Download Q11: What is the relationship among organizational theory, design

Q11: What is the relationship among organizational theory, design, change, and organizational
structure and culture?
Organizational theory is the study of how organizations function, impact others, and are impacted by
employees and society. It deals with the entire organization. This might be used to study an
organization to look for opportunities to improve the operation or solve bottlenecks within the
organization (incite change).
Organizational design deals with the organization's structure and culture. It involves how the
organization is organized and the manner which things are communicated, learned, shared, and
distributed based on their environment. One might study an organization by looking at the theory of it,
then delving deeper into the design of the organization to find out why the organization functions in
such a manner (for instance, what within the structure or culture causes the various impacts?). A strong
organizational design helps a company be more competitive, handle adversity, and increase efficiency.
Organization structure is the formal set of task and authority relationships. This is basically who does
what, and the organizational chart. The organizational culture is the shared values in the organization
which influence behavior. Culture is based on the people involved (employees and stakeholders and
management), ethics, and structure of organization.
Basically it is looking at a company and unpeeling the layers- first seeing the organizational theory, going
further to see how the organization is organized (design), how changes occur (what are the catalysts?),
and evaluating the structure to see who does what, how they are inter-related, and finally the culture or
values of the company that affect decisions and interactions. You would then know what the company
does, how it is set up, how change is effected, and the culture of the company.
Organizational change is the process of changing and redesigning organizations. This can be done more
efficiently once a thorough study of the organizational theory, design, structure and culture are made. It
is the process of moving from the present state to a future state to become more efficient, or more
competitive.
Reference
ORGANIZATIONAL-THEORY-DESIGN-AND-CHANGE-Chapter-01
Q12: Create a code of ethics for an organization of your choice. For each point in the code of ethics,
describe an ethical dilemma that would be resolved using the code of ethics.
1. Code of ethics: Southern Auto Body Supply
Southern Auto Body Supply strives to conduct business in the most ethical manner possible and,
in parallel with its vision, become the industry paramount in this regard. Southern employees
shall:
1) Conduct business in a manner in accordance with all local and federal laws and mandates
and, when faced with a decision in a gray area, always err on the side of conservative justice.
2) Comply with disclosure principals in all areas of business including finance, accounting, sales,
and others to ensure the best internal and external decisions are made in full confidence with all
readily available information.
3) Maintain communicative outlets for employees, vendors, and customers to enable those who
feel ethical violations have occurred with the ability to relay this information to the appropriate
persons.
Ethical dilemma resolved by point #1: An employee working for a competitor who is a friend of a
Southern salesman calls asking for a price on a case of masking tape. The employee isn’t sure
how much harm can become of a transfer of information, but knowing that Southern maintains
a private file of prices and prints a privacy notice on all invoices, the employee understands that
the company takes the position that its prices are not to be shared openly with competitors and
that violation constitutes trademark infringement.
Ethical dilemma resolved by point #2: A Southern salesman is trying to sale an account on a new
coatings line. The buyer for the customer asks whether the coating offers a better match than a
competitor. The salesman knows it does not. By referring to point #2, the salesman knows he
should not lie and should fully disclose the facts and try to sale the coating on the service levels
that accompany a purchase or the lower price.
Ethical dilemma resolved by point #3: A Southern employee knows that a manager is stealing
product to use in his home based business on weekends. The employee knows from past
experiences that the upper management takes such acts seriously and will not lash out at her
for ‘blowing the whistle’ and will keep the disclosure private. Because she does not fear being
ostracized, she openly discloses the info to one of the owners over lunch.
2. Transaction Cost Theory
Environmental Uncertainty and Bounded Rationality
Environmental uncertainty is the situation created when a firm’s management has limited
knowledge related to the general environment. Although management is highly trained with
regard to the specific environment (the industry, the competition, etc.) they are typically
inexperienced with regard to the general environment including economic and political
conditions. Bounded reality is a framework through which the management can utilize the best
available information to predict how to react to unknown environmental conditions. An
example relevant to these concepts includes the environmental uncertainty accompanied by the
recent downturn in the financial markets. A manager might wonder if an equity offering mid
2009 might be a viable option for funding a new project slated to occur late 2009. The
uncertainty of the economic environment is creating an obstacle for the decision process.
Although all possible outcomes are beyond the rational known for any manager, using history as
a bounded rationale, the manager might conclude that a 42% drop in the DOW is a typical
recession and that the duration of such is an average 8 months. As such, the manager might
conclude that the DOW will recover a position around 11,500 by mid 2009 and hedge the
decision by an investment in an index fund until the market recovers.
Opportunism and Small Numbers
Opportunism is prevalent in transactions where there are a small number of possible
participants. As such, lying and cheating and unethical behavior is more likely to occur than in
situations where there are a large number of participants. Consider a retailer doing business in a
small community. There are only 10 accounts to sell. 3 of these accounts do not pay their bill on
time and have been known in the past to beat vendors out of money. If there were 1,000
customers in the area, the firm could steer clear of these shops. However, because the area only
has 10 customers and is still relatively competitive, the firm will likely be forced to find a way to
service these 3 unethical accounts if they are to produce revenues high enough to produce a
profit. Perhaps they will do business on a cash basis or will charge higher prices to these or all
firms to compensate for the anticipated losses.
Risk and Specific Assets
Asset specificity is, essentially, placing a high level of investment in a non transferable skill or
technology. For example, Wal-Mart wanted all of its vendors to utilize RFID technology on its
products for inventory and logistical purposes. However, since the asset isn’t currently
transferable to other customers, the investment was considered risky because if Wal-Mart
scrapped the idea after a vendor invested heavily in it, the firm was stuck with a value-less asset.
3. Authority and Control Structure
R & D Lab
The factors that determine the appropriate authority and control structure in an R&D lab
include the fact that creativity is highly desired in such an environment. As such, a loose
authoritative design that values ethics and a wide workplace control structure allows employees
the ability to think freely and to create new and profitable lines.
Large Department Store
The factors that determine the appropriate authority and control structure in a large
department store include that there is a balance of value in creativity and regulation. On one
hand, management will want a medium sized framework of rules adhered to such as how to
handle customer complaints and ensuring that the store is opened on time and not closed early.
On the other hand, they will want the employees to be creative in marketing design and product
placement and react to consumer demand quickly. As such, an authority and control structure
that is balanced and neither too loose nor too tight is necessitated.
Small Manufacturing Company
The factors that determine the appropriate authority and control structure in a small
manufacturing company include the fact that there is little room for creativity and that strict
rule adherence is mandated if efficient methods are to result. For example, minimum wage
factory workers are unlikely to realize a more efficient means of production relative to a highly
trained managerial team (although it is not impossible). As such, a highly structured and
relatively strict authority and control structure is needed to ensure employees act according to
the predetermined strategy so that waste is reduced and profitability is preserved.
U2 –Q11: Explain the differences between centralization and decentralization and between
standardization and mutual adjustment. What factors determine the ability to strike a balance
between these mechanisms?
Centralization is the process in which top authority has the power of decision making and all other levels
have to follow the decisions which are taken by the top level managers. In centralized organization, the
decision making moves from top to bottom level. The span of control of top managers is high in the
centralized structure organization. Decentralization is the process in which the top management
delegates the small decision making or daily decision making authority to lower management levels. In
decentralization structure, the knowledge and views are passed from the lower level to the higher level.
In this structure, top management gives attention on the long term goals and makes strategies to
achieve them. In this structure, few tiers will be their in the organization (Miyamoto, 2008).
Standardization is the process in which rules and regulations are set and organization has to follow the
rules, regulations and procedures. In standardization, the actions are foreseeable as the rules are set. In
Mutual Adjustment, it allows to take decision rather than solve the problems with the help of set rules.
In mutual adjustment, the outcomes are flexible and respond creatively to people (Aart, 2005).
Factors which help to identify the balance between Centralization and Decentralization are decision
making authority and leadership. For example, centralization is required when the organization
environment is stable and top management wants to hold the organization overall, whereas
decentralization is useful in those organizations where top management want to delegate daily decision
making authority to lower level and focus only on long term goals. Factors which help to identify the
balance between standardization and mutual adjustment are using the appropriate quantity of
formalization and socialization. Formalization defines set rules and procedures of the standardized
operations of the organization. Socialization is the process in which organization team members
understand the process and find out the problems and solve them through innovative manner to
achieve the goals (Aart, 2005).
References
Aart, C.V. (2005). Organizational principles for multi-agent architectures. The Netherlands: Birkhauser.
Miyamoto, K. (2008). International management accounting in Japan: current status of electronics
companies. Singapore: World Scientific.
U2 –Q12: Transaction cost theory argues that the goal of organizations is to minimize the costs of
exchanging resources in the environment and the costs of managing exchanges inside the
organization. What do organizations consider when trying to choose interorganizational strategies in
order to minimize transaction costs and bureaucratic costs?
Transaction costs are costs involved during the monitoring, negotiating and governing of various
exchanges that take place between organizations or organizations. Bureaucratic costs on the other hand
are the internal transaction costs incurred within an organization. Transaction cost theory argues that an
organization’s goal is to minimize both external and internal transaction costs (Jones, 2010)
In the transaction cost theory, inter-organizational strategies to be used in minimizing these costs
should takes into account the forecasts of why and when the strategies can be used and the costs of
linkage mechanisms. Therefore for organizations to minimize transaction costs and bureaucratic costs,
they need to consider a number of factors when choosing inter-organizational strategies. In this sense
organizations must identify the source of transaction costs, the level of these transaction costs and how
the transaction costs are likely to be. They must also estimate the saving gotten from using different
linkage mechanisms and estimate the bureaucratic costs of operating the linkage mechanism. They
should also choose the linkage mechanism which achieves the most savings in transaction costs at the
lowest bureaucratic costs (Jones, 2010). These are the major steps that an organization should take into
consideration when choosing and inter-organizational strategy using transaction costs theory.
Example of linkage mechanism which achieves the most savings in transaction costs at the lowest
bureaucratic costs is outsourcing, franchising, and Keiretsu. Franchising helps to reduce transaction
costs without incurring bureaucratic costs in such a way that the franchisee acquires rights from the
franchiser to use their resources for a fee where the franchiser provides the products and the franchisee
distributes them thereby reducing the bureaucratic costs of franchisers of managing business in a given
location where the franchisee is operating. In Keiretsu, a company can benefit from minority ownership
of other businesses without incurring bureaucratic costs of ownership. In Outsourcing, where value
creation exceeds bureaucratic costs, moving a value creation done inside the company to external
companies is viable (Jones, 2010).
References
Jones, G.R. (2010). Organizing in a Changing Global Environment. Chapter 3 in Organizational Theory,
Design, and Change. (6th). Upper Saddle River, New Jersey NJ: Pearson Education Inc. Publishing.
U3 – Q11: Why is differentiation necessary to build a formal organizational structure? Is
differentiation limited to large organizations? How is the concept of span of control related to both
integration and differentiation?
Organizational structures have been used by man since time immemorial. Right from the early days of
hunter-gatherers, to tribal warlords, one man would be given the task of leading the pack and assigning
tasks to each member of his team. Right from the oldest kingdom to the papacy, hierarchical structures
have been followed everywhere. Each person was given his or her task and was expected to follow it.
Each person was assigned different leadership roles and responsibilities that were required for the task
at hand. At the end of it, there was also a strong reporting structure in place that ensured accountability
and performance appraisal. So the notion that organizational structure and design is a relatively new
concept is quite wrong. Society in itself is similar to a formal organizational structure. If you have studied
about the old civilizations, you will see that each group of people was assigned a task, right from
agriculture, animal husbandry, cloth-stitching and metal-work. We implement the same concept in a
business today.
Organizational structure is defined as a "hierarchical concept of subordination of entities that
collaborate and contribute to serve one common aim."
Source:
Buzzle.com." Formal Organizational Structur". http://www.buzzle.com/articles/formal-organizationalstructure.html.
No. Even small organizations need to incorporate differentiation in their daily business activities. No one
is a master all. Delineation of functions of the employees is necessary for a fully functional organization.
In some organizations, division of labor and the degree of specialization are being reduced, while in
other organizations, division of labor and specialization are increasing. A number of factors can influence
this discrepancy among organizations.
For example, the degree of specialization and division of labor can be related to the size of the
organization; typically, small and mid-sized employers are not able to cost justify specialized division of
labor. Lindbeck and Snower (1997) report that, as the costs of communication among workers declines,
the degree of specialization, and consequently, division of labor within organizations, may rise. Some
literature reports that, as the size of the market increases, it supports more division of labor. The degree
of division of labor within firms can also depend on the degree to which performance on particular tasks
is measurable, and the degree to which wages affect task performance
Source:
Lindbeck, Assar, and Snower, Dennis J. (1997). "The Division of Labor Within Firms." Stockholm, Sweden:
Institute for International Economic Studies, University of Stockholm. (Accessed from
http://www.enotes.com/business-finance-encyclopedia/division-labor)
Span of control, also known as span of management, is a human resources management term that
refers to the number of subordinates a supervisor can effectively manage.
In relation to the organization, the span of control depends on how differentiated an organization is. The
more the organization is differentiated the more it is easier to manage provided that operational
mechanisms are in place. A study conducted by Slack and Parent (2006) shows that 'one of the ways to
manage complexity is formalization. This can refer to the existence of mechanisms, such as rules and
procedures that govern the operation of an organization.
Sources:
Answers.com. "Span of control". http://www.answers.com/topic/span-of-control#ixzz1IHeLp5aM .
Accessed March 31, 2011.
Slack, Trevor and Parent, Milena M. Understanding sport organizations: the application of organization
theory 2nd Edition, 2006.
U3 – Q12: Explain the concepts of empowerment, self-managed teams, and cross-functional teams,
and develop an essay that argues for their inclusion in either a tall or flat organizational structure.
Empowerment evaluation has become a global phenomenon, reaching the four corners of the Earth in
less than a decade. It is a change process that has supported people and communities in improving their
lives in places ranging from the corporate offices of Hewlett Packard to townships in South Africa.
Self managed teams reduce costs because of the reductions in managerial ranks throughout the
organization. In a study examining the economic benefits of organizing field technicians into self
managed teams, it was found that SMTs absorb the monitoring and coordination tasks of supervisors,
substantially reducing indirect labor costs but without adversely affecting objective measures of quality
and labor productivity.
A cross functional team refers to members from various work areas who identify and solve mutual
problems. Cross functional teams draw members from several specialties or functions and deal with
problems that cut across departmental and functional lines to achieve their goals.
U4 – Q11: Consider you own experience with workplace culture. Describe past and current
experiences with organizational culture. Be as specific as possible and support your comments with
examples.
Based on the information you have provided, I share my experiences with organizational culture. I hope
this helps in preparing your assignment for submission and clearly understanding how organizational
culture influences performance, customer satisfaction and other vital components of operations.
The workplace culture of my organization is not progressive, but stuck in the past. Many employees feel
as if we have done thing a particular way for a number of years and should continue to do so with no
regard or concern for innovation.
Many attempts have been made in the past to change the culture by implementing components such as
pay for performance and integrating a system wide component for patient satisfaction within job
descriptions and performance appraisals.
These implementations have done little to change the culture as most employees are primarily focused
on the task at hand and not the overall picture. For example, if a nurse is on the phone with a patient
and a guest walks up to the desk, he or she may not be respectful enough to ask the caller to hold and
acknowledge the guest. This mentality or part of our culture has been difficult to break away from. In
promoting a customer centric culture or environment, you would think that attaching such a
requirement to ones pay would be significant enough to change employee attitudes. However, it has not
been enough.
Our employees also do not trust management. Therefore, sustaining our employee suggestion program
has been extremely difficult. The committee has been rallying to encourage the staff to share their
innovative ideas with the organization in an effort to improve patient care, processes and the
environment. As the culture of the organization does not promote trust for leadership it is believed that
the staff's opinions are not valued. An additional issue we experience is that management is not
required to support the program and has at times taken credit for employee contributions. This creates
a great deal of hostility amongst employees as we forge ahead to improve the level of service we deliver
to our patients.
U4 – Q12: What are the principal differences between a functional structure and a multidivisional
structure? Why does an organization change from a functional to a multidivisional structure?
The multidivisional structure possesses two main advantages over a functional structure, innovation
that let a company grow and diversify yet overcome problems that stem from loss of control. First, each
distinct product line or business unit is placed in its own self contained unit or division , with all support
functions.
In a functional structure, activities are grouped together by common function from the bottom to the
top of the organization all engineers are located in the engineering department, and the vice president
of engineering is responsible for all engineering activities. With a functional structure, all human
knowledge and skills with respect to specific activities are consolidated, providing a valuable depth of
knowledge for the organization. Why does a company change from a functional to a multidivisional
structure?
The company changes from a functional to a multidivisional structure because each division is clearly
accountable, in addition within a division there is excellent coordination of functions, and the divisional
structure develops a broad skills based. The most important reason why companies change over from a
functional to a multidivisional structure is that a multidivisional is more flexible and responsive to
changes in a mark
U5 – Q11: What core competences give an organization competitive advantage? What are examples
of an organization’s functional-level strategies?
A core competence is the result of a specific unique set of skills or production techniques that deliver
value to the customer. In order to be competitive, it must provide potential access to a wide variety of
markets; should make a significant contribution to the perceived customer benefits of the end product;
should be difficult for competitors to imitate, otherwise it will not be competitive by any means.
What are examples of an organization's functional-level strategies?
Each organization may contain a variety of functional areas, here are a few critical areas, and you can go
the website link to view each strategies:
Finance and Accounting: Focus on planning methods-credit strategies or liquidity strategies; how to
arrange budget systems and approaches
Human Resources: Job design and specifications; training and development; compensations and
promotions
Information Systems: Standardization policies and approaches; centralization/decentralization of IS
people, computers, and databases
Marketing: Focus on how to market your service/product by targeting price (how much), product (type
of product), promotion (special or sales) and place (where to target)
Production/Operations: Size and location of facility, size of inventory, level of specialization
Research & Development: Innovate versus imitate strategies, in my opinion, this is the most critical, if
the product is not innovative, and simply imitate other competitors, the organization is always going to
be a step behind
http://www.kulzick.com/funcstrat.htm
Other website links for reference:
http://www.referenceforbusiness.com/management/Sc-Str/Strategy-Levels.html
http://www.albany.edu/faculty/ja0754/bmgt481/lecture4.html
U5 – Q12: Why would an organization choose a corporate level strategy to expand its value-creation
activities beyond its core domain? Discuss how an organization’s structure and culture might change
as the organization begins to enter new domains.
An organization may choose a corporate level strategy to expand its value-creation activities beyond its
core domain due to the fact that unlike the core domain which is normally narrow in perspective, the
corporate level strategy becomes more concerned with a broader scope of the organization’s strategic
activities as well as how these match with the organization’s environments, its capabilities, resources, as
well as the expectations and values of its stakeholders. Basically, whereas the core domain of an
organization is more self-focused on the organization alone, the corporate level strategy looks at the
entire strategic scope of the organization.
Discuss how an organization’s structure and culture might change as the organization begins to enter
new domains
An organization’s structure and culture might change as the organization begins to enter new domains
because each domain is unique in its features. New domains each have their own challenges that need
to be dealt with in specificity and generally; no single strategy is used to tackle every domain. From a
structural and cultural point of view, new domains call for more focus on them, with the organization’s
structure requiring modification to concentrate or lay more focus on dealing with each individual
domain. Organizational structures may need to be modified to have different hierarchical levels in which
a flatter structure may be nursed to take care of the different domains, all reporting to an overall head
that oversees entire operations. From a cultural perspective, this would change since individuals would
have to adapt the way they do things in manners that become compatible with the new domain in
focus. Since we have identified that every domain is unique, then different attitudes and methodologies
need to be adopted to effectively deal with the organizational new domains.
Reference:
About Corporate Level Strategy. (n.d.). Retrieved March 17, 2011 from
http://www.corporatelevelstrategy.org/
U6 – Q11: Why do organizations grow? What types of major crisis is an organization likely to
encounter as it grows?
Why do organizations grow?
Because they are designed to grow!
Organizations when formed become a distinct entity. When properly managed, it 'breaths' a life on its
own. There is no stopping its growth.
Just like a living organism, in order to properly grow it must shelve its old skin to give way for a new skin.
Survival and aim for greatness are the main reasons why organizations grow.
Here is an example (as culled from Greiner's) of an organization that refuses to grow:
"Key executives of a retail store chain hold on to an organization structure long after it has served its
purpose, because their power is derived from this structure. The company eventually goes into
bankruptcy."
These executives did not see that the old structure restricts the potential for organizational growth.
Here is another one:
"A small research company chooses complicated and formalized an organization structure for its young
age and limited size. It flounders in rigidity and bureaucracy for several years and is finally acquired by a
larger company."
The Great Benjamin Franklin said that "without continual growth and progress, such words as
improvement, achievement, and success have no meaning." And this applies to all organizations.
What types of major crisis is an organization likely to encounter as it grows?
Harvard Business School outlines these crises:
There are two types of growth that an organization encounters, evolution and revolution.
a.) Evolution - when there is prolonged periods of growth where no major upheaval occurs in
organization practices.
b.) Revolution - refers to those periods of substantial turmoil in organization life.
As the organization increases in size and age, both evolution and revolution growth are factored in. The
organization generally undergoes these five stages of change as suggested by Greiner's model of
growth:
Phase 1
Evolution stage- Crisis of leadership
Revolution stage- growth through creativity
Phase 2
Evolution stage- Growth through direction
Revolution stage- Crisis of autonomy
Phase 3
Evolution stage- Growth through delegation
Revolution stage- Crisis of control
Phase 4
Evolution stage- Growth through coordination
Revolution stage- Crisis of red tape
Phase 5
Evolution stage- Growth through collaboration
Revolution stage- More and more crisis
Sources:
12 Manage: The Executive Fast Track, "Growth Phase Model",
http://www.12manage.com/methods_greiner.html
Harvard Business Review. "Evolution and Revolution as Organizations Grow" by Larry E. Greiner, Vol.
50(4). Copyright C) 1972
U6 – Q12: What is organizational change? Describe and explain the forces for and resistances to
organizational change.
Organizational changes are departures from the status quo or from smooth trends. They are almost
without exception the products of an organizing force. There are two such forces for change: the
organization’s top managers and the organization’s environment. Top mangers influence organizational
change in four important ways. The first way is through their belief systems , their values, ideologies,
and mental models of cause effect relationships.
U7 – Q11: What is the relationship between quantum and incremental technological change? Why
are these types of change important to organizations?
Quantum technological change is a sudden and significant shift in technology that comes about due to
quantum innovations. These kinds of innovation lead not only to environmental changes but it also
demand significant operational changes in organizations.
Incremental technological change builds on quantum changes. In other word, they refine quantum
innovations. An example of a quantum change is when Intel invented the first microprocessor. All the
successors to the first microprocessor is a result of incremental innovations.
Quantum and incremental technological changes are important to organizations because they help to
reduce
operational cost of the organization. In other words, technological innovations enable organizations to
increase output and significantly reduce the cost of producing their products. In addition, due to
technological innovations, organizations can operate with less people, produce more goods and
services, and ultimately reduce the price of goods in the economy.
U7 – Q12: How do cognitive biases affect organizational learning and the quality of decision making?
What can be accomplished to reduce the negative impact?
Cognitive biases affect organizational learning and the quality of decision making in several ways. Due to
cognitive biases, managers oftentimes misinterpret information. This misinterpretation causes
managers to make poor decisions, and to put biases ahead of good, sound judgment. Managers
oftentimes like to control the situation presented to them, and when biases are present, there may be a
fear of lack of control, which will produce an organizational learning outcome that is undesirable.
When dealing with cognitive biases, managers also have the tendency to blame, by use of projection,
those under them for situations that either can't be immediately solved, or that go wrong. Ego
defensiveness also plays a large role in cognitive biases with managers. By using this cognitive bias,
managers believe that a situation which turned out poorly due to their decision making really isn't that
bad - the situation becomes rationalized by the manager, to save ego. The problem is that theses biases,
including projection and ego defensiveness, which are the most frequently used, put a halt to
organizational learning.
To reduce the negative impact, the biggest step managers can take is to listen to the employees that
have a different opinion as to the course of action that should be taken. Managers can also view such
experiences as chances for organizational learning opportunities, and analyze what has taken place. The
outcomes can then be used as a tool for managers, to act as a guide in future organizational learning
and decision making scenarios.
U8 – Q11: Define and explain the term authority, and discuss the bases of authority. How does
authority differ from power? Explain how people or departments within organizations can gain power
through control of resources and through solving key organizational problems.
According to the Merriam-Webster Dictionary, Authority is defined as “The Power to enforce laws, exact
obedience, command, determine or judge.” It is also defined as “The power to influence or persuade
resulting from knowledge or experience.” http://www.merriam-webster.com/dictionary/authority
Power on the other hand, is defined as “possession of control, authority, or influence over others.”
http://www.merriam-webster.com/dictionary/power
Authority is typically granted by one person or organization to another person or organization to act or
represent in a specific manner. Power on the other hand is the ability to influence others to act in a
certain way. Authority can be granted, but power is a talent or skill. Power can come from physical,
psychological or personal traits. Furthermore, authority is granted and has certain limits imposed upon
it. For example, a police officer is imbued with the power to arrest someone, but does not have the
authority to judge and sentence them. Power on the other hand is earned and its limits can be difficult
to define.
In the workplace, individuals or departments may gain power by controlling access to resources such as
knowledge. For example, Cobol is a programming language that is rarely taught today. However, many
legacy applications are built on Cobol. So when a Cobol application needs to be fixed, a programmer
with that skill set has the power to demand a very high salary.
The control of power can become an issue in organizations, if individuals or departments seek to
consolidate power by denying others the access to resources. This can be seen in organizations that are
implementing ERP systems. ERP systems allow all users access to data through a centralized
database. As a result, certain departments may lose exclusive control over information which gave
them power and influence in the past. In some cases, people have tried to stop ERP implementations by
covertly refusing to cooperate or secretly sabotaging the project in an effort to maintain the status quo.
On the other hand, power can be gained in a positive manner by solving issues. For example, an
individual who is able to come up with a better manner for performing a task, will gain more influence
and power because they are recognized for their skill.
Resources
Authority vs Power. Resource Associates Corporation. Retrieved October 28th 2011 from
http://www.resourceassociatescorp.com/blog/2009/12/authority-vs-power/
Power vs Authority. Psychology of Management. Retrieved October 28th, 2011 from
http://psychologyofmanagement.blogspot.com/2010/04/power-vs-authority.html
U8 – Q12: Why is it important to maintain a balance of power between different groups of
organizational stakeholders?
Maintaining a balance of power between different groups of organizational stakeholders may be hugely
attributed to fostering an environment of collaboration where everyone's input is valued and taken into
consideration. When one party takes ownership of making decisions without giving consideration to
how such decisions will impact others involved, the mutual respect is placed in jeopardy. Particularly, if
the long standing practice or agreement has been to make decisions jointly.
It is important to maintain a balance of power in order to not only keep the peace but to further the
organization’s mission. Maintaining this balance is excellent for public relations, as well as, customer and
employee satisfaction.
An example of an organizational stakeholder attaining too much power would be related to a vendor my
organization contracts with. The owner of the contract company has demonstrated very brash behavior
and has taken over various aspects of operations where they should not be in direct control. This
stakeholder has gained too much power and many leaders within the organization are afraid to correct
the behavior.
This may be an issue experienced in many hospitals or healthcare systems that depend on medical
providers to advance their programs.
-------------------- 2nd Assignment--------------------Subject is “Human Resource Management Methods”
250+ words to each question.
COURSE TEXTBOOK: Ivancevich, J. M. (2010). Human resource management (11th ed.). New York, NY:
McGraw-Hill.
***** 451--U6a – Q11a: Discuss the implications of the Family and Medical Leave Act for a small firm
and for a family (at least 1 paragraph for the family and 1 paragraph for the firm).
***** 451--U6a – Q12a: What are some of the advantages and disadvantages of a merit-based
compensation system?
***** 451--U7a – Q11a: Women and minorities often face what is called a glass ceiling. Why would
some individuals hinder or block the advancement of people up the management ladder? Have you ever
encountered or observed the glass ceiling?
***** 451--U7a – Q12a: How should the manager evaluate the effectiveness of outplacement service?