Unit 5
Determine the Focus
and Direction of
Improvement
Unit Objectives:
1. To discuss several approaches to
determine the focus and direction of
improvement.
2. To discuss relevant classical
management theories to implement
improvement; and
3. To introduce emerging strategies of
improvement.
Approaches to determine focus
& direction of improvement
 There are several approaches that
may be used to determine the focus
and direction of improvement in
organization.
 The approaches include
(a) the key organizational components
approach (Leavitt, H,.J,, 1964) and
(b) the systems theory approach (Bartol,
K.M. and Martin, D.C., 1994).
Other approaches: The classical
Management Theories
 The classical management theories
include:
1. bureaucratic theory,
2. human relations theory, and
3. contingency theory.
4. Theory Z
Emerging Strategies of Improvement
 Emerging strategies of improvement
such as:
1. customer-oriented/driven strategy,
and
2. process-oriented Strategy
 These two will be dealt in details in
separate units.
Key Organizational Components
Approach
 According to Leavitt (1964),
significant changes and innovations
usually involve alterations in one or
more of these key components:
1. structure,
2. technology,
3. human resources and
4. culture (see exhibit 1).
Key Organizational Components
Approach (Exhibit 1)
Technology
Human
Resources
Structure
Culture
Interrelated components
 Since these components are
somewhat interrelated, a change in
one may create the need for
adjustments or adaptations in others.
Structural Components
 Organization structure is the pattern
interactions and coordination
designed by management to link the
tasks of individuals and groups in
achieving organizational goals.
 Structure determines how division of
work, responsibility, cooperation,
consultation and decision levels need
to be created in organizations.
Structural Components
 Structure includes such factors as the way
jobs are defined and clustered into work
units and the various mechanisms used to
facilitate vertical and horizontal
communication (e.g., delegation and the
use of interdepartmental teams).
 Structure must be adapted as
circumstances change, reorganization are
common and results in continuous
restructuring.
Structural Components
 Reorganizations influence change by
altering the pattern of interactions and
coordination.
 Research suggests that reorganizations
representing a quantum change – a change
that is both concerted and dramatic – tend
to be more frequently associated with
subsequent high performance than do
piecemeal and incremental reorganization.
Technology Components

1.
2.
3.
4.
5.
Technology involves
the knowledge,
tools,
machines,
equipment, and
work technique, used by an
organization in delivering its
products or services.
Technology Components
 Changes in technology are reflected
both in major new products and
services and in frequent
improvements in current products
and services.
 Technological change is an important
factor in international competition.
Technology Components
 Technological innovations are also
altering the work methods in
organizations.
 Technological changes often affect the
number of employees required and
the types of skills they need.
Human Resources Components
 Bringing about improvement or
change in individuals in the
workplace is typically aimed at
altering
1. the knowledge,
2. skills,
3. perceptions, and
4. behaviors needed to do the job more
effectively and efficiently.
Human Resources Components
 Changing individual relies on training
and development activities,
supplemented by performance
appraisal and reward systems that
reinforce the needed behaviors.
 Frequently, recruitment and selection
systems must be adjusted to reflect
the needs for individuals with
differing skills.
Human Resources Components
 Having individuals who possess the
knowledge and skills required to handle
changing circumstances takes careful
planning.
 Improvement/change in human resource
systems are necessary to enhance the
effectiveness of alterations made in other
organizational components, such as
structure and technology.
Culture Components

1.
2.
3.
4.
Organizational culture is a system of
shared values,
assumptions,
beliefs and
norms that unite members of the
organization.
Culture Components
 A number of organizations attribute their
success partly to distinctive cultures that
are rooted in values articulated by strong
founders and reinforced by subsequent
leaders.
 Some have made cultural changes based on
such factors as visions of their leaders or
threats to survival. For example from
money-losing, little concern for customers,
costs, or productivity to one that
emphasizes customer focus, productivity,
and initiatives
Culture Components
 The change in culture may be part of
the major changes that help the
transformation.
 Major organizational changes often
require alterations in organizational
culture.
 A major change in one component
tends to have implications for the
others.
The Systems Theory Approach
 The systems theory approach is
based on the notion that
organizations can be visualized as
systems.
 A system is a set of interrelated
parts that operate as a whole in
pursuit of common goals.
Exhibit 2: The Classic Systems
Approach
 According to the
systems approach,
an organizational
system has three
major components:
input, process and
output (see exhibit
2).
INPUT
PROCESS
OUTPUT
The Contemporary Systems
Approach
 However according to Bartol and
Martin (1994) the expanded version
of systems approach has four main
components as follow:
1. inputs,
2. transformation processes,
3. outputs and
4. feedback (see Exhibit 3).
Exhibit 3: The Contemporary
Systems Approach
RESOURCES:
Human
Materials
Equipment
Financial
Informational
INPUT
MANAGERIAL &
TECHNOLOGICAL
ABILITIES:
Planning
Organizing
Leading
Controlling
Technology
TRANSFORMATION
PROCESSES
OUTCOMES:
Products & services
Profit and loses
Employee growth and
satisfaction
OUTPUT
FEEDBACK FROM ENVIRONMENT
INFORMATION ABOUT
Results
Organizational status
The Advantages of Systems
Approach
 The systems approach has a number of
advantages:
 First, it can analyze systems at different
levels (individual, group, organization,
society and supranational level).
 Second, the systems view provides a
framework for evaluating how well the
various parts or components of an
organization interacts to achieve a common
goal.
The Advantages of Systems
Approach
 Third, it emphasizes that a change in one
part of the system may affect other parts.
 Fourth, the systems approach considers
how a organization interacts with its
environment – the factors outside the
organization that can affect its operations.
In order to consider the environment
adequately, an organization needs to
operate as an open system.
Open System
 Open system is a system that operates in
continual interaction with its environment.
 Through such interaction the system takes
in new inputs and learns about how its
outputs are received by various important
outside elements.
 This open system received numerous
feedback compared to a closed system.
Characteristics of Open System
 Three major characteristics of open
systems are
1. negative entropy,
2. differentiation, and
3. synergy.
Negative entropy:
 It is the ability of the open systems
to bring in new energy, in the forms
of inputs and feedback from the
environment, in order to delay or
arrest decay over time (entropy).
Differentiation:
 Is the tendency of open systems to
become more complex.
 The increased complexity usually
stems from the addition of
specialized units to handle
particularly troublesome or
challenging parts of the
environment.
Synergy:
 Is the ability the whole to equal more
than the sum of its parts.
 This means that an organization
ought to be able to achieve its goal
more effectively and efficiently than
would be possible if the parts
operated separately
Open System
 According to the systems viewpoint,
managers are likely to be more
successful if they attempt to operate
their units and organizations as open
systems that are carefully attuned to
the factors in the environment that
could significantly affect them.
Determine the New Focus and
Direction
 Intended improvement strategies must be
in line with its vision and purpose/mission.
 In other words all improvement strategies
must be aligned with its grand strategic
plans.
 For an organization, continuing to do the
same things it has done in the pass may
not help it survive, let alone be competitive
in a dynamic, at time erratic and
unpredictable business environment.
Introduction
 Even trying to do the same thing harder, or
fine-tuning it, may not pay off.
 Things have to be done differently.
Structures, processes, methods, and
product technologies that were appropriate
to the earlier market conditions may not be
relevant to present or future markets.
 These have to be replaced by new
structures, processes, and methods
relevant to changing times.
Introduction
 Organizations may have to reset
themselves on a different set of basic
assumptions and business opportunities
that relate to





customer focus,
competitive intelligence,
its knowledge and competency base,
innovativeness,
a new products/services or markets.
Introduction
 Designing a new state is possible if
organization is clear as to what the
new focus and direction of
improvement.
 That is, it needs to be clear about its
intended improvement and it should
be in line or aligned with its grand
strategic plans.
Introduction
 It has to examine its
 current strength and weaknesses in the
context of opportunities,
 threats, and
 dynamism of the business environment,
while identifying what should be
improved or changed and how, and
determining the pace of improvement or
change (see Exhibit 4).
Align With
Strategic Plan
Vision
Mission
Intended
Improvement
AREA OR FOCUS
OF IMPROVEMENT
DIRECTION
OF IMPROVEMENT
OUTCOME
Feedback from Environment
INPUT
Knowledge
Skill
Experience
Information
Facilities
Machines
Tools
Materials
Supplies
Energies
PROCESS
OUTPUT
Product
By-products
Service
Employee education &
training
Employee morale
Cost reduction
Technology effeciency
Quality and cheaper materials
Less wastage
Input quality assurance
Less energy, less pollution
Work procedures
Work safety
Reduce process time
Quantity
Quality of products,
services & work
Defect or error reduction
Value-added product or service
Meeting delivery schedules
Individual Effectives
-Job satisfaction
-Performance
-Personal development
Team Effectiveness
-Quality of work life
-Performance
Organizational Effectiveness
-Performance
-Productivity
-Stakeholder satisfaction
-Customer satisfaction
Possible focus and direction of
improvement are:
1. Responsiveness to environment
changes
2. Management process and control
strategy
3. Human resource strategy
4. Structure and systems strategies
5. Political strategy
6. Outcome strategy
1. Responsiveness to environment
changes
 – be consumer – and – market –
focused (providing better value to the
customer).
2. Management process and control
strategy
 – geared to policy considerations relating to
product, process and market.
 It is also geared towards improving intraorganizational dynamics such as:
1. intra-and inter-unit coordination,
2. individual and group accountability,
3. distribution of benefits/resources, and
4. shaping or reorienting its information
management in line with the planned
strategy.
3. Human resource strategy
 – aimed at designing people-oriented
strategies that involve employees and
enable them to achieve the
organization’s goals and objectives.
 It helps them develop the knowledge,
skills and behavior necessary for
change implementation.
4. Structure and systems strategies
 – organizations may have to
 redesign their structure,
 reorganization tasks, positions,
people, and systems for the
speedy delivery of product or
service which is of high customer
value.
5. Political strategy
 – is to identify the external and
internal political realities influencing
the organization.
 Conflicting interests,
 shifts in power balance, and
 coalitions/alliances among
individuals/groups often
accompany significant
organizational changes.
6. Outcome strategy
 – focused on
 individual,
 team and
 organizational effectiveness
and efficiency.
Classical Management Theory
Approach
 The classical management theory includes
the following theories among others:
1. Bureaucracy theory developed by Weber,
1947
2. Human relations theory developed by
Likert, 1961; McGregor, 1960 and Maslow,
1954 and others.
3. Contingency theory developed by Gilbreth,
1977; Lawrence and Lorsch, 1967; Trist,
1981; and Woodward, 1965.
4. Theory Z
Basic Assumption of
Bureaucracy Approach
 Bureaucracy approach emphasizes
the need for organizations to operate
in a rational manner, rather than,
relying on the arbitrary whims of
owners and managers.
 Organizations operate more fairly and
efficiently if there are rules and
standardized procedures governing
every conceivable situation.
Characteristics of Bureaucracy Theory
Approach to bring Improvement
The following are the characteristics of
bureaucracy approach:
1. Specialization of labor.
2. Formal rules and procedures.
3. Impersonality.
4. Well-defined hierarchy (well-structured).
5. Career advancement based on merit
6. Slow respond to change
1. Specialization of labor
 – jobs are broken down into routine
well-defined tasks and members are
extremely competent at their tasks.
2. Formal rules and procedures
 – written rules and procedures specify
the behaviors desired from members
facilitate coordination and ensure
uniformity.
3. Impersonality
 – Rules, procedures, and sanction are
applied uniformly regardless of
individual personalities and personal
considerations.
4. Well-defined hierarchy (wellstructured)
 – multiple levels of positions, with carefully
determined reporting relationships among
levels, provide supervision of lower offices
by higher ones, a mean for handling
exceptions, and the ability to establish
accountability of actions.
 Change is handled by creating new
structure and new rules and ignoring the
roles of individuals in dealing with change.
5. Career advancement based on
merit
 – selection and promotion is based on
the qualifications and performance of
members.
6. Slow respond to change
 Slow respond to change
Basic Assumption of Human
Relation Theory
 The assumption of human
relationship theory is that
 improving social relations in
organizations,
 understanding workers and managers as
human beings with social and emotional
needs, and
 improving interpersonal communication
may cause organization to function more
effectively and efficiently.
The Human Relation Approach:
Basics Principles
 The basic principles of the human
relations approach are as
follows:
1. Decentralization
2. Participatory Decision-Making
3. Concern for Developing SelfMotivated Employees
Decentralization
 The strict notion of hierarchy employed by
classical management theorists is
replaced with the idea that individual
workers and functional areas (i.e.,
departments) should be given greater
autonomy and decision-making power.
 This requires greater emphasis on lateral
communication so that coordination of
efforts and resources can occur.
 This communication occurs via informal
communication channels rather than the
formal, hierarchical ones.
Participatory Decision-Making
 Decision-making is participatory in the sense
that those making decisions on a day-to-day
basis include line workers not normally
considered to be "management."
 The greater autonomy afforded individual
employees -- and the subsequent reduction in
"height" and increase in span of control of the
organizational structure -- requires that they
have the knowledge and ability to make their
own decisions and the communication skill to
coordinate their efforts with others without a
nearby supervisor.
Concern for Developing SelfMotivated Employees
 The emphasis on a system of decentralized and
autonomous decision-making by members of the
organization requires that those members be
highly "self-motivated" (that is, able to set their
own task-related goals and monitor their own
performance in achieving them).
 So one goal of managers in such an organization
is to design and implement organizational
structures that reward such self-motivation and
autonomy.
 Another is to negotiate working relationships
with subordinates that foster effective
communication in both directions.
Concluding Remark on the Human
Relations approach
 Thus, the human relations approach
suggests changes in
 the structure of the organization
itself,
 in the nature of work, and
 in the relationship between
supervisor and subordinate.
 Each of these changes relies upon
assumptions about the individual, the
organization, and communication.
Basic Assumption of The
Contingency Theory
 Contingency theory is a viewpoint
that argues that appropriate
managerial actions depends on the
particular parameters of the situation
(see Exhibit 5).
Exhibit 5: Contingency Theory
Approach to Improvement
CONTINGENCY
THEORY
Appropriate action depends
on situation and condition
SITUATION 1
SITUATION 3
SITUATION 2
The Contingency Theory
 This theory holds that neither
structure nor people are the
determinants of organizational
success.
 Successful organizations develop their
structures by studying and adapting
to different situations.
Contingency Theory Approach
to Improvement
 Contingency theorists do not believe
that one type of organization fits all
environments.
 Each organization must be sufficiently
flexible to adapt to changing
conditions.
Theory Z (Japanese
Management)
The Theory Z approach involves:
giving workers job security;
including them in some decision making;
emphasizing group responsibility;
increasing quality;
establishing gradual advancement policies,
more informal controls and broader career
paths;
6. and showing greater concern for
employees’ work and nonwork well-being.

1.
2.
3.
4.
5.
Other Emerging Strategies
 Two recent perspectives that have
gained attention over the recent
years include:
1. A customer-oriented/driven strategy
– Tenner and DeToro, 1992; and
Harigopal, 2001.
2. A process-oriented Strategy – Tenner
and DeToro, 1992; and Harigopal,
2001.