Leadership & Change Management

1. Leadership & Change Management • Lecturers :- • Jim Bowes • Reading Materials :- • Bernard Burnes Managing Change 5th Edition. Pearson • Senior & Fleming : Organisational Change 3rd Edition. Pearson • David Boddy : Management An Introduction 4th Edition. Prentice Hall

2. Lecture 1 Learning Outcomes • An appreciation of the factors driving globalisation • The ability to utilise the PESTEL model in an international context • Hofstede’s comparative analysis of National cultures • The importance of organisational structure and the various structural forms available to an organisation • The influence of contingencies on structure • The learning organisation

3. GLOBALISATIONManaging Internationally • The growth of international business • Ways of doing business internationally • An international PESTEL • Comparing national cultures • Globalisation – arguments for and against

4. An overview of the themes

5. Growing value of business across national borders Raises management issues other than distance About inputs, transformation and outputs National contexts imply different ways of conducting management tasks Planning, organising, leading, controlling Management practices also affect nations Globalisation debate Why study international aspects?

6. Factors driving globalisation in an Industry

7. Exporting and importing Transporting goods or delivering services Licensing Gives right to make and sell products Joint ventures and strategic alliances Firms share risks and resources Wholly-owned subsidiaries overseas Costly, but retains control Ways of doing business internationally

8. Multinationals Based in one country, operate in many (Intel) Transnationals Operate in many, but decentralise (while maintaining consistent image) (Coca-Cola) Global companies Closely integrated operations across many countries (Nestlé) Alternative business structures

9. Using PESTEL internationally

10. Political and economic • Political • State involvement in business and its regulation? • Firms in networks (Japan) or isolated units (US)? • Corruption – arbitrary/pervasive • Economic • Stage of development • Poorer countries with cheap labour as sources of supply • Markets • Companies target countries with high demand for their products (tobacco, alcohol, media) • Differences in consumer preferences

11. Social and technological • Social • Technological • Physical infrastructure • Ports, airports, local transportation • Communications technologies • wireless links, Internet access • Poor infrastructure is also a business opportunity

12. Environmental and legal • Environmental (natural) • Natural resources available in an economy • Renewable or not • Pollution and its regulation • Conflicts between business and communities • Legal • Trade agreements and trade groupings • WTO, European Union, Asean, Nafta …

13. Using PESTEL • Focus NOT on drawing up a long list of factors, but agreeing on critical ones that seem most relevant to specific situation • People interpret factors subjectively, as well as noting objective realities • Many pay particular attention to socio-cultural factors, and how they differ between nations

14. The socio-cultural context (1) • Meaning of culture • Patterns of basic assumptions and ways of behaving that groups (including nations) develop and transmit to new members • Context and culture • Low-context – meaning is clear and explicit • E.g. US, Germany, Scandinavia • High-context – meaning depends on shared experience and understanding • E.g. Japan, Arab countries, Southern Europe

15. The socio-cultural context (2) • Attitude to conflict • Some countries see dissent as normal and healthy, and expect people to discuss conflicts (The Netherlands) • Others value harmony, especially that junior staff accept views of seniors (East Asia) • Attitude to change • The result of positive human action, or of events beyond human influence? • Attitude to time • An infinite resource or a scarce resource to manage?

16. Hofstede’s comparative analysis (1) Distinguished five dimensions • Power distance (high or low) • High – accept inequality of wealth and power:e.g. France, Brazil • Low – do not accept inequality – e.g. Sweden, UK • Uncertainty avoidance • High – tolerate ambiguity - e.g. US, Australia • Low – uncomfortable with uncertainty, prefer clarity – e.g. Latin America, southern Europe

17. Hofstede’s comparative analysis (2) • Individual/collectivism • Individualist societies stress individual responsibility and success – e.g. US, UK • Collectivist societies stress loyalty to group in return for support – South America, Asia • Masculinity/femininity • M. societies show assertive behaviour,e.g. Japan, Italy, Arab countries • F. societies show modest behaviour, interest in quality of life – e.g. Sweden, Norway, Denmark

18. Hofstede’s comparative analysis (3) • Long-term/short-term orientation • High LTO societies value rewards that will come far into the future, e.g. China, Taiwan, Hong Kong, Japan • Low LTO societies value the past and the present, a respect for tradition, e.g. UK, Australia, US, Canada

19. Globalisation • Globalisation of markets (Levitt, 1983) • “needs and desires irrevocably homogenised” • Implied standard production and marketing • Or going local? • Local tastes vary, local brands outsell global • Much variation to suit diverse tastes(e.g. Starbucks, Coke, Nestlé) • Globalisation of production • High-wage countries outsourcing supply to cheaper sources – India, China, Eastern Europe

20. The globalisation debate • Benefits • Growth in trade brings wealth, wider choice and probably better value • Costs • Trade liberalisation supports rich countries • May disadvantage small producers, leading to social unrest • Perception of multinational political dominationin some areas

21. Organisation structure • Structure and performance • Elements in structure: the design options • Dividing work into functions and divisions • Coordinating work: alternative ways • Mechanistic and organic structures • Learning organisations

22. Structure and performance Figure 10.1 Alternative structures and performance

23. Why study structure? • Evidence that a company’s structure affects whether it adds value to resources • e.g. how to divide and coordinate tasks • Current structure reflects assumptions • Knowledge enables us to question • assumptions in a structure, and its context • alternatives available • limitations of any structure

24. Structure and performance? • As a business grows, those running it divide the work and coordinate the parts – they create a structure within which people work • When an organisation is not performing well, managers often change the structure • Reflect the belief that structure affects performance • Clarifies expectations and enables monitoring • Avoids confusion and waste of poor structure What kind of structure works best?

25. 5 Types of Structure

26. Strategies and structures Figure 10.9 Relationship between strategies and structural types

27. Influences on structure ( Senior & Fleming) Stability/Turbulence PEST Environment Culture Creativity Politics Leadership Strategy Technology Size Structure

28. Contingencies • STRATEGY • e.g. cost leadership or differentiation – what structure to encourage relevant behaviour? Cost leadership requires efficiency . Differentiation needs innovation • TECHNOLOGY • What structure best supports technologies used to transform inputs, in manufacturing or services? • BUSINESS ENVIRONMENT • What structure best supports people as theycope with different environments? ` • SIZE & LIFE CYCLE • What structure best supports an organisationas it grows

29. Contingencies ormanagement choice? • Contingency • Effective performance depends on managers adoptinga structure suited to the key contingencies of the environment in which it is operating • Management choice • Managers have greater degree of choice over the structures they adopt • Standards of performance not always rigorous • Preferred choices may have limited effect on performance • Political interests and ambitions shape choice • Implications for role of managers?

30. Consequences of deficient organizational structures – Child 1988 • Motivation and morale may be depressed • Decision making may be delayed and lacking in quality • There may be conflict and lack of coordination • An organization may not respond innovatively to changing circumstances • Costs may rise rapidly, particularly in the administrative area

31. Learning organisation Features

32. Organizational structure and change( Senior & Fleming) • There are many influences on the way an organization might structure for successful performance and to cope with change • Organizations do need to consider the internal and external environments in relation to the need for change, whether it was structured along strict bureaucratic, mechanistic lines or as one of the newer network forms • If organizations are able, to some extent, to manipulate their environments to suit their strategies and structures, this will enable them to preserve existing structures and operational arrangements

33. PESTEL model enables analysis of the potential issues when managing across national borders These may affect the way managers choose to structure international operations Research on national cultures implies recognising differences, while balancing these with company cultures Management practices will affect the outcomes of the globalisation debate and hence the future context Conclusion

34. Conclusion (Cont’d) • Organizational structure can be likened to the skeleton of the organization supporting the implementation of strategic decision making and operational processes • Redesigning an organization’s structure has to be carefully planned with change taking place as current business performance has to be sustained. This implies a mixture of incremental and transformational change

35. Supplementary Material

36. Mechanistic and organic structures Table 10.3 Characteristics of mechanistic and organic systems Source: Based on Burns and Stalker (1961)

37. Contrasting forms • Burns and Stalker identified alternative forms • Each appropriate to certain conditions • mechanistic – stable • organic – unstable • Fit with conditions led to high performance • Later work (Lawrence and Lorsch 1967) focused on differences between units within the same organisation • Related differences to contingencies

38. Contingencies – strategy • e.g. cost leadership or differentiation – what structure to encourage relevant behaviour? • cost leadership requires efficiency – a functional structure? • differentiation needs innovation – matrix or team-based? • GSK example of a new structure to support strategy – Fig. 10.8

39. Contingencies – technology What structure best supports technologies used to transform inputs, in manufacturing or services? • e.g. production line or custom-made? • e.g. information systems enable different ways of delivering services – new structures to support relevant behaviour? • see MIP on centralised manufacturing at RBS

40. Contingencies – business environment What structure best supports people as theycope with different environments? • Burns and Stalker (1961) contrasted • rayon plant (stable market, few changes) with • small electronics companies (volatile, uncertain market, many changes) • Lawrence and Lorsch (1967) showed that firms face many environments with different needs • How to link differently structured departments?

41. Environment and structure Figure 10.10 The relationship between environment and structure

42. Contingencies – sizeand life cycle What structure best supports an organisationas it grows (number of staff)? • Birth – informal, little division of labour, organic • Youth – decisions shared more widely, specialists employed • Mid-life – extensive division of responsibility, with rules for coordination • Maturity – mechanistic, perhaps divisions,selling some units that no longer fit Problem of managing the transitions

43. Activity Consider your own organization, or one you know well or, if the organization is large, a particular section of it. Do any of the five proposed consequences of structural deficiencies listed apply to the prevailing situation? If the answer is yes to any of the points, what does this imply for the way the organization is structured? What changes could be made? Justify your conclusions with reference to the discussions of different structural forms.