Food for thought
A central problem in organizational change is
that “the whole burden of change typically
rests on so few people. In other words, the
number of people at every level who make
committed, imaginative contributions to
organizational success is simply too small.”
--- Pascale (et al. 2000)
Session 4
Managing Change at the
inter-personal Level
Topics for Today
• The role of incentives for individual behavior.
– Debate: Extrinsic or intrinsic motivation?
– Summary and takeaways
• Interpersonal relationships and organizational
change
– Topic 1: The social capital of entrepreneurial
managers
– Case study: Managing Xerox’s MDC
– Topic 2: Empowerment as a strategy for
organizational change
– Summary and takeaways
Theme 2: On Motivating People
• Management is about managing people
– The mission of business school training
– The cases of Silicon Valley and Morgan Stanley
• Is incentive an indispensable managerial tool?
– What is incentive?
– Do people respond to incentives?
– The folly of rewarding A, while hoping for B
• What kinds of incentives?
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Incentive pay or intrinsic motivation?
Individual-based or collective-based
Short-term based or long-term based?
Types of jobs (professional versus nonprofessional)
Debate:
Extrinsic or Intrinsic Motivation?
Extrinsic motivation
• For
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The bottom line: economic rewards have to be competitive
Economic rewards are indicators of achievement and status
Incentive pay (to induce higher level of efforts)
Labor costs versus labor investment.
• Against (Kohn):
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Induces only temporary compliance.
Pay is not a motivator.
Rewards punish.
Rewards rupture relationships.
Rewards ignore reasons.
Rewards discourage risk-taking.
Rewards undermine interest.
Intrinsic Motivation
• For:
– The Hawthorn experiment;
– Individuals enjoy work, collective activities;
– Individuals respond to peer pressures, social
comparison;
– Socialization, professional training shape behaviors;
• Against (?):
– To what extent?
– Under what conditions?
In general, the more cognitive
sophistication and open-ended thinking
that was required, the worse people
performed when working for a reward.
— Aflie Kohn (2000, p. 55)
Summary and takeaways
• Motivation and incentive matter.
• Incentives take different forms
– Financial, social recognition
– Individual-based, collective-based
– Short-term, long-term
• Motivations vary with—
– Work environments
– Different types of career lines
– Stages in the life course
• A key managerial task is to figure out what motivates
your employees and design your ‘incentive plan’
accordingly.
Managing changes at interpersonal level
• Beyond individuals and into social relations
• Types of social relations
– Organization chart versus informal social groups
– Social capital
– Corporate culture: mutual expectations, tacit
knowledge
• Implications for entrepreneurial managers
– The use of social capital
– Empowerment
Social Capital
• Definition: the wealth of a manager’s relationships
within and beyond the firm
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Relationship and information
Relationship and opportunities
Relationship and control
Relationship and solidarity
• Social capital versus human capital
- Investment in social relationships pays!
- Relational property versus individual property
- Focuses on the value a manager adds through other people
• A form of network structure
Strength of Weak Ties
(Granovetter 1973, 1983)
• Actors gain novel information from less
intimate ties than close ties
– actors who are strongly connected share information
directly, therefore they possess the same knowledge
– new information comes from external connections
which are likely to be weak
• Example
– Job search
– Adoption of innovation
– Learning among managers
Tie Strength Argument
Actors B & D have a weak link thus are in a more
likely position to acquire novel information which
gives them a better opportunity for early adoption
B
A
C
E
D
F
Structural Equivalence
(Burt 1987)
• Actors who are identically positioned within a
network use one another as a frame of
reference to evaluate their relative adequacy
– actors are not necessarily directly connected
– actors are in competition with one another
– actors who are in the same equivalence class
(status) tend to adopt at the same time
Structural Equivalence Argument
Actors B & D are structurally equivalent and
have an indirect awareness of one another;
thus they will adopt similarly
B
A
C
D
Structural Holes
(Burt 1992)
• An actor is in a more advantageous position to
gain and control novel information if s/he is
connected to others who themselves are not
directly connected to one another.
– Nonredundant sources of information allow
efficiency with little constraint
– Developed to explain interpersonal communication
in a competitive environment
Structural Holes Argument
Both actors A & B are connected to 4 others. Actor A is
highly constrained with only 1 nonredundant tie. Actor B
has 4 nonredundant ties and is in a better position to
access novel information and adopt early.
A
F
X
W
B
C
E
D
Z
Y
Efficiency in social network
Structural hole versus solidarity
• Structural holes facilitate efficiency in
information exchange and control
• But solidarity requires dense and redundant ties
• Examples
– Informal groups
– Promotion
Case Study:
John Clendenin and Xerox’s MDC
What do you think of Clendenin in his
managerial role?
• Professional goals
– Career goals
– Where he fits
• Entrepreneurial
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Building social capital
Creating opportunities
Getting resources
Expanding power
• As a manager
– The management of MDC
How Social Capital Helps?
• Parts and Supply Administration Manager
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key contact: Tom Gunning
Gaining information and cooperation
• Access to Opportunity in MSDC
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Key contact: Les Elstein
Creating opportunities
• Developed plan for new MDC
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Key contact: Sy Zivan
Mobilizing resources
MultinatÕl
Work Group
Sy Zivan
P. Ketchem
Steering
Comm.
J. Clendenin
T . Gunning
Les Elstein
MDC
Corp.
Info
Mgmt.
CISB
The political lens
• MDC’s growth threatens other corporate units
and causes tensions with Hewitt;
• Conflicts between MDC and other units in
overlapping authorities (p. 7).
• At MSDC, the interests of the lower-level
managers are not consistent with that of Xerox.
• Conflict management: building coalitions
The cultural lens
• The Corporate culture of Xerox is in many ways
the same as the Marine Corps. There is a
definite way of doing things and an “order” to
things that was often explicit. I feel very
comfortable working there.
• A close-knit society – a strong in-group culture
Strategic design
• Between MDC and other parts of Xerox
– Changes in Xerox, MDC’s mission, and MDC’s
reporting lines
– Tension with other units
• Within MDC
– Charismatic leadership
– Human resource management: informal, trust
– Culture and incentives at MDC
Clendenin’s Decision
Stay at MDC
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Pros
Use of existing
Social Capital
Past experience
Independence
Discretion with
regard to decisions
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Cons
2 year commitment
Reduced Scope
Relationship with
Hewitt
Diminished
reputation and role
Clendenin’s Decision
Accept Corporate Position
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Pros
Expanded
responsibilities
Opportunity to
expand network
Possibility to jump
ship
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Cons
Uncertainty of
“The fit between
Situational Requirements
and Personal Traits”
Lateral Move
Pressure to Succeed
Summary and takeaways
• Key ideas from social capital argument
– Actors and their actions are viewed as interdependent units
– Relational ties between actors are channels for transfer of
resources
– Network structures provide opportunities as well as constraints
on individual action
• Different network structures facilitate different types of
strategic action
– Structural holes – information
– Dense social relations – social integration
• For entrepreneurial change agent: Social capital plays an
important role in the change process
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acquiring information
creating opportunities
mobilizing resources
Making things happen