1e.
Chapter 2
Globalization,
Organizational Design,
and Context
Copyright © 2005 South-Western. All rights reserved.
PowerPoint Presentation by Charlie Cook
Chapter Objectives
After completing this chapter, you should be able to:
 Identify the various contexts of leadership.
 Understand the implications of these contexts for
leader–follower relationships.
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2–2
An Integrative Framework
• An integrative, or “open,” model for examining
leader– follower relations that is divided into four
contextual components.
 External context: environmental forces.
 Organizational context: processes for converting
inputs into outputs within a cultural and human
resource management milieu.
 Evaluative context: assessment of organizational
processes.
 Feedback: a loop flowing back from evaluation into
the organization and hence into the environment.
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2–3
An Integrated Framework for the External, Organizational,
and Evaluative Contexts of Leadership
Figure 2.1
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2–4
The External Context
• Economic Context
 Globalization (“disorganized capitalism”)
 Reduced trade barriers, more global capital flows,
declining transportation costs, portable new
technologies, and integrated financial markets
 Multinational companies (MNCs)
 World-wide distribution of human and capital
assets for competitive advantage
 Labor market flexibility
 “Core” or “peripheral” workers
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2–5
The External Context (cont’d)
• Technological Change
 Advanced microprocessor-based technology (MBT)
that radically changes work processes.
 Conventional technical change—new machinery that
does not incorporate microelectronic technology.
 Organizational (structural) change involving in work
organization (e.g., self-managed teams) or job design
but not new machinery.
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2–6
The External Context (cont’d)
• Political Context
 General economic management
 Supply-side
economics
 Deregulation
 Labor law reform and human resource management
 Pro-individualistic
versus pro-collective regulations
 Current and future quality of the natural environment
 Asymmetrical
 Kyoto
worldwide environmental destruction
Protocol on Climate Change
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2–7
The External Context (cont’d)
• Social Forces
 Changing workforce demographics
 An
aging workforce in Western economies
 Increasing social and cultural diversity
 Class,
ethnicity, and gender
 Language
 Religion
and customs
and philosophy
 Value
systems and attitudes toward work (work-life
balance)
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2–8
Reflective Question ▼
• Look at Figure 2.1.
 What recent external events have impacted your
workplace, the workplace in which a member of
your family is employed, or a workplace you have
studied.
 How has the management responded to such
contextual changes? (For example, has it
introduced a new business strategy or new
methods of working?)
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2–9
The Organizational Context
• The Strategy
 A pattern of activity that top leaders perform over time
to achieve organizational performance goals.
 Corporate,
business, and functional
 Strategic leadership: the ability to articulate a vision
for the organization and to motivate followers to
support that vision.
 Strategic formulation: involves senior leaders’
evaluating strategic factors and making strategic
choices that guide the organization to meet its goals.
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2–10
The Organizational Context (cont’d)
• Strategies based on differentiation require:
 Flexible followers, able to quickly and easily cross
over job boundaries.
 The creation and maintenance of a required
knowledge base.
 An appropriate corporate culture, which encourages
commitment to organizational goals.
 A strategy and planning function within human
resource management that aims to mesh strategic
needs with operational requirements.
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2–11
View CD
• Go to the CD-ROM and work through the
Organizational Design and Leadership
section.
 How do the practitioners address how their
businesses are changing?
 What contextual factors do they focus on?
 Explain the links among the market conditions
faced by the firms.
 How useful is the concept of strategic choice in
explaining management actions in these firms?
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2–12
The Organizational Context (cont’d)
• The Organizational Structure
 The manner in which an organization divides its
specific work activities and achieves coordination
among these activities.
 Division of labor (dimensions)
 The horizontal dimension involves grouping work
activities into subunits, or departments, and then
into jobs (specialization of the workforce).
 The vertical dimension is concerned with
apportioning authority for planning, decision
making, and monitoring.
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2–13
The Horizontal and Vertical Dimensions of
Division of Labor in a Manufacturing Firm
Figure 2.2
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2–14
The Organizational Context (cont’d)
• Structural Components
 Complexity: a measure of the degree of differentiation
within the organization, levels of hierarchy, and the
number of geographical locations of work units.
 Horizontal complexity: the division of tasks
 Specialization
and departmentation
 Vertical complexity: levels of hierarchy
 Flat
and tall organizations
 Spans
of control
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2–15
The Organizational Context (cont’d)
• Structural Components (cont’d)
 Formalization: the degree of standardization of work
and jobs within the organization is defined and
controlled by rules.
 Centralization: the degree to which decision making is
concentrated at a single point in the organization.
 Decentralization

and autonomy
Centralization and control
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2–16
Models of Organizational Structure
• Mechanistic
• Organic
 High complexity
 Low complexity
 High formalization
(bureaucratic)
 Low formalization
 High centralization and
formal coordination
 Downward vertical
communications
 Maximizes efficiency and
productivity
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 Low centralization and
informal coordination
 Participative decision
making
 Horizontal and vertical
communications
 Maximizes adaptability
and flexibility
2–17
Mintzberg’s Five Core Parts of a Work Organization
Source: Based on Mintzberg, H. (1979). The Structuring of Organizations. Englewood
Cliffs, NJ: Prentice Hall, pp. 215–297; Mintzberg, H. (1981). “Organization Design:
Fashion or Fit?” Harvard Business Review 59, January–February, pp. 103–116.
Copyright © 2005 South-Western. All rights reserved.
Figure 2.3
2–18
A Functional Configuration in
an Engineering Company
Source: Bratton J., and Gold, J. (2003). Human
Resource Management: Theory and Practice, 3rd ed.
Basingstroke, UK: Palgrave Macmillan.
Copyright © 2005 South-Western. All rights reserved.
Figure 2.4
2–19
A Product Configuration
in an Auto Company
Source: Bratton J., and Gold, J. (2003). Human Resource Management:
Theory and Practice, 3rd ed. Basingstroke, UK: Palgrave Macmillan.
Copyright © 2005 South-Western. All rights reserved.
Figure 2.5
2–20
A Matrix Configuration in
an Engineering Company
Source: Bratton J., and Gold, J. (2003). Human Resource Management:
Theory and Practice, 3rd ed. Basingstroke, UK: Palgrave Macmillan.
Copyright © 2005 South-Western. All rights reserved.
Figure 2.6
2–21
Business Process Reengineering (BPR)
• Changing how an organization relates to its
value-adding operational work.
 Employees are seen as a valuable asset, capable of
serving the customer without command and control
leadership.
 The firm develops a market-driven focus on the
relationship between buyer and seller of services or
goods, rather than the relationship between employer
and employee.
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2–22
Traditional Versus Reengineered
Organizational Designs
Table 2.1
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2–23
Reflective Question ▼
• Go to the following Web sites:
 Center for the Study of Work Teams
http://www.workteams.unt.edu
 DaimlerChrysler AG
http://www.daimlerchrysler.com
 Canadian Auto Workers Union
http://www.caw.ca
• Why have these organizations introduced teams?
• Do teams always improve organizational
performance?
• Why are trade unions skeptical of work teams?
• How have teams affected organizational structures
and leadership styles?
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2–24
Technology and Structure
• Production Technology
(Woodward)
• Types of Technology
(Perrow)
 Unit production
(customized output)
 Routine
(few exceptions)
 Mass production
(standardized output)
 Engineering
(many exceptions)
 Continuous-process
production
(flow output)
 Craft
(limited exceptions)
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 Nonroutine
(many difficult
exceptions)
2–25
Technology and Leadership
• The Contingency Approach
 Suggests a situational relationship between types of
technology and organizational structure and
leadership style.
• Labor Process Theory
 Considers economic and political interests (capital
accumulation) that lie behind technological change.
 New technology “deskills” work in order to increase
management control over the labor process.
 Critics countered with the suggestion of a strategy
of “responsible autonomy.”
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2–26
The Concept of Strategic Choice
• Strategic Choice
 Emphasizes the importance of managerial choice in
decisions about the implementation of technology.
 Can be considered a political process in the exercise
of a power leader’s prerogative to make decisions.
 Suggests that dominant coalitions are not necessarily
the holders of formal power within the organization.
 Effective leaders serve as “creative mediators”;
allowing followers to modify the strategic decisions
made by the leaders.
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2–27
People and the Leadership Process
• Individual differences can affect how followers
behave and relate both to other followers in the
workplace and to leaders:
 Personal attributes (e.g., age, education, abilities, and
gender)
 Attitudes and values about work
 Social needs and preferences, experience, and
expectations
 Cultural background
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2–28
Organizational Culture and Leadership
• Culture
 Is the social processes, bonds, underlying
assumptions, belief systems, espoused values,
norms, language, behavioral rituals, and myths that
uniquely identify an organization.
 Is neither natural nor fixed; rather it is created through
socialization and learning.
 Generates commitment and enthusiasm among
followers by making them feel that they are part of a
“family” and participants in a worthwhile venture.
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2–29
Reflective Question ▼
• Think about an organization where you have
worked or studied.
 Can you identify a set of characteristics that
describe its culture?
 If its leaders sought to have a paradigm shift to a
culture characterized as innovative, what might
its socialization program look like?
 Is socialization equivalent to brainwashing?
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2–30
Human Resource Management (HRM)
and Leadership
• Human Resource Management
 Is the body of knowledge and techniques associated
with regulating followers’ behavior.
 Helps leaders meet organizational objectives and
resolve conflict stemming from the tension inherent in
the employment relationship.
 Involves fostering desired forms of follower behaviors
related (fitted) to accomplishing aspects of the
business strategy.
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2–31
The Evaluative Context
• Questioning Leadership
 Does leadership really matter?
 Do certain leadership activities actually lead to highperformance organizations?
• Measuring Leadership’s Effects on Outputs
 Operating performance
 Units
produced, quality, and sales
 Financial performance
 Return
on investment, market share, profits, and
stock price
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2–32