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. Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 2–3 An Integrated Framework for the External, Organizational, and Evaluative Contexts of Leadership Figure 2.1 Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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) Copyright © 2005 South-Western. All rights reserved. 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?) Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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? Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 2–13 The Horizontal and Vertical Dimensions of Division of Labor in a Manufacturing Firm Figure 2.2 Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 2–22 Traditional Versus Reengineered Organizational Designs Table 2.1 Copyright © 2005 South-Western. All rights reserved. 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? Copyright © 2005 South-Western. All rights reserved. 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) Copyright © 2005 South-Western. All rights reserved. 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.” Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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? Copyright © 2005 South-Western. All rights reserved. 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. Copyright © 2005 South-Western. All rights reserved. 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 Copyright © 2005 South-Western. All rights reserved. 2–32