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GENERAL MANAGEMENT
CHECK POINT 16: ORGANIZATIONAL DESIGN, DEVELOPMENT, AND CHANGE

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1. what is organizational design?
2. Factors Which May Affect A Company's Organizational Design
3. The Role Of External Business Environment In Organizational Design
4. The Role Of Business Activities In Organizational Design
5. Different Types Of Operational Activities
6. Greiner's Model Of Organizational Development
7. Six Phases Of Organizational Development
8. Phase 1: The Creativity Period
9. Phase 2: The Direction Period
10. Phase 3: The Delegation Period
11. Phase 4: The Coordination Period
12. Phase 5: The Collaboration Period
13. Phase 6: The Alliance Period
14. Greiner's Conclusions Regarding Organizational Development
15. What Is Change Management?
16. Implementation Of The Change Management Process
17. For Serious Business Owners Only
18. The Latest Information Online
 

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GENERAL MANAGEMENT
CHECK POINT 16: ORGANIZATIONAL DESIGN, DEVELOPMENT, AND CHANGE

Please Select Any Topic In Check Point 16 Below And Click.

1. what is organizational design?
2. Factors Which May Affect A Company's Organizational Design
3. The Role Of External Business Environment In Organizational Design
4. The Role Of Business Activities In Organizational Design
5. Different Types Of Operational Activities
6. Greiner's Model Of Organizational Development
7. Six Phases Of Organizational Development
8. Phase 1: The Creativity Period
9. Phase 2: The Direction Period
10. Phase 3: The Delegation Period
11. Phase 4: The Coordination Period
12. Phase 5: The Collaboration Period
13. Phase 6: The Alliance Period
14. Greiner's Conclusions Regarding Organizational Development
15. What Is Change Management?
16. Implementation Of The Change Management Process
17. For Serious Business Owners Only
18. The Latest Information Online
 

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WELCOME TO CHECK POINT 16

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
And Sales Management
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
2 7 12 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 92 97
3 8 13 18 23 28 33 38 43 48 53 58 63 68 73 78 83 88 93 98
4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
 

HOW CAN YOU BENEFIT FROM CHECK POINT 16?

 
The main purpose of this check point is to provide you and your management team with detailed information about Organizational Design, Development, And Change and how to apply this information to maximize your company's performance.
 
In this check point you will learn:
 
• What is the organizational design?
• About factors which may affect a company's organizational design.
• About the role of external environment in organizational design.
• About the role of business activities in organizational design.
• About Greiner's model of organizational development.
• About six phases of organizational development.
• About Greiner's conclusions regarding organizational development
• What is change management?
• About Kotter's eight-step process for leading change.
• About the implementation of the change management process... and much more.
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 16

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
•. Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. WHAT IS ORGANIZATIONAL DESIGN?

THE ORGANIZING PROCESS

Business owners and managers must be familiar with the basic elements of the organizational design, development, and change to succeed in the constantly changing business environment.

Organizational Design focuses on arranging functions and people within an organization in the most efficient manner in accordance with the organization's mission and strategic objectives and ensuring that these objectives are met in a timely manner. Organizational design entails developing a suitable organizational structure, formulating essential functions and roles, and defining the levels of authority, responsibility and accountability for each position.

For a number of years experts tried to develop the best method of organizational design. They concluded, however, that such a method may lead to the creation of a bureaucratic and inflexible structure wherein human and environmental factors are often neglected. It is apparent, therefore, that there is no single way to design an organization.

According to James F. Stoner, there are four Key Variables that may affect the organization and its structure as illustrated below.
 

FOUR KEY VARIABLES THAT AFFECT AN ORGANIZATIONAL STRUCTURE

Company
Strategy

Company
Environment

Company
Technology

Company
Employees

THE PRIME OBJECTIVE OF THE MANAGEMENT TEAM

The prime objective of the executive management team is to establish an effective "fit" between an Organization's Structure and the above mentioned key variables in order to maximize the company's operational performance and results.

Stoner further clarifies the impact which a Company's Strategy has on its management structure as outlined below. (34)

THE IMPACT OF A COMPANY'S STRATEGY ON ITS STRUCTURE

1.

Strategy determines organizational tasks, which provide the ultimate basis for the organizational design.

2.

Strategy influences the selection of technology and human resources necessary for the accomplishment of organizational tasks. These tasks, in turn, will influence the appropriate management structure.

3.

Strategy determines the specific internal environment suitable for the organizational operations. This environment will also influence the management structure.

ARE YOU A ONE-PERSON BUSINESS OWNER?

If you are a One-Person Business Owner, you may skip this check point at this stage because it is not applicable to a micro-business like yours.

However, it will be very beneficial for you to become familiar with the basic elements of Organizational Design in the future, because one day you may decide to take your business to the next level and employ additional employees within your organization.

 

ADDITIONAL INFORMATION ONLINE

Organizational Design By Amy Kates, DTU Business.
Overview Of Organizational Design By Michael Glenn.
Design Of The 21st Century Organization By Tammy Erickson.
Five Ideas About Organizational Design - P1, By Nicolay Worren.
Introduction Of Organizational Design By Nick Kitchen, LSBF Global MBA.

2. FACTORS WHICH MAY AFFECT A COMPANY'S ORGANIZATIONAL DESIGN

FACTORS WHICH MAY AFFECT A COMPANY'S ORGANIZATIONAL DESIGN

1.

The Company's Strategy.
The company's strategic plan and objectives, formulated by management, play a critical role in developing a specific type of organizational structure in order to meet the company's objectives in the most cost-effective and timely manner.

2.

The External Business Environment.
The external business environment may produce stable, changing, or turbulent conditions which will have a strong impact on the company's organizational design. Thus, in a stable environment, the company's structure may be relatively rigid. However, the more change or turbulence there is in the environment, the more flexibility should be built into the organizational design to allow fast and cost-effective response by the company in the marketplace.

3.

The Complexity Of Technology.
The complexity of technology from unit to process production leads to more complicated organizational structures and requires a greater degree of supervision and coordination. Companies with higher level of technology usually require larger number of clerical and administrative staff. In addition, complex equipment requires more attention in terms of maintenance and production scheduling to keep it in operation longer.

4.

The Company's Employees.
The skills, experiences, and attitudes of employees also play an important role in the organizational design. Top managers, for example, have the opportunity to select specific strategies and to develop the organization in accordance with their personal aspirations, values, and abilities. Lower-level managers and other employees may also contribute to an effective organizational design through use of their skills, education, and talent.

 

ADDITIONAL INFORMATION ONLINE

Company's Strategy By Andy Bird, Walt Disney International.
Company's Changing Strategy By Rick Going, Tupperware Brands, CBS.
The External Business Environment By Matt Alanis, Alanis Business Academy.
Why Is Employee Recognition In The Workplace So Important? By David Long.
Innovation To Reduce The Complexity Of Technology By Tom Joyce, HP Systems.

3. THE ROLE OF EXTERNAL BUSINESS ENVIRONMENT IN ORGANIZATIONAL DESIGN

EXTERNAL BUSINESS ENVIRONMENT

External Business Environment plays a significant role in the process of organizational design, development of effective organizational structure, and organizational change management. External business environment, discussed in detail in this tutorial, includes economic environment, social environment, technological environment, competitive environment and global business environment, as illustrated below.

FIVE TYPES OF EXTERNAL BUSINESS ENVIRONMENT

Economic
Environment

Social
Environment

Technological
Environment

Competitive
Environment

Global Business
Environment

Critical elements of the external business environment, such as customers, suppliers, financial institutions, laws and regulations, discussed in detail in this tutorial, may also influence the process of a company's organizational design, development of effective organizational structure, and change management, as presented below.

IMPORTANT ELEMENTS OF EXTERNAL BUSINESS ENVIRONMENT

Customers

Suppliers

Financial Institutions

Laws
And Regulations

There are three types of conditions related to the external environment which should be considered during the process of organizational design, development of effective organizational structure, and organizational change management, as illustrated below. (35)

THREE TYPES OF CONDITIONS RELATED TO THE EXTERNAL BUSINESS ENVIRONMENT

Stable
Environment

Changing
Environment

Turbulent
Environment

STABLE BUSINESS ENVIRONMENT

In a Stable Business Environment, an organization does not face an unexpected or drastic change of conditions in the marketplace.

Customers' needs are identified well in advance and remain steady and predictable. Laws that affect activities of a particular organization or relate to the development of a specific product have not changed much during the recent years and are not expected to change suddenly. New technological developments occur very slowly, thereby imposing a minimal burden on research budget.

 

CHANGING BUSINESS ENVIRONMENT

In a Changing Business Environment, an organization must be prepared for new drastic change of conditions in the marketplace and for frequent change of customers' needs.

New technological developments are expected to occur at a faster rate, thus imposing additional requirements on a company's research efforts. Furthermore, a number of new laws that affect organizational activities or product development may be introduced at a more frequent rate.

 

TURBULENT BUSINESS ENVIRONMENT

In a Turbulent Business Environment, an organization must be prepared for sudden changes of conditions in the marketplace.

Such conditions may be caused by a drastic change in laws regulating a company's activities or product development, by new technological developments, or by launching of new products by competitors. A turbulent environment exists in several industries, such as high-tech products, fashion, and computers.

4. THE ROLE OF BUSINESS ACTIVITIES IN ORGANIZATIONAL DESIGN

BUSINESS ACTIVITIES

Organizational design, development of effective organizational structure, and organizational change management also depend on the nature of the company's Business Activities.

Three main types of business activities include manufacturing activities, non-manufacturing activities, projects and contracts are illustrated below.

THREE MAIN TYPES OF BUSINESS ACTIVITIES

   

Manufacturing
Activities

 

Non-Manufacturing
Activities

 

Projects
And Contracts

Manufacturing activities entail the process of converting raw materials into finished products through the use of equipment, tools, labor, and other production facilities.   Non-manufacturing activities include a broad range of service and merchandising operations.   These activities include a broad range of projects which are performed in accordance with specific contractual obligations undertaken by companies or individuals.

Non-Manufacturing Activities can be further sub-divided into two categories illustrated below.

NON-MANUFACTURING ACTIVITIES

 

Service Operations

 

Merchandising Operations

Service operations entail rendition of trade and professional services aimed at satisfying customers' needs.   Merchandising operations entail buying and selling of products at a profit.

Manufacturing Activities, Non-Manufacturing Activities, Projects, And Contracts and discussed in detail in Tutorial 4.

5. DIFFERENT TYPES OF OPERATIONAL ACTIVITIES

OPERATIONAL ACTIVITIES

The organizational structure in every company also depends upon the specific type of Operational Activities. Thus, for example, the organizational structure in manufacturing companies depends upon the specific types of Manufacturing Operations. All manufacturing companies, therefore, can be classified into three groups, based on type of manufacturing operations and a specific manufacturing volume as illustrated below.

 

THREE TYPES OF MANUFACTURING OPERATIONS

   

Job Shop Production

 

Batch Production

 

Flow Production

Job shop production entails the manufacture of a one-of-a-kind custom designed product or similar products in a small quantity.   Batch production entails the manufacture of similar products in batches.   Flow production entails the manufacture of large quantities of similar products, sometimes using an assembly line.
 

NON-MANUFACTURING OPERATIONS

Non-Manufacturing Operations include four categories: service operations, merchandising operations, project management operations, and contract management operations.

Some examples of these operations are described below.

 

TYPES OF NON-MANUFACTURING OPERATIONS

Service
Operations

Merchandising
Operations

Project
Management
Operations

Contract
Management
Operations

 

SERVICE OPERATIONS

A Service Operation is a non-manufacturing activity in which each assignment results in completing a specific type of work or, simply, satisfying a customer's need. All service operations, in turn, can be classified into two types illustrated below.
 

TWO TYPES OF SERVICE OPERATIONS

 

Custom Service

 

Standard Service

 

MERCHANDISING OPERATIONS

Merchandising Operation represents another type of a non-manufacturing activity. Merchandising operation, in essence, is based on buying and selling of products or merchandise at a profit.

There are two basic types of merchandising operations illustrated below.

 

TWO TYPES OF MERCHANDISING OPERATIONS

 

Wholesale Operation

 

Retail Operation

Operational Activities are discussed in detail in Tutorial 4.

6. GREINER’S MODEL OF ORGANIZATIONAL DEVELOPMENT

DO YOU HAVE A “CRYSTAL BALL”?

So here you are – a proud owner of a small business, which you and your partners started a few years ago. You went through the initial stages of informal business development and now you have thirty employees, including three managers. You also have about one hundred clients, you just signed a long-term lease on your new premises, and business seems to be going reasonably well. Here is a question. Would you like to have a “crystal ball” and, by traveling in time into the future, see how your business will look, say, ten years from now? Hopefully you will find some answers below.

EVOLUTION OF A COMPANY'S DEVELOPMENT

Most business owners and top managers are aware that the organizational design must be geared toward the continuous growth of their companies. This is particularly important since a "no-growth" situation leads to stagnation and signifies deterioration in a company's condition within a competitive environment. 

Larry E. Greiner studied a number of growing companies and developed a model to describe how organizations change over time and how these changes affect the organizational design and general management practices. According to Greiner:

Every growing organization undergoes six distinct phases over a certain period of time. Each phase, in turn, consists of two stages outlined below.

Greiner suggests that each Evolutionary Stage causes its own Revolution, which, in turn, leads to the company's next development phase.

TWO STAGES IN A COMPANY'S DEVELOPMENT

Stage 1: Evolution

Evolution relates to the extended period of steady growth during which no drastic changes take place.

Stage 2: Revolution

Revolution, conversely, relates to a predictable period of a company's life during which major changes may occur.

7. SIX PHASES OF ORGANIZATIONAL DEVELOPMENT

SIX PHASES OF ORGANIZATIONAL DEVELOPMENT

The six phases of Organizational Development, developed by Larry E. Greiner, are illustrated below.

Note: 

All information herein is adapted and reprinted from publication "Evolution and Revolution as Organizations Grow" published in Harvard Business Review in 1998.

 

Company Size

Greiner’s Six Phases Of A Company’s Growth

Large Company



















Medium-Sized Company





















Small Company

 

PHASE 6:
Growth Through ALLIANCES Which May Culminate With A NEW CRISIS
.

 

PHASE 5:
Growth Through COLLABORATION Which May Culminate With The GROWTH CRISIS
.

 
 

PHASE 4:
Growth Through COORDINATION Which May Culminate With The RED TAPE CRISIS
.

   
 

PHASE 3:
Growth Through DELEGATION Which May Culminate With The CONTROL CRISIS
.

     
 

PHASE 2:
Growth Through DIRECTION Which May Culminate With The AUTONOMY CRISIS
.

       

PHASE 1:
Growth Through CREATIVITY Which May Culminate With The LEADERSHIP CRISIS.

         
 

Age Of The Organization 

Young Company                                                                 Mature Company

Adapted and reprinted by permission of Harvard Business Review, "The Five Phases Of Growth", from "Evolution and Revolution As Organizations Grow", by Larry E. Greiner, May - June 1998, Copyright © 1998 by the President and Fellows of Harvard College; All rights reserved

8. PHASE 1: THE CREATIVITY PERIOD

PHASE 1: THE CREATIVITY PERIOD

In the birth stage of an organization, the emphasis is on creating both a product, or service, and a market. The characteristics of the Phase 1 - The Creativity Period are outlined below.

CHARACTERISTICS OF PHASE 1 - THE CREATIVITY PERIOD

1.

The founders of the company are usually technically or entrepreneurially oriented and they generally dislike management activities; their physical and mental energies are absorbed entirely by making and selling a new product or developing and providing new service.

2.

Communication among employees is frequent and informal.

3.

Long hours of work are rewarded by modest salaries and the promise of ownership benefits.

4.

Decisions and motivation are highly sensitive to marketplace feedback;  management acts as customers react.

All the foregoing individualistic and creative activities are essential for a company to get off the ground. But as the company grows, those very activities become the problem, as illustrated below.

TYPICAL PROBLEMS DURING THE CREATIVITY PERIOD

1.

Larger production runs require knowledge about the efficiencies of manufacturing.

2.

Increased numbers of employees cannot be managed exclusively through informal communication, and new employees are not motivated by an intense dedication to the product or organization.

3.

Additional capital must be secured, and new accounting procedures are needed for financial control.

4.

The company's founders find themselves burdened with unwanted management responsibilities. They long for the "good old days" and try to act as they did in the past.

5.

Conflicts among harried leaders emerge and grow more intense.

 

LEADERSHIP CRISIS

At this point Leadership Crisis occurs which is the onset of the Phase 1 Revolution.
 

Who will lead the company out of confusion and solve the managerial problems confronting it? Obviously, a strong manager is needed - one who has the necessary knowledge and skills to introduce new business techniques. But finding that manager is easier said than done. The founders often resist stepping aside, even though they are probably temperamentally unsuited to do the job.

So here is the first critical choice in an organization's development: to locate and install a strong business manager who is acceptable to the founders and who can pull the organization together or to keep the management status unchanged.

9. PHASE 2: THE DIRECTION PERIOD

PHASE  2: THE DIRECTION PERIOD

Those companies that survive the first phase by installing a capable business manager usually embark on a period of sustained growth under able and professional leadership. The characteristics of the Phase 2 - The Direction Period are outlined below.

CHARACTERISTICS OF PHASE 2 - THE DIRECTION PERIOD

1.

A functional organizational structure is introduced to separate manufacturing and operations from marketing activities and job assignments become increasingly specialized.

2.

Accounting systems for inventories and purchasing are introduced.

3.

Incentives, budgets, and work standards are adopted.

4.

Communication becomes more formal and impersonal as a hierarchy of titles and positions grows.

5.

The new business manager and his or her key supervisors assume most of the responsibility for instituting direction, and lower-level supervisors are treated more as functional specialists than autonomous decision-making managers.

Although the new directive techniques channel employees' energy more efficiently into growth, they eventually become inappropriate in controlling a more diverse and complex organization.

TYPICAL PROBLEMS DURING THE DIRECTION PERIOD

1.

Lower-level employees find themselves restricted by a cumbersome and centralized hierarchy.

2.

Lower-level employees have come to possess more direct knowledge about markets and machinery than do their leaders at the top.

3.

Consequently, lower-level employees feel torn between following procedures and taking initiative on their own.

 

AUTONOMY CRISIS

Thus, the Phase 2 Revolution emerges from Autonomy Crisis. The solution adopted by most companies is to move toward more delegation. Yet it is difficult for the top-level managers, who previously were successful at being directive, to give up responsibility to lower-level managers.

Moreover, the lower-level managers are not accustomed to making decisions by themselves. As a result, numerous companies' founder during this revolutionary period by adhering to centralized methods, while lower-level employees become disenchanted and leave the organization.

10. PHASE 3: THE DELEGATION PERIOD

PHASE 3: THE DELEGATION PERIOD

The next phase of growth evolves from the successful application of a decentralized organizational structure. The characteristics of the Phase 3 - The Delegation Period are outlined below.

CHARACTERISTICS OF PHASE 3 - THE DELEGATION PERIOD

1.

Much greater responsibility is given to the managers of plants and market territories.

2.

Profit centers and bonuses are used to motivate employees.

3.

Top-level executives at headquarters limit themselves to managing by exception based on periodic reports from the field.

4.

Management often concentrates on acquiring outside enterprises that can be lined up with other decentralized units.

5.

Communication from the top is infrequent and usually occurs by correspondence, telephone, or brief visits to field locations.

 

POSSIBLE EXPANSION DURING THE DELEGATION PHASE

The Delegation Phase allows companies to expand by means of the heightened motivation of managers at lower levels.

Managers in decentralized organizations, who have greater authority and incentive, are able to penetrate larger markets, respond faster to customers, and develop new products. A serious problem eventually emerges, however, as outlined below.

 

TYPICAL PROBLEMS DURING THE DELEGATION PERIOD

1.

Top-level executives sense that they are losing control over a highly diversified field operation.

2.

Autonomous field managers prefer to run their own shows without coordinating plans, money, technology, and personnel with the rest of the organization.

3.

Freedom breeds a parochial attitude among field managers within the organization.

 

CONTROL CRISIS

Soon, the organization falls into Control Crisis. The Phase 3 Revolution is under way when top management seeks to regain control over the company as a whole. Some top-management teams attempt a return to centralized management, which usually fails because of the organization's newly vast scope of operations. Those companies that move ahead find a new solution in the use of special coordination techniques.

11. PHASE 4: THE COORDINATION PERIOD

PHASE  4: THE COORDINATION PERIOD

The evolutionary period of the coordination phase is characterized by the use of formal systems for achieving greater coordination and by top-level executives taking responsibility for the initiation and administration of these new systems. The characteristics of the Phase 4 - The Coordination Period are outlined below.

CHARACTERISTICS OF PHASE 4 - THE COORDINATION PERIOD

1.

Decentralized units are merged into product groups.

2.

Formal planning procedures are established and intensively reviewed.

3.

Numerous staff members are hired and located at headquarters to initiate company-wide programs of control and review for line managers.

4.

Capital expenditures are carefully weighted and parceled out across the organization.

5.

Each product group is treated as an investment center where return on invested capital is an important criterion used in allocating funds.

6.

Certain technical functions, such as data processing, are centralized at headquarters, while daily operating decisions remain decentralized.

7.

Stock options and company-wide profit sharing are used to encourage employees to identify with the organization as a whole.

 

RED-TAPE CRISIS

All these new coordination systems prove useful for achieving growth through the more efficient allocation of a company's limited resources. The systems prompt field managers to look beyond the needs of their local units. Although these managers still have a great deal of decision-making responsibility, they learn to justify their actions more carefully to a watchdog audience at headquarters.

A lack of confidence, however, gradually builds between line and staff, and between headquarters and the field. The many systems and programs introduced begin to exceed their usefulness. Red-Tape Crisis is in full swing.

 

TYPICAL PROBLEMS DURING THE COORDINATION PERIOD

1.

Line managers increasingly resent direction from those who are not familiar with local conditions.

2.

Staff people, for their part, complain about uncooperative and uninformed line managers.

3.

Together, both groups criticize the bureaucratic system that has evolved.

4.

Procedures take precedence over problem solving and innovation dims.

In short, the organization has become too large and complex to be managed through formal programs and rigid systems. The Phase 4 Revolution is under way.

12. PHASE 5: THE COLLABORATION PERIOD

PHASE  5: THE COLLABORATION PERIOD

This observable phase emphasizes strong interpersonal collaboration in an attempt to overcome the red-tape crisis.

Where Phase 4 was managed through formal systems and procedures, the Phase 5 Revolution emphasizes spontaneity in management action through teams and the skillful confrontation of interpersonal differences. Social control and self-discipline replace formal control. This transition is especially difficult for the experts who created the coordination system, as well as for line managers who relied on formal methods for answers. The Phase 5 Evolution, then, builds around a more flexible and behavioral approach to management. 

The characteristics of the Phase 5 - The Collaboration Period are outlined below.

CHARACTERISTICS OF PHASE 5 - THE COLLABORATION PERIOD

1.

The focus is on solving problems quickly through team action.

2.

Teams are combined across functions to handle specific tasks.

3.

Staff experts at headquarters are reduced in number, reassigned, and combined into interdisciplinary teams that consult with, not direct, field units.

4.

A matrix-type structure is frequently used to assemble the right teams for the appropriate problems.

5.

Formal control systems are simplified and combined into single multi-purpose systems.

6.

Conferences of key managers are held frequently to focus on major problems.

7.

Educational programs are used to train managers the behavioral skills for achieving better teamwork and conflict resolution.

8.

Real-time information systems are integrated into daily decision-making processes.

9.

Economic rewards are geared more to team performance than to individual achievement.

10.

Experimenting with new practices is encouraged throughout the organization.

 

GROWTH CRISIS

All these new coordination and collaboration systems prove effective for achieving growth through the more efficient collaboration of a company's limited resources. The systems prompt field managers to look beyond the needs of their local units. Although these managers still have a great deal of decision-making responsibility, they learn to justify their actions more carefully to a watchdog audience at headquarters.

A lack of confidence, however, gradually builds between line and staff, and between headquarters and the field. The many systems and programs introduced begin to exceed their usefulness. Growth Crisis is in full swing.

13. PHASE 6: THE ALLIANCE PERIOD

PHASE  6:  THE ALLIANCE PERIOD

This observable phase emphasizes strong collaboration and possible alliance with other business organizations in an attempt to overcome the growth crisis and streamline the business operation. 

Where Phase 5 was managed through collaboration and based on a more flexible and behavioral approach to management within the organization, the Phase 6 Revolution emphasizes excessive management inefficiencies and unproductive labor within the organization. The Alliance Period is based on extraordinary solutions and looking for ways to further cut operating costs by outsourcing work, entering into a joint venture or merging with another organization, or being acquired by another holding company, thereby demonstrating a more pragmatic approach to crisis management.

The characteristics of the Phase 6 - The Alliance Period are outlined below.

CHARACTERISTICS OF PHASE 6 - THE ALLIANCE PERIOD

1.

The focus is on solving problems more cost-effectively through collaboration with other business organizations, including present and former competitors. This may also include implementation of new cost-reduction programs, outsourcing of work to large sub-contractors.

2.

The company may decide to enter into a joint venture deal with another partner or merge its operations with a similar business organization to become a leaner and more competitive business operation. This may entail reducing the number of managers and employees in each company to avoid duplication of efforts, to reduce expenses, and to streamline operational activities.

3.

The company may also decide to be acquired by its former competitor in a friendly takeover arrangement. This may also create a new business entity which could become a leaner and more competitive organization in the marketplace. Staff experts at headquarters are further reduced in number, reassigned, and combined into inter-disciplinary teams that consult with, not direct, field units.

4.

The company will continue with its emphasis to ensure high level of professionalism by its management personnel and employees. Additional emphasis may be on the multi-disciplinary approach to business management to ensure higher level of productivity and profitability and maximizing the benefits of effective Total Quality Control, Supply Chain Management, Kaizen, and Just-In-Time procedures.

5.

The company will also continue to expand its management and technological expertise and become more Internet-savvy by utilizing latest technological advances available online. Formal control systems are further simplified and combined into single multi-purpose systems.

Adapted and reprinted by permission of Harvard Business Review, "The Five Phases Of Growth", from "Evolution and Revolution As Organizations Grow", by Larry E. Greiner, May - June 1998, Copyright © 1998 by the President and Fellows of Harvard College. All rights reserved.

14. GREINER'S CONCLUSIONS REGARDING ORGANIZATIONAL DEVELOPMENT

GREINER'S CONCLUSIONS REGARDING ORGANIZATIONAL DEVELOPMENT

Greiner's Model Of Organizational Growth And Development suggests that:

"The organization grows out of its structure despite the structure's initial suitability. An important factor which managers should keep in mind, therefore, is that no management structure is suitable forever. Hence, it is essential to identify the present stage of your company's development, to create an appropriate management structure, and to evaluate its suitability on a regular basis."

You must also keep in mind that the development of each of the six phases, identified by Larry E. Greiner, may be slower in some companies, and faster in others, depending upon that company's age, size, and whether that company is in a low-growth industry, medium-growth industry, or high-growth industry.

Greiner's conclusions for various types of industries are summarized below.

GREINER'S CONCLUSIONS RELATED TO
THE ORGANIZATIONAL GROWTH AND DEVELOPMENT

   

Low-Growth
 Industry
 (Stable 
Environment)

 

Medium-Growth
 Industry 
(Changing
 Environment)

 

High-Growth 
Industry
 (Turbulent
 Environment)

It usually takes a company long time to undergo all five development phases in a low-growth industry.   It usually takes a company less time to undergo all five development phases in a medium-growth industry, in comparison with the low-growth industry.   It usually takes a company least amount of time to undergo the five development phases in a high-growth industry.

Larry E. Greiner offers the following important suggestions to entrepreneurs, business owners, and managers to ensure Effective Organizational Development. (37).

HOW TO ENSURE EFFECTIVE ORGANIZATIONAL DEVELOPMENT

 1. Know Where You Are In The Organizational Developmental Sequence.

 2. Recognize The Limited Range Of Optional Solutions.

 3. Realize That Some Solutions May Breed New Problems.

 4. Be Prepared To Introduce New Solutions Before The Existing Solutions Become Real  Problems.

Note:

Larry E. Greiner is a Professor of Management and Organization at the University of Southern California's Marshall School of Business in Los Angeles.

Adapted and reprinted by permission of Harvard Business Review, "The Five Phases Of Growth", from "Evolution and Revolution As Organizations Grow", by Larry E. Greiner, May - June 1998, Copyright © 1998 by the President and Fellows of Harvard College. All rights reserved.

15. WHAT IS CHANGE MANAGEMENT?

WHY DO WE NEED CHANGE?

Jack Welch, the former chairman and CEO of General Electric and the founder of the Jack Welch Management Institute, said:

"When the rate of change outside exceeds the rate of change inside, the end is in sight".

According to Greiner's Model Of Organizational Growth And Development, each organization will find itself in one of the six stages of organizational development discussed above. For this reason, you and your management team should ask yourself one simple question:

At what stage is our organization, based on the Greiner's Model of organizational growth and development?

Once you and your management team identify at what stage of the Greiner's Model development your organization is, you will be in a better position to adopt a pro-active approach and move forward with the change management process to avoid any potential crisis and to secure a brighter future for your organization.

 

CHANGE MANAGEMENT PROCESS

Change Management is a structured approach designed to facilitate a smooth and successful transition by individuals, teams, and organizations from their current state to a desired future state to maximize the organizational performance and results.

Change Management Process entails a detailed evaluation of the current state parameters within an organization and a thorough planning of new parameters in the desired future state.

The change management process requires evaluation of existing conditions in the marketplace, evaluation of existing operational systems within the organization, development of new strategies and objectives designed to improve the organization's performance, development and implementation of the change management process sequence.

 

CHANGE MANAGEMENT PROCESS QUESTIONS

 
You and your management team should ask specific questions before proceeding with the change management process. These questions may include the following:
 
• Are we satisfied with our company's current performance in the marketplace?
• Do we need to adjust our organizational structure due to recent changes in the marketplace?
• Can we improve our business performance by making changes in our organizational        structure?
• Do we need to employ additional personnel to meet new challenges in the marketplace?
• How will our employees react to proposed changes in our organizational structure?
• Are we committed to introduce the change management process to secure our company's   future?
 

THE EIGHT-STEP PROCESS FOR LEADING CHANGE

 
John Kotter, a best-selling author and authority on leadership and change management, developed The Eight-Step Process For Leading Change. According to this process, you and your management team should do the following;
 
1. Establish a sense of urgency for change within your organization.
2. Create the guiding coalition of employees to implement change within your organization.
3. Develop a clear vision of change shared by your entire management team.
4. Communicate the vision of change to encourage employee participation on a company-wide     basis.
5. Empower employees to clear obstacles to change and foster a "can-do" culture.
6. Secure short-term wins and build confidence among employees within the organization.
7. Consolidate positive results of the change process and keep moving forward.
8. Incorporate the changes into your company's culture to avoid reversal to old habits and     status-quo.
 

ADDITIONAL INFORMATION ONLINE

Organizational Change By Woody Allen.
What Is Change Management By Gavin Wedell.
Change Management By The Virtual Consultancy.
Organizational Change Management By Wipro Videos.
A Brief Introduction To Change Management By Paul Brown.

16. IMPLEMENTATION OF THE CHANGE MANAGEMENT PROCESS

REQUIREMENTS FOR A SUCCESSFUL CHANGE MANAGEMENT PROCESS

The implementation of the Change Management Process is similar in certain ways to the Management By Objectives Process, discussed in detail in this tutorial. You and your management team must create specific conditions within your organization to ensure effective implementation of the change management process:

1. Employees must be willing to take a hard look at their current situation.
2. Effective communication is essential to ensure employee participation in the change process.
3. Employees must be willing to participate in the change management process.
4. Employees must participate in the change management decision-making process.
5. Employees' must be willing to take "ownership" for the outcome of the change management    process.

The Change Management Process entails a number of steps which are summarized below.

STEPS IN THE IMPLEMENTATION OF THE CHANGE MANAGEMENT PROCESS

Step 1: Identify Specific Reasons Which May Require Organizational Change In Your Company.

Step 2: Develop Planned Goals And Objectives Related To The Organizational Change Process.

Step 3: Specify Methods Of Achieving Your Objectives Related To The Organizational Change Process.

Step 4: Specify Time Parameters Related To The Organizational Change Process.

Step 5: Communicate The Planned Changes And Reasons For Change To All Employees In A Clear And Timely Manner.

Step 6: Involve The Management Team And Employees In Implementing The Change Management Process.

Step 7: Explain All Steps That Will Be Undertaken To Avoid Any Uncertainty Among Employees.

Step 8: Encourage Employees' Pro-Active Participation In The Change Management Process.

Step 9: Identify Any Possible Information Vacuum Related To The ChangeManagement Process And Fill The Gaps.

Step 10: Ensure Complete Transparency During The Change Management Implementation Process.

Step 11: Secure Short-Term Achievements And Build Confidence Among Employees Within The Organization.

Step 12: Consolidate Positive Results Of The Change Process And Keep Moving Forward.

Step 13: Incorporate The Changes Into Your Company's Culture.

 

 

ADDITIONAL INFORMATION ONLINE

Leading Corporate Transformation By Yodhia Antariksa.
Change Management Versus Change Leadership By John Kotter.
What Is Change Management By Jennifer Witt, Project Management.
Overcoming Resistance To Change - Isn't It Obvious By Learning TOC.
Change Management 30 Seconds Training By Management Consultancy.

17. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

18. THE LATEST INFORMATION ONLINE

 

LESSON FOR TODAY:
Change Is Inevitable. Growth Is Optional.

John C. Maxwell

Go To The Next Open Check Point In This Promotion Program Online.