Unit 6 Organizational Structure and Change

Overview

Having looked at budgets and the place of budgets in ensuring the organization is on track to reach its defined goals and objectives, we now look at structures and designs of organizations.

Every living organism has a structure and a design. We see this in plants, animals, humans – from the smallest single cell creature to the most complex, structure and design are evident. These structures and designs set them apart and enhance their unique features. Further, these structures are important to support growth.

Below are three images that illustrate the importance of structures. In the first, the beauty of the flowers are enhanced by the structure that supports the plants. Likewise, the grape vine is supported by the trellis structure, and then humans are supported by the skeletal structure. We are well aware of the importance of a strong bone structure for our growth and movement. Structures and design are essential for optimal outcomes.

Sources: flowers grapes skeleton

Similarly, in organizations, structures and designs are important to support the growth of the organization, to cope with change, and for organizational agility.

Topics

This unit is divided into the following topics:

  1. Organizational Structures and Design
  2. Organizational Change
  3. Managing Change

Learning Outcomes

When you have completed this unit, you should be able to:

  • Identify the need for and types of organizational structures and designs
  • Critically analyze the structure of an organization
  • Create an organizational structure that supports vision and mission of an organization
  • Explain the need to adapt structure so support change and growth

Activity Checklist

Here is a checklist of learning activities you will benefit from in completing this unit. You may find it useful for planning your work.

Learning Activities

  • Read section 10.1 of Principles of Management to see how different organizations fit into the mechanistic – organic structure continuum. Select from the three videos listed to further explore this topic.
  • Read and analyze the Critical Thinking case study:Danny Meyer Leads His Company through the Challenges of Eliminating Tips.
  • Read the blog, 7 Real-Life Examples of Successful Change Management In Business and discuss how the companies managed change.

Assessment

  • Unit 5 Team Memo (Please confirm assignment instructions in Moodle)

Resources

Here are the resources you will need to complete this unit.

6.1 Organizational Structures and Design

As an organization moves towards goals in keeping with its clearly defined vision and mission, it is important for all team members to, “be on the same page”, know their roles and responsibilities and know how their individual contributions connect to the big picture of the organization. A well thought through and crafted organizational structure meets this need and connects activities and people within a work organization.

An effective organizational structure helps people to know:

  1. what work they should do
  2. how their work supports or relies on other team members, and
  3. how these work activities contribute to the fulfillment of the purpose of the organization.

All organizational structures lie somewhere on a continuum between Mechanistic and Organic organizations. Mechanistic organizations are very formal, centralized and bureaucratic. While organic structures are decentralized, team based, and are generally nimble, and therefore are able to respond to the VUCA environment effectively (for details on VUCA, refer to Unit 2 on the work of Dave Ulrich on VUCA and Market Oriented Ecosystem).

Activity: Read and Reflect

Read section 10.1 of the course text to see how different organizations fit into the mechanistic – organic structure continuum. To further illustrate how effective organizational structure helps people define and value their work, watch this short video on the Three Stonecutters.

Next, watch the following 9-minute video for a quick survey of types of organizational structures and their advantages/disadvantages.

You may also want to watch this three minute video that explains the mechanistic and organic structures in detail.

Questions to Consider

After completing the activities above, consider the following questions:

  • Reflect on your organization. Where does your organization fit on the mechanistic – organic continuum?

  • Given the mission and vision of your organization, where would you like your organization to be placed? Should it move more towards mechanistic? Or move more towards organic?

Note that the learning activities in this course are ungraded, unless specified. They are designed to help you succeed in your assessments in this course, so you are strongly encouraged to complete them.

6.2 Organizational Change

Heraclitus, the Greek philosopher, is known to have said that “Change is the only constant in life.” This rings so very true in every aspect of our lives. We see children experiencing change in their physical bodies as they grow. We see people acquiring new skills and certifications as they progress in life, we see families moving to larger houses as their families grow. Conversely, we have also heard of seniors downsizing their homes and their activities. In all this we gather that change is initiated to support the station of life we are in. To ignore such initiatives of change reduces our effectiveness and makes us irrelevant for the times we live in.

Organizational change needs to be viewed the same way. An organization may start off as a small unit with the entrepreneurial spirit, but as it grows, it needs to adapt with success, growth and external market conditions. More staff will be needed, new departments will be added, training and development programs will be revamped and upgraded both reactively and proactively. See the two diagrams below that depict these stages and the need for organizational change. Also see Exhibit 10.5 in course text for further details.

Figure The Lifecycle of An Organization Fig 6.1 Source: The Lifecycle of An Organization

Figure Future of Decisions Fig 6.2 Source: Future of Decisions

The course text in section 10.2 outlines a few change models that can be utilized in initiating change. Needless to say, every change model has its strengths and limitations, and the organization needs to select the model that is the best fit, taking into consideration the culture of the organization and the situation it faces. Advice from external consultants with input from internal consultants may be sought on the best model or frame to be used.

Activity: Case Study

Read the Critical Thinking Case Study (end of Chapter 10 of course text): Danny Meyer Leads His Company through the Challenges of Eliminating Tips.

Answer these three critical thinking questions in your Learning Journal:

  1. What type of change is this: transformational or incremental? Why?
  2. What level(s) of change is Meyer aiming for in this case?
  3. What models are consistent with Meyer’s process for designing and implementing change?

6.3 Managing Change

If change is inevitable as we have seen in Topic 1 and 2, organizations have one of two options to respond: (a) resist change or (b) embrace change. Management and leadership must decide how they will respond. History is replete with examples of businesses organizations that are nonexistent, have become irrelevant or lost their “sting” or effectiveness, because of resistance to change. Attitudes that are resistant to change are expressed in responses and comments such as:

“We have always done it this way.”
“That will not work here.”
“We know it best, because we have been in the industry for a long time.”
* “We know better than them.”*
“This is a temporary setback; we will bounce back.”

Kodak, Blackberry, Blockbuster videos, SEARS, Toys R us, are some recent examples of businesses that failed to stay relevant.

The course text (section 10.3) lists three helpful questions that managers need to ask when initiating and managing change:

  1. Is the organization in a state of deficiency that needs significant fixing, or is it in a state of high performance, where there exists a need for refining and tweaking (deficit-based change or abundance-based change)?
  2. What are our assumptions about how to create change? This question is crucial, because the answers determine the preferred designs for planned change and the perceptions of the effectiveness of the change.
  3. What are our fundamental beliefs about people and change? (Organizational perspective on change.)

Similar to implementing budgets (Unit 5), change can be implemented either using the top-down approach or the bottom-up approach. As we discussed in Unit 5 with budgets, both approaches have strengths and limitations. But with the bottom-up approach, one significant advantage is the participatory approach that fosters the spirit of ownership amongst employees. In reality, both the approaches work together (the hybrid approach).

Activity: How to Make a Cultural Transformation

Waitch this video from Simon Sinek on How to Make a Cultural Transformation. What does the law of diffusion, or the bell curve, look like for your organization or team?

Unit 6 Summary

In Unit 6, you have had the opportunity to learn about the need for effective organizational structures and designs. Organizational structures should not be a copy of some other successful organization, but, rather, must flow from unique vision and mission and core values statement of the organization. These fundamentals will drive how the organization approaches change, the choice of methods, and the manner in which change is implemented.

Personal Application

Before participating in the assessment for this unit, consider how you might apply what you have learned.

  • Assume you are leading/managing a: (a) small division in an organization, (b) small scale start up, or (c) ministry team in church.
  • Pick one of these three scenarios and write a 1–2-page memo to your team on the importance of 1 topic covered during your readings for Unit 6.
  • The memo to the team will emphasize the importance of applying this topic/ practice for organizational success and will include specific steps to motivate team members to implement these initiatives.

Please see the Assessments section in Moodle to confirm assignment instructions, including the grading criteria and due dates.

Checking Your Learning

Before you move on to the next unit, you may want to check to make sure that you are able to:

  • Identify the need for and types of org structures and designs
  • Critically analyze structure of their organizations
  • Create an org structure that supports vision and mission of their org
  • Explain the need to adapt structure so support change and growth