the organization. PM is predicted to increase motivation, innovation, and performance because it helps employees fulfill three basic needs: autonomy, meaningfulness of work, and interpersonal contact

2. The Representativeness Bias: Faulty Generalizing from a Small Sample or a Single Event

the tendency to generalize from a small sample or a single event.

5. The Anchoring & Adjustment Bias: Being Influenced by an Initial Figure

the tendency to make decisions based on an initial figure. The bias is that the initial figure may be irrelevant to market realities.

What's Wrong with the Rational Model?ASSUMPTIONS OF THE RATIONAL MODEL

• Complete information, no uncertainty. You should obtain complete, error-free information about all alternative courses of action and the consequences that would follow from each choice. • Logical, unemotional analysis. Having no prejudices or emotional blind spots, you are able to logically evaluate the alternatives, ranking them from best to worst according to your personal preferences. • Best decision for the organization. Confident of the best future course of action, you coolly choose the alternative that you believe will most benefit the organization.