Evaluate and compare different organizational structures and culture

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TABLE OF CONTENTS I. Introduction: 2 II. Detail: 3 1. Evaluate and compare different organizational structures and culture: .3 2. The relationship between an organization’s structure and culture and the effects on business performance: .8 3. The factors which influence individual behavior at work: 9 4. Organization theory strengthens principles and practice of organizing and management .12 Classical management theory .12 5. The different approaches to management and theories of organization used by Microsoft: .14 6. The different leadership styles and the effectiveness of these leadership approaches in Microsoft Corp. : .16 Conclusion: 17 Reference : .18 1 I. Introduction: In the case of Microsoft Corp. Software Company, after 27 exist years, Microsoft network is broadened in 105 countries and region with 78000 people 1 . The success of Microsoft is a proof for management’s talent of William H. Gates and Steven A. Ballmer although they have a different management way. Have a question is given: What is the best way for management? There are not any adequate answers for this question. However, in management the talent of overview, foreseen and observes are necessary to evaluate flexible most. 1 Microsoft Corporation (2007, July 30) Bill Gates-Chairman, Microsoft Corp. Retrieved March 24, 2008, Web site: http://www.microsoft.com/presspass/exec.mspx?pf=true 2 II. Detail: 1. Evaluate and compare different organizational structures and culture: Getting the structure right is important for any organization, whatever its size, its technology or its environment. In this point of Child’s view, it is claimed: “The allocation of responsibilities, the grouping of functions, decision - making, co – ordination, control and reward – all these are fundamental requirement for the continued operation of an organization. The quality of an organization’s structure will affect how well these requirements are met.” 2 Depend on environment, technology and tasks or strategy of management, each organization will be structured to meet its objective or motivate workers. Organization structure can be broken down into two main types: function and division. “A function is a set of people who perform the same types of tasks or hold similar positions in an organization.” “A division is a group of functions created to allow an organization to produce and dispose of its goods and services to customers.” 3 Besides, authority/power is also a factor influencing on “shape of organization”. The span of control is a tool to evaluate authority and hierarchy structure is “flat” or “tall”. It is mean that an organization with the narrow span of control and high level will lead to tall structure. In contrast, wider span of control and low level is result in flat structure. The figure below is about organizational pyramid what shows you span of control, overall. 2 Child J. (1988). Organization: A guide to Problems and Practice. Paul Chapman. 3 Veeramuthu (2008) Organizations and Behavior, Hanoi: National Economic University. 2- page handout on the Organizational Structure and Culture. 3 Figure 1.1. Organizational pyramid 4 Relate to hierarchy, authority can be recognized under an aspect of centralize or decentralize. In the centralized organizations, managers retain most of responsibilities and the power concentration in one person. In contrast, decentralized organizations disperse responsibilities and decisions for lower level managers. At all, each organization will decide what combination is most effective. Making up a right structure is not enough for an organization to run clearly and effectively. Organizational culture is also remarkable. As the same as other concepts, there are many way to define organizational culture. One of the definition is described as follow: “Culture (in the sense of organizational ‘climate’) is the collective self-image and style of the organization; its shared values and beliefs, norms and symbols” 5 Each organization has different expectations, values, norms and ways to adapt and identify its culture. Thus, culture in each organization is unique. For example: if relationship of customers is cared of the culture, this distinction will be adopted by individuals. However, following the ideas of 4 EDEXCEL HNC & HND BUSINESS, (2004) Mandatory Unit 3: Organizations and Behavior Supporting foundation degrees. 1 st ed., London: BPP Professional Education, Aldine House, Aldine Place, pp. 64. 5 EDEXCEL HNC & HND BUSINESS, (2004) Mandatory Unit 3: Organizations and Behavior Supporting foundation degrees. 1 st ed., London: BPP Professional Education, Aldine House, Aldine Place, pp. 103. 4 Harrison, Handy classify four main types of organizational culture: power, role, task, and person culture. 6 Within power culture, power is central by judgment of key individual. In role culture, individuals pay attention to their particular job. Furthermore, task culture based on job satisfaction and expert power. Finally, person culture takes individual as central focus and talent of individual is target for structure exists. As we mentioned about organizational structure and culture before, now we will look through the case scenario of Microsoft; the article “Ballmer’s Microsoft” that published in Business Week on 17 th June, 2002; to understand more clearly: • Under management of Gate: Building a Microsoft basic foundation, Gates paid attention to develop production “the Windows operating system and Office suite of applications” that he believed more customers’ attraction and competition moves. To be convenient for product development and management, he divided company following functional structure. “Gates gave his pal free rein to restructure the way Microsoft manages finance, sales, product development, marketing, even strategic planning”. Concentrate to production, Microsoft employees worked in smaller groups and all product activities were done at one site. It is reason why the amount of Microsoft’s products was always competitive comparing with other company in the industry. “We have always had a multi-product strategy where the product managers and the development teams are the champions, and that is a process that has allowed us to have many more products than any one else in the industry”. 7 In general, with the Microsoft’s goal at this time, organization structure that Gate created is suitable. To manage employees pretty well he used flat structure with narrow span control for office. Hierarchy was centralized that Gate handed most of power. It is true as Jame Collins said: “To my mind, Microsoft has never been a company. It's a single remarkable individual, Gates, with thousands of the smartest, best-paid people anywhere helping that individual. It's basically like a big wheel, with Gates at the hub.” 8 The authority of Gates covered around company and the last decision in hand. One of the evidence for his strong power is he had his own “think week” when he can think a new strategy in technology. This proof seems like simple but it expresses that he is such an important and 6 Handy C.B. (1993). Understanding Organizations. Penguin 7 Lalonde J.E. (1990,Feb. 18). A Billion-Now Microsoft's Chairman Bill Gates Needs A New President For The '90S. Retrieved April 17, 2008, Web site: http://management.about.com/gi/dynamic/offsite.htm? site=http://www.seattletimes.com/news/business/html98/micr%5F20000114.html 8 Gates, Bill Leadership the Bill Gate way. Retrieved April 17, 2008, Web site: http://www.icmrindia.org/casestudies/catalogue/Leadership%20and%20Entrepreneurship/Leadership%20the%20Bill %20Gates%20Way-Leadership%20and%20Entrepreneurship.htm#Introduction 5 seft-decision person “Gates had his ‘think week’ where he secluded himself at his family’s retreat in Hood Canal in northwest Washington to ruminate on the Next Big Thing in technology”. Turn your sight into culture. Power culture is the way Gate created in first years of Microsoft. At that time, the control key is Gates, he handed off decisions. It is may be that, others ideas were gathered and filled up each other but the last is Gates. • Under management of Ballmer: Gates gave his place to Ballmer in January 2000. Taking a position as CEO of Software Company with clearly goal “great, long- lasting company”, Ballmer has reconstructed Microsoft’s corporate from top to bottom. With open-mind, he had a big innovation shaping Microsoft‘s division, tall, unwieldy and decentralized structure. He has broken Microsoft into seven operating divisions, each units has own leader and they have individual decision making and accountability “It’s a balance sheet that divides the company into seven distinct businesses and gives each unit’s leader the financial tools to measure its performance”. Looking ahead, the scale of Microsoft rose larger with a number of employees. It is reason why he has delegated a second tier of executives. Ballmer gave up old line of hierarchy that in the hands of Gates and Ballmer and made Microsoft to become decentralized structure “He has empowered a second tier of executives to run their businesses with less supervision, breaking from Microsoft’s heritage of placing every important decision in the hands of Gates and Ballmer” .Moreover, “management sync weeks” every quarter day-after-day proclaims a changing management from Ballmer, once again. Here, all ideas are expressed and the final is group-decision. On the other hand, Ballmer has reduced a level of management to manage more easily and efficiently. Microsoft structure is less flat therefore, the span of control is narrower and the gap between the sales and product-development are restored. Now, we are going definitely to Microsoft’s culture under management of Ballmer. Refer to division structure, Ballmer sent off a strong role culture. Firstly, we will focus on belief, one of the firm to appreciate organization culture. By the vision improving the relationship with customers and competitors, he has pointed out an anchor that influence on not only the method customers respond but also employees interact with customers “Microsoft’s mission is not just about technology. It’s also about improving the way the company handles relationships with customers and others in the technology industry”. Further, specific manifestations of culture are people behaviors, too. It is also regarded as belief that look at aspect of perception and feeling “People have to be very open, self- critical, almost relentlessly honest, and, at the same time, respectful”. Secondly, value is also 6 important aspect. Giving core values “honesty, integrity, and respect”, Ballmer guides employees and promote their behavior in Microsoft environment. To be considerable positive mind, from these core values, Ballmer takes relationship with the rest of industry that did not happen with aggressive person as Gate. Finally, norm is a number of rule and order that are forced employees to obey. With an aim making all stick and employees are independent in their job, Ballmer has ordered array of meetings, reviews and examine “He says the company’s core value of honesty, integrity, and respect must shine through with customers, partners, and the tech industry”. In sum up, under Ballmer’s hand, Microsoft has made its own culture that has created specific image in industry. • Competitor of Microsoft’s software company: Mozilla – Producer of Mozilla FireFox, the software Web browsers. It is time to look at one another competitor of Microsoft to evaluate and have a view more adequate. Consider as a big competitor, Mozilla with software web browsers Mozilla FireFox is actually competition comparing with the software IE (Internet Explore) of Microsoft. The reason choosing Mozilla but not another one is the different nature and nature goal. While the goal of Microsoft is a high fiscal, Mozilla is only a non-profit Corporation. Another reason is an image about open culture that Mozilla is a priority. Contrastively, Microsoft always tries to give persuasive data fights against this trend 9 . Focus on making great products, Mozilla has applied a functional structure. This type of structure is effective for managing and easy to focus on product group “This unique structure enables Mozilla to financially support and cultivate competitive, viable community innovation. The result is great products build by passionate people” 10 . Because of the main mission is an openness and opportunity on the Internet rather than business, like profits or price of stock therefore authority are decentralize and opener “Developers and programmers are central, but designers, testers, users and advocates are also key elements”. 11 About culture, it can be said that an innovation. Indeed, over 20 percent market share in Europe, Mozilla FireFox send off free culture. In early, this organization has affirmed its own value, it is explain why the corporation have a success and bring its culture to around World Wide Web “providing a Web browser with enough marketshare to drive open standards on the Web. Carefully managed, this value — and the resulting ability to generate revenue — can be used to make the Mozilla project self-sustaining and help keep the Internet open and diverse”. 12 Next, believing in personal traits make organization culture stronger. In this case, stand for nonprofit organization, it is 9 D.T., (2007,May 29). Who makes Miccrosoft unsleep well?. Retrieved April 17, 2008, from Estern Culure Web site: http://dongtac.net/spip.php?article599 10 About Mozilla. Retrieved April 17, 2008, from Mozilla Web site: http://www.mozilla.com/en-US/about/ 11 About Mozilla. Retrieved April 17, 2008, from Mozilla Web site: http://www.mozilla.com/en-US/about/ 12 About Mozilla. Retrieved April 17, 2008, from Mozilla Web site: http://www.mozilla.com/en-US/about/ 7 not just belief, it is also independent attitude. Take examples are ability to work well, entrepreneurial style and spirit, good judgment and consensus building skills…etc. 2. The relationship between an organization’s structure and culture and the effects on business performance: As we noted, in one organization, structure and culture have mutual actions. Rely on what type of structure is shaped, culture will have an effect. For example: with type of functional, centralized structure, most of managers will show his organization to role culture. It is simple to understand, role culture has a main trend well personal relations so function structure seems like the most suitable. Because the characteristic of function is dividing to tasks, employees of individual task can exchange and work each others. And then, the more exchange the more relationship. • Advantages: Microsoft also is not exception. Everything went well for Microsoft; the fiscal went sharply within 27 years. Aside from a management the way dividing employees to perform similar tasks and group smaller one to develop and complete independent projects are adequate business. It helped higher product capacity and work effectively “Gates believed that user-friendly computers and easily accessible software could attract many new customers. He tried to view the entire product portfolio of Microsoft in the light of future prospects and likely competitor moves. Accordingly, he made strategic decisions regarding product development”. 13 Day to day, the scale of Microsoft expand more and more. The management is quite difficult, there is not another way is empower to second authority to manage. It not only solves a difficult in management employees but also gives a condition for sub-units to express potential and take full advantages in source of grey matter. Further, a volume of time to supervise is release in stead of a manager can spend time to make a strategy or schedule of work in the future. • Disadvantages: Microsoft is not always right. Once again, Microsoft wants to bridge a belief in customers by getting product-development groups. However, the business was not successful because of these elements: First of all, a net work of Microsoft is too large. Develop more groups of product is having to add more people for project. It is a really trouble with such a large company as Microsoft Corp. The 13 Lalonde J.E. (1990,Feb. 18). A Billion-Now Microsoft's Chairman Bill Gates Needs A New President For The '90S. Retrieved April 17, 2008, Web site: http://management.about.com/gi/dynamic/offsite.htm? site=http://www.seattletimes.com/news/business/html98/micr%5F20000114.html 8 scale of management wide, supervisors will not adequate and easily lead to impact or higher is conflict. The second, a range of products are published but not have remarkable. Microsoft has not concentrated in any product for any people group. If Microsoft is still greedy and cover all products of industry, the company could lose it own goal and old own market. 3. The factors which influence individual behavior at work: In any side, any aspect, every people differ from one another. So on, behavior is a complex element in management. However, without understanding behavior will lead to result in conflict and frustration. As a starting point, a manager need to recognize how differences influence subordinates’ behavior and attempt to understand them if they are to be successful. 14 Individual behavior is affected by diverse different factors. Such an individual factors are personality, perception, attitude, learning, conflict, stress and change. The first factor is about personality. Personalities become more clearly defined and generally stable when people grow up into adulthood. “Personality is the relatively stable set of psychological attributes that distinguish one person from another”. 15 The big five is the classification system of traits to serve a model to appreciate and describe personality. In other words, these traits in big five influence on behaviors and individual actions. It includes five dimensions of trait that can be remembered as OCEAN or NEOAC: 1) Openness to experience (Not open to experience) 2) Conscientiousness (Un-directedness) 3) Extraversion (Introversion) 4) Agreeableness (Antagonism) 5) Neuroticism (Emotional stability) Each Supertrait is measured by 6 facets (or subordinate traits). The figure will describe more detail: 16 14 Moorhead G., Organization: A guide to Problems and Practice. 15 Griffin R.W., Organizational Behavior: Managing People and Organizations. Houghton Mifflin Company. 16 McCrae, R. R. and Costa, P. T. (2003). Personality in adulthood, a five-factor theory perspective (2nd ed.). New York: Guilford Press. http://wilderdom.com/personality/traits/PersonalityTraitsBig5.html 9 O C E A N Fantasy Competence Warmth Trust Anxiety Aesthetics Order Gregariousness Straightforward- ness Angry hostility Feelings Dutifulness Assertiveness Altruism Depression Actions Achievement striving Activity Compliance Self- consciousness Ideas Self Discipline Excitement- seeking Modesty Impulsiveness Values Deliberation Positive emotion Tender- mindedness Vulnerability Basically, personality starts at birth, goes on adolescent and shapes in adult; but it can still be changed by circumstance, reflect of environment or situation. Observing and analyzing is a mission of managers to make his/her subordinates high feeling, spirit, and a little bit of changing basic personality. In deed, understanding basic personality is important, it is not only affect people’s behavior in organization but also their perception and attitude toward the organization. 17 The second hidden element is perception. Touch, sight, hearing, taste and smell are five senses help people awareness, encoding and decoding information about environment. The way and the process discover environment is not the same target and situation so each people will have own distinctive view. “Perception is the relatively stable set of psychological attributes that distinguish one person from another”. 18 Perception is cognitive process and appears whenever stimulate the senses. There are threes factors which influence perception: perceiver, target (or object) and situation. Through the process of observing, selecting and organizing, people perceive data information from outside. However, because of the imbalance level of knowledge, sometimes lead to misperceive. Indeed, many classic research studies clearly showed that in workplace, managers and subordinates often have different perception “The manager and the employee perceive the job design freedom in different ways; they have different perceptions of the employees’ amount of freedom” 19 Another aspect of individual behavior in organizations is attitudes. We define attitude as: 17 Pervin L. (1984). Current Controversies and Issue In Personality. New York: Wiley. 18 Griffin R.W., Organizational Behavior. Boston, Toronto: Houghton Mifflin Company. 19 Gibson J.L., Organizations Behavior Structure Processes. Boston, Massachuserrs: Irwin Mc Graw-Hill. 10