UNIT- II (continuation)

Centralization and Decentralization Centralization denotes concentration of authority and decentralization dispersion of authority. Physical or geographical decentralization refers to dispersion of organizations operations throughout the country. The functional decentralization refers to dispersion of organization functions into separate autonomous units, for example, production, marketing, finance etc., Allen has defined both the terms as follows: Centralization is the systematic and consistent reservation of authority at central points within an organization. Decentralization applies to the systematic delegation of authority in an organization wide context. Thus, centralization refers to the reservation of authority at the top level of the organization and decentralization refers to systematic delegation of authority in the organization However, there can neither be absolute centralization nor there can be absolute decentralization. Rationale of Centralization / Benefits of Centralization: 1. 2. 3. 4. 5. 6. Centralization provides opportunity for personal leadership. It facilitates integration of efforts. Quick decisions are possible; hence emergencies can be handled very easily. It makes communication and control easier in the organization. It helps in reducing wastage of efforts by avoiding duplication. There is uniformity in actions throughout the organization and thus, co ordination can be achieved easily. Centralization is quite suitable for smaller organizations, organizations producing single or homogeneous products and operating in limited geographical areas. Rationale of Decentralization Decentralization offers the following benefits: 1. It reduces burden of the top management so that it can focus more attention of strategic management. 2. It facilitates growth and diversification in the organization. 3. It is good philosophy to motivate managers. 4. It encourages development of managers by providing them opportunities. 5. It emphasizes on horizontal growth of the organization. Decentralization is useful basically to large organization with multiple products or operating in different geographical locations. Some of the major problems of decentralization are: 1. If not followed properly, decentralization will create chaos in the organization in the absence of proper control. 2. It tends to increase costs by making most units autonomous.

3. There is more need for good managers. 4. Decentralization requires high degree of self motivation and self-control.

Making Decentralization effective

Following are some measures which make decentralization more effective. 1. Centralized Top policy and control: The concept of centralized policy formulation and control in decentralized structure has been generated out of the management practices of general motors of the U.S.A. This system has been described as Centralized control with decentralized responsibilities. This approach is followed by many large and diversified Indian organizations like D.C.M Ltd., Gwalior Rayon Limited and so on. The Centralized policy and control should be limited to certain basic and important activities affecting the functioning of entire organization. Such areas may be functioning pattern, dividend distribution etc. Each unit enjoys considerable autonomy within the context of overall organizational policy. To make control effective, there is a need for developing appropriate control and reporting techniques. 2. Appreciation of concept of Decentralization: There is a need for developing proper climate in which decentralization is taken in right perspective. In this, leadership role of top managers is quite important; unit managers should be given free hand in operational matters and must be held responsible for final results. They should be given adequate compensation in the form of security of job, promotion and other benefits based on their performance. 3. Development of Managers: The success of decentralization depends on the quality of managers who hold various positions. Since these managers cannot always be recruited from outside, there is an urgent need for developing managers within. Therefore, transformation from centralization to decentralization should be a gradual process so that there is no vacuum in the organization in respect of managers. 4. Competition among units: Since various units of decentralized organization work independently, there should be proper competition among units. The contribution of each department is to be measured in terms of market price and /or quality. This will create consciousness among unit and department among unit and department managers. Competition may be generated in terms of overall contribution of the units to the department and suitable incentive package may be adopted to reward highly efficient units.

Factors determining Degree of Decentralization 1. Size of organization: The larger the size of an organization, the more urgent is the need for decentralization. In a large organization, more decisions are to be made at more places. In such cases, it becomes difficult to coordinate them and results in slow decision making. Slow decision making may be quite costly to the organization. Therefore, to minimize the cost, authority should be decentralized wherever feasible. 2. History of the organization: Decentralization of authority depends on the way the organization has been built up over a period of time. Normally, those organizations which expand from within or expand under the direction of the owner founder show a marked tendency to keep authority centralized. On the other hand, organizations that represent amalgamations and consolidations are likely to show a definite tendency retain decentralized authority. 3. Management philosophy: Decentralization is a kind of management philosophy to regulate organizational processes including decision making. In many cases, top managers may take advantages of the innate desire of people to create to be free or to have status. On the other hand, many top managers may keep authority with them because they can not give up activities and authorities they enjoyed before. 4. Availability of managers: If better quality managers are available, there is more chance for decentralization, because (i) these managers can handle the problems of decentralized units effectively. (ii) such managers have higher need for degree of autonomy. Moreover, decentralization also works as training ground for a manager which increases the ability of good managers. 5. Pattern of planning: Planning is the most crucial management function in thinking about decentralization. In the organization having carefully drawn standing plans, the chance for decentralization is high. Similarly, if they have been made party to the planning process, other functions can be easily decentralized. 6. Control techniques: Higher the degree of development and use of control techniques, better is the prospect for decentralization. 7. Decentralization Activities: In many cases, decentralization of authority becomes necessary because there is decentralization based on other factors like economics of divisions of labour, the opportunities for using physical facilities at various locations, and the nature of work. For example, the activities of banking, insurance and transport organizations have to be decentralized. 8. Rate of change in organization: If the business of the organization is fast developing and it is facing the problems of expansion, there is more chance that authority will be decentralized. As against this, in old well established, or slow moving organizations, there is a natural tendency to centralized authority. 9. Environmental influences: The most important environmental force is the government regulations over the private business. For example, business covered by administered prices like petroleum etc., requires less time of managers in determining the price structure and sometimes even distribution pattern.

Standardization Standardization means creating routine patterns of behavior or output. Many organizations try to improve the quality and consistency of a product or service by standardizing work activities through job descriptions and procedures. Standardization co ordinates work that is simple and routine, but is less effective where tasks are complex and conditions are ambiguous. In these situations companies might co-ordinate work by standardizing the individuals or teams goals and product or service output (e.g., customer satisfaction, production, efficiency) For instance, to co-ordinate the work of sales people companies assign sales targets rather than specific behaviours. Mechanistic structure Vs. Organic structure An organizational structure with a narrow span of control and high degree of formalization and centralization is known as mechanistic structure. Mechanistic structures have many rules and procedures, limited decision making at lower levels, tall hierarchies of people in specialized rules and vertical communication flows. Tasks are rigidly defined and are altered only when sanctioned by higher authorities. The basic characteristics of an organization based on mechanistic structure are: (i) (ii) (iii) (iv) (v) (vi) Division of labour by functional specialization A well defined hierarchy of authority A system of rules covering the duties and rights of employees A system of procedures for dealing with work situations. Impersonal relations among people. Selection and promotion based on technical competency and excellence.

Steps in organizational structure / process in designing structure (i) Determination, identification and enumeration of activities : In designing the structure, managers must identify the necessary activities that must be performed in order to achieve the organizational objectives. While identifying the activities, it should be borne in mind that no necessary activity is left and no unnecessary activity is performed. The major activities are further classified into a number of sub activities. (ii) Grouping and assigning of activities Primary derivative Closely related and similar activities are grouped into departments or division. Grouping may be done or several bases, such as functions, geographical regions, types of customers, types of equipments etc., Grouped activities in the form of departments, sections, etc., are assigned to various positions. The assignment of activities creates responsibility and ensures certainty of work performance.

(iii)

Delegation of authority authority & Responsibility. Since the assignment of job to an individual creates responsibility on his part, he must have corresponding authority to discharge his obligations. Authority and responsibility are correlated. Through the process of delegation, authority structure in the organization is created, that is, who will interact with whom in an official way.

An organizational structure with a wide span of control, little formalization and decentralized decision making is known as organic structure or adhocracies. Tasks are fluid, adjusting to new situations and organizational needs. The organic structure values knowledge and takes the view that information may be located anywhere in the organization. Thus, communication flows in all directions with little concern for the formal hierarchy. These organizational structures are characterized by the following: (i) (ii) (iii) (iv) Tasks and roles are less rigidly defined Decision making is more centralized The employees are more friendly and respectful to each other so that there is more information and suggestions. Departmental boundaries are flexible.

Mechanistic structures operate best in stable environments because they rely on efficiency and routine behaviours. However, most organizations operate in a world of dramatic change. Information technology, globalization, a changing workforce and other factors have strengthened the need for highly organic structures that are flexible and responsive to these changes. Restructuring Interventions Two restructuring interventions are: downsizing and re engineering. Down sizing decreases the size of the organization through workforce reduction or organizational redesign. It generally is associated with layoffs where a certain number or class of organization members are no longer employed by the organization downsizing can contribute to organization development by focusing on the organizations strategy, addressing the needs of all organizations members and following through with growth plans. Re engineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance a typical reengineering project prepares the organization, rethinks the way work gets done and restructures the organization around the newly designed core processes. Unit III ORGANISATION CULTURE

Meaning: Organization culture is the basic pattern of shared assumption, values and beliefs considered to be the correct way of thinking about and acting on problems and opportunities facing the organization. O Reilly has defined organizational culture as organizational culture is the set of assumptions, beliefs, values and norms that are shared by an organizations members. Elements of culture Assumptions, beliefs values and norms are known as abstract elements of the culture. Externally oriented characteristics like products, buildings, and dresses etc., which are known as material elements of the culture. Assumptions represent the deepest part of organizational culture because they are unconscious and taken for granted. Assumptions are the shared mental models, the broad worldviews or theories in use that people rely on to guide their perceptions and behaviours. Beliefs represent the individuals perceptions or reality values are more stable long lasting beliefs about what is important. They help us define what is right or wrong or good or bad in the world. Norms means informal rules and expectations norms guide the way in which people behave Vijay Sathe has exemplified some common things to demonstrate the compound of organizational culture. (i) shared things (e.g.) the way people dress) (ii) shared saying (e.g.) lets go to work) (iii) share actions( e.g. a service oriented approach) (iv) shared feelings ( e.g. hard work is not rewarded here) Characteristics of organizational culture There are seven primary characteristics that aggregately capture the essence of an Organizations culture: 1. Innovation and Risk taking - the degree to which employees are encouraged to be innovative and risk taking 2. Attention to detail - the extent to which employees are expected to exhibit precision, analysis and attention to detail. 3. Outcome orientation - the degree to which management focuses on results or outcomes rather than on techniques and process used on achieving those results or outcomes. 4. People orientation - the degree to which management decisions take into consideration the effects of outcomes on people of the organization. 5. Team orientation - the degree to which various organizational activities are organized on team basis rather then individual basis. 6. Aggressiveness - the extent to which people in the organization are aggressive and competitive rather than easy going. 7. Stability - the extent to which the organization emphasizes in maintaining status quo rather than change.

Levels of culture According to Edger Schein organization culture has three levels. These are (i) artifacts (ii) shared values and (iii) common assumptions Artifacts (Method of socialization) Artifacts are the observable symbols and signs of an organizations culture such as the way visitors are greeted the physical layout etc. The categories of artifacts are (a) Organizational heroes: The behavior of top management and their leadership styles have the impact on the behavior of organizational members. These leaders become the role models and they represent what the company stands for and reinforce the values of the culture. (b) Rituals and ceremonies: Rituals are the programmed routines of daily organizational life that dramatize the organizations culture Rituals include how visitors are greeted, how often senior executives visit subordinate, how people communicate with each other, and how much time employees take for lunch. Ceremonies are planned activities conducted specifically for the benefit of an audience. This would include publicity rewarding or punishing employees or celebrating the lunch of new product. (c). Stories and Legends stories and legends about past corporate incidents serve as powerful social prescriptions of the way things should be done. They convey valuable knowledge throughout the organization by providing human relation to corporate expectations, individual performance standards and the like stories create emotions in listeners, which tends to improve their money of the lesson within the story. (d.) Physical structures and symbols: Building, Desks, Chairs, office space and wall hangings are few of the items that might convey cultural meaning symbols Communicate organizational culture inspection messages. Certain code of dress or a company logo can reflect its values and orientations. (e) Organizational language: The language of the workplace species about the companys culture how employees address co workers describe customers express angle are all verbal symbols of cultural values. 2. Shared values Values are the second and deeper level of culture and the reflected in the way individuals actually behave values are those principles and qualities that shape our thinking and behaviour. Values reflect a persons underlying belief as to what should be and what should not be. Values can be classified into Instrumental values and Terminal values. Instrumental values define such enduring beliefs that certain behaviour is appropriate at all times irrespective of the objectives or outcomes. In case of terminal values, the objectives

become more important than the appropriateness of the behaviour in achieving such objectives. 3. Common assumption: Assumptions are at the deepest and most fundamental level of cultural diagnosis. The common assumptions can be traced to larger social and cultural values held by a particular society or country. For example in American the emphasis is mostly on individualized achievement while in Japan, is more on collective achievement. Types of Organizational culture 1. Dominant culture and sub culture Dominant culture expresses the core values that are shared by majority of members of the organization. The term core values refer to the primary or the dominant values that are accepted throughout the organization. It is the macro view of the culture that gives an organization its distinct personality. Sub culture expresses a set of values that are shared by the members of a division or department. Sub cultures typically are a result of problems or experiences that are shared by members of a particular department these subcultures can form vertically or horizontally. 2. Strong Vs Weak culture A strong culture is charaterised by the organisations core values being intensely held and widely share. More intensely the core values are shared, the stronger the culture is. The degree of shared ness depends on two factors: Orientation and rewards. When the organizations core values are not shared with high degree of intensity it forms week culture weak culture is usually characterized by high turnover of employees. How culture forms: The original culture is derived from the founders philosophy. This, in turn strongly influences the criteria use in hiring. The actions of the current top management set the general climate of what is acceptable behaviour and what is not. How employees are to be socialized will depend both on the degree of success achieved in matching the values of new employees with organizations value in the selection process and top management preference for socialization methods.

Top Managem ent

Philosophy of Organizations founders

Selection Criteria Socialisation

Organis ational Culture

Functions of culture Culture performs a number of functions within an organization. They are 1. Boundary defining role: Culture helps to create distinction between one organization and others. 2. Sense of Identity: Culture helps to create sense of Identify for the members of organizations. 3. Generation of commitment: Culture encourages the members of the organization to give priority to organizational interest over and above their personal interest. 4. Social system stability: Culture enhances social stability culture is also known as the social glue. It provides a list of social dos and donts for the employees. 5. Sense making and control mechanism: Culture helps in making sense and control mechanism that guides and shapes the attitudes and behaviours of the employees Thus culture is beneficial to the organization as well as to the employees Dysfunctions of culture Culture can be proved to the liability to the organization. 1. Barrier to change Consistency of employee behaviour is an asset to the organization, when it has a stable environment when the organization is dynamic it will prove to be liable as the employees will try to resist in the environment. 2. Barrier to diversity: Strong cultures put a lot of pressure on the employees to confirm to the accepted values and styles of the organization. 3. Barrier to mergers and acquisition: Cultures can act as barriers to mergers and acquisition. Favourable financial statements or product lives may be initial

alteration at the time of acquisition but another important factor to be considered is how well the cultures of the two organization match with each other. Change in organizational culture The following conditions must be present then only a cultural change can taken place. 1. A dramatic crisis: Any dramatic crisis in the organization like a major financial set back loss major customer or technological break through by a company may force the management to look into the relevance of the exercise. 2. New top leadership: If some top executives leave the organization and new leadership takes over, they may provide an alternative set of key values or a new culture. 3. Young and small organization: when the organization is new and its size is small it, will be easier for the management to change the culture. 4. Weak culture: weak culture is more vulnerable to change than strong ones. How to keep the culture alive The following practices may used to sustain the culture in the organization. 1. Selection: Standardised procedures should be used to hire right people for right job. At the interview, the candidates whose personal styles and values do not fit with the organizations culture must be screened out. Thus selection helps in sustaining culture by identifying the candidates who can culturally match the organization culture. 2. Top Management: The actions of top management have major impact on the organizations culture. Through what they say and how they behave senior executives establish norms. 3. Socialisation: The process that adapts employees to the organisations culture is socialization. Socialisation can be conceptualized as a process made up of three stages. Pre arrival, encounter and metamorphosis.

(i) Pre arrival: This stage comprises all the learning that occurs before a new member joins the organization. (ii) Encounter:

Upon entry into the organizations the new employees enters this state here the individual informs with the realities of the situation in terms of his job and the job performance environment such as superior peers subordinates and organizational culture. It the expectations are similar with realities he adapts the organization culture quickly otherwise. Matching people with culture: Goffee and Jones provide some interesting insights on different organizational cultures and guidance to prospective employees. They have identified four distinct cultural types. The two dimensions underlying organizational cultural are: (i) Sociability: It is a measure of friendliness. High sociability means people to kind things for one another without expecting something in return. Sociability is consistent with a high people orientation high team orientation and focus on process rather than outcomes. (ii) Solidarity. It is measure of task orientation. Solidarity is consistent with high attention and detail and high aggressiveness. 1. Net worked culture (High on sociability low on solidarity. These organization views members as family and friends people know and like each other. People willingly give assistance to others and openly share information. The negative aspect associated with this culture is the focus on friendship can lead to tolerance for poor performance. 2. Mercenary culture (low on sociability, High on solidarity) These organisations are strictly goal focused. People are intense and determined to meet goals. Mercenary cultures are not just about winning; they are about destroying the enemies the negative aspect of this culture is that it can lead to inhumane treatment on low performers.

3. Fragmented culture (Low on sociability low on solidarity) These organizations are made up of individualists. Commitment is first and foremost to individual members and their job tasks. In fragmented cultures employees are judged

solely on their productivity and their and absence of collegiality are the major negatives of these culture. Communal Culture (High on sociability, high on solidarity): This category values both friendship and performance. Leaders of these cultures tend to be inspirational and charismatic, with a clear vision of the organistions future. The negative aspect of this culture is that it often consumes once total life. The charismatic leader frequently looks to create disciples rather than followers. Impact of organizational culture: Organisational culture, being unique and distinctive prescribes some specific modes of behaviour for its members. Though such behavioural processes may have different dimensions, they ultimately create impact an objective setting, work ethic, motivational pattern and organizational processes. 1. Objective setting: Culture moulds people and people are the basic building blocks of the organization. Therefore it must reflect the objective of its member. Particularly those who are the key decision makers. 2. Work Ethic: Ethic relates to conformity to the principles of human conduct. Work ethic in an organization is derived from is culture. Thus organizational culture determines the ethical standards for the organization as a whole and its individual members. 3. Motivational patterns: Culture determines the way people approach their jobs and even life in general. If organizational culture is geared towards achievement, people will find it quite motivating and put their outmost energies for the work. 4. Organisational processes: Various organizational processes like planning, decision making, controlling etc, are determined by the organizational culture because these processes are carried out by the people in the organization.

**** Unit IV Organisational change

Meaning Forces for change Resistance to change Types and forms of change Evolutionary and Revolutionary change Change process Organisation Development HR functions and Strategic change management Implications for practicing managers. Meaning The term change refers to an alteration in a system whether physical, biological or social. Thus, organisational change is the alteration of work environment in organisation. Change as a process, is a simple modification of the structure or process of a system. Organisational change may have following features: 1. Change results from the pressure of both internal and external forces. 2. When change occurs in any part of the organisation, it disturbs the old equilibrium necessitating the development of a new equilibrium. 3. Any change may affect the whole organisation. and degrees of significance. 5. Organisational change is a continuous process. 6. Change may be reactive or proactive. Forces for Change / Factors in Organisational Change The various factors that necessitate organisational change may be grouped into two categories: External and Internal. A. External Factors Each organisation has goals and responsibility related to others in its environment. Changes in social, political, economic, technological and legal environment force organisations to change themselves. The change in various environmental factors necessitating changes in the organisation are explained below: 1. Technological Change: When there is a change in technology in the organisations environment, the organisation has to adopt new technology. Otherwise it will become less cost effective and its competitive position weakens. When the organisation adopts a new technology, it has its impact on organisation structure, organisational processes and behaviour of people. For example, computers and automation have made significant impact on organisational functioning. 2. Changes in Marketing Conditions: There may be two types of forces which may affect the competitive position of an organisation other organisations supplying the same products and buyers who are buying the product. Any change in these 4. Change will affect the various parts of the organisation in varying rates of speed

forces may require suitable changes in the organisation. For example, liberalization forced many Indian organisations to realign themselves with the new situation. Similarly, there may be changes in buyers in terms of their needs, liking disliking and income disposal for a product. These changes force the organisations to bring those products which meet buyers requirements. 3. Social Changes: Social changes reflect in terms of peoples aspirations, their needs and their way of working. Social changes have taken place because of the several forces like level of education, urbanization, feeling of autonomy and international impact due to new information sources. 4. Political and Legal Changes: political and legal factors broadly define the activities which an organisation can undertake and the methods which will be followed by it in accomplishing those activities. Any change in these political and legal factors may affect the organisational operation. B. Internal factors: Any Change in organisations internal factors may also necessitate change. Such a change is required because of two reasons: 1. Change in Managerial Personnel: Old managers are replaced by a new manager which is necessitated because of retirement, promotion, transfer or dismissal. Each new manager brings his own ideas and way of working in the organisation. Attitudes of personnel change even though there is no change in them. The result is that an organisation has to change accordingly. 2. Deficiency in Existing Organisation: Sometimes, changes are necessary because of deficiency in the present organisational arrangements and processes. These deficiencies may be in the form of unmanageable span of management, large number of managerial levels, and lack in co-ordination between various departments, obstacles in communication, lack of uniformity in policy decision and so on. Resistance to Change is an attitude or behaviour that shows unwillingness to make or support a change. People tend to resist many types of changes because new habits or sacrifices are required. When change is minor and within the scope of correcting

programme, adjustment is fairly routine, but when a change is major or unusual, more serious upsets may occur. This leads to general proposition that people and their social systems will often resist change in organisations. There are two sides of resistance as a cost and as a benefit. Resistance as a Cost If people resist changing, the organisation may not be able to introduce new phenomena in order to adopt environmental requirement. One example of Bajaj auto Ltd. is relevant here. In order to increase its manufacturing capacity, the company procured land near its old plant site but later shifted the new plant site away from the old plant because of resisting work culture of the old plant. Resistance as a Benefit On the other hand, it provides a benefit to the organisation and its change agent: resistance by some members of the organisation provides an opportunity to the change agents to weigh the pros and cons of introducing change more carefully. While introducing a change emphasises only its positive side; resistance to change emphasizes on negative side; the reality lies in between. Thus, resistance to change provides help in managing change in two ways: 1. It may signal the need for more effective communication about the meaning and purpose of a change. 2. It also highlights real inadequacies in the proposed change and suggests better ways for developing and introducing change. Factors in Resistance to Change People tend to evaluate the effect of change individually but they express it through group in collective form. Therefore, the reasons underlying resistance to change may be identified at individual and group level. A. Individual Resistance There are many factors operating at the individual level which are responsible for resistance. They are i.e., economic, psychological and social factors. 1. Economic Factors: People feel attached to the organisation for satisfying their economic needs physiological, job security, etc., over other needs. People may feel that they will be affected in the following ways:

(i) Skill Obsolescence: A change is generally meant for better methods of working which may involve new techniques, technology, etc., whenever people feel that new technology poses a threat of replacing or degrading them, they simply resist such a change. When computer was introduced, it attracted lot of resistance because of this reason. (ii) Fear of Economic Loss: A change may reduce job options and turn into technological unemployment. This feeling is created because people feel that those who can match the new requirements will be better off than those who cannot match. (iii)Reduced Opportunity for Incentives: Whenever there is change, people may feel that they will have lower opportunity to earn incentives and bonus as the new system requires additional skills. 2. Psychological Factors: Psychological factors are based on peoples emotions, sentiments and attitudes towards change. Major psychological factors responsible for resistance are: (i) (ii) Ego Defensiveness: A change may affect the ego of the people and in order to defend their ego, people resist change. Status Quo: People want status quo, that is, they do not want any disturbance in their existing equilibrium of life and work pattern. The change will disturb such equilibrium and people have to obtain another equilibrium which is a painful exercise. Therefore, everyone tries to avoid it. (iii) (iv) Low Tolerance for Change: Some people have very low level of tolerance for change and these people resist any new idea. Lack of Trust in Change Agent: If people have low degree of confidence in the change agent (the person who initiates change), they show resistance to change efforts. This is the reason why labour union resists change initiated by management. (v) Fear of Unknown: The change will bring results in future which are always not certain. This lack of certainty creates anxiety and stress in the minds of people and they want to avoid it.

3. Social Factors: People from their own social groups at the workplace for the satisfaction of their social needs. To the extent the satisfaction of these needs is affected by a change, people resist it. The major factors causing resistance to change are: (i) Desire to Maintain Existing Social Interaction: People desire to maintain existing social interaction since it is a satisfying one. When there is any change, it is likely to be changed which people do not want. Therefore, they resist change. (ii) Feeling of Outside Interference: A change brought by the change agent is considered to be interference in the working of people. This is heightened if the change agent belongs to another social class e.g., change initiated by managers affecting workers. B. Group Resistance: The effect of group as a source of resistance may be analysed in terms of nature of group dynamics and vested interests. (1) Nature of Group Dynamics: Group dynamics refers to the forces which operate in a group determining behaviour of its members. These forces determine how effective a group would be in accepting or rejecting a change. The following nature of group dynamic is important: (i) (ii) (iii) (iv) (v) (vi) If both change agent and people belong to the same group, the role of group is more effective. If the members have developed strong belongingness to the group, the role of group is more effective. The degree of group attractiveness to its members affects how effective the group is Group can exert more pressure on those factors which are responsible for group being attractive to the members. The degree of prestige of a group, determines the degree of influence the group has. Any attempt to change the group norms by any outside force is resisted.

(2) Vested Interests: In a group, some members become more influential than others. These persons may be group leaders appointed formally or accepted by people as leader in an informal group. These persons may use the group as a means for satisfying their own needs. Thus, these vested interests try to influence group behaviour in the form of a uniform response to a change. This phenomenon is more common in the case of labour unions. C. Organizational Resistance to Change: The organisation itself resists many changes because of certain reasons. The major reasons for organisational failure to change are: (i) Counting Past Successes: A major problem before the organisations which have past success stories is, how to face challenges of the changing environment. Since these organisations have achieved success by following a particular set of management practices, they become too rigid to change and they hide their failure to change in the guise of past success. (ii) Stability of System: The organisation may design a system through which it may derive many benefits. The system is stabilized and any change may be perceived a threat by the organisation itself. (iii) Resource Limitations: The organisation has to adapt to its environment but the adoption has its own cost. If the organisation is not fully equipped for meeting such demands, it may not be possible for the organisation to bring necessary change. (iv) Sunk Cost: Most of the organisations have sunk cost involved in various assets. Sunk cost can be in the form of people also. If the change is required, organisation has to pay for those though they may not be as useful. (v) Inter organisational agreement: The organisation may enter into agreement with other organisations over certain aspects of working. If any change is to be incorporated, the organisation has to taken into account the wishes of other organisations too. It does not mean that the organisation will always resist change. It depends more on the style of top management. If it is risk taking, forward looking, innovative and has Zeal for progress, the organisation may take change programmes much more frequently.

Based on aggressiveness which various companies show in changing themselves, Miles and Snow have classified into four categories: 1. Defenders: These are the firms which penetrate in a narrow market / product domain and guard it. They emphasis more on cost-effectiveness, centralized control, intensive planning and put less emphasis on environmental scanning. 2. Prospectors: These firms use broad planning approaches, broad environmental scanning, decentralized controls and reserve some resources utilized for future use. They go on searching new products / markets on regular basis. 3. Analysers: Above two are the extreme cases of choice making modes. In between lye analysers and reactors. Analysers act sometimes as defenders and sometimes as prospectors. 4. Reactors: These organisations realize that their specific environment is changing but fail to relate themselves with the changing environment. They have to behave in one of the above three ways otherwise, they cannot survive Overcoming Resistance to Change Problem of overcoming resistance to change can be handled at two levels; at the level of individuals and at the level of group. A. Efforts at Individual Level: When resistance to change comes from the people at individual level, the problem can be solved at the same level. For this purpose, the following efforts can be made: 1. Involvement: Involvement is a process through which those who are affected by the change are brought to understand the change. This is not a one time action. It includes finding out from the members how they interpret the proposed change and what they think about it. Getting opinions out in the open, so that they are looked at and evaluated, is an important trust building task. As this process goes, the level of resistance to change tends to decrease, understanding of change increases and the personal involvement in the change increases. 2. Obtaining Commitment: Commitment is an agreement to take an active part in the actual mechanics of the change. Commitment to take part in the change programme can be obtained in private from each individual.

3. Leadership: The role of leadership in getting acceptance for a change is very important as a capable leader reinforces a climate of psychological support for change. 4. Training and Psychological Counseling: People should be educated to become familiar with change, its process and working. They must be taught new skills, helped to change attitudes and indoctrinated in new relationships. Such educational process can be aided by training classes, meetings and conferences. B. Efforts at Group Level: The managers can form strategies for overcoming resistance in the following manner: 1. Group Contact: Though the group contact, many things about change can be made clear such aspects as the reasons for change, benefits of change and how the benefits of the change will be shared among organizations and its members. Advantages of group contacts are (i) Through group one can communicate with more people per unit of time. (ii) In group, there may be some person who may support the idea for change. (iii) Group can get at the basic problem very rapidly. 2. Participation: Those people who are directly affected by the change should be given opportunity to participate in that change before the final decisions are reached. The organisation must regard the participation as meaningful and share the results of the change with its members. 3. Group Dynamics Training for Change: Group dynamics also helps in providing various training programme for accepting and implementing change. Such training techniques include role playing, psychodrama, and sensitivity or t-group training. Types of Change I. On the Basis of Subject Matter of Change 1. Strategic Change: This is a change in the very mission of the organisation. 2. Structural Change: Decentralised operations and participative management style have been more recent trends in the organisational structure. Since these structural changes shift the authority and responsibility to lower level management, the members have to be prepared to develop a team spirit as well as acquire skills to make on-the-spot decisions.

3. Process Oriented Change: These changes relate to technological developments, information processing, automation and use of robotics in the manufacturing operations. 4. People Oriented Change: any organisational change affects people in some form. These changes are directed towards performance improvement, group cohesion, dedication and loyalty to the organisation as well as developing a sense of self actualization among the members. II. On the Basis of Origin 1. Evolutionary Change: Such changes do not greatly violate the traditions and states QUO exceptions. They are usually piecemeal, take place one by one. 2. Revolutionary Change: Changes sometimes may be cataclysmic. The revolutionary changes result in overturning the status quo arrangements, cause violations, rejections or suppression of old exceptions. These changes are rarely introduced except where situations become highly intolerable having no other acceptable options. III. On the basis of Planning Planned Change: is intentional and occurs with a change agents direction. Most planned changes may be regarded as efforts intended to deal with performance gaps in ways that benefit on organisation and its members. Unplanned Change: Occurs spontaneously and without a change agents direction. They may be disruptive such as a wildcat strike that ends in a plant closure, or beneficial. IV. On the basis of reaction Proactive Change: is brought out of the anticipation of the likely behaviour of the forces having impact on the organisation. Such organisations are known as prospectors which constantly interact with their environment to identify new opportunities and threats. Reactive Change: It occurs when external or internal forces make it necessary for a change to be implemented. Most of the organisations which believe in traditional pattern of working often go for reactive change. Types of Change Approach

I.

Economic Approach: refers to creating change for the purpose of creating

shareholder value. Such change is driven by top management with financial incentive for employees to perform. Change is planned and focused. Change agents focus on decision that affects the strategy, structure and systems of their organisation. II. Organisational Development Approach: The goal of this approach is to develop employees competencies to solve problems by having them identify and become emotionally committed to improving the performance of the firm. This approach requires management to engage people emotionally in examining why the existing structure and systems are not meeting the new challenges facing the organisation. III. Action Research Approach: This approach takes the view that meaningful change is a combination of action orientation and research orientation. An action orientation involves diagnosing current problems and applying interventions that resolve those problems. Research orientation involves application of conceptual framework to real situation. In other words, action research embraces the notion of organisational learning and knowledge management. This approach adopts an open systems view. Action research is also a highly participative process. Overall, action research is a data based, problem oriented process that diagnoses the need for change, introduces the intervention, and then evaluates and stabilizes the desired changes. Steps. (1) Establish Client Consultant Relationship: The process begins by forming the client consultant relationship. Consultants need to determine the clients readiness for change. Many change management consultants prefer to adopt the role of process consultant. Process consultation is a method of helping people within the system solve their own problems by making them aware of organisational processes, the consequences of those processes, and the means by which they can be changed (2) Diagnose the used for Change: Organisational diagnosis identifies the appropriate direction for the change effort by gathering and analyzing data about an on-going system. (3) Introduce Intervention: This stage applies one or more actions to correct the problem.

(4) Evaluate and Stablise Change: Rewards, information systems, team norms and other conditions are redesigned so that they support the new values and behaviours. IV. Appreciative Inquiry Approach A change process that directs attention away from the groups own problems and focuses participants on the groups potential and positive elements. The following diagram outlines the Four - D Model of Appreciative Inquiry.

Discovery Identifying the best of what is

Dreaming Envisioning what might be

Designing Engaging in dialogue about what should be

Delivering Developing objectives about what will be

V. Parallel Learning structure Approach Parallel learning structures are highly participative arrangements, composed of people from most levels of the organisation who follow the action research model to produce meaningful organisational change. They are social structures developed alongside the formal hierarchy with the purpose of increasing the organisations learning and producing meaningful organisational change.

The Change Process / Process of Planned Change: The change is successful if it is taken in a planned way which proceeds in a sequential form as shown in the following figure

Identifying need for change

Elements to be changed

Planning for change

Assessing change forces

Action for change

Unfreezing

Changing Feed back Refreezing

1. Identifying Need for Change: The first basic step is to identify when change in the organisation is required. The most information for identifying need for change comes from the organisations feedback and control data. Identification of need for change depends on gap analysis and this gap analysis should be seen on progression basis. 2. Elements to be Changed: What elements of the organisation should be changed will largely be divided by need and objectives of change. Usually change is required in three major elements of the organisation. Organisation structure, technology and people. Structural change may include job design, job definitions, basis of departmentation, span of control, organisational policies and procedures, co-ordination, power structure etc. Technological changes include changes in plant & equipment; techniques for doing work, production methods etc., and changes in people include changes in their behaviour, interaction pattern, informal grouping, skills, attitudes etc. 3. Planning for Change: At this stage, managers should plan about how the change can be brought. Planning for change includes who will bring change, when to bring change and how to bring change. 4. Assessing Change Forces: Kurt Lewin assumes that in any situation, there are both driving and restraining forces which influence any change that may

occur. Equilibrium is reached when sum of driving forces equals the sum of restraining forces. The management has to push driving forces and / or converting or immobilizing restraining forces so that people accept the change. 5. Actions for Change: Actions for change comprise three stages unfreezing, changing refreezing: (1) Unfreezing: It simply makes the individuals or organisations aware and prepares them for the change. According to Schein, unfreezing is the process of breaking down the old attitudes and behaviours so that they start with a clean slate. He also suggested some measures which are helpful in undertaking unfreezing process. These are (i) (ii) (iii) (iv) The physical removal of the individuals from their accustomed routines, sources of information and social relationships. The undermining and destruction of social support. Demeaning and humiliating experience to help individuals to see their old attitudes as unworthy and think to be motivated to change. The consistent linking of reward with willingness to change and to punishment with unwilling to change. (2) Changing (Acceptance to change) : Once the unfreezing process has been completed, their behaviour patterns have to be redefined. H.C.Kellman has proposed three methods of reassigning new patterns of behaviour. These are: a) Compliance: It is achieved by strictly enforcing the reward and punishment strategy for good or bad behaviour. b) Identification: Identification occurs when members are psychologically impressed upon to identify themselves with some given role models whose behaviour they would like to adopt and try to become like them. c) Internalisation: It involves some internal changing of the individuals thought processes in order to adjust to a new environment. (3)Refreezing: Refreezing occurs when the new behaviour becomes a normal way of life. The new behaviour must replace the former behaviour completely for successful change to take place.

6. Feedback: Management of change requires feedback and follow-up actions to ensure that change programme is progressing in right direction. Feed back received from the initial attempt of change programme may be used to modify the subsequent programme. Organisational Development In the 1960s, a new and integrated type of method known as organisation development (OD) originated to bring change in the entire organisational aspect. Harold Rush has defined organisational development as a planned, managed and systematic process to change the culture, systems and behaviour of an organisation in order to improve the organisations effectiveness in solving its problems and achieving its objectives. Features of OD 1. Planned Change: OD is a strategy of planned change for organisational improvement. 2. Comprehensive Change: OD efforts focus on comprehensive change in the organisation. OD efforts take an organisation as an interrelated whole and no part of it can be changed meaningfully without making corresponding changes in other parts. 3. Long range Change: OD focuses on the elevation of an organisation to a higher level of functioning by improving the performance and satisfaction of organisational members on long term basis. 4. Dynamic Process: OD is a dynamic process and includes the efforts to guide and direct changes as well as to cope with or adopt changes imposed. Thus OD efforts are ongoing, interactive and cyclic process. 5. Participation of Change Agent: Most OD experts emphasize the need for an outside, third party change agent. They discourage do it yourself approach. 6. Emphasis on Intervention and Action Research: OD approach results into an active intervention in the ongoing activities of the organisation. Action research is the basis for such intervention.

7. Normative Educational Process: OD is based on the principle that norms form the basis for behaviour and change and is a re-educative process of replacing old norms by new ones. Objectives / Role of OD Programmes OD can be utilized for the following results in the organisation: 1. To build and enhance interpersonal trust, communication, co-operation and support among all individuals and groups throughout the organisation at all levels. 2. To encourage an analytical approach to problem solving in a team spirit and open manner. 3. To increase the sense of belonging to the organisation so that the organisational goal becomes the goals of the members of the organisation. 4. To assign decision-making and problem solving responsibilities to skilled and knowledgeable persons who are closer to the sources of information. 5. To increase personal responsibility for planning, implementing the plans and be aware and responsible for the consequences. 6. To help managers to manage according to the relevant objectives, rather than depending upon past particles. 7. To increase the openess of communications in all directions. Basic OD Assumptions 1. Most individuals have drives towards personal growth and development. 2. Highest productivity can be achieved when the individual goals are integrated with organisational goals. 3. Co-operation is always more effective than conflict. 4. The suppression of feelings adversely affects problem solving, personal growth and satisfaction. 5. The growth of individual members is facilitated by relationships which are open, supportive and trusting. 6. The difference between commitment and agreement must be fully understood. 7. OD programs, if they are to succeed, must be reinforced by the organisations total human resources system.

Process of OD In OD programmes, various steps are 1. Problem Identification and Diagnosis: The problems may be a gap between desired path of action and actual path of action. OD programme starts with the identification of the problems in the organisation. Diagnosis gives correct identification of a problem and its causes and determines the scope of future course of action. Once a problem is identified, the analysis will show why the problem exists. 2. Planning Strategy for Change: Attempts are made to transform diagnosis of the problem into proper action plan involving the overall goals for change, determination of the basic approach for attaining these goals, and the sequence of detailed scheme for implementing the approach. 3. Intervening in the System: It refers to implementation of the planned activities. There may be various methods through which external consultant intervene in the system, such as education and laboratory training, process consultation, team development etc. 4. Evaluation: This step relates to evaluate the results of OD programme so that suitable actions may be followed up. This step again involves data gathering because such data will provide the basis for OD efforts evaluation and suggest suitable modification or continuation of OD efforts in similar direction. Action Research Model of OD The OD process can be presented in the form of Action Research Model. The cyclical process of using research to guide action, which generates new data as the basis for new actions, is known as action research. French and Bell have defined action research as follows: Action research is the process of systematically collecting research data about an ongoing system relative to some objective, goal, or need of that system; feeding these data back into the system; taking actions by altering selected variables within the system based both on the data and on hypothesis; and evaluating the results of actions by collecting more data.

The action research model is given in the following figure: Action Research Model of OD

Organisational Perceptions of Problem

Further data collection by consultant

Reassessment of situation through further data collection

Data Collection and diagnosis by consultant on the problems

Feed back and discussion with client to work on the problems

Feed back to client and discussion to work on the feed back

Feed back to the client about the nature and causes of the problems Joint action planning for solving the problems

Determination of objectives and plan of action Determination of action behaviour for achieving these objectives

New Plan of action

Action behaviour

OD Interventions: OD interventions refer to various activities for improving organisational performance. OD interventions are also referred as OD techniques or OD strategies. French and Bell have defined OD intervention as: Sets of structures activities in which selected organisational units (target groups or individual) engage with a task or a sequence of tasks where the task goals are related directly or indirectly to organisational improvement. Interventions constitute the action thrust of organisation development; they make things happen. Classification of OD Interventions There are various OD interventions and they are classified indifferent ways. OD interventions can be classified on two bases: (i) approach adopted and (ii) target on the

basis of approach adopted, OD interventions are classified into two categories: (i) Process intervention and (ii) Structural interventions. Though there are many OD interventions, more commonly used interventions are: Sensitivity training, grid OD, Survey feed back, Process consultation, team building and management by Objectives. 1. Sensitivity Training Sensitivity training (also known as T - Group) approach evolved from group dynamics concept of Kurt Lewin and the first sensitivity training session was held in 1946 in state teachers College, New Britain, USA. Sensitivity training is a small group interaction process in the unstructured form which requires people to become sensitive to others feelings in order to develop reasonable group activity. Process Sensitivity training focuses on small group with number of members ranging from ten to twelve. Based on the sources from where these members are drawn, there may be three types of T group. Stranger lab, Cousin lab and Family lab. In Stranger lab, all participants are from different organisations and they are strangers to each other. In cousin lab all participants are from the same organisation but from different units. In Family lab, all participants are from the same unit and know each other quite well. The events run as follows: (i) (ii) (iii) (iv) In the beginning, there is an intentional lack of directive leadership, formal agenda. In the second phase, the trainer becomes open, non-defensive and expresses his or her own feelings in a minimally evaluative way. In the third phase, inter personal relationships develop. The members serve as resources to one another. The last phase attempts to explore the relevance of the experience in terms of back home situations. Positive Consequence (i) (ii) Sensitivity training results into more supportive behaviour, more sensitive people and more considerate managers. Participants become more open and self understanding.

(iii) (iv)

Communication is improved a lot and leadership skills are well developed. Participants become aware of group norms and sense of belongingness.

Negative Consequences Many participants have reported a feeling of humiliation and frustrated. Problems in sensitivity training emerge because of two reasons. First, some problems emerge in the training process itself especially if it is not conducted properly. Second, problems may emerge because of the mismatch between the person so trained and the nature of work environment. 2. Grid Organisation Development It was developed by Blake and Mouton. It utilizes or number of instruments, enabling individuals and groups to assess their own strengths and weaknesses. The basic content of grid OD is managerial grid. The whole orientation is to develop 9,9 managerial style through the application of behavioural science knowledge. It consists of six phases. (1) Managerial grid: It covers various aspects of assessing managerial styles, problem solving, communication skills and team work. The individuals try to learn to become 9,9 managers by practice. (2) Teamwork Development: the focus in this stage is to develop teamwork by analyzing team culture, traditions and the like. (3) Inter group development: At this stage, the focus is on inter-group behaviour and relations. Each group separately analyses the ideal inter-group relationship. (4) Developing Ideal strategic Corporate Model: At this stage, the focus shifts to the total organisation and to develop skills necessary for organisational excellence. (5) Implementing the Ideal Strategic Model: This includes building of the organisation on the model of ideal organisation on the basis of concepts developed under stage 4. (6) Systematic Critique: Critical analysis is made at this stage which will bring out the short comings that may be there. Criticism: It lacks contingency approach, therefore, it discounts reality. Further Grid OD is a non rigorous method.

3. Survey Feed Back The basic objectives of survey feed back are Process (1) Data Collection: The first step is data collection with the help of a structural questionnaire. The questionnaire may include different aspects of organisational functioning. After the questionnaires are completed, data are classified, tabulated and analysis is made to arrive at some meaningful conclusions. (2) Feed back of information: The feed back is given either orally or in a written form to the persons who have participated in the filling up of questionnaires. It should be constructive and suggestive. (3) Follow up Action: Follow up action is taken based on the data collected. One such follow up action may be to advise the participants to develop their own action plans to overcome the problems or in the form of developing some specific OD interventions particularly process consultation and team building. Evaluation Positive: (i) (ii) (iii) It is cost effective means of implementing a comprehending OD programme. It generates great amount of information efficiently and quickly. Decision making and problem solving abilities of organisation can be improved tremendously. Negative: It is not a technique in itself; it provides base for actions for change. The effectives of this method depend on two factors: (i) (ii) Questionnaire used and method adopted for its administration should be reliable and valid. It is of no use unless follow up action is taken. To assist the organisation is diagnosing its problems and developing action To assist the group members to improve the relationships. plan for problem solving.

4. Process Consultation: It is a technique for intervening in an ongoing system. The consultant works with individuals and groups in the organisation to help them learn about human and social processes to solve problems Steps: Schein has suggested the following steps: (i) (ii) Initiate Contact: In this stage, the client makes initial contact with the consultant with a view to solve problems faced by the organisation. Define the Relationship: At this stage, client and consultant enter into agreement covering various aspects of consultancy services like fees and spelling out services, time etc. (iii) (iv) Select the Setting and the Method: It involves a clear cut understanding of where and how the consultant will do the job that is required. Gather Data and make a Diagnosis: Information is collected from various sources through the use of questionnaires, observations and interviews about the problems spelled out at the initial stage. This data gathering occurs simultaneously with the entire consultative process. Information collected is processed to diagnose the problems. (v) (vi) Intervene: At this stage, the consultant intervenes by using different interventions like coaching, structural change etc. Reduce involvement and Terminate: When the P.C work is completed, the consultant disengages from the client organisation by mutual agreement. Evaluation Process consultant plays a major role. He suggests the various changes in the processes and assists the organisational members to incorporate those changes. Hence it is a very effective intervention. However, problem may emerge due to consultants inability to steer the organisation out of troubles. Another problem may emerge at the level of organisation and its members in terms of how they inculcate the new processes and culture as suggested by the consultant. However, both these problem may be overcome by engaging suitable consultant.

5. Team Building Team building is the most important, widely accepted, and applied OD intervention. Various steps of team building process are repetitive and cyclical as indicated by the following figure. Process of Team Building

Problem sensing

Examining Perceptual differences

Giving and Receiving feed back

Developing interactive skills

Follow up action

(i) Problem Sensing: There are a number of ways in which problems of a team can be identified. This problem can better be identified in terms of what is hindering team effectiveness. In problem identification, the emphasis should be on consensus. (ii) Examining Differences: The perception of people on an issue differs and it may be brought to conformity through the process of exercise on perception. The role of communication is important in this context. (iii)Giving and Receiving Feed back: The feed back should be given to the members about their feelings, about the issue, the way people talk about the issue etc., Such feed back generally provides members to evaluate the values but at the same time, also provides opportunity to understand themselves. (iv)Developing Interactive Skills: The basic objective of this process is to increase the ability among the people as to how they should interact with others and engage in constructive behaviour. Following are examples of constructive and negative behaviours. Constructive Behaviours: Building, Bringing in, clarifying, innovating.

Negative Behaviours: Over talk, Attacking, Negative. At the time of discussion of feedback, people themselves take assignments to increase specific constructive behaviours and decrease specific negative behaviours. (v) Follow up Action: At this stage, the total team is convened to review what has been learned and to identify what the next step should be. These attempts bring cooperative and supportive feelings among people involved in the team functioning. Evaluation Positive i) ii) iii) i) ii) It improves the organisations problem solving and decision making ability. It helps in developing effective inter personal relationships. It helps developing communication within the group and inter-group. It focuses only on work teams. Team building becomes a complicated exercise when there is frequent change in team members. Management By Objectives (MBO) MBO is not only an OD intervention but also is a technique and system which helps in improving organisational performance. The term MBO was coined by Drucker in 1964. It has been defined as MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective and efficient achievement of organisational objectives. Features 1. MBO is an approach and philosophy to management 2. MBO is bound to have some relationship with every management technique. 3. The basic emphasis of MBO is an objective. 4. The MBO is characterized by the participation of concerned managers in objective setting and performance reviews. 5. Periodic review of performance is an important feature of MBO. 6. Objectives in MBO provide guidelines for appropriate system and procedures.

However it suffers from the following limitations:

MBO is a system for achieving organisational objectives, enhancement of employee commitment and participation. The process of MBO is shown in the following figure: MBO Process

Organisational Purpose & Objectives

Planning Premises

Key result areas

Superiors objectives

Superiors recommendation for subordinate objectives

Subordinates statement of his objective

Matching resources

Subordinates agreed objectives Subordinates performance Performance review and Appraisal

Organisational Purpose & Objectives

Planning Premises

Key result areas

Superiors objectives

Superiors recommendation for subordinate objectives

Subordinates statement of his objective

Matching resources

Subordinates agreed objectives Subordinates performance Performance review and Appraisal

1. Setting of Organisational Purpose and Objectives: The first basic step in MBO is the definition of organisational purpose and objectives. Usually, the objective setting starts at the top level of the organisation and moves downward to the lowest management level. This will go in a sequence like this (i) (ii) (iii) (iv) Defining the purpose of the organisation. Long range and strategic objectives Short term organisational objectives Divisional / departmental / sectional objectives

(v)

Individual mangers objectives. provide the basis for the identification of Key Result Areas (KRA) Examples of KRAs are :

1. Key Result Area: Organisational objectives and planning premises together

(i) Profitability, (ii) Market standing (iii) Innovation, (iv) Productivity etc. 2. Setting Sub ordinates Objectives: The process of objective setting begins with superiors proposed recommendations for his sub-ordinates objectives. In turn, the subordinate state his own objectives as perceived by him. Thereafter, the final objectives for the subordinate are set by the mutual negotiation between superior and subordinate. 3. Matching Resources with Objectives: Resource availability becomes an important aspect of objective setting because it is the proper application of resources which ensures objective achievement. Therefore, there should be matching between objectives and resources. 4. Appraisal: Appraisal is undertaken as an on-going process with a view to find out deficiency in the working and also to remove it promptly. 5. Recycling: The three aspects involved in recycling process include setting of objectives at various levels, action planning in the context of those objectives and performance review. Each of these aspects gives base for others

Recycling aspect of MBO

Objective setting

Action Planning

Performance Review

Benefits of MBO 1. Better Managing: MBO helps in better managing the organisational resources and activities. Resources and activities are put in such a way that they result into better performance. 2. Clarity in Organisational Action: MBO tends to provide the key result areas (KRAs) where organisational efforts are needed. Since organisational objectives are defined very clearly, they help in relating the organisation with its environment. 3. Personnel Satisfaction: MBO provides greatest opportunity for personnel satisfaction. This is possible because of two closely related phenomena participation in objective setting and rational performance appraisal. 4. Basis for organisational Change: MBO stimulates organisational change and provides a framework and guidelines for planned change, enabling top management to initiate, plan, direct and control the direction and speed of change Problems and Limitations of MBO Some of the problems are inherent in MBO system itself while others emerge because of wrong implementation. They are 1. Time and Cost: It is a process which requires large amount of time of the senior managers. Further, MBO generates paper work because large number of forms is to

be designed and put into practice. However, such problems are transitory aid emerge only at the initial stages. 2. Failure to Teach MBO Philosophy: MBO is a philosophy of managing an organisation in a new way. However, managers fail to understand and appreciate this new approach. 3. Problems in Objective Setting: MBO requires verifiable objectives against which performance can be measures. However, setting such objectives is difficult at least in some areas. 4. Emphasis on Short term Objectives: There is always a danger in emphasizing short term objectives at the cost of long term objectives. 5. Inflexibility: MBO represents the danger of inflexibility in the organisation, particularly when the objectives need to be changed. 6. Frustration: Sometimes, MBO creates frustration among managers because, many organisations could not implement MBO properly and introduction of MBO tends to arouse high exception for rapid change, particularly among young and junior managers. Pre requisites for Installing MBO Programme 1. Purpose of MBO: MBO is a means rather than an end. Hence, the organisation should be very clear about the purpose for which it is being implemented. 2. Top Management Support: The presence of top management support is a critical factor in determining the success of MBO programme. Management support for using objectives to plan and to control, working on a continuous basis, increase the probability of success of a programme. 3. Training for MBO: Systematic training is requires in the organisation for disseminating the concepts and philosophy underlying MBO. Another type of training should be in the area of inter group and inter personal relationships because MBO entails a lot of such elements. 4. Participation: success with MBO requires a commitment on the part of each individual involved in this type of system.

5. Feedback for Self direction and Self control: Feedback under MBO should take two forms, first, the individual should get periodic reports on where he stands on an overall performance basis. Second, feedback is necessary in the form of periodic counseling and appraisal interview. 6. Other factors: i) ii) iii) If the full benefits of MBO are to be realized, it must be carried all the way down to the first line of the organisation. Organisations compensation system should be tied with MBO programme. The person responsible for introducing MBO must be certain that competing objectives are not set. Change Agent is anyone who possesses enough knowledge and power to guide and facilitate the change effort. Transformational leaders are the primary agents of change because they form a vision of the desired future state, communicate that vision in ways that are meaningful to others, behave in ways that are consistent with the vision and build consistent to the vision. Characteristics of Successful Change Agents HELP SCORES. 1. Homophily: it is the degree of closeness and similarly between change agent and the client. The closer the relationship, the easier and more successful the change. 2. Empathy: it involves understanding of feelings and emotions of others. Understanding is very helpful in bringing about the desired change. 3. Linkage: It refers to the degree of collaboration between the change agent and the client. The tighter the linkage, the more likely is the success. 4. Proximity: The closer the proximity the better the relationship between the two. 5. Structuring: It involves proper and clear planning of all activities that are related to change. 6. Capacity: It refers to the organisations capacity to provide the resources that are needed for successful organisational development.

7. Openness: The degree of openness between the change agent and the client would considerably affect the outcome of the program. 8. Reward: All members expect that the change will bring potential benefits. The greater the potential for rewards, the more determined the effort would be in making the required change. 9. Energy: It refers to the amount of effort put into the change process. 10. Synergy: It means that the whole is more than the sum of its parts. This means that the above nine factors support success mutually as well as individually, they are favourable to the programme. Role of Change Agents The objective of the change agents is to bring desired change in the organisation. However, for this purpose, a specific role is required to be performed by the change agents, both external and internal. Role of External Change Agent: The external change agent is in a position to view the organisation meant for change from a system view point. The role of consultant may include diagnosis of the situation, planning strategy for change, intervening in the system and evaluation of the change efforts in the context of various out comes. The change programme will be successful only when the consultant is given the role of process consultation and the rest of the programme is implemented by the organisation itself. Role of Internal Change Agents The internal change agents are likely to accept the system as given and try to accommodate their change tactics to the needs of the organisation. There may be two categories of persons who may act as internal change agents: (i) (ii) (i) Chief Executive and Change Advisors

Chief Executive: The chief executive sponsors the change programme and provides support and leadership for its success. Change programme has a greater chance of success if it is sponsored by the chief executive when the change process proceeds smoothly, the role of the chief executive may

gradually reduce and other key members also act as change agents in their respective domain. (ii) Change Advisors: These are the internal personnel initially selected to work in close harmony with external consultant. They are trained by the consultant for implementing the change. The change advisors role concerns primarily with the organisation to accept the change programme and is essentially educational. He helps the manager to develop appropriate behaviour and skills for the change process. Human Response to Change 1. Acceptance: If an employee perceives that a change is likely to affect him favourably, he accepts it. 2. Resistance: Resistance means opposition to change. The resistance to change may be in any of the following forms: aggression, apathy towards work, absenteeism and tardiness, strikes etc. 3. Indifference: Sometimes, the employees fail to realize the impact of change or some people feel that they will not be affected by change. If so, they will remain indifferent to change. 4. Forced Acceptance: even if there is resistance to change in the initial stages but if change forces are stronger than resistance forces, people have to accept the change. Performance Gap is a discrepancy between the desired and actual state of affairs. Force Coercion strategy uses authority, rewards and punishments to create change. Rational persuasion strategy uses facts, special knowledge, and rational argument to create change. A shared power strategy uses participatory methods and emphasizes common values to create change. Resistance to Change is an attitude or behaviour that shows unwillingness to make or support a change. Innovation is the process of creating new ideas and putting them into practice.

Organisational Diagnosis is the process of assessing the functioning of the organisation, department, team or job to discover the sources of problems and areas of improvement. An accurate diagnosis of organisational problems and functioning is absolutely essential as a starting point for planned organisational change UNIT V ORGANISATION EVOLUTION AND SUSTENANCE Organisational life cycle- Models of transformation Models of organizational Decision making organizational learning Innovation, Intrapreneurship and creativity HR implications. ORGANISATIONAL LIFE CYCLE Organizations progress through a life cycle. The various stages involved in life cycle are sequential in nature and follow a natural progression. Quinn and Cameron have proposed four major stages to describe an organizations life cycle. 1. Entrepreneurial stage: Every organization starts with the entrepreneurial stage. The entrepreneur devotes his/her whole energy in producing and marketing the product. At this stage, the size of the organization is small. This stage is also known as one man show. He/She being the owner of the organization controls it. The organization at this stage adopts organic structure. The organization required to introduce management techniques to move to the next stage. 2. Collectivity stage: Having with the managerial direction and control organization tends to take formal shape. Departmentalization starts based on division of labor following hierocracy of authority. A strong leadership motivates employees to contribute their maximum mite for accomplishing the organizational goals. This makes the structure a highly organic one. Now the organization needs delegation of authority to move form stage 2 to state 3 i.e. formalization stage. 3. Formalization stage: This is the middle stage of an organization. In this stage, the bureaucratic characteristics emerge in the organization. Now, Policies, Procedures, and rules are finalized to formalize the whole organization. It is clarified who will report to whom. These help managers exercise control over system and coordinate the organizational activities effectively. When bureaucratization and formalization assume excessive proportions, these need to be curbed to advance to the next stage, namely elaboration stage. 4. Elaboration stage: The elaboration stage is marked by extensive control systems, rules and procedures. Innovation is for formally institutionalized and assigned to the research and development (R& D) department of the organization. Individual employees often focus on maintaining the organizational activities. In order not to allow organization to decline or die, this stage needs periodically to be revitalized. For introducing revitalizing changes the old top managers are often replaced by new managers with fresh ideas.

The organization that fails to revitalize itself trends to decline and ultimately dies.

Learning in organization: Learning is a relatively permanent change in behavior that occurs as a result of a persons interaction with the environment. Learning occurs when interaction with the environment leads to behavior change. This means that we learn through our senses, such as through study, observation and experience Learning is essential because the organizations survival and success depend on employees learning about external environment learning also influences individual behavior and performance through three elements of the MARS model. First people acquire skills and knowledge through learning opportunities which gives them the competencies to takes more effectively. Second learning understanding of their tasks and relative importance of work activities. Third, learning motivates employees. Employees are more motivated to perform certain tasks because they learn that their effort will result in desire performance. Learning Explicit and Tacit knowledge When employees learn, they acquire both explicit and tacit knowledge. Explicit knowledge is organized and can be communicated from one person to another. The information we receive in a lecture is mainly explicit knowledge. Explicit knowledge can written down and given to others Tacit knowledge is not documented, rather it is action oriented and known bellows the level of consciousness. Tacit knowledge is acquired through observation and direct experience. Nature of learning 1. Learning involves a change in behavior 2. The behavioral change must be relatively permanent 3. The behavioral change must be based on some form of practice or experience 4. The practice or experience must be reinforced in order for learning to occur. Components of Learning Process 1. Drive: Learning frequently occurs in the presence of drive any strong stimulus that impels action. Without drive, learning does not take place. Drives are basically of two types- primary or physiological and secondary or psychological drives. Individuals operate under many drives at the same time. To predict behaviour it is necessary to establish which drives or stimulating the most.

2. Cue Stimuli are any objects existing in the environment as perceived by the individual. There may be two types of stimuli so for as their results in terms of response are concerned: Generalization and discrimination.

1. Generalisation occurs when a response is elicited by a similar but new stimulus. The principle of generalization has important implication for human learning. Because of generalization a person does not have to completely relearn each of the new tasks or objects which constantly control him. It allows the organizational members to adapt to overall changing conditions and specific new or modified job assignments. . 2. Discrimination is opposite of generalization. This is a process whereby there is a response to a stimulus but not same response to a similar but some that different stimulus. 3. Responses the stimulus results into responses. Responses may in the physical form or may be in terms of attitudes perception etc. 4. Reinforcement may be defined as environmental events affecting the probability of occurrence of responses with which they are associated. The role of reinforcement in learning is very important. 5. Retention: The stability of learned behaviour over time is defined as retention. Some of the learning is retained over a period of time, while others may be forgotten. Factors affecting learning 1. Motivation: Learners motivation is one of the major conditions for learning. The degree of learners motivation is positively associated with his learning. 2. Mental set: Mental set refers to the preparation for an action If a person is prepared to act the can do the things quickly. 3. Nature of learning materials: Nature of learning materials affects learning by providing clue for understanding. (i) if the learning material is of easy nature it is learned quickly (ii) If the learn is familiar with the learning material the can learn more quickly (iii) If serial position shape and meaningful users of learning materials are positive learning taken place at faster rate. 4. Practice: The more a person practices more he absorbs learning contents. Most of the motor skills (like typing, swimming driving etc.,) are learned based on this principle. 5. Environment: Environment in which process occurs affects learning. Environment with high pressure and high rate of change increases the likelihood of stress

and has negative impact of learning environment with features of support cohesion and affiliation has positive impact of learning.

Perspectives of Learning: 1. Reinforcement 2. Social learning and 3. Direct experience Each perspective offers a different angle for understanding the dynamics of learning. Behaviour Modification: Learning through Reinforcement: One of the oldest perspectives on learning, called behaviour modification (also known as operant conditioning and reinforcement theory) takes the extreme view that learning is completely dependent on the environment. Reinforcement is very important for learning because behavioural response in conditioned by reinforcement. Reinforcement can be defined as anything that increases the strength of response and trends to induce repetitions of the behaviour that precede the reinforcement. A-B-Cs Behaviour modification: Behaviour modification recognizes that behaviour is influenced by two environmental contingencies: the antecedents and the consequences. The central objective of behaviour modification is to change behaviour (B) by managing its antecedents (A) and consequences (c). Antecedents are events preceding the behaviour informing employees that certain behaviours will have particular consequences. Consequences are events following a particular behaviour that influences its future occurrence. People tend to repeat behaviour that are followed by pleasant consequences and are less likely to repeat behaviour that are followed by unpleasant consequences. This can be explained by the following figure. Antecedents what happens before behaviour Contingencies of Reinforcement: Behaviour modification identifies four types of consequences, collectively known as the contingencies of reinforcement that strengthen, maintain or weaken behaviour. 1. Positive reinforcement: Positive reinforcement occurs when the introduction of a consequence increases or maintains the frequency or future probability of a behaviour. Behaviour what person says or does Consequences what happens after behaviour

Receiving a bonus after successfully completing an important project usually creates a positive reinforcement. 2. Negative reinforcement: Negative reinforcement occurs when the removal or avoidance of a consequence increases or maintains the frequency or future probability of behaviors. Superiors apply negative reinforcement when they stop criticizing employees whose substandard performance has improved negative reinforcement is sometimes called avoidance learning. 3. Punishment: Punishment occurs when a consequence decreases the frequency or future probability of a behavior. It may occur by the supervisors introducing an unpleasant consequences or removing a pleasant consequence. Example Employee is threatened with a demotion or discharge after treating client badly. 4. Extinction: Extinction occurs when the target behaviour decreases because no consequence follows it. Behaviour that is no longer reinforced tends to disappear, it becomes extinct. In this respect extinction is a do-nothing strategy. The following figure illustrates the types of contingencies. What contingency of reinforcement should be used in the learning process? In most situations, positive reinforcement should follow desired behaviour and extinction should follow undesirable behaviours. This is because there are fever adverse consequences when applying these contingencies compared with punishment and negative reinforcement. However, some form of punishment may be necessary for extreme behaviour such as stealing inventory and punishment maintains a sense of equity, However, Punishment and negative reinforcement should be applied cautiously because they generate negative emotions and attitudes towards the punisher and organization. 1. Schedules of Reinforcement The most effective schedule of reinforcement for learning new tasks is continuous reinforcement. Employees learn desire behaviours quickly and when the reinforcement is removed, extinction also occurs very quickly. A variable interval schedule is common for promotions. Fixed ratio schedule reinforcement after a fixed number of behaviour Companies often use a variable ratio schedule in which employee behaviour is reinforced after a variable number of times. Sales people experience showed that variable ratio reinforcement is good because they make a successful sale after a varying number of client calls. The variable ratio schedule is a low cost way to reinforce behaviour because employees are rewarded infrequently. Social Learning Theory: Learning by observing Social learning theory states that much learning occurs by observing others and then modeling the behaviours that lead to favourable outcomes ad outstanding behaviours that lead to punishing consequences. Three related features of social learning theory are: behavioural modeling, learning behaviour consequences and self reinforcement.

(1) Behaviour modeling: People learn by observing the behaviour of a role model on the critical tasks, remembering the important elements of the observed behaviour and then practicing those respected and the models action are followed by favourable consequences. It is valuable form learning because tacit knowledge and skills are mainly acquired from other in this way. (2) Learning behaviour consequences This element learning theory says that we learn by logically thinking through the consequences of our actions. (iii) Self Reinforcement: Self Reinforcement occurs whenever an employee has control over a reinforcement but does not take the reinforcement until completing a self set goal. Reinforcement has become increasingly important because employees are given more control over their working lives and are less dependent on supervisors. Learning Theory Experience Kolbs experiential learning model illustrates experiential learning as a cyclical four stage process. Concrete experience Active Reflective experimentation observation Abstract conceptualisa tion Concrete experience involves sensory and emotional engagement in some activity. It is followed by reflective observation, which involves listening, watching recording and elaborating on the experience. The next stage in the learning cycle is abstract conceptualization. This is the stage in which we develop concepts and integrate are observations in to logically sound theories. The fourth stage, active experimentation, occurs when we test our previous experience reflection and conceptualization in a particular context. Learning through experience works best where there is a strong learning orientation. The fastest growing form of experiential learning in the workplace is called action learning. Action learning is considered one of the most important ways to develop executive competencies.

Learning Theories Learning theories can be grouped in to three categories. (i) Conditioning theory /connectionist/behaviouristic theory. (ii) Cognitive learning theory and (iii) Social learning theory. I conditioning theory Conditioning is the process in which an ineffective object or situation becomes so much effective that it mach the hidden response apparent. This is based on the premise that learning is establishing association between response and stimulus conditioning has two theories (a) classical conditioning and (b) operant conditioning. (a) Classical conditioning: Classical conditioning states that behaviour is learned by repetitive association between a stimulus and a response (S R association) four elements are always present in classical conditioning (i) unconditioned stimulus (US) (ii) Unconditioned response (UR) (iii) conditioned stimulus (CS) (iv) Conditioned Response (CR). The work of the famous Russian physiologist and Nobel Prize winner, Ivan Pavlov demonstrated the classical conditioning process. Classical conditioning theory experimented with a dog is presented in the follow figure. I Before conditioning Meat (US) Bell (Neutral stimulus) II During conditioning Meat (US) + Bell (CS) III After conditioning Bell (CS) Salivation (CR) Salivation (UR) Salivation (UR) No response

Classical conditioning has some important implications for understanding human behavior. Another implication of higher-order conditioning is that reinforcement can be acquired. A conditioned stimulus becomes reinforcing under higher order conditioning. This shows the importance of secondary rewards (higher order conditioning) in organization. However, this theory fails to explain total behavior of human being.

(b) Operant conditioning: Operant is defined as behaviour that produces effects. Operant conditioning suggests that people emit responses that are rewarded and will not emit responses that are either not rewarded or punished. Operant conditioning implies that behavior is voluntary and it is determined maintained and controlled by its consequences. The basic principle of learning new behavior involves the relationship between three elements. 1. Stimulus situation 2. Behaviour response to the person. 3. Consequence of the response to the person. Example - application of brake by vehicle driver to avoid accident. Fear of accident (without application brake) stimulus situation Application of brake behavioural response Avoidance of accident consequence of response Management can use the operant conditioning process successfully to control and influence the behaviour of employees by designing the suitable reward system. Operant conditioning leads to a very comprehensive approach to reinforcement and behaviour modification.

(ii) Cognitive Learning theory Cognition refers to an individuals ideas, thoughts, knowledge, interpretations and understanding about himself and his environment. The cognitive approach emphasizes the positive and free will aspects of human behaviour. This model was developed from the work done by Tolman. According to this theory of learning, (i) Stimulus (s) leads to another stimulus or S-S rather than the classical S-R or the operant (R-S) explanation and (ii) Learning consists of a relationship between cognitive environmental cues and expectation and behaviour is goal-directed. This theory has relevance in the field of motivation. Various expectancy theories of motivation derive clues from cognitive theory of learning. III Social Learning theory: Social learning theory combines and integrates both behaviouristic cognitive concepts and emphasizes the integrative nature of cognitive, behavioural and environmental determinants. According to social learning theory, learning occurs in two steps. (i) The person observes how others act and then acquires a mental picture of the act and its consequences (reward & Punishment)

(ii) The person acts out the acquired image and if the consequences are positive he will tend to do it again If the consequences are negative the person will not do it again A simple example of this phenomenon is that people learn that fire burns the body is learned from others and not necessarily by touching the fire. Integrating various Learning Theories Though the various learning theories differ in their orientation, all theories try to explain the logic behind learning process. Each theory focuses on a specific feature of learning and does not fully explain the phenomena of learning in all situations. Therefore, to understand how learning takes place, we have to take all these theories in an integrated way. Learning Organisation; Organisation learning is process a set actions when learning organization is an entity. Garvin has defined a learning organization as A learning organization is one which is skilled at creating, acquiring and transferring knowledge and modifying its behaviour t reflect new knowledge and insights. Decision making models There are three decision making models. They are (i) Rational (ii) Bounded Rationality and (iii) Political (i) Rational Model: The rational model involves a process for choosing among alternatives to maximize benefits to an organization. It includes comprehensive problem definition throughout data collection and analysis and a careful assessment of alternatives. Individual preferences and organizational choices are a function of the best alternative for the entire organization. The rational model of decision making is based on the explicit assumptions that (1) all available information concerning alternatives has been obtained (2) These alternatives can be ranked according to explicit criteria and (3) the alternative selected will provide the maximum gain possible for the organization. Xerox six stages process: Xerox developed a companywide six stages rational process for guiding decision making that is presented in the following table. In terms of the individual the rational model puts a premium on logical thinking. It encourages more deliberation including the search for critical pieces of information one obvious limitation of the rational model is that is full use can take considerable amount of time. The resources required to use the rational model may exceed the benefit from it. This approach requires considerable data and information, which may be hard to obtain. Moreover, if the situation keeps quickly become obsolete even when the rational process is

used decision makers may simply change the stated goals, criteria or weights if a favoured alternative doesnt come out on top. Intrapreneurship Entrepreneurship within an existing organization or business structure is said to be the intrapreneurship. In the present era of hyper competition the need for new products of hyper competition, need for new products and the intrapreneurial spirit have become so great that more and more companies are developing an intrapreneurial environment. Intrapreneurs: The entrepreneurs emerging from within the organization are called intrapreneurs. The intrapreneurs are top executives encouraged to catch hold of new ideas to convert them into product.

Establishing Intrapreneurship in the organization: An organization desiring to establish an intrapreneurial environment must implement a procedure for its creation. This is particularly true when the organization environment is very traditional and has a record of little change and few new products being introduced. (i) Top Management commitment The first step in this process is to secure a commitment to intrapreneurship in the organization by top upper and middle management levels. Once the top management of the organization has been committed to intrapreneurship for sufficient period of time (at least 3 yrs) the concept is introduced throughout the organization. This is accomplished most effectively through seminars, where the aspects of intrapreneurship are introduced and strategies are developed to transform the organizational culture into a intrapereneurial one. Once the initial framework is established and the concept embraced, intrapreneurial leaders need to be identified selected and trained. This training needs to focus on identifying viable opportunities and their markets and developing the appropriate business plan. II Ideas and General areas should be identified

Second ideas and general areas that top management is interested in supporting should be identified along with the amount of risk money that is available to develop the concept further. Over all program expectations and the target results of each imtrapreneurial venture should be established. As much as possible these should specify the time frame, volume and profitability requirement for the new venture, and the impact of the organization.

(iii) Using of Technology: Third a company needs to use technology to make it more flexible. Technology has been used successfully for the past decade by small companies that behave like big ones. Similarly large companies can use technology to make themselves responsive and flexible like smaller firms.

(iv) Provide training to employees: Fourth the organization should be a grap of interested managers who will train employees as well as share their train employees as well as share their experience. The training session should be conducted on day per month for a specified period of time. (v) Developing the ways to get closer to it customer: Fifth the organization needs to develop ways to get closer to its customer. This can done by Tapping the database Hiring from smaller rivals. Helping the retailer (iv) Learn to be more productive with fewer resources: Sixth an organization that wants to become more entrepreneurial must learn to be more productive with fewer resources. Top heavy organiations are out of data in todays hyper competitive environment. To accommodate the large cutbacks in middle management, much more control has to be given to subordinates at all levels in the organization. The span of control may become as high as 30 to 36 individuals of such companies. (viii) Establish strong support structure:

Seventh the organisation needs to establish a strong support structure for intrapreneurship.This is particularly important because intrapreneruship is usually a secondary activity in the organization. To be successful these venture requires flexible innovative behaviour with the intrapreneurs having total authority over expenditure and access to sufficient funds. (Viii) Reward the entrepreneurial unit Eighth support must also involve tying the reward to the performance of the intrapreneurial unit. This encourages the team members to work harder and compete more effectively since they will benefit directly from their effort. Finally the organization needs to implement an evaluation system that allows successful intrapreneurial units to expand and unsuccessful ones eliminated.

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