SEU Organizational Development Process Paper

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Organization Design and Development (MGT 404)
Due Date: 03/04/2022 @ 23:59
Course Name: Organization Design and
Development
Course Code: MGT404
Student’s Name:
Semester: Second
CRN:
Student’s ID Number:
Academic Year:2021-22-2nd term
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
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The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Department of Business Administration
Organization Design and Development- MGT 404
Assignment 2, Total Marks: 10
Course Learning Outcomes:
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Describe the basic steps of the organizational development process.
Analyze the human, structural and strategic dimensions of the organizational
development.
Part 1 (5 marks):
Please refer to application 5.2 entitled as “Top Management Team at Ortiv Glass
Corporation.” available in your textbook and answer the following:
1. Discuss why ‘strategic orientation’ is fundamental to diagnosis in OD. Demonstrate your
answer using two examples from this application.
2. Describe and evaluate each of the Ortiv’s team design components:
– Goal clarity
– Task structure
– Team functioning
– Group composition
– Group norms
Part 2 (5 marks):
Please refer to figure 5.2 in your textbook (comprehensive model for diagnosing
organizational system) and answer the following:
3. Provide a brief description of a hypothetical organization and explain the three key
inputs (or environmental types) that affect the way such organization could be designed.
4. Propose a job position and describe each of its potential design components at the
individual level.
Answers:
Part 1:
A.1
A.2
Part 2:
A.3
A.4
© Pixmann/Imagezoo/Getty Images
10e
Organization
Development & Change
Thomas G. Cummings
University of Southern California
Christopher G. Worley
University of Southern California
Pepperdine University
Australia • Brazil • Mexico • Singapore • United Kingdom • United States
Organization Development & Change,
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Dedication
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5
Diagnosing
learning
objectives
Discuss the philosophy and purpose of diagnosis in organization
development (OD).
Explain the role of diagnostic models in OD, especially the open-systems
model.
Describe and apply organization-level diagnostic processes.
Describe and apply group-level diagnostic processes.
Describe and apply individual-level diagnostic processes.
D
iagnosing is the second major phase in the
general model of planned change described
in Chapter 2 (Figure 2.2). It follows the entering and contracting stage (Chapter 4) and precedes
the planning and implementation phase. When
done well, diagnosis clearly points the organization
and the organization development (OD) practitioner
toward a set of appropriate intervention activities
that will improve organization effectiveness.
Diagnosis is the process of understanding a
system’s current functioning. It involves collecting
pertinent information about existing operations as
well as analyzing those data and drawing conclusions about the reasons for current performance
and the potential for change and improvement.
Effective diagnosis provides the systematic knowledge of the organization needed to design appropriate interventions. Thus, OD interventions
derive from diagnosis and include specific actions
intended to improve organizational functioning.
(Chapters 10–20 present the major interventions
used in OD today.)
This and the next chapter describe different
aspects of the diagnostic process. This chapter
presents a general definition of diagnosis and
discusses the need for diagnostic models in guiding
the process. Diagnostic models derive from
conceptions about how organizations function,
and they tell OD practitioners what to look for
in diagnosing organizations, groups, or jobs. They
serve as a road map for discovering current
functioning. A general, comprehensive diagnostic
model is presented based on open-systems
theory. We then describe and apply the model to
diagnostic situations at the organization, group,
and job levels. Chapter 6 completes the diagnostic
phase by discussing processes of data collection,
analysis, and feedback.
89
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PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
5-1 What Is Diagnosis?
Diagnosis is the process of understanding how the organization is currently functioning,
and it provides the information necessary to design change interventions.1 It generally
follows from successful entry and contracting, which set the stage for successful diagnosis. Those processes help OD practitioners and client members jointly determine which
organizational issues to focus on, how to collect and analyze data to understand them,
and how to work together to develop action steps from the diagnosis. In another sense,
diagnosis is happening all the time. Managers, organization members, and OD practitioners are always trying to understand the drivers of organization effectiveness as well
as how and why changes are proceeding in a particular way.
Unfortunately, the term diagnosis can be misleading when applied to organizations.
It suggests a model of organization change analogous to the medical model of diagnosis:
An organization (patient) experiencing problems seeks help from an OD practitioner
(doctor); the practitioner examines the organization, finds the causes of the problems,
and prescribes a solution. Diagnosis in organization development, however, is much
more collaborative than such a medical perspective implies and does not accept the
implicit assumption that something is wrong with the organization.
First, the values and ethical beliefs that underlie OD suggest that both organization
members and OD practitioners should be involved in discovering the determinants of
current organization effectiveness. Similarly, both should be involved actively in developing appropriate interventions and implementing them. For example, a manager might
seek an OD practitioner’s help to reduce absenteeism in his or her department. The
manager and an OD consultant jointly might decide to diagnose the cause of the problem by examining company absenteeism records and by interviewing selected employees
about possible reasons for absenteeism. Alternatively, they might examine employee loyalty and discover the organizational elements that encourage people to stay. Analysis of
those data could uncover determinants of absenteeism or loyalty in the department, thus
helping the manager and the OD practitioner jointly to develop an appropriate intervention to address the issue.
Second, the medical model of diagnosis also implies that something is wrong with
the patient and that one needs to uncover the cause of the illness. In those cases where
organizations do have specific problems, diagnosis can be problem oriented, seeking reasons for the problems. On the other hand, as suggested by the absenteeism example
above, the OD practitioner and the client may choose one of the newer views of organization change and frame the issue positively. Additionally, the client and the OD practitioner may be looking for ways to enhance the organization’s existing functioning. Many
managers involved with OD are not experiencing specific organizational problems. Here,
diagnosis is development oriented. It assesses the current functioning of the organization
to discover areas for future development. For example, a manager might be interested in
using OD to improve a department that already seems to be functioning well. Diagnosis
might include an overall assessment of both the task performance capabilities of the
department and the impact of the department on its individual members. This process
seeks to uncover specific areas for future development of the department’s effectiveness.
In organization development, diagnosis is used more broadly than a medical definition would suggest. It is a collaborative process between organization members and the
OD practitioner to collect pertinent information, analyze it, and draw conclusions for
action planning and intervention. Diagnosis may be aimed at uncovering the causes of
specific problems, focused on understanding effective processes, or directed at assessing
the overall functioning of the organization or department to discover areas for future
CHAPTER 5 DIAGNOSING
91
development. Diagnosis provides a systematic understanding of organizations so that
appropriate interventions may be developed for solving problems and enhancing
effectiveness.
5-2 The Need for Diagnostic Models
Entry and contracting processes can result in a need to understand either a whole system
or some part, process, or feature of the organization. To diagnose an organization,
OD practitioners and organization members need to have an idea about what information to collect and analyze. Choices about what to look for invariably depend on how
organizations are conceived. Such conceptions can vary from intuitive hunches to scientific explanations of how organizations function. Conceptual frameworks that OD practitioners use to understand organizations are referred to as “diagnostic models.” They
describe the relationships among different features of the organization, as well as its
environment and its effectiveness. As a result, diagnostic models point out what areas
to examine and what questions to ask in assessing how an organization is functioning.
However, all models represent simplifications of reality and therefore emphasize certain organizational features as critical while ignoring other features. Focusing attention
on particular features, often to the exclusion of others, can result in a biased diagnosis.
For example, a diagnostic model that relates team effectiveness to the handling of interpersonal conflict would lead an OD practitioner to ask questions about relationships
among members, decision-making processes, and conflict resolution methods. Although
relevant, those questions ignore other group issues such as member skills and knowledge,
the complexity of the tasks performed by the group, and task interdependencies. Thus,
OD practitioners must choose diagnostic models and processes carefully to address the
organization’s presenting problems as well as to ensure comprehensiveness.
Potential diagnostic models are everywhere. Any collection of concepts and relationships that attempts to represent a system or explain its effectiveness can potentially qualify as a diagnostic model. Major sources of diagnostic models in OD are the thousands of
articles and books that discuss, describe, and analyze how organizations function. They
provide information about how and why certain organizational systems, processes, or
functions are effective. The studies often concern a specific facet of organizational behavior, such as employee stress, leadership, motivation, problem solving, group dynamics,
job design, and career development. They also can involve the larger organization and
its context, including the environment, strategy, structure, and culture. Diagnostic models can be derived from that information by noting the dimensions or variables that are
associated with an organization’s effectiveness.
Another source of diagnostic models is OD practitioners’ experience in organizations. So-called “field knowledge” offers a wealth of practical information about how
organizations operate. Unfortunately, only a small part of that vast experience has been
translated into diagnostic models that represent the professional judgments of people
with years of experience in organizational diagnosis. The models generally link diagnosis
with specific organizational processes, such as group problem solving, employee motivation, or communication between managers and employees. The models list specific questions for diagnosing such processes.
This chapter presents a general framework for diagnosing organizations rather than
trying to cover the range of OD diagnostic models. The framework describes the systems
perspective prevalent in OD today and integrates several of the more popular diagnostic
models. The systems model provides a useful starting point for diagnosing organizations,
PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
groups, and individual jobs. (Chapters 10–20 present additional diagnostic models that
are linked to specific OD interventions.)
5-3 Open-Systems Model
This section introduces systems theory, a set of concepts and relationships describing the
properties and behaviors of things called systems—organizations, groups, and jobs, for
example. Systems are viewed as unitary wholes composed of parts or subsystems; the system serves to integrate the parts into a functioning unit. For example, organization
systems are composed of groups or departments, such as sales, operations, and finance.
The organization serves to coordinate behaviors of its departments so that they function
together in service of an organization goal or strategy. The general framework that
underlies most of the diagnosing in OD is called the “open-systems model.”
5-3a Organizations as Open Systems
As shown in Figure 5.1, the open-systems model recognizes that organizations exist
in the context of a larger environment that affects how the organization performs, and,
in turn, is affected by how the organization interacts with it. The model suggests that
organizations acquire specific inputs from the environment and transform them using
social and technical processes. The outputs of the transformation process are returned
to the environment and information about the consequences of those outputs serve as
feedback to the organization’s functioning.
The open-systems model also suggests that organizations and their subsystems—
groups and individual jobs—share a number of common features that explain how they
are organized and how they function. For example, open systems display a hierarchical
ordering. Each higher level of system is composed of lower-level systems: Systems at the
level of society are comprised of organizations; organizations are comprised of groups;
and groups are comprised of individual jobs. Although systems at different levels vary
in many ways—in size and complexity, for example—they have a number of common
characteristics by virtue of being open systems. The following open-systems properties
are described below: environments; inputs, transformations, and outputs; boundaries;
feedback; and alignment.
FIGURE 5.1
The Open-Systems Model
© Cengage Learning 2015
92
CHAPTER 5 DIAGNOSING
93
Environments Environments are everything outside of the system that can directly or
indirectly affect its outputs. Open systems, such as organizations and groups, exchange
information and resources with their environments. Because these external forces influence the system, organizations cannot completely control their own behavior. Organizations, for example, are affected by such environmental conditions as the availability of
labor and human capital, raw material, customer demands, competition, and government
regulations. Understanding how these external forces affect the organization can help to
explain some of its internal behavior.
Inputs, Transformations, and Outputs Organizational systems are composed of
three related properties: inputs, transformations, and outputs. Inputs consist of human
capital or other resources, such as information, energy, and materials, coming into the
system from the environment. For example, a manufacturing organization acquires raw
materials from an outside supplier. Similarly, a hospital nursing unit acquires information concerning a patient’s condition from the attending physician. In each case, the
system (organization or nursing unit) obtains resources (raw materials or information)
from its environment.
Transformations are the processes of converting inputs into outputs. In organizations, a production or operations function composed of both social and technological
components generally carries out transformations. The social component consists of people and their work relationships, whereas the technological component involves tools,
techniques, and methods of production or service delivery. Organizations have developed
elaborate mechanisms for transforming incoming resources into goods and services.
Banks, for example, transform deposits into mortgage loans and interest income. Schools
attempt to transform students into more educated people. Transformation processes also
can take place at the group and individual levels. For example, research and development
departments can transform the latest scientific advances into new product ideas, and
bank tellers can transform customer requests into valued services.
Outputs are the results of what is transformed by the system and sent to the environment. Thus, inputs that have been transformed represent outputs that leave the system.
Group health insurance companies receive premiums and medical bills, transform them
through record keeping, and export payments to hospitals and physicians.
Boundaries The idea of boundaries helps to distinguish between organizational systems and their environments. Boundaries—the borders or limits of the system—help to
protect or buffer the organization’s transformation process from external disruptions;
they also assure that the right inputs enter the organization and the relevant outputs
leave it. An organizational system’s boundaries can vary in permeability, with some systems, such as a highly cohesive work team on the shop floor, being relatively closed to
the environment and other systems, such as a field sales force, being open to external
forces. Organizational boundaries are determined not only by physical location, but also
can be defined for managerial, technical, or social purposes. For example, to facilitate
managerial control, a department’s boundaries could encompass all members reporting
to a common administrator; to promote a smooth workflow, the department’s boundaries might include suppliers, employees, and customers located along a common supply
chain; or to foster cohesion among members, the department’s boundaries could
embrace those members sharing particular social connections and attitudes. Because
organizational boundaries can serve different purposes, OD practitioners may need to
determine early in the OD process if the client system’s boundaries are appropriate for
the intended purpose of the change effort. This may result in redefining or changing the
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PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
client’s boundaries before diagnosing begins. For example, the boundaries that identify a
particular client system on an organization chart might be well suited for addressing
leadership issues in that unit. However, the client system’s boundaries might have to be
enlarged to include other related departments if the intent of OD is to improve coordination among interdependent work groups.
Feedback As shown in Figure 5.1, feedback is information regarding the actual performance or the outputs of the system. Not all such information is feedback, however.
Only information used to control the future functioning of the system is considered
feedback. Feedback can be used to maintain the system in a steady state (for example,
keeping an assembly line running at a certain speed) or to help the organization adapt
to changing circumstances. McDonald’s, for example, has strict feedback processes to
ensure that a meal in one outlet is as similar as possible to a meal in any other outlet.
On the other hand, a salesperson in the field may report that sales are not going well
and may insist on some organizational change to improve sales. A market-research
study may lead the marketing department to recommend a change to the organization’s advertising campaign.
Alignment How well a system’s different parts and elements align with each other
partly determines its overall effectiveness. This alignment or fit concerns the relationships between the organization and its environment as well as among the components
that comprise the design of the organization. Alignment represents the extent to which
the features and operations of one component support the effectiveness of another component. Just as the teeth in the wheels of a watch must mesh perfectly for the watch to
keep time, so do the parts of an organizational system need to mesh for it to be effective.
Diagnosing environmental relationships and the interactions among the various components of an organizational system requires taking “a systemic perspective.” This view
suggests that diagnosing often involves the search for misalignments among the various
parts of an organizational system.
5-3b Diagnosing Organizational Systems
When viewed as open systems, organizations can be diagnosed at three levels. The highest level is the overall organization and includes the company’s strategy, structure, and
processes. Large organization units, such as divisions, subsidiaries, or strategic business
units, also can be diagnosed at that level. The next lowest level is the group or department, which includes group design and methods for structuring interactions among
members, such as norms and work schedules. The lowest level is the individual position
or job. This includes ways in which jobs are designed to elicit required task behaviors.
Diagnosis can occur at all three organizational levels, or it may be limited to issues
occurring at a particular level. The key to effective diagnosis is knowing what to look
for at each level as well as how the levels affect each other.2 For example, diagnosing a
work group requires knowledge of the variables important for group functioning and
how the larger organization design affects the group. In fact, a basic understanding of
organization-level issues is important in almost any diagnosis because they serve as critical inputs to understanding groups and jobs.
Figure 5.2 presents a comprehensive model for diagnosing these different organizational
systems. For each level, it shows (1) the inputs that the system has to work with, (2) the key
components for designing the system to create, and (3) the system’s outputs. The relationships shown in Figure 5.2 illustrate how each organization level affects the lower levels.
CHAPTER 5 DIAGNOSING
95
FIGURE 5.2
© Cengage Learning 2015
Comprehensive Model for Diagnosing Organizational Systems
The environment is the key input to organization design decisions. Organization design is
an input to group design, which in turn serves as an input to job design. These cross-level
relationships emphasize that organizational levels must fit with each other if the organization
is to operate effectively. For example, organization structure must fit with and support group
task design, which in turn must fit with individual-job design.
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PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
The following sections of this chapter address diagnosing at each of the three
levels—organization, group, and individual job. General overviews of the dimensions
(and their relationships) that need to be understood at each level are presented. It is
beyond the scope of this chapter to describe in detail the many variables and relationships reported in the extensive literature on organizations. However, specific diagnostic
questions are identified and concrete examples are included as an introduction to this
phase of the planned change process.
5-4 Organization-Level Diagnosis
The organization level of analysis is the broadest systems perspective typically taken in
diagnostic activities. (In some cases, OD is applied to a multiorganization system; those
change processes are discussed in Chapter 20 on Transorganizational Change.) The
model shown in Figure 5.2 is similar to other popular organization-level diagnostic
models. These include Weisbord’s six-box model,3 Nadler and Tushman’s congruency
model,4 Galbraith’s star model,5 and Kotter’s organization dynamics model.6 Figure 5.2
shows that an organization’s design components represent the way the organization
organizes itself within an environment (inputs) to achieve specific results (outputs).7 To
understand how a total organization functions, it is necessary to examine particular
inputs, design components, and the alignment of the two sets of dimensions.
5-4a Inputs
Figure 5.2 shows that three key inputs or environmental types affect the way an organization is designed. We first describe these environments and then identify environmental
dimensions that influence how organizations respond to external forces.
Environmental Types Three classes of environments influence how organizations
function and achieve results: the general environment, the task environment, and the
enacted environment.8
The general environment consists of all external forces that can directly or indirectly
affect an organization.9 The general environment can include a variety of social, technological, economic, ecological, and political/regulatory forces. These forces may interact in
unique and unpredictable ways, presenting the organization with challenging threats and
opportunities. Each of the forces also can affect the organization in both direct and indirect ways. For example, an organization may have trouble obtaining raw materials from
a supplier because a national union is grieving the supplier’s employment practices, a
government regulator is bringing a lawsuit against the supplier, or a consumer group is
boycotting the supplier’s products. Thus, parts of the general environment can affect the
organization without having any direct connection to it.
The task environment is another important organization input. Michael Porter
defined an organization’s task environment in terms of industry structure represented
by five forces: supplier power, buyer power, threats of substitutes, threats of entry, and
rivalry among competitors.10 First, an organization must be sensitive to powerful suppliers who can increase prices (and therefore lower profits) or force the organization to
pay more attention to the supplier’s needs than to its own needs. For example, unions
represent powerful suppliers of labor that can affect the costs of any organization within
an industry. Second, a firm must respond to powerful buyers. Powerful retailers, such as
Walmart and Costco, can force Procter & Gamble, Johnson & Johnson, or other
CHAPTER 5 DIAGNOSING
97
suppliers to lower prices or deliver their products in particular ways. Third, an organization must be sensitive to the threat of new firms entering into competition. Profits in the
restaurant business tend to be low because of the ease of starting a new restaurant.
Fourth, a company must respond to the threat of new products or services that can
replace existing offerings. Ice cream producers must carefully monitor their costs and
prices because it is easy for a consumer to purchase frozen yogurt or other types of
desserts instead. Finally, an organization must be sensitive to rivalry among existing
competitors. If many organizations are competing for the same customers, then the organization must be responsive to product offerings, costs, and structures if it is to survive
and prosper. Together, these five forces play an important role in determining an organization’s success, whether it is a manufacturing or service firm, a nonprofit organization, or a government agency.
While the general environment and the task environment describe the objective
pressures an organization faces, the organization must first recognize those forces. The
enacted environment consists of organization members’ perception and representation
of the general and task environments. Environments must be perceived before they can
influence decisions about how to respond to them.11 Organization members must
actively observe, register, and make sense of the environment before it can affect their
decisions about what actions to take. Thus, only the enacted environment can affect
which organizational responses are chosen. The general and task environments, however,
influence whether those responses are successful or ineffective. For example, members
may perceive customers as relatively satisfied with their products and may decide to
make only token efforts at developing new products. If those perceptions are wrong
and customers are dissatisfied with existing products, the meager product development
efforts can have disastrous organizational consequences. As a result, an organization’s
enacted environment should accurately reflect its general and task environments if members’ decisions and actions are to be effective.12
Environmental Dimensions In addition to understanding what inputs are at work,
the environment can be understood in terms of its rate of change and complexity.13
The rate of change in an organization’s general environment or task environment can
be characterized along a dynamic–static continuum. Dynamic environments change rapidly and unpredictably while static environments change more slowly and expectedly.
The complexity of the environment refers to the number of different elements in the general and task environments that can significantly affect the organization. Some organizations, such as software development firms, face dynamic and complex environments. Not
only do technologies, regulations, customers, and suppliers change rapidly, but also all of
them are important to the firm’s survival. On the other hand, other organizations, such
as manufacturers of glass containers, face more stable and less complex environments.
A useful way to understand how the rate of change and complexity of environments
influence organizations is to view environments as information flows that organizations
need to process to discover how to relate to their environments.14 The key dimension of
the environment affecting information processing is information uncertainty, or the
degree to which environmental information is ambiguous. Organizations seek to remove
uncertainty from the environment so that they know how to transact with it. For example, organizations may try to discern customer needs through focus groups and surveys
and attempt to understand competitor strategies through press releases, sales force behaviors, and knowledge of key personnel. The greater an organization environment’s rate of
change and complexity, the more information uncertainty the organization faces, and
consequently, the more information the organization must process to learn about the
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PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
environment.15 Thus, dynamic and complex environments pose difficult informationprocessing problems for organizations. For example, global competition, technological
change, and financial markets have created highly uncertain environments for many
multinational firms and have severely strained their information-processing capacity.
5-4b Design Components
Figure 5.2 shows that an organization’s design is composed of four components—technology,
structure, management processes, and human resources systems. It is surrounded by an intermediate input—strategy—and an intermediate output—culture—that need to be considered
along with the organization’s design. Effective organizations align their strategy to environmental inputs and then fit the design components to each other to support the strategy
and to jointly promote strategic behaviors. (Chapter 18 describes strategy and organization
design interventions.)
A strategy represents the way an organization uses its resources (human, economic, or
technical) to achieve its goals and to gain a competitive advantage in a particular environment.16 Because strategy defines how an organization positions itself to compete in an
environment, it is shown in Figure 5.2 as an intermediate input between the environment
and the four design components. A complete statement of strategy includes the organization’s mission, goals and objectives, strategic intent, and functional policies.17 An organization’s mission defines the long-term purpose of the organization, the range of products or
services offered, the markets served, and the societal needs addressed. Goals and objectives
include specific targets for achieving strategic success. They provide explicit direction, set
organization priorities, provide guidelines for management decisions, and serve as the cornerstone for organizing activities and setting standards of achievement. “Strategic intent” is
a succinct label or metaphor that describes how the organization intends to leverage three
resource dimensions—breadth, aggressiveness, and differentiation—to achieve its goals and
objectives. For example, in 2013, a turnaround strategic intent drove Nokia’s goals of
restoring financial confidence. That turnaround can be characterized by a narrower (as
opposed to broader) focus on specific markets and products, increased aggressiveness demonstrated by its marketing expenditures and internal cost reductions, and improved differentiation through its alliance with Microsoft and its Windows 8 operating system. Finally,
functional policies are the methods, procedures, rules, or administrative practices that
guide decision making and convert strategic plans into actions. In the semiconductor business, for example, Intel had a policy of allocating about 30% of revenues to research and
development to maintain its lead in microprocessors production.18 (Chapters 18 and 19
describe strategy interventions.)
Technology is concerned with the way an organization converts inputs into products
and services. It represents the core transformation process and includes production
methods, workflow, and equipment. Two features of the technological core have been
shown to influence other design components: technical interdependence and technical
uncertainty.19 Technical interdependence involves the extent to which the different
parts of a technological system are related. High interdependence requires considerable
coordination among tasks, such as might occur when departments must work together
to bring out a new product. Technical uncertainty refers to the amount of information
processing and decision making required during task performance. Generally, when tasks
require high amounts of information processing and decision making, they are difficult
to plan and routinize. The technology of car manufacturing is relatively certain and
moderately interdependent. As a result, automobile manufacturers can specify in advance
the behaviors workers should exhibit and how their work should be coordinated.
CHAPTER 5 DIAGNOSING
99
Structure is the basic organizing mode for (1) dividing the overall work of an organization into subunits that can assign tasks to groups or individuals and (2) coordinating
these subunits for completion of the overall work.20 Structure, therefore, needs to be
closely aligned with the organization’s technology. Organization structure can divide
work by function (e.g., accounting, sales, or production), by product or service
(e.g., Chevrolet, GMC, or Cadillac), by customer (e.g., large, medium, or small enterprise), or by some combination of both (e.g., a matrix composed of functional departments and product groupings). Structures can coordinate work across subunits through
the managerial hierarchy or a variety of lateral mechanisms, such as plans and schedules,
budgets, project managers, liaison positions, integrators, cross-departmental task forces,
and matrix relationships. The amount of coordination required in a structure is a function of (1) the amount of uncertainty in the environment, (2) the degree to which subunits differ from each other, and (3) the amount of interdependence among subunits.21
As uncertainty, subunit difference, and interdependence increase, more sophisticated
coordinating devices are required.22 (Chapter 12 discusses structural interventions.)
Management processes are methods for processing information, making decisions, and
controlling the operation of the organization. They help the organization to understand
how well it is performing, to detect and control deviations from goals, to make relevant
decisions, and to communicate the results. Closely related to structural coordination,
management processes monitor organizational operations and feed data about work
activities to managers and members so that they can better understand current performance, make relevant decisions, and coordinate work. Effective information, decision
making, and control systems are linked closely to strategic objectives; provide accurate,
understandable, and timely information; are accepted as legitimate by organization members; and produce benefits in excess of their cost.
Human resources systems include mechanisms for selecting, developing, appraising, and
rewarding organization members. These influence the mix of skills, personal characteristics,
and behaviors of organization members. An organization’s strategy and technology provide
important information about the skills and knowledge required if the organization is to be
successful. Appraisal processes identify whether those skills and knowledge are being
applied to the work, and reward systems complete the cycle by recognizing performance
that contributes to goal achievement. Reward systems may be tied to measurement systems
so that rewards are allocated based on measured results. (Chapters 15, 16, and 17 discuss
specific human resources systems, such as rewards and career development.)
Organization culture represents the basic assumptions, values, and norms shared by
organization members.23 Those cultural elements are generally taken for granted and
serve to guide members’ perceptions, thoughts, and actions. For example, McDonald’s
culture emphasizes efficiency, speed, and consistency. It orients employees to company
goals and suggests the kinds of behaviors necessary for success. In Figure 5.2, culture is
shown as an intermediate output from the four design components because it represents
both an outcome and a constraint. Culture initially derives from an organization founder’s values and is reinforced and sustained through organization selection and socialization processes. It is also an outcome of the organization’s history and environment as
well as of prior choices made about the strategy, technology, structure, management processes, and human resources systems. Because organization culture is personally internalized, it can be difficult to change and can restrict an organization’s ability to change its
strategy and organization design components.24 In that sense, culture can either hinder
or facilitate organization change. In diagnosing organizations, the culture needs to be
understood well enough to determine its alignment with the organization’s strategy and
the four design components. (Chapter 18 discusses culture change in more detail.)
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5-4c Outputs
The outputs of organization design are measures of how well the design contributes to
organization effectiveness. This can include three kinds of outcomes. First, organization
performance refers to financial outcomes, such as sales, profits, return on investment
(ROI), or earnings per share (EPS). For nonprofit and government agencies, performance often refers to the extent to which costs were lowered or budgets met. Second,
productivity concerns internal measurements of efficiency, such as sales per employee,
waste, error rates, quality, or units produced per hour. Third, stakeholder satisfaction
reflects how well the organization has met the expectations of different groups having
an interest in the organization. For example, customer loyalty can be measured in
terms of market share or focus-group data; employee engagement can be measured in
terms of an opinion survey; investor satisfaction can be measured in terms of stock
price or analyst opinions; and environmental sustainability can be measured by the organization’s carbon footprint.
5-4d Alignment
Diagnosing the effectiveness of an organization requires knowledge of the above elements to determine the alignment or fit among them.
1. Does the organization’s strategy fit with the inputs? To be effective, an organization’s strategy needs to be responsive to the general and task environments.
They include external forces, threats, and opportunities that need to be considered in making strategic choices about mission, goals and objectives, strategic
intent, and functional policies. The organization makes those choices based on
members’ perceptions of the environment (the enacted environment). Thus, the
organization’s information-processing and strategy-making capabilities must
match the information uncertainty of the general and task environments if the
organization’s perceptions and strategic choices are to accurately reflect external
realities. Environments that change rapidly and are complex are highly uncertain.
In these situations, organizations need to constantly process information and
monitor wide segments of their environments; their strategy-making process
needs to be flexible resulting in strategic choices that can quickly be adapted to
changing external conditions. (Chapter 19 describes dynamic strategy-making
interventions.) Conversely, organizations can periodically assess selected parts of
the environment and make strategic choices that are stable over moderate to long
periods of time when the information uncertainty of their general and task environments is relatively low.
2. Do the organization design components fit with each other to jointly support the
strategy? For example, if the organization’s strategy is highly flexible and responsive
to environmental change, then the design components must mutually support and
reinforce agile and adaptable organizational behaviors. Successful firms in Silicon
Valley, such as Apple and Oracle, tend to have flexible strategies that promote innovation and change. Their organization design components include leading-edge
technologies that are complex and uncertain; flexible structures that emphasize agility and fast responses; management processes that provide rapid information and
feedback and promote employee decision making; human resource policies that
select, develop, and reward talented employees. These flexible and agile firms have
organization cultures that value technical sophistication, member commitment,
invention, and customer loyalty.
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101
5-4e Analysis
Application 5.1 describes the Steinway organization and provides an opportunity to perform an organization-level analysis.25 A useful starting point is to examine outputs and
to ask about the organization’s current effectiveness. Steinway has excellent market share
in the high-quality segment of the grand piano market, a string of improving financial
measures, and strong customer loyalty. However, the data on employee satisfaction are
mixed; there are both long-tenured people and an indication that some workers are leaving for other jobs. Financial improvements appear modest when contrasted with industry
averages. Understanding the underlying causes of these effectiveness issues begins with
an assessment of the inputs and organization design and then proceeds to an evaluation
of the alignments among the different parts.
In diagnosing the inputs, two questions are important.
1. What is the company’s general environment? Steinway’s external environment is
only moderately uncertain and not very complex. Socially, Steinway is an important
part of a country’s artistic culture and the fine arts. It must be aware of fickle trends
in music and display an appropriate sensitivity to them. Politically, the organization
operates on a global basis and its distribution and sales networks must be attuned to
different governmental and country requirements. The manufacturing plant in
Hamburg, Germany, suggests an important political dependency that must be monitored. Technologically, Steinway appears reasonably concerned about the latest
breakthroughs in piano design, materials, and construction. They are aware of alternative technologies, such as the assembly-line process at Yamaha, but prefer the
classic methods they have always used. Ecologically, Steinway must be mindful.
Their product requires lumber and they are very selective (some would say wasteful)
about the choices, rejecting many pieces. It is likely that environmentalists would
express concern over how Steinway uses this natural resource. Together, these environmental forces paint a relatively moderate level of uncertainty. Most of these
issues are knowable and can be forecast with some confidence. In addition, while
there are several environmental elements that need to be addressed, not all of them
are vitally important. The environment is not very complex.
2. What is the company’s task environment? Steinway’s industry is moderately competitive and profit pressures can be mapped by looking at five key forces. First, the
threat of entry is fairly low. There are some important barriers to cross if an organization wanted to get into the piano business. For example, Steinway, Yamaha, and
Baldwin have very strong brands and dealer networks. Any new entrant would need
to overcome these strong images to get people to buy their product. Second, the
threat of substitute products is moderate. On the one hand, electronic keyboards
have made important advances and represent an inexpensive alternative to grand
and upright pianos. On the other hand, the sophisticated nature of many of the
artists and audiences suggests that there are not many substitutes for a concert
grand piano. Third, the bargaining power of suppliers, such as providers of labor
and raw materials, is high. The labor union has effective control over the muchsought-after craft workers who manufacture and assemble grand pianos. Given the
relatively difficult time that most high-end piano manufacturers have in holding
onto these highly trained employees, the organization must expend considerable
resources to retain them. Similarly, given the critical nature of wood to the final
product, lumber suppliers can probably exert significant influence. Fourth, the bargaining power of buyers varies by segment. In the high-end segment, the number of
buyers is relatively small and sophisticated, and the small number of high-quality
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S
teinway & Sons, which turned 160 years old
in April 2013, is generally regarded as the finest piano maker in the world. Founded in
1853 by the Steinway family, the firm was
sold to CBS in 1972, taken private in 1985 by
John and Robert Birmingham, and sold again in
1995 to Dana Messina and Kyle Kirkland, who took
it public in 1996. Steinway & Sons is the piano
division of the Steinway Musical Instruments Company that also owns Selmer Instruments and
other manufacturers of band instruments (www.
steinwaymusical.com). Piano sales in 2002 were
$169 million, down 7.6% from the prior year and
mirroring the general economic downturn. Since
going public, Steinway’s corporate revenues have
grown a compounded 6–7% a year, while earnings
per share have advanced, on average, a compounded 11%. The financial performance for the
overall company in 2002 was slightly below industry averages.
The Steinway brand remains one of the
company’s most valuable assets. The company’s president notes that despite only 2%
of all keyboard unit sales in the United States,
they have 25% of the sales dollars and 35% of
the profits. Their market share in the high-end
grand piano segment is consistently over 80%.
For example, 98% of the piano soloists at 30 of
the world’s major symphony orchestras chose
a Steinway grand during the 2000/2001 concert season. Over 1,300 of the world’s top pianists, all of whom own Steinways and perform
solely on Steinways, endorse the brand without financial compensation.
Workers at Steinway & Sons manufacturing
plants in New York and Germany have been
with the company for an average of 15 years,
often over 20 or 30 years. Many of Steinway’s
employees are descendants of parents and
grandparents who worked for the company.
THE ENVIRONMENT
The piano market is typically segmented into
grand pianos and upright pianos, with the former
being a smaller but higher-priced segment. In
1995, about 550,000 upright pianos and 50,000
grand pianos were sold. Piano customers can
also be segmented into professional artists,
amateur pianists, and institutions such as concert halls, universities, and music schools. The
private (home) market accounts for about 90%
of the upright piano sales and 80% of the grand
piano sales, with the balance being sold to institutional customers. New markets in Asia represent important new growth opportunities.
The piano industry has experienced several important and dramatic changes for such
a traditional product. Industry sales, for example, dropped 40% between 1980 and 1995.
Whether the decline was the result of
increased electronic keyboard sales, a real
decline in the total market, or some temporary
decline was a matter of debate in the industry.
Since then, sales growth has tended to reflect
the ups and downs of the global economy.
Competition in the piano industry has also
changed. In the United States, several hundred
piano makers at the turn of the century had
consolidated to eight by 1992. The Baldwin
Piano and Organ Company is Steinway’s primary U.S. competitor. It offers a full line of pianos under the Baldwin and Wurlitzer brand
names through a network of over 700 dealers.
In addition to relatively inexpensive upright pianos produced in high-volume plants, Baldwin
also makes handcrafted grand pianos that are
well-respected and endorsed by such artists as
Dave Brubeck and Stephen Sondheim, and by
the Boston, Chicago, and Philadelphia orchestras. Annual sales are in the $100 million range;
Baldwin was recently sold to the Gibson Guitar
Company. The European story is similar. Only
Bösendorfer of Austria and Fazioli of Italy
remain as legitimate Steinway competitors.
Several Asian companies have emerged as
important competitors. Yamaha, Kawai, Young
Chang, and Samick collectively held about
35% of the vertical piano market and 80% of
the grand piano market in terms of units and
75% of global sales in 1995. Yamaha is the
world’s largest piano manufacturer with sales
of over $1 billion and a global market share of
about 35%. Yamaha’s strategy has been to
application 5 1
STEINWAY & SONS
CHAPTER 5 DIAGNOSING
produce consistent piano quality through continuous
improvement. A separate handcrafted concert grand
piano operation has also tried to use continuous
improvement methods to create consistently highquality instruments. More than any other highquality piano manufacturer, Yamaha has been able
to emulate and compete with Steinway.
THE STEINWAY ORGANIZATION
Steinway & Sons offers several different pianos,
including two brands (Steinway and the less
expensive Boston brand) and both upright and
grand piano models. The company handcrafts its
grand pianos in New York and Germany, and sells
them through more than 200 independent dealers.
About half of the dealers are in North and South
America and approximately 85% of all Steinway
pianos are sold through this network. The company
also owns retail outlets in New York, New Jersey,
London, Munich, Hamburg, and Berlin.
The dealer network is an important part of Steinway’s strategy because of its role in the “concert
bank” program. Once artists achieve a certain status, they are invited to become part of this elite
group. The performer can go to any local dealer, try
out different pianos, and pick the one they want to
use at a performance for only the cost of bringing
the piano to the concert hall. The concert bank contains over 300 pianos in more than 160 cities. In
return for the service, Steinway is given exclusive
use of the performer’s name for publicity purposes.
Creating a Steinway concert grand piano is an
art, an intricate and timeless operation (although
alternate methods have been created and improved,
the basic process hasn’t changed much). It requires
more than 12,000 mostly handcrafted parts
and more than a little magic. The tone, touch,
and sound of each instrument is unique, and 120
technical patents and innovations contribute to the
Steinway sound. Two years are required to make a
Steinway grand as opposed to a mass-produced
piano that takes only about 20 days. There are
three major steps in the production process: wooddrying (which takes about a year), parts-making, and
piano-making.
Wood-drying operations convert moisture-rich
lumber into usable raw material through air-drying
and computer-controlled kilns. Time is a critical element in this process because slow and natural
103
drying is necessary to ensure the best soundproducing qualities of the wood. Even after all the
care of the drying process, the workers reject
approximately 50% of the lumber.
After drying, the parts-making operations begin.
The first of these operations involves bending of the
piano rim (the curved side giving a grand piano its
familiar shape). These rims are formed of multiple
layers of specially selected maple that are manually
forced into a unified shape, held in presses for several hours, and then seasoned for 10 weeks before
being joined to other wooden parts. During this
time, the sounding board (a specially tapered Alaska
Sitka spruce panel placed inside the rim to amplify
the sound) and many other case parts are made.
The final critical operation with parts-making
involves the fabrication of the 88 individual piano
action sets that exist inside a piano. Piano “actions”
are the intricate mechanical assemblies—made
almost completely of wood and some felt, metal,
and leather—that transmit finger pressure on the
piano keys into the force that propels the hammers
that strike the strings. The action is a particularly
important part of a piano because this mechanical
linkage gives Steinways their distinctive feel. In the
action department, each operator is responsible for
inspecting his or her own work, with all assembled
actions further subject to 100% inspection.
Piano-making operations include “bellying,”
finishing, and tone regulating. The bellying process
involves the precise and careful fitting of the
soundboard, iron piano plate, and rim to each
other. It requires workers to lean their stomachs
against the rim of the piano to complete this task.
Because of individual variations in material and the
high degree of precision required, bellying takes
considerable skill and requires several hours per
piano. After the bellying operations, pianos are
strung and moved to the finishing department. During finishing, actions and keyboards are individually
fit to each instrument to accommodate differences
in materials and tolerances to produce a working
instrument. The final piano-making step involves
tone regulating. Here, the pianos are “voiced” for
Steinway sound. Unlike tuning, which involves the
loosening and tightening of strings, voicing
requires careful adjustments to the felt surrounding the hammers that strike the strings. This operation is extremely delicate and is performed by
only a small handful of tone regulators. The tone
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regulators at Steinway are widely considered to be
among the most skilled artisans in the factory.
Their voicing of a concert grand can take as much
as 20 to 30 hours. All tone regulators at Steinway
have worked for the company in various other positions before reaching their present posts, and several have more than 20 years with the firm. Finally,
after tone regulation, all pianos are polished,
cleaned, and inspected one last time before packing and shipment.
Steinway produced more than 3,500 pianos in
2002 at its New York and Hamburg, Germany,
plants. Almost 430 people work in the New York
plant and all but about 100 of them work in
production. They are represented by the United
Furniture Worker’s union. Seventy-five percent of
the workers are paid on a straight-time basis; the
others, primarily artisans, are paid on piece rates.
Retaining workers has proved increasingly difficult
as well-trained Steinway craftspeople are coveted
by other manufacturers, and many of the workers
could easily set up their own shop to repair or
rebuild older Steinway pianos. Excess inventories
due to weak sales both pre and post September 11
forced Steinway to adjust its production schedule;
rather than lay off highly skilled workers needed to
build its pianos, workers in the New York plant
reported to work every other week.
pianos means that customers can put pressure on prices, although they are clearly
willing and able to pay more for quality. In the middle and lower segments,
the number of buyers is much larger and fragmented. It is unlikely that they could
collectively exert influence over price. Finally, the rivalry among firms is severe.
A number of well-known and well-funded domestic and international competitors
exist. Almost all of them have adopted marketing and manufacturing tactics similar
to Steinway’s in the high-end segment, and they are competing for the same customers. The extensive resources available to Yamaha as a member of their keiretsu, for
example, suggest that it is a strong and long-term competitor that will work hard to
unseat Steinway from its position. Thus, powerful buyers and suppliers as well as
keen competition make the piano industry only moderately attractive and represent
the key sources of uncertainty that Steinway faces. Overall, Steinway executives’
perceptions of the general and task environments seem to be accurate.
The following questions are important in assessing Steinway’s strategy and organization design:
1. What is the company’s strategy? Steinway’s primary strategy is a sophisticated
niche and differentiation strategy. It attempts to meet its financial and other objectives by offering a unique and high-quality product to sophisticated artists. However,
its product line does blur the strategy’s focus. With both Boston and Steinway
brands and both upright and grand models, a question about Steinway’s commitment to the niche strategy could be raised. No formal mission or goals are mentioned in the case, and this makes it somewhat difficult to judge the effectiveness
of the strategy. Nevertheless, it seems reasonable to assume a clear intent to maintain its dominance in the high-end segment. However, with new owners in 1995, it
is also reasonable to question whether goals of profitability or revenue growth,
implying very different tactics, have been sorted out.
2. What are the company’s technology, structure, management processes, human
resources systems, and culture? First, Steinway’s core technology is highly uncertain and moderately interdependent. The manufacturing process is craft-based and
CHAPTER 5 DIAGNOSING
105
dependent on the nature of the materials. Each piano is built and adjusted with the
specific characteristics of the wood in mind. So much so that each piano has a different sound that is produced as a result of the manufacturing process. The technology is moderately interdependent because the major steps in the process are not
closely linked in time. Making the “action sets” is independent of the “bellying” process, for example. Similarly, the key marketing program, the concert bank, is independent of manufacturing. Second, the corporate structure is divisional (pianos and
band instruments), while the piano subsidiary appears to have a functional structure.
The key functions are manufacturing, distribution, and sales. A procurement,
finance, and human resources group is also reasonable to assume. Third, management processes are focused on the production system. There are specific mentions
of inspections by both the worker and the organization. For example, 100% inspection (as opposed to statistical sampling) costs time and manpower and no doubt is
seen as critical to quality. In addition, there must be some system of keeping track of
work-in-progress, finished goods, and concert bank inventories. Fourth, the human
resources system is highly developed. It includes a reward system that is both hourly
and piece rate; a unionized employee relationship; worker retention programs; and
global hiring, compensation, benefits, and training programs. Fifth, while there is little specific information, Steinway’s culture can be inferred. The dominant focus on
the high-end segment, the craft nature of the production process, the importance of
the concert bank program, and the long history of family influence all point to a
culture of quality, craftsmanship, and responsiveness. These values are manifest in
the way the organization chooses its raw materials, the way it caters to its prized
customers, the care in the production process, and the image it works to retain.
Now that the organization inputs, design components, and outputs have been
assessed, it is time to ask the crucial question about how well they fit together. The first
concern is the fit between the environmental inputs and the strategy. The moderate complexity and uncertainty in the general and task environments argue for a strategy that is
flexible enough to address the few critical dependencies but formal enough to control a
sophisticated production process. Steinway’s focus on the high-end segment of the industry
and the moderate breadth in its product line support this flexibility. It clearly intends to
differentiate its product by serving the high-end segment with unique high-quality pianos.
However, the market for higher-priced and more specialized concert grands is much smaller than the market for lower-priced uprights and limits the growth potential of sales
unless Steinway wants to compete vigorously in the emerging Asian markets where the
Asian companies have a proximity advantage. Steinway’s lack of clear strategic goals in
general and policies that support neither growth nor profitability also would make entry
into new markets difficult. Steinway’s flexible and responsive manufacturing process supports and defends its preeminence as the top grand piano maker in the world. It also mitigates the powerful buyer forces in this segment. Steinway’s moderate product line breadth
gives it some flexibility and efficiency as well. It can achieve some production efficiencies
in the upright and medium-market grand piano segments, and its brand image helps in
marketing these products. Steinway must be careful not to broaden its product line too
much, however, as this could dilute its strategic focus on the high-end market. Overall,
the alignment between Steinway’s environment and its strategy appears sound.
The second concern is the alignment of the design components to support the strategy. There appears to be a good fit between Steinway’s strategy and the organization
design components. The differentiated strategic intent requires technologies, structures,
and systems that focus on creating sophisticated and unique products, specialized
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marketing and distribution, and the concert bank program. The flexible structure, formal
inspection systems, and responsive culture seem well suited for that purpose. Steinway’s
technology appears aligned with its structure. The production process is craft-based and
deliberately not standardized. The functional structure promotes specialization and
professionalization of skills and knowledge. Specific tasks that require flexibility and adaptability from the organization are given a wide berth. Although a divisional structure overlays Steinway’s corporate activities, the piano division’s structure is functional but not rigid
and appears to be responsive to the craft and the artists it serves. In addition, the concert
bank program is important for two reasons. First, it builds customer loyalty and ensures
future demand. Second, it is a natural source of feedback on the instruments themselves,
keeping the organization close to the artist’s demands and emerging trends in
sound preferences. The well-developed human resources system supports the responsive
production and marketing functions as well as the global nature of the enterprise. Finally,
Steinway’s culture of quality and responsiveness promotes coordination among the production tasks, serves to socialize and develop people, and establishes methods for moving information throughout the organization. Clearly, any change effort at Steinway will have to
acknowledge its long-established culture and design an intervention accordingly. The strong
culture will either sabotage or facilitate change depending on how the change process aligns
with the culture’s values and norms.
Based on this diagnosis of the Steinway organization, at least two OD interventions
seem relevant. First, in collaboration with the client, the OD practitioner could suggest
increasing the clarity of Steinway’s strategy. In this intervention, the practitioner would
want to talk about formalizing—rather than changing—Steinway’s strategy because the
culture would likely resist strategy change. However, there are obvious advantages to be
gained from a clearer sense of Steinway’s future goals, its businesses, and the relationships among them. Second, Steinway could focus on better coordinating its structure,
measurement systems, and human resources systems. The difficulty of retaining key production personnel warrants continuously improved retention systems as well as efforts to
codify and retain key production knowledge in case workers do leave. This would apply
to the marketing and distribution functions as well, since they control an important
interface with the customer.
5-5 Group-Level Diagnosis
Work groups are prevalent in all types and sizes of organizations. They generally consist
of a relatively small number of people working together on a shared task either faceto-face or virtually via electronic communication. Work groups can be relatively permanent and perform an ongoing function, or they can be temporary and exist only to perform a certain task or to make a specific decision. Figure 5.2 shows the inputs, design
components, outputs, and relational fits for group-level diagnosis. The model is similar
to other popular group-level diagnostic models such as Hackman and Morris’s
task group design model,26 McCaskey’s framework for analyzing groups,27 and Ledford,
Lawler, and Mohrman’s participation group design model.28
5-5a Inputs
Organization design and culture are the major inputs to group design. They consist
of the design components characterizing the larger organization within which the group
is embedded—technology, structure, management processes, and human resources
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107
systems—and organization culture. Technology can determine the characteristics of the
group’s task; structural systems can specify the level of coordination required among
groups. Management processes can determine how much information the group receives
and how much decision making and self-control it can exercise. The human resources
and measurement systems, such as performance appraisal and reward systems, play an
important role in determining team functioning.29 For example, individual-based,
forced-ranking performance appraisal and reward systems tend to interfere with team
functioning because members may be concerned with maximizing their individual performance to the detriment of team performance. Organization culture can influence the
norms that groups develop to control member behavior. Collecting information about
the group’s organization design context can greatly improve the accuracy of diagnosis.
5-5b Design Components
Figure 5.2 shows that group designs have five major components: goal clarity, task structure, group composition, team functioning, and performance norms.
Goal clarity involves how well the group understands its objectives. In general, goals
should be moderately challenging; there should be a method for measuring, monitoring,
and feeding back information about goal achievement; and the goals should be clearly
understood by all members.
Task structure is concerned with how the group’s work is designed. Task structures
can vary along two key dimensions: coordination of members’ efforts and regulation of
their task behaviors.30 The coordination dimension involves the degree to which group
tasks are structured to promote effective interaction among group members. Coordination is important in groups performing interdependent tasks, such as surgical teams and
problem-solving groups. It is relatively unimportant, however, in groups composed of
members who perform independent tasks, such as a group of call center specialists or
salespeople. The regulation dimension involves the degree to which members can control
their own task behaviors and be relatively free from external controls such as supervision, plans, and programs. Self-regulation generally occurs when members can decide
on such issues as task assignments, work methods, production goals, and membership.
(Chapter 14 discusses OD interventions for designing group task structure.)
Group composition concerns the membership of groups. Members can differ on a
number of dimensions having relevance to group behavior. Demographic variables,
such as age, education, experience, and skills and abilities can affect how people behave
and relate to each other in groups. Demographics can determine whether the group is
composed of people having task-relevant skills and knowledge, including interpersonal
skills. People’s internal needs and personal traits also can influence group behaviors.
Individual differences in social needs can determine whether group membership is likely
to be satisfying or stressful.31
Team functioning is the underlying basis of group life. It involves group processes having to do with how members relate to each other, which is important in work groups
because the quality of relationships can affect task performance. In some groups, for example, interpersonal competition and conflict among members result in their providing little
support and help for each other. Conversely, groups may become too concerned about
sharing good feelings and spend too little time on task performance. In OD, considerable
effort has been invested in helping work-group members develop healthy interpersonal relations, including an ability and a willingness to share feelings and perceptions about members’ behaviors so that interpersonal problems and task difficulties can be worked through
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and resolved.32 Group functioning, therefore, involves task-related activities, such as advocacy and inquiry; coordinating and evaluating activities; and the group-maintenance function, which is directed toward holding the group together as a cohesive team and includes
encouraging, harmonizing, compromising, setting standards, and observing.33 (Chapter 10
presents interpersonal and group process interventions.)
Performance norms are member beliefs about how the group should perform its task
and what levels of performance are acceptable.34 Norms derive from interactions among
members and serve as guides to group behavior. Once members agree on performance
norms, either implicitly or explicitly, then members routinely perform tasks according
to those norms. For example, members of problem-solving groups often decide early in
the life of the group that decisions will be made through voting; voting then becomes a
routine part of group task behavior. (Chapter 10 discusses interventions aimed at helping
groups to develop appropriate performance norms.)
5-5c Outputs
Team effectiveness has two dimensions: performance and quality of work life. Performance is measured in terms of the group’s ability to control or reduce costs, increase
productivity, or improve quality. It is a “hard” measure of effectiveness. In addition,
effectiveness is indicated by group members’ quality of work life. It concerns work satisfaction, team cohesion, and organizational commitment.
5-5d Alignment
Diagnosing team effectiveness requires assessment of how well the group elements
described above fit with each other.
1. Does the group design fit with the inputs? As shown in Figure 5.2, the key inputs
into group design are the larger organization’s design and culture. Organization
designs and cultures that are highly flexible and promote agile and adaptive organizational behaviors generally fit with work groups composed of highly skilled and
experienced members performing highly interdependent tasks. Conversely, organization designs and cultures that are bureaucratic and support standardized behaviors generally align with work groups that have clear, quantitative goals and
norms and structures that support routine task behaviors and interactions.
Although there is little direct research on these fits, the underlying rationale is
that congruence between organization design and culture and group design supports overall integration of task behaviors within the organization. When group
designs are not compatible with organization designs and cultures, groups often
conflict with the organization.35 They may develop norms that run counter to
organizational effectiveness, such as occurs in groups supportive of horseplay,
goldbricking, and other counterproductive behaviors.
2. Do the group design components fit with each other? The nature of a group’s
task determines how the design components should align with each other. When
the task is highly interdependent and requires coordination among group members, goal clarity, task structure, group composition, performance norms, and
team functioning all need to promote effective task interaction among members.
For example, task structure might physically locate related tasks together; group
composition might include members with similar interpersonal skills and social
needs; performance norms would support task-relevant interactions; and healthy
interpersonal relationships would be developed. Conversely, when a group’s task
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is independent, the design components should promote individual task performance.36 The other relevant task dimension concerns task uncertainty, which
has to do with the amount of information processing and decision making
that need to occur during task performance. When a work group has an
uncertain task, then task structure, group composition, performance norms, and
team functioning should promote self-regulation. Members should have the necessary freedom, information, and skills to assign members to appropriate tasks, to
decide on production methods, and to set performance goals.37 For example,
when self-regulation is needed, task structure might be relatively flexible and
allow the interchange of members across group tasks; composition might include
members with multiple skills, interpersonal competencies, and social needs; performance norms would support complex problem solving; and efforts would be
made to develop healthy interpersonal relations. On the other hand, when technology is relatively certain, group designs should promote standardization of
behavior and groups should be externally controlled by supervisors, schedules,
and plans.38
5-5e Analysis
Application 5.2 presents an example of applying group-level diagnosis to a topmanagement team engaged in problem solving.
Examination of the group’s outputs shows that it is ineffective at problem solving.
Members report a backlog of unresolved issues, poor use of meeting time, lack of
follow-through and decision implementation, and a general dissatisfaction with the
team meetings. Examining group inputs and design components and assessing the fit
among them can uncover the causes of those group problems.
The key inputs into a work group are the design and culture of the larger organization. The Ortiv Glass Corporation’s decentralized philosophy allows each plant to
set up its own organization design. Freedom to innovate in the manufacturing plants
is probably an outgrowth of the firm’s OD activities and culture, which promote participation and innovation. Although little specific data are given about the new plant’s
organization design, tasks are structured into functional departments that must work
together to produce plate glass. The team’s problem-solving activities reflect this interdependence among the departments as coordination among team members is needed
to resolve plantwide issues. The team meetings also seem to involve many issues that
are complex and not easily solved, so there is probably uncertainty in the technology
or work process. This ambiguity is typical in a new plant and makes it difficult for a
problem-solving team to determine the causes of problems or to find acceptable solutions. Consequently, members of the top-management team must process considerable
information during problem solving.
Diagnosis of the team’s design components answers the following questions:
1. How clear are the group’s goals? The team’s goals seem relatively clear: they are to
solve problems. There appears to be no clear agreement, however, on the specific
problems to be addressed. As a result, members come late because they have “more
pressing” problems needing attention.
2. What is the group’s task structure? The team’s task structure includes face-to-face
interaction during the weekly meetings. This structure allows members from different functional departments to come together physically to share information and to
solve problems mutually affecting them. It facilitates coordination of problem
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T
he Ortiv Glass Corporation produces and
markets plate glass for use primarily in
the construction and automotive industries.
The multiplant company has been involved
in OD for several years and actively supports participative management practices and employee
involvement programs. Ortiv’s organization design
is relatively flexible, and the manufacturing
plants are given freedom and encouragement
to develop their own organization designs and
approaches to participative management. It
recently put together a problem-solving group
made up of the top-management team at its
newest plant.
The team consisted of the plant manager and
the managers of the five functional departments
reporting to him: engineering (maintenance),
administration, human resources, production,
and quality control. In recruiting managers for
the new plant, the company selected people
with good technical skills and experience in their
respective functions. It also chose people with
some managerial experience and a desire to
solve problems collaboratively, a hallmark of participative management. The team was relatively
new, and members had been working together
for only about five months.
The team met formally for two hours each
week to share pertinent information and to
deal with plantwide issues affecting all of the
departments, such as safety procedures, interdepartmental relations, and personnel practices. Members described these meetings as
informative but often chaotic in terms of decision making. The meetings typically started
late as members straggled in at different
times. The latecomers generally offered
excuses about more pressing problems occurring elsewhere in the plant. Once started, the
meetings were often interrupted by “urgent”
phone messages for various members, including the plant manager, and in most cases, the
recipient would leave the meeting hurriedly to
respond to the call.
The group had problems arriving at clear
decisions on particular issues. Discussions
often rambled from topic to topic, and members tended to postpone the resolution of problems to future meetings. This led to a backlog
of unresolved issues, and meetings often
lasted far beyond the two-hour limit. When
group decisions were made, members often
reported problems in their implementation.
Members typically failed to follow through on
agreements, and there was often confusion
about what had actually been agreed upon.
Everyone expressed dissatisfaction with the
team meetings and their results.
Relationships among team members were
cordial yet somewhat strained, especially
when the team was dealing with complex
issues in which members had varying opinions
and interests. Although the plant manager publicly stated that he wanted to hear all sides of
the issues, he often interrupted the discussion
or attempted to change the topic when members openly disagreed in their views of the
problem. This interruption was typically followed by an awkward silence in the group. In
many instances, when a solution to a pressing
problem did not appear forthcoming, members
either moved on to another issue or they informally voted on proposed options, letting majority rule decide the outcome. Members rarely
discussed the need to move on or vote; rather,
these behaviors emerged informally over time
and became acceptable ways of dealing with
difficult issues.
application 5 2
TOP-MANAGEMENT TEAM AT ORTIV GLASS CORPORATION
solving among the departments in the plant. The structure also seems to provide
team members with the freedom necessary to regulate their task behaviors in the
meetings. They can adjust their behaviors and interactions to suit the flow of the
discussion and problem-solving process.
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3. What is the composition of the group? The team is composed of the plant manager and the heads of the five functional departments. All members appear to have
task-relevant skills and experience, both in their respective functions and in their
managerial roles. They also seem to be interested in solving problems collaboratively. That shared interest suggests that members have job-related social needs and
should feel relatively comfortable participating in group problem-solving situations.
4. What are the group’s performance norms? Group norms cannot be observed directly
but must be inferred from group behaviors. The norms involve member beliefs about
how the group should perform its task, including acceptable levels of performance.
A useful way to describe norms is to list specific behaviors that complete the sentences
“A good group member should …” and “It’s okay to ….” Examination of the team’s
problem-solving behaviors suggests the following performance norms:
• It’s okay to come late to team meetings.
• It’s okay to interrupt meetings with phone messages.
• It’s okay to leave meetings to respond to phone messages.
• It’s okay to hold meetings longer than two hours.
• A good group member should not openly disagree with others’ views.
• It’s okay to vote on decisions.
• A good group member should be cordial to other members.
• It’s okay to postpone solutions to immediate problems.
• It’s okay not to follow through on previous agreements.
5. What is the nature of team functioning in the group? The case strongly suggests
that interpersonal relations are not healthy on the management team. Members do
not seem to confront differences openly. Indeed, the plant manager purposely
deflects issues when conflicts emerge. Members feel dissatisfied with the meetings
but spend little time talking about those feelings. Relationships are strained, but
members fail to examine the underlying causes.
The problems facing the team can now be explained by assessing how well the group
design fits the inputs. The plant’s organization design requires coordinated problem solving among functional departments. The newness of the plant and the uncertainty of the
technology result in complex, plantwide issues that require considerable information
processing to resolve. The weekly team meetings are an attempt to address and resolve
these interdependent and complex problems. The plant’s culture promotes participation
in problem solving and the team meetings are a reflection of that involvement. Although
it is too early to tell whether the team will succeed, there does not appear to be significant incongruity between the plant’s organization design and culture and what the team
is trying to do.
Next, alignment among the group design components is assessed to determine how
well they fit together to promote interdependent and complex problem solving. The
team’s task structure and composition appear to fit the type of issues that the team is supposed to address. The face-to-face meetings help to coordinate problem solving among the
department managers, and except for interpersonal and group problem-solving skills,
members seem to have the necessary task-relevant expertise to address the plantwide problems. There appears, however, to be a conflict in the priority between the problems to be
solved by the team and the problems faced by individual managers. Moreover, there seems
to be a mismatch between the demands of the problem-solving task and the team’s performance norms and interpersonal relations. Complex, interdependent problems require performance norms that support sharing of diverse and often conflicting kinds of
information. The norms must encourage members to generate novel solutions and to
assess the relevance of problem-solving strategies in light of new issues. Members need to
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address explicitly how they are using their knowledge and skills and how they are weighing
and combining members’ individual contributions. The team’s performance norms fail to
support complex problem solving; rather, they promote a problem-solving method that is
often superficial, haphazard, and subject to external disruptions. Members’ interpersonal
relationships reinforce adherence to the ineffective norms. Members do not confront personal differences or dissatisfactions with the group process. They fail to examine the very
norms contributing to their problems. In this case, diagnosis suggests the need for group
interventions aimed at improving performance norms and developing healthy interpersonal relationships. (Chapter 10 describes interpersonal and group process interventions.)
5-6 Individual-Level Diagnosis
The final level of organizational diagnosis is the individual job or position. An organization consists of numerous groups; a group, in turn, is composed of several individual
jobs. This section discusses the inputs, design components, and relational fits needed
for diagnosing jobs. The model shown in Figure 5.2 is similar to other popular job
diagnostic frameworks, such as Hackman and Oldham’s job diagnostic survey and
Herzberg’s job enrichment model.39
5-6a Inputs
Four major inputs affect job design: organization design, culture, group design, and the
personal characteristics of jobholders.
Organization design is concerned with the larger organization within which the individual job is the smallest unit. Organization design is a key part of the larger context
surrounding jobs. An organization’s technology, structure, management processes, and
human resources systems can have a powerful impact on the way jobs are designed and
on people’s experiences in them. For example, company reward systems can orient
employees to particular job behaviors and influence whether people see job performance
as fairly rewarded. In general, technology characterized by relatively uncertain tasks is
likely to support job designs allowing employees flexibility and discretion in performing
tasks. Conversely, low-uncertainty tasks are likely to promote standardized job designs
requiring routinized task behaviors.40
Culture represents the values and norms shared by organization members. Because
they are generally taken for granted, they guide members’ perceptions, thoughts, and
actions. Culture can influence the kinds of work designs that organizations consider
and that members perceive as legitimate. The more an organization culture promotes
member participation and innovation, the more likely job designs will be highly flexible
and involve member decision making.
Group design concerns the work group containing the individual job. Like organization design, group design is an essential part of the job context. Task structure, goal clarity, group composition, performance norms, and team functioning serve as inputs to job
design. They typically have a more immediate impact on jobs than do the larger, organization design components. For example, group task structure can determine how individual jobs are grouped together—as in groups requiring coordination among jobs or in
ones comprising collections of independent jobs. Group composition can influence the
kinds of people who are available to fill jobs. Group performance norms can affect the
kinds of job designs that are considered acceptable, including the level of jobholders’ performances. Goal clarity helps members to prioritize work, and group functioning can
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affect how powerfully the group influences individual-job behaviors. When members
maintain close relationships and the group is cohesive, group norms are more likely to
be enforced and followed.41
Personal characteristics of individuals occupying jobs include age, education, experience, skills, and abilities. All of these can affect how people react to job designs and perform. Individual needs and expectations also can affect employee job responses. For
example, individual differences in growth needs—the need for self-direction, learning,
and personal accomplishment—can determine how much people are satisfied by jobs
with high levels of skill variety, autonomy, and feedback about results.42 Similarly, work
motivation can be influenced by people’s expectations that they can perform a job well
and that good job performance will result in valued outcomes.43
5-6b Design Components
Figure 5.2 shows that individual jobs have five key dimensions: skill variety, task identity,
task significance, autonomy, and feedback about results.44
Skill variety is the degree to which a job requires a range of activities and abilities to
perform the work. Assembly-line jobs, for example, generally have limited skill variety
because employees perform a small number of repetitive activities. On the other hand,
most professional jobs include a great deal of skill variety because people engage in
diverse activities and employ several different skills in performing their work.
Task identity measures the degree to which a job requires the completion of a relatively whole, identifiable piece of work. Skilled craftspeople, such as tool-and-die makers
and carpenters, generally have jobs with high levels of task identity. They are able to see
a job through from beginning to end. Assembly-line jobs involve only a limited piece of
work and score low on task identity.
Task significance identifies the degree to which a job has a significant impact on
other people’s lives. Custodial jobs in a hospital are likely to have more task significance
than similar jobs in a toy factory because hospital custodians are likely to see their jobs
as affecting someone else’s health and welfare.
Autonomy indicates the degree to which a job provides freedom and discretion in
scheduling the work and determining work methods. Assembly-line jobs generally have
little autonomy; the work pace is scheduled and people perform preprogrammed tasks.
College teaching positions have more autonomy. Professors usually can determine how
a course is taught, even though they may have limited say over class scheduling.
Feedback about results involves the degree to which a job provides employees with direct
and clear information about the effectiveness of task performance. Assembly-line jobs often
provide high levels of feedback about results, whereas college professors must often contend
with indirect and ambiguous feedback about how they are performing in the classroom.
Those five job dimensions can be combined into an overall measure of job enrichment. Enriched jobs have high levels of skill variety, task identity, task significance,
autonomy, and feedback about results. They provide opportunities for self-direction,
learning, and personal accomplishment at work. Many people find enriched jobs internally motivating and satisfying. (Chapter 14 discusses job enrichment more fully.)
5-6c Outputs
Individual-job effectiveness includes two kinds of outputs, those related to how well the
job is performed and those having to do with how people experience their job. Performance is measured in terms of the quantity, quality, time, and cost of producing a
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particular job outcome such as a product or service. Indicators of an individual’s experience of the job include job satisfaction, absenteeism, and personal development.
5-6d Alignment
The diagnostic model in Figure 5.2 suggests that the job-design elements just described
must align with each other to produce effective job outputs, such as high quality and
quantity of individual performance, low absenteeism, and high job satisfaction.
1. Does the job design fit with the inputs? Job design should be congruent with the
larger organization design, culture, and group design within which the job is embedded.45 Both the organization and the group serve as powerful contexts for individual
jobs or positions. They support and reinforce particular job designs. Highly flexible
organization designs, participative cultures, and work groups that permit members
to self-regulate their behavior align with enriched jobs. These organization and
group inputs promote autonomy, flexibility, and innovation at the individual-job
level. Conversely, bureaucratic organizations and cultures and groups relying on
external controls are congruent with job designs scoring low on the five design components. These organization and group inputs reinforce standardized, routine jobs.
As suggested earlier, congruence across different levels of organizational design promotes integration of the organization, group, and job levels. Whenever the levels do
not fit each other, conflict is likely to emerge.
Job design also should fit jobholders’ personal characteristics if they are to
perform effectively and derive satisfaction from work. Generally, enriched jobs fit
people with strong growth needs.46 These people derive satisfaction and accomplishment from performing jobs involving skill variety, autonomy, and feedback about
results. Enriched jobs also fit people possessing moderate-to-high levels of taskrelevant skills, abilities, and knowledge. Enriched jobs generally require complex
information processing and decision making; people must have comparable skills
and abilities to perform effectively. Jobs scoring low on the five job-design components generally fit people with rudimentary skills and abilities and with low growth
needs. Simpler, more routinized jobs requiring limited skills and experience fit better
with people who place a low value on opportunities for self-direction and learning.
However, because people can develop growth needs and expertise through education, training, and experience, job design must be monitored and adjusted from
time to time to fit jobholders’ changing needs and enhanced knowledge and skills.
2. Do the job-design components fit with each other? The five job-design components must align with each other to provide a clear and consistent direction to how
the job should be performed. Enriched job designs that score high on skill variety,
task identity, task significance, autonomy, and feedback of results signal the need for
flexibility…
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