Organization

Structure And
Organizational
Change
Dimensions of Organization
Structure
 What makes up the term organization
structure
 Three components as the core dimensions of
organizational structure are:
 Complexity
 Formalization
 Centralization
Core Dimensions

Complexity : refers to the degree of differentiation that exists within the organization.

There are three kinds of differentiation .
1) Horizontal differentiation : means separation between units.
2) Vertical differentiation : refers to the depth of the organizational hierarchy.
3) Spatial differentiation : it encompasses the degree to which the location of an organization’s facilities and personnel are dispersed geographically.

An increase in any one of these three factors will increase an organization's complexity.
Core Dimension contd.
 Formalization : refers to the degree to which jobs within
an organization are standardized.

 Formalization has been defined as the “extent to which

rules, procedures, instructions and communications are
written”.

 Formalization would be measured by determining if the

organizations has a policies and procedures manual,
assessing the number & specificity of its regulations,
reviewing job descriptions to determine the extent of
elaborateness and detail, and looking at other similar
official documents of the organization.
Core Dimension

 Centralization : Most problematic of the three

components.
 The term refers to the degree to which decision
making is concentrated at a single point in the
organization. A high concentration implies high
centralization, whereas a low concentration
indicates low centralization or what may be
called decentralization.
Centralization contd.

 Centralization can be described more specifically

as the degree to which the formal authority to
make discretionary choices is concentrated in an
individual, unit, or level, thus permitting
employees minimum output into their work.
 Centralization is concerned only with the formal
structure not the informal organization.
 It looks at decision discretion.
Decentralization

 It reduces the probability of information

overload, facilitate rapid responses to new
information, provides more detailed input into
a decision, instills motivation, and represents
a potential vehicle for training managers in
developing good judgment.On the other
hand, centralization adds a comprehensive
perspective to decisions and can provide
significant efficiencies.
Decentralization In
Organization
 A definition by Dale states that if degree of
decentralization is greater, greater is the
number of decisions made lower down in the
hierarchy, and the more important those
decisions are.
Decentralization contd.
 The balance between centralization and
decentralization : There are choices about which
decisions to decentralize & which to centralize.
 Choosing decision areas to delegate is frequently
regarded as a problem of selecting the proper
balance between centralization and decentralization.
 What is Organizational
Change?
 An alteration of an organization’s
environment, structure, culture, technology,
or people due to
 A constant force
 An organizational reality
 An opportunity or a threat

 Change agent
 A person who initiates and assumes the
responsibility for managing a change in an
organization
Forces for Organizational
Change
External forces – External forces of changes
include all those factors of macro-environment and
task environment which directly or indirectly affect
the functioning of an organization.
These forces are ---
1.- Social forces
2.- Business & Economic forces
3.- Technological forces
4.- Work environment forces
5.- Political & Legal forces
6.- Competition

ICBM-SBE
PGDM(2008-10)
 Forces for Organizational
Change
Internal Changes –
These forces may either be derived from the
change in external environment or may be
management induced forces.
For example – if the management decides to provide a day
care service for the children of working women as to
motivate them, It may be regarded as management
induced force. And if as per the agreement with trade
union the management is forced to construct houses for
its employees it may be considered as derivative force.

ICBM-SBE
PGDM(2008-10)
 organizations make major
 Radical change:
innovations in the ways they do business
 Stages of Radical Change*

Unfreezing Transitioning Refreezing

 Lewin’s Three-Step Change Process
 Unfreezing
 Identifying need for change
 Usually involves reducing those forces maintaining the
organization’s behavior at its present level
 Help people accept that change is needed because the
existing situation is not adequate
 Moving
 Implementing the change
 Shifts the organization’s behaviors to a new level
 Involves rearranging of current work norms and
relationships to meet new needs
Refreezing

Stabilizes the organization at a new state of equilibrium

Reinforces the changes made so that the new ways of

behaving become stabilized

 ongoing process of evolution over
 Incremental change:
time, during which many small adjustments occur
routinely

people who strive to create radical

 Tempered radicals:
change but do so by prodding an organization to
make many small incremental changes

 Total quality management: relies heavily on continuous

incremental change
 Reactive change: occurs when an
organization is forced to adapt or innovate
in response to some event in the external
or internal environment

 Anticipatory change: occurs when

managers make organizational
modifications based on forecasts of
upcoming events or early in the cycle of a
new trend
 Types of Organizational Change

Small
Adjustments Incremental Incremental
Degree of Change
Anticipatory Reactive
Change Change

Radical Radical
Anticipatory Reactive
Major Change Change
Transformation
Timing of Change
Before Major Shifts in After Major Shifts in
the Environment the Environment
The Process of Organizational
Change Start
2. Determine the
1. Assess the Performance
Environment Gap

3. Diagnose
7. Monitor the Organizational
Changes Problems

6. Anticipate 4. Articulate and

Resistance and Communicate a
Take Action to 5. Develop and Vision for the
Reduce Implement an Future
Action Plan
 Human reactions to change
1. Acceptance: Individuals perceive change will
affect him favourably.

2. Resistance: Individuals perceive change will

affect him unfavourably.

3. Indifference: When people fail to realise the

impact of change or they feel that they will not
be affected by the change; either way they
remain indifferent.

4. Forced acceptance: People are forced to accept

the change though they may resist at initial
stages.
 Sources of Resistance to Change

Individual Resistance Organizational

Resistance
* Perception
* Personality * Organization design
* Habit * Organizational culture
* Threats to power * Resource limitations
and influence * Fixed investments
* Fear of the unknown * Interorganizational
* Economic reasons agreements

Resistance to Change
Minimizing Resistance to Change
Communication  Highest priority and first
strategy for change
 Improves urgency to change
 Reduces uncertainty (fear of
unknown)
Minimizing Resistance to Change
Communication
 Provides new knowledge and
Training skills
 Includes coaching and action
learning
 Helps break old routines and
adopt new roles
Minimizing Resistance to Change
Communication
 Increases ownership of change
Training  Helps saving face and
reducing fear of unknown
Employee
Involvement  Includes task forces, search
conferences
Minimizing Resistance to Change
Communication  When communication, training,
and involvement do not resolve
Training stress
 Potential benefits
Employee  More motivation to change
Involvement
 Less fear of unknown
Stress  Fewer direct costs
Management
Minimizing Resistance to Change
Communication

Training
 When people clearly lose
something and won’t otherwise
Employee support change
Involvement  Influence by exchange--
Stress reduces direct costs
Management

Negotiation
Minimizing Resistance to Change
Communication

Training
 When all else fails
Employee  Assertive influence
Involvement
 Firing people -- radical form of
Stress
Management “unlearning”
 Problems
Negotiation • Reduces trust
• May create more subtle
Coercion resistance
Technological Change Organizational Redesign

Job Redesign Organizational

Development
THANK YOU