Why Study Organizations? Organizations Are Taking Over Organizations are everywhere.

Increasingly, they are taking over the tasks that used to be performed by individuals and families. For example, it used to be that when a couple got married, their friends and relatives built them a house to live in. Now, the construction is done by developers and the distribution is handled by the market. Food collection is done by agricultural businesses. Hunting has been replaced by cattle factories and poultry companies. Food preparation is increasingly performed by consumer packaged goods companies, and by restaurants. Pretty soon, you'll be able to hire an organization to eat the food too. :-) Child-rearing is increasingly performed by a network of organizations including schools, daycare centers, television networks, summer camps and churches. Most of us are born in an organization (the hospital) and will die in one too (the hospital again, or the nursing home), and then a funeral parlor will take care of the body. Organizations organize our lives. Our schedules are almost entirely set by organizations. This is especially true for students, whose lives revolve around school-imposed classroom schedules, library-cafeteria-computer center hours, course deadlines, etc. All this means that what happens in the economy and in the courts and in technology (all elements of the environment of organizations) affects all of our lives profoundly. The reason most organizations do things the way they do is largely a function of what they can make money doing, what is legal, and what technology permits. The school cafeteria is organized as a selfservice operation not because you personally asked for it to be that way but because it's an economical way to do things. Organizations Determine Socio-Economic Status Increasingly, prestige in industrialized nations is determined by occupation, and by rank within the organization we work for. So bankers (an occupation) have a certain status in society, and bankers who are senior vice-presidents (a high rank) are particularly blessed. Similarly, most people's income is derived from their jobs in organizations, so organizations also largely determine the amount of money that individuals have. Finally, organizations wield considerably more power than individuals do, so the individuals who control organizations also have considerable power.

Why Study OB?

Organizational Success Factors Suppose you are an investment analyst trying to evaluate the long-term profitability of a company. What are some of the observable factors you might consider in making a judgement?
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financial strength quality of its products market dominance technology management

All of these are important, but they are mostly about the present. Just because their technology is good today doesn't mean it will always be good. There are a lot of makers of vacuum tubes that can attest to that. Financial strength is basically a measure of the company's past success. What determines whether the company will continue to develop sought-after products, will continue to develop cutting edge technology, will continue to make the right guesses about which way the market is going to go, will continue to make sound investments, is the people and the organizational culture and structure.

Personal Success Factors When you first get a job, it is usually because of your technical skills. By "technical" I don't mathematical or computer. I mean the nuts and bolts of your profession. For example, if you get a job as an artist, it's because you can paint (or sculpt or whatever). If you get a job as a marketing researcher, it's because you (appear to) know about marketing research methods, such as survey construction, sampling, and statistics. Now, some people stay in technical positions all their lives. But others move on to manage people. Their technical skills don't matter as much anymore (especially since technology keeps changing). What does matter is their ability to manage people. And that's what O.B. is about. Ten years out of school, the one business course that manager say they wish they had paid more attention to is Organizational Behavior.

Another important aspect of OB is the understanding that it gives you of organizational structure and process. Understanding how organizations really work, is key to rising to the top levels of management. Most people who work in organizations come to understand the politics and issues in their own departments. But they don't get much opportunity (and often don't even think about) what happens in the rest of the organization. People trained in organizational behavior have the jump on those people, because they already understand a great deal about what makes organizations tick. Hence, their presentations, their political moves, their organizational initiatives are all in better tune with the organization as a whole, and are more apt to be admired by people higher in the organization.

What is OB?

The discipline of Organizational Behavior encompasses three broad areas: 1. The Behavior of People in Organizations OB draws on psychology, anthropology and sociology to gain insight into the behavior of individuals in organizational settings. Topics studied include:
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perception, cognition, learning personality and motivation leadership, power, conformity, communication decision making

2. Organizational Structure Organizations consist of people organized to achieve organizational goals (like manufacture cars). One of the most important strategic elements of an organization is its structure: how the people are arranged so as to produce what the organization produces. Topics include:
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task identification and division of labor departmentation coordination and control mechanisms processes and procedures, such as promotion, hiring policies, compensation organizational form (e.g., bureaucracy) size centralization of decision-making the relationships among these variables

3. Behavior of organizations Just as we can study the interactions of individuals with the organization and with each other, we can also study the interactions of organizations with their environments, which include individual citizens and other organizations including the government. Some of the behaviors of organizations that we are interested in include:
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adoption of new practices such as 1. downsizing 2. team-based structure 3. domestic partner benefits (e.g., partners of gay employees get full medical coverage) 4. re-engineering 5. environmental protection ("green" practices) adaptation to changing conditions 1. global competition 2. increasing pace of technological change 3. changing social structure (e.g., status of women)

As part of these investigations, we study such things as:

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the position or organizations in the economic food chain (organization A sells to organization B, which sells to organization C and so on): an economy is like an ecosystem, and an organizations position in the economy is their ecological niche the influence of stakeholders on organizations

Coordination

Based loosely on the discussion in Mintzberg's Structure in Fives: Designing Effective Organizations.

Any collection of people that is faced with accomplishing some complex task faces two issues: how to divide up the labor, and how to coordinate their efforts. How this is done is the heart of what we mean by organizational structure. Division of Labor

There are two aspects of this issue. First, there are technical aspects of the task which determine in what way and to what extent you can break up the task into subtasks that can be performed by a single person. This often determines what jobs or positions may exist in the organization. There is some discretion here, but in general there is not a lot that an organization can do to change how this is done short of adopting a different technology altogether. Second, there is the allocation of people to jobs. People have different competencies, and are better placed in certain jobs rather than others. They also have different interests, and so have different levels of motivation for different jobs. Placing people in the right jobs is a crucial strategic issue. Misusing talent, such as promoting the best engineer in the company to a pure management job that he or she has no interest or competence in, is a waste at best and dangerous at worst. As organizations enter the 21st century, the source of competitive advantage is increasingly human resources. This may sound strange in a technological age where machines do more and more of the work, but it is precisely technology that creates this dependence on human resources. This is because technology is knowledge-driven. It is all about understanding how things work and being able to exploit that knowledge to solve client problems. The most important resource most organizations have is human smarts (exceptions are oil companies and other natural resource exploiters). Given that the key problem in division of labor is the assignment of people with certain competencies and interests to tasks, part and parcel of the division of labor is the notion of specialization. Suppose you are xeroxing a set of student papers. Let's say there are 21 people in the class and each one has written a 5-page paper which has been stapled together. Now you want to make a copy of every paper to give to every other student and the professor so that everyone can critique everyone's paper (what a nightmare!). That's 21 copies of 21 5-page papers that have to xeroxed and then stapled together (because the stapler built into the copy machine never works). Suppose you have two assistants (so there's three of you doing this). There are two obvious ways to divide up the labor. One is to give each person seven of the papers and then have them each do three steps on their seven papers: 1) unstaple the originals; 2) make 21 copies; 3) staple each of the copies. Assume that you have only one Xerox machine. So everyone starts unstapling their originals. Then, one person gets to use the Xerox while the others wait. When she's through, she starts stapling the copies while another person starts Xeroxing. This could take quite awhile. The other way to divide up the labor is to have everyone unstaple, then one person starts xeroxing, another person starts stapling a moment later, and the third person ferries new copies from the Xerox to the stapler. This could be done much faster than the other way. This is the method of specialization into jobs or roles.

(At this point, you might want to look at the handout on departmentation. You'll see that these two ways of dividing the labor correspond to departmentation by product/market (the first one) and by function (the second one).) Note that one of the reasons why the second method works better is that there was only one Xerox machine. What if there had been three Xerox machines? Well, then there wouldn't be so much difference between the two methods of dividing up the labor, though it is probable that the second method would still be a bit faster. One reason is that by restricting each person's job to just one task which is performed repetitively, you eliminate switching time (finding the unstapler, then moving the stuff over to the Xerox, then moving it all back, etc.). Another reason is that when people do one thing over and over again, they get really good at it. They have a chance to develop job competency. In combination with pairing up people who have certain talents with the jobs that need those talents, this can really result in productivity gains. Notice that I haven't even mentioned the really slow way to do this task: each person takes each copy all the way through the process. In other words, she starts with the first original, unstaples it, then makes one Xeroxed copy, then staples that. Then she makes another copy, then staples that, and so on twenty-one times. Then starts with the second original. Nobody would do it this way because we automatically group similar tasks together to be done consecutively. Coordination There are three basic coordinating mechanisms: mutual adjustment, direct supervision, and standardization (of which there are three types: of work processes, of work outputs, and of worker skills).

Mutual Adjustment This mechanism is based on the simple process of informal communication. It is used in very small companies, such as a 5-person software shop, or for very, very complicated tasks, such as putting the first person on the moon. Mutual adjustment is the same mechanism used by furniture movers to maneuver through a house, or paddlers to take a canoe downriver, or jazz musicians playing a live engagement. It's especially useful when nobody really knows ahead of time how to do what they're doing. Direct Supervision Achieves coordination by having one person take responsibility for the work of others, issuing instructions and monitoring their actions. An example is the offensive unit of a football team. Here, there is marked division of labor and specialization, and the efforts of the players are coordinating by a quarterback calling specific plays.

If the organization is large enough, one person cannot handle all the members, so multiple leaders or managers must be used, then the efforts of these people (the managers) are coordinated by a manager of managers, and so on. Standardization A third mechanism of coordination is standardization. Here, the coordination is achieved "on the drawing board", so to speak, or "at compile-time" if you like, not during the action or "run-time". The coordination is pre-programmed in one of three ways: Work Processes. An example is the set of assembly instructions that come with a child's toy. Here, the manufacturer standardizes the work process of the parent. Often, the machinery in a factory effectively standardizes work by automatically providing only, say, blue paint when blue paint is needed, and only red paint when red paint is needed. Outputs. Standardized outputs means that there are specifications that the product or work output must meet, but aside from that the worker is free to do as they wish. Stereo equipment manufacturers have a lot of freedom in designing their products, but the interface portions of the product (the connections to other stereo devices like CD's, speakers, tape-recorders, etc.) must be the same as everyone else's, or else it would be hard to put together a complete system. Worker Skills. Professional schools, like medical schools, law school, business school, produce workers that do stuff exactly the same way. How do you treat a staphyloccocus infection? You use one of the following antibiotics. It's a series of recipes that are memorized. Employers (e.g., hospitals) can rely on these employees (physicians) to do things the standard way, which allows other employees (e.g., nurses) to coordinate smoothly with them. When a surgeon and an anesthesiologist meet for the first time in the operating room, they have no problem working together because by virtue of their training they know exactly what to expect from each other.

Fitting Coordinating Mechanisms to Tasks Simple tasks are easily coordinated by mutual adjustment. As organizational work becomes more complicated, direct supervision tends to be added and takes over as the primary means of coordination. When things get even more complicated, standardization of work processes (or, to a lesser extent, of outputs, or of skills) takes over as primary, but in combination with the other two. Then when things become really complicated, mutual adjustment tends to become primary again, but in combination with the others.

Departmentation (Grouping)

One reason organizations exist is to do things that would be hard for one person to do by themselves. For example, it's hard to conceive of one person building an office building. Instead, we have organizations of thousands of people with diverse skills that work together to build buildings. However, coordinating, controlling and just keeping track of a lot of individuals introduces its own problems. One way to solve these problems is to create a hierarchical system of supervision, so that small groups of workers (up to say, 50 people) are supervised by coordinators (managers). Depending on how many people there are in the organization, the coordinators themselves need to be organized into groups supervised by higher level managers, and so on. Part and parcel of this hierarchical supervisory system is the cutting up of the organization into groups (departments). The question arises: On what basis should we carve up the members of the organization into subunits? What would happen if we did it randomly, without regard for tasks? One problem would be that each manager would have to be aware of what needed to be done in every area of the organization, in order to direct his/her workers. This would be impossible in most cases. Common Bases For Departmentation What organizations actually do is group people in a way that relates to the task they perform. This still leaves a lot of possibilities. Here are six common bases for departmentation: 1. Knowledge and Skill. People are grouped by what they know. For example, hospitals have departments like Neurology, Allergy, Cardiology, Internal Medicine, GastroEnterology, etc.

2. Work Process. Workers are grouped based on the process or activity used by the worker. For example, a manufacturing company may create separate casting, welding and machining groups. Often, it is the underlying technology that determines the departmentation. For example, a print shop may have separate letterpress and offset departments -- two different processes for getting the same outputs. 3. Business Function. Grouping by the basic function in the organization: purchase supplies, raise capital, generate research, etc. This leads to the familiar departments of manufacturing, marketing, engineering, finance, and so on. 4. Time. When work is done. For example, shifts in a factory or hospital or hotel. 5. Output. Grouping based on the products or services that the employee works on. For example, a manufacturer may have different divisions for each of its product lines. 6. Client. Grouping based on the type of clients their work is ultimately sold to. For example, computer companies often have different sales departments for home, small business, educational, government and large business customers. 7. Place. Groups are based on the geographical areas that they serve. For example, during WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the world where the US was fighting. Similarly, Post Offices are often divided by regions and zipcodes. Actually, some of these (like #1-Knowledge and #2-Work Process) can be impossible to distinguish. In general, it is more useful to think in terms of two basic categories, which are generally called function and market, but which you might think of as Means and Ends. Here's how the seven categories above fall into the two supercategories, along with some other information about the two categories: Means (Function)
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Ends (Market)
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Specific Types

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knowledge & skill work process business function time

Output Client Place

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Kinds of Companies

small organizations of various kinds large-scale manufacturing assembly line production professional bureaucracies: universities, hospitals

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Often found in really big orgs and multinationals divisionalized forms & conglomerates Orgs with high product line heterogeneity Orgs in fast moving industries Orgs with extra resources

available, like Microsoft

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Strengths

Works well with smaller organizations Groups skill sets so they can consult with each other and socialize each other: put all the accountants together, all the factory workers together, etc. Avoids duplication of efforts: just one HR dept., one operations division, etc. Allows economies of scale: single purchasing dept. can order large quantities of paper for all parts of the organization

Allows different parts of org to evolve in different ways at different speeds to adapt to the complex environment Some sense of ownership of product: in effect creates many small companies responsible for one small product. Sense of belonging to team and of common fate.

Weaknesses

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Does not create sense of ownership/responsibility for final product: Encourages finger-pointing: "not my department" People in different functional areas dont understand the whole, nor other parts

Can create significant duplication of effort and knowledge throughout org. Innovations don't spread: brilliant new time management system in one division is unknown in other divisions No economies of scale

Matrix & Project-based Organizations An attempt to organize company according to both function and market dimensions simultaneously, so that each person belongs to both a functional department and a product/market department. Some people therefore report to two bosses.

The big advantage of matrix organizations is that they are great for sharing of information and enabling people to coordinate their efforts with larger organizational goals and strategies. The problem, of course, is that having two bosses can be confusing, and is a situation that is easily exploited by subordinates, who can pit their bosses against each other. The subordinates can also be unwitting victims of power struggles among the bosses. The matrix form works best when one dimension is a permanent affiliation (typically functional), and the other is a temporary dimension, such as a client project. So a person is, say, a marketing research analyst, and is presently assigned to the Carnation project, which will take 6 weeks, and will then be assigned to the R.J. Reynolds project, and so on. Criteria For Choosing

An organization can divide itself into departments any way it wants using any criteria it wants -there is no law about it. It doesn't have to be rational. However, there is a theory (developed by James Thompson) about what is the best way to do it. According to the theory, there are 4 basic rational criteria for choosing the bases for departmentation:

1. Work-flow interdependence. This refers to the flow of product from person to person as it is being constructed. There are four kinds of increasingly tight interdependence:
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pooled: sharing of resources and consequences only. In other words, the positions have really nothing to do with each other, they are only interdependent in the general sense of being part of the same company, so they are funded by the same budget. sequential: work is fed from one position to the next, like an assembly line reciprocal: work passed back and forth between a pair of positions/tasks team: work flows around and through a network of positions, like the ball in a basketball game.

Now here is the key idea: where work-flow interdependence is critical, rational organizations try to group tasks/positions together which are more tightly interdependent. That is, operations which are team-interdependent should be grouped first (i.e., at the lowest levels in the organization), operations that are reciprocal-interdependent should be grouped second, and so on. This is illustrated in the figure below, which gives the organization chart of a hypothetical manufacturing organization.

Counting from the bottom up, the first and second groupings are by work process, the third is by business function, and the fourth is by output (product). Now think about it in terms of interdependencies. The tightest interdependencies are between the turning, milling and drilling operations. These are team or reciprocal interdependencies. So they are the first to be grouped together (under "General Foreman: Fabricating"). The next tightest interdependencies are the sequential interdependencies between fabrication and assembly, since first you make the materials, then you assemble them. So these are grouped together under "Manager: Manufacturing". There are also sequential interdependencies between the business functions of design (engineering), manufacturing, and marketing. So at the next level up, we merge all of these under "Vice-President: Snowblowers". Above this level, most of the workflow interdependencies are only of the pooled variety: the snowblower department really has little to do with the frostbite remedy department, except that they all dip into the same general pool of organizational resources (capital, management talent, physical assets, etc.). 2. Process interaction. This refers to consultations among people about how to do things. For example, lawyers in a corporation consult each other to take advantage of specialized skills and to develop a common approach to things.

3. Economies of scale. Groups formed in order to achieve economies of scale. For example, if each department in a factory has a maintenance person, it may be inefficient because the small departments don't have quite enough work for a fulltime maintenance person, while the big departments have too much. This approach also encourages specialization, as within a central maintenance department there can be specialists for different kinds of problems. 4. Social considerations Groups are formed in order to minister to people's social needs. This often leads to functional groupings because people are comfortable with their "own kind" (as in technical people prefer technical people, sales types like sales types, etc.). Often there are individual concerns, like two people who don't get along, the force certain departments to be placed under other departments, or not placed under certain departments. Communication Structure and its Effects on Task Performance

The formal organization chart of a bureaucratic organization can be thought of as a network. It is a directed graph (a non-symmetric network) that records the social relation "reports to" (or, if you prefer the arrows to go downward, "is the boss of"). That social relation tends to channel a lot of the communications within an organization. For example, a lot of prescriptive information (i.e., do this, stop doing that) flows downward along the links. It's unusual, and can cause problems, when prescriptive information moves in a different pattern, such as from a boss to someone else's subordinate, or among peers, or from a subordinate to a supervisor. At the same time, a lot of descriptive ('this is the status of such-and-such project') flows up the links, often in the form of reports. The formal organization also determines a lot of other communication as well. For example, most roles (jobs) within an organization are interlinked, forcing occupants of those roles to interact with others playing their own roles. For example, the personnel department, like the payroll department, generally has to interact with all employees. People in the marketing research department work closely with people in the marketing department, who also work with people in the new product development department. In addition to these formally prescribed communications, there are also multitudes of informal communications, ranging from getting technical advice to sexual harassment. Some of these are

affected by the official organizational structure (e.g., most communication occurs between people whose offices are within 50 feet of each other) and others are not. Given that there are many ways to structure communication in an organization, the question arises how the pattern of communications within the organization affects the performance of the organization -- its ability to sell products, reduce costs, adapt to changes in environment, etc. In other words, what is the best communication structure? One way to investigate this question is to perform controlled lab experiments. This is what Alex Bavelas and his student Harold Leavitt did at MIT in the late 40s and 50s. The Leavitt Experiment Basically, the experiment had 5 people play a game somewhat similar to Clue in which they have to solve a puzzle. At the start of the game, each person is given a key bit of information. In order to solve the puzzle, everyone's bit of information must be pooled together. The players communicate with each other, transmitting what information they have, until the puzzle is solved. Unlike Clue, the idea is for every single player to get the answer. The faster, more efficiently they can do it, the better. Setup Each person is put in a uniquely colored cubicle (this is before computers are invented). They are given colored stationary matching their cubicle. There are slots in the wall where they can send and receive messages. At the start of each game, each person is given 5 symbols chosen from a set of six. The objective is to discover which symbol they all have in common. Each cubicle has 6 switches on the wall, labeled by the symbols. When a player learns the answer he (they were all men) flips the switch corresponding to the symbol he believes everyone has in common. The experimenters record the time when that happens. When all 5 subjects have flipped a switch, the experimenter calls a halt to the game and records whether they got it right. If the game has not yet been halted, a subject could change his answer if he likes. Subjects are free to write anything they like on the their messages, and to send as many or as few as they like. The cubicles do not all contain the same number of slots. Some cubicles might have just one slot, which would mean that the subject in that cubicle could only message one person (whoever is at the other end of the tube). The slots serve to restrict communications into certain patterns. Five separate patterns were tested: the star (wheel), the Y, the chain (line), and the circle. The subjects were not told what pattern they were in, or even that they were in a pattern.

The same set of subjects played the game in the same positions 15 times. Results Time. The star and Y were considerably faster, on average, than the chain and circle. Messages. The star and Y used the least number of messages. The chain was next, then the circle (which used quite a bit more). Errors. An error was defined as the throwing of an incorrect switch before the end of a game. The star, the Y and chain made the fewest errors, while the circle made the most (however, the circle had the most error corrections). Satisfaction. The subjects in a the circle network enjoyed themselves the most, followed by the chain, the Y and finally the star. Leadership. The probability of opining that the group had a leader went up in the order: circle, chain, Y, and star. In addition, agreement as to who was the leader increased in the same order (it was 100% in the case of the star). Improvement. Circle people were very likely to say that they could have done things more efficiently and that was missing was "a system". Star people did not feel they could improve much. Discussion Which structure should have been the fastest? Theoretically, the star can solve the puzzle in a minimum of 5 time units, the Y in 4, the chain in 5, and the circle in just 3. How do you figure this? Consider the star:

At time 1, persons 2, 3, 4, and 5 can send their information to person 1, so at the end of time 1, person 1 knows all the information and therefore (presumably) the answer. At time 2, person 1 can send the answer to person 2. At time 3, person 1 can send the answer to person 3. At time 4, person 1 can send the answer to person 4. And finally, at time 5, person 1 can send the answer to person 5. So, given that you can't send stuff simultaneously to more than one person at a time, it takes a minimum of five units of time for this configuration to solve the puzzle.

Now consider the Y. At time 1, persons 2, 3 and 4 send their info to person 1, while person 5 sends to person 4. At time 2, person's 1 and 4 exchange what they know, so know both of them know everything. At time 3, person 1 sends the answer to person 2, while person 4 sends the answer to person 5. At time 4, person 1 sends the answer to person 3. So it takes the Y only 4 units of time, at minimum.

Now, the circle is more complicated to figure out, so I will use multiple figures to explain it. At time 1, persons 5 and 2 send to person 1, person 1 sends to person 2, and persons 4 and 3 exchange their information, so that at the end of time 1, here is what each person knows:

End of Time 1 (The numbers in the parentheses indicate whose information a person has at the end of the round. Person 1 has {1,5,2} which means they have obtained the information that 2 and 5 had, plus their own.) Now, in Time 2, person 1 sends their info to person 5, person 4 also sends to person 5, person 3 and person 2 exchange information. At the end of Time 2, person 5 knows the answer, but no one else does:

End of Time 2 In time 3, persons 3 and 4 exchange their information (so both know the answer), and persons 1 and 2 exchange their information, so each of them knows the answer. Since person 5 already knew the answer, the round is over. So the circle should have been the fastest. However, the actual experimental results were exactly the opposite. Now, it's easy to think: 'big deal: people are not computers. they don't necessarily do things in the mathematically most efficient way.' But if that were all there was to it, none of

the structures would have performed consistently better than the others. There is clearly SOME effect of structure on performance, just not the one we expected. So what is the relationship? According to Bavelas and Leavitt, it's centralization. The more centralized a structure is, the better it performs. They use "centralization" to refer to the distance nodes are from the most central node, who acts as an information integrator. The closer everyone is to that integrator, the faster the puzzle is solved. Of course, channeling all information to a single integrator is not the only possible strategy for solving problems. But it is a reasonable strategy that is easy to implement and which works well with simple problems. Another feature of centralized systems is that the most central node is clearly more central than all the other nodes. This makes clear who is the leader, and also makes the funnel-everything-toan-integrator strategy more obvious. So centralized systems don't waste time searching for a strategy nor vying for leadership: they just do it. Later research, however, has shown that centralization is not always optimal. The next table shows under which conditions and criteria centralized vs decentralized systems are best. Variable Simple Task Complex Task centralized decentralized decentralized

Fewest messages: centralized Least time: Least errors: centralized centralized

Most satisfaction: decentralized decentralized

Centralized systems don't work as well as decentralized systems with complex tasks because some problems are too big for an individual to handle: the whole idea is to use the entire organization as a distributed processing unit to solve problems that no one person could possibly handle. This is similar to the classic argument for the superiority of capitalism (decentralized) over communism (centralized). Also, with large systems (many nodes) central nodes can be overwhelmed with communications. In addition, in such systems, most of the network remains idle while waiting for information to filter back from the center.

Positional Analysis Leavitt also analyzed the data by position in the network -- i.e., by node. He found that: 1. The most central positions send the most messages 2. They enjoy their jobs more 3. The most central positions send fewer organizational messages and more informational/solution messages. (and in highly centralized networks, the most central nodes send few informational messages vs solution messages) Leadership An interesting implication of the Bavelas-Leavitt research is that one path to leadership is centrality. In the past, many people have assumed that leadership is a personality trait that a person is born with or at least develops over a long period of time. Since in the experiment people are placed in the central position randomly, it is apparent that there are time when it is positional centrality that determines leadership, and not any enduring personality characteristic. Structure and Cognition In these experiments, it was initially thought that the winning networks would be those whose pattern allowed the spread of information in the minimum time. This is a structural characteristic. However, it turned out that another structural characteristic, centralization, seemed to have more effect. One possible reason for this is that in the centralized systems, the number of possible patterns of communication was much smaller. People were more or less forced to adopt a certain strategy for solving the problem. In contrast, for the circle, there were many many possibilities, only a few of which worked well. Even if they all worked well, it was much harder for people to choose one strategy and stick to it. It is often the case in organizations that a satisfactory strategy that is easy to find, implement and stick to is superior to an optimal strategy that is hard to find, hard to implement, and hard to stick with. It is also helpful if the strategy that a structure pushes people towards is one that people are naturally positively disposed towards. For example, people readily understand leadership. It is much harder to understand the system which, in the circle, would actually lead to much faster performance than the integrator strategy. This strategy of choosing a satisfactory rather than optimal solution is known as satisficing, and is an important concept in organizational theory. It is part of a larger conception of organizations as systems that overcome human cognitive limitations -- a condition known as bounded rationality. The idea of bounded rationality is that people are intendedly rational, but they can't

really be rational because they can't consider all the possibilities. There isn't enough time, nor information, nor the brains needed to sort it all out. Scientific Management

Frederick Taylor was a foreman at Bethlehem Steel Works at the turn of the century. Developed a discipline called scientific management, which included a technique called time and motion studies, which revolutionized productivity in many industries. Taylor dealt with the problem of how to get more out of workers. One principle he relied on was piecework. This is where you get paid by the number of X that you produce. Part of the manager's job, in Taylor's mind, was to analyze tasks and break them down in such a way that you could pay people on a piecework payment plan. Another Taylor principle was that the manager does the thinking and the worker does the physical labor. He felt that if you let the worker the thinking, he would not do as good a job as someone who is a specialist in thinking. In particular, the worker would not figure out the best way to do the work. But a manager could analyze the task and figure out scientifically the best way to get it done. The most famous example is moving pig iron (crude iron that comes in pieces called "pigs" weighing about 92 pounds). The task was simple: to take pig iron from the blast furnace and carry it up a plank onto a railroad car. Taylor studied the men as they did this. At the time, good workers were able to move about 12 tons per day. Based on some elementary bio-mechanical analysis of energy expenditure and efficiency, Taylor calculated that a man in good condition should be able to move 47 tons a day. Now, he knew that simply telling the workers that this was now going to be the new norm would not work. Even if they were willing, they would surely try to speed everything up, and end up getting tired too quickly, with the possible result of moving even less than 12 tons. Based on his bio-mechanical analysis, Taylor knew that the only way to achieve 47 tons would be to walk at a certain measured pace, to carry it just so, drink water at measured intervals, and to take very frequent but very short breaks, whether the man thought he wanted one or not. So he put the men on a stopwatch, and told them when to move, when to stop, when to breathe, etc. The very first day, his first subject moved 47 tons. A key lesson he drew here was the worker himself does not have the means to figure out the best way to do the job. Instead, he does it the way it has always been done, which is not necessarily the best way. So he advocated a strong division of labor between management (thinking) and

worker (doing). It is the manager's job to fully understand the worker's task, and to plan a method of doing it, and then forcing the worker to do it that way. Taylor felt that workers' attempts to do things their own way were detrimental to the company and to the worker (since they would accomplish less and get paid less). He said that a trained gorilla would make a better worker than most humans. Today, this sounds offensive and that sort of attitude would not get very far. Furthermore, the basic focus on the needs of the tasks rather than the needs of the persons has not been in vogue over the last 20 years. Just now, however, as re-engineering gains popularity, the focus is shifting once again on structure over people as the variable to manipulate to improve performance. Henri Fayol

Fayol was a key figure in the turn-of-the-century Classical School of management theory. He saw a manager's job as:
y y y y y

planning organizing commanding coordinating activities controlling performance

Notice that most of these activities are very task-oriented, rather than people-oriented. This is very like Taylor and Scientific Management. Fayol laid down the following principles of organization (he called them principles of management): 1. Specialization of labor. Specializing encourages continuous improvement in skills and the development of improvements in methods. 2. Authority. The right to give orders and the power to exact obedience. 3. Discipline. No slacking, bending of rules. 4. Unity of command. Each employee has one and only one boss. 5. Unity of direction. A single mind generates a single plan and all play their part in that plan. 6. Subordination of Individual Interests. When at work, only work things should be pursued or thought about. 7. Remuneration. Employees receive fair payment for services, not what the company can get away with.

8. Centralization. Consolidation of management functions. Decisions are made from the top. 9. Scalar Chain (line of authority). Formal chain of command running from top to bottom of the organization, like military 10. Order. All materials and personnel have a prescribed place, and they must remain there. 11. Equity. Equality of treatment (but not necessarily identical treatment) 12. Personnel Tenure. Limited turnover of personnel. Lifetime employment for good workers. 13. Initiative. Thinking out a plan and do what it takes to make it happen. 14. Esprit de corps. Harmony, cohesion among personnel. Out of the 14, the most important elements are specialization, unity of command, scalar chain, and, coordination by managers (an amalgam of authority and unity of direction). Bureaucracy

The last century saw the perfection of the bureaucracy -- a form of organization that has been enormously successful and is the result of thousands of years of trial and error evolution. Max Weber outlined the key characteristics of a bureaucracy: 1. 2. 3. 4. 5. 6. 7. specification of jobs with detailed rights, obligations, responsibilities, scope of authority system of supervision and subordination unity of command extensive use of written documents training in job requirements and skills application of consistent and complete rules (company manual) assign work and hire personnel based on competence and experience

Today, many of these principles seem obvious and commonplace. However, they are all inventions --- organizations did not always have these features. Today we also think of bureaucracies as inefficient, slow and generally bad. In Weber's time, they were seen as marvelously efficient machines that reliably accomplished their goals. And in fact, bureaucracies did become enormously successful, easily outcompeting other organization forms such as family businesses and adhocracies. They also did much to introduce concepts of fairness and equality of opportunity into society, having a profound effect on the social structure of nations.

However, bureaucracies are better for some tasks than others. In particular, bureaucracies are not well-suited to industries in which technology changes rapidly or is not yet well-understood. Bureaucracies excel at businesses involving routine tasks that can be well-specified in writing and don't change quickly. Weber's Rational Bureaucracy (this discussion based on the discussion in "The Organizational Age" by Rodney Stark in Sociology, 3rd Edition) At the turn of the century a sociologist named Max Weber began to study the new forms of organization being developed for managing large numbers of people in far-flung and complex activities. Since he was German, he was very familiar with Moltke's development of the General Staff (see course packet material on 19th Century Bureaucracies). Furthermore, Germany had been an early leader in developing a civil service. At the same time, German industry was beginning to adopt the organizational methods developed in the United States. Surveying this scene, Weber attempted to isolate the elements common to all of these new organizations. Weber concluded that all these new large-scale organizations were similar. Each was a bureaucracy. Today many of us regard bureaucracy as a dirty word, suggesting red tape, inefficiency, and officiousness As we shall see, bureaucracies can develop these features, especially if authority is highly centralized. Weber's purpose, however, was to define the essential features of new organizations and to indicate why these organizations worked so much better than traditional ones. Let us examine the features that Weber found in bureaucracies. Above all, Weber emphasized that bureaucratic organizations were an attempt to subdue human affairs to the rule of reason-to make it possible to conduct the business of the organization "according to calculable rules." For people who developed modern organizations, the purpose was to find rational solutions to the new problems of size Weber saw bureaucracy as the rational product of social engineering, just as the machines of the Industrial Revolution were the rational products of mechanical engineering. He wrote: "The decisive reason for the advance of bureaucratic organization has always been its purely technical superiority over any former organization. The fully developed bureaucratic mechanism compares with other organizations exactly as does the machine with non-mechanical modes of production." [Weber, 1946]. For Weber the term bureaucracy was inseparable from the term rationality. And we may speak of his concept as a "rational bureaucracy" But what were the features developed to make bureaucracies rational? We have already met them: (1) functional specialization (2) clear lines of

hierarchical authority, (3) expert training of managers, and (4) decision making based on rules and tactics developed to guarantee consistent and effective pursuit of organizational goals. Weber noted additional features of rational bureaucracies that are simple extensions of the four just outlined, To ensure expert management, appointment and promotion are based on merit rather than favoritism, and those appointed treat their positions as full-time, primary careers. To ensure order in decision making, business is conducted primarily through written rules records, and communications. Weber's idea of functional specialization applies both to persons within an organization and to relations between larger units or divisions of the organization. We have already seen how this applied to Swift & Co. Within a Swift packing plant, work was broken down into many special tasks, and employees were assigned to one or a few such tasks, including the tasks involved in coordinating the work of others. (Such coordination is called administration or management.) Furthermore, Swift was separated into a number of divisions, each specializing in one of the tasks in the elaborate process of bringing meat from the ranch to the consumer. Weber argued that such specialization is essential to a rational bureaucracy and that the specific boundaries separating one functional division from another must be fixed by explicit rules, regulations, and procedures. For Weber it was self-evident that coordinating the divisions of large organizations requires clear lines of authority organized in a hierarchy. That means there are clear "levels of graded authority." All employees in the organization must know who their boss is, and each person should always respect the chain of command; that is, people should give orders only to their own subordinates and receive orders only through their own immediate superior In this way, the people at the top can be sure that directives arrive where they are meant to go and know where responsibilities lie. Furthermore, hierarchical authority is required in bureaucracies so that highly trained experts can he properly used as managers. It does little good to train someone to operate a stockyard, for example, and then have that manager receive orders from someone whose training is in advertising. Rational bureaucracies can be operated, Weber argued, only by deploying managers at all levels who have been selected and trained for their specific jobs. Persons ticketed for top positions in bureaucracies are often rotated through many divisions of an organization to gain firsthand experience of the many problems that their future subordinates must face. [Recall how Moltke rotated his General Staff officers through various regiments.] Finally, Weber stressed that rational bureaucracies must be managed in accordance with carefully developed rules and principles that can be learned and applied and that transactions and decisions must be recorded so that rules can he reviewed. Only with such rules and principles

can the activities of hundreds of managers at different levels in the organization be predicted and coordinated. If we cannot predict what others will do, then we cannot count on them. Moltke had to be sure that staff officers faced with an unexpected crisis would solve it as he would. To ensure that, officers had to be trained in Moltke's tactical principles and rules. Similarly Gustavus Swift had to know that his stockyards would not buy meat faster than his packing plants could process it or that more meat would not be shipped than his eastern refrigerators could accommodate, of course, it is impossible to spell out detailed rules to fit all contingencies. Therefore, decision makers must be highly trained and must report their decisions promptly and accurately to their superiors. For a long time, Weber's rational bureaucracy model dominated social science thinking about large, modern organizations. If organizations did not operate quite as Weber had said a bureaucracy should, then the solution was to bring them in line with the ideal bureaucratic procedures. However by World War II, sharp criticism of Weber's ideas began to surface. social scientists began to argue that Weber had ignored much of what really went on in organizationsthe conflicts, the cliques, and the sidestepping of rules and the chain of command. The problem, according to Philip Selznick 1948,1957), lay in the fact that bureaucracies were not and could not be like machines because they consisted of human beings. In the final analysis, people will simply not imitate machines. Informal The Hawthorne Studies Organizational Structure

The big contribution of the late 19th century to organizations was the notion of rationality. The essence of what Weber, Fayol, Taylor and all those other classical theorists were saying was try to organize in a rational manner. Rather than make your brother vice-president of finance, put in somebody who is actually qualified to do the job. Instead of moving pig-iron the traditional way, work out the bio-mechanics of it and develop a work style that maximizes output. A part of this rationalist perspective (particularly Scientific Management) was a simple motivational theory, based ultimately on Adam Smith and utilitarianism. The idea is that people work best when they are maximizing self interest. Which was interpreted to mean money. But there is more to formal organizations than purely formal behavior, and more to human motivation than just pay. Human beings are social animals. We need to hang around with others. We like to be liked by others. We don't like to be the person that nobody likes. We also like respect and power and autonomy. So there are other needs that workers need to fill besides the ones that money buys.

Whenever a set of people get together and starts interacting on a long term basis, they start to form an informal group. An informal group is more than just a collection of people. Groups have internal social structure based on dominance and friendship relations. There are social leaders. There are hangers-on. Organizations contain lots of informal groups. Their existence -- and importance -- really came to light in the 1920's and '30s at the Hawthorne plant of the Western Electric Company in Chicago, studied by Elton Mayo, Roethlisberger and Dickson, from MIT. They started out studying ways of improving worker productivity, partly in the tradition of Taylor, and partly as a reaction to Taylor because one effect of Taylorization was tremendous morale problems among workers. Their experiments were in 3 phases, called the illumination, relay assembly, and bank wiring room studies respectively.

Illumination The first experiments were with illumination - lighting in the factory. It was thought that workers might work better when there was more light, but light was very expensive, so they needed to find the optimum level to satisfy both requirements. They assigned workers making induction coils to 2 groups: test and control. Both started same amount of light. Then the Test group was given more light. Productivity went up. unfortunately, it also went up in the control group. So then they increased the light in the group again. Once again, productivity went up or stayed the same in both groups. Again raised the light level, and again the same result. with But, Test they

So then they reduced the lighting in the Test group way down, below the level in control group. Productivity soared in the Test group, and continued to go up in the control group. They reduced light some more: same result. They finally got down to a level of light equivalent to a moonlit night, and found that productivity was still the same or higher. This really confused the researchers. As one of the researchers put it at the time, they were "knocked galley-west" by the results. They finally took two workers and put them in a closet with no light at all -- just the crack under the door. Productivity was just fine. They had to conclude that light didn't seem to matter in the way they expected. And there was something very strange about why output kept going up relative to the rest of the factory. So they planned a more elaborate experiment.

Relay Assembly Test Room The second experiment was the relay assembly test room. Six women who assembled telephone relay switches were taken out of the main area and placed in special test room where they could be observed. All immigrants (as were most factory workers). It was a 5 year experiment. Productivity was measured the whole time by a machine that counted the number of relays that each person assembled as she dropped it down a little chute. They gauged the effects of rest pauses, shorter work days, shorter work weeks, wage incentives and different supervisory practices on output. The results were just like the results of the lighting experiment. No matter what change they introduced, it always seemed to either have no effect, or it improved productivity, even when the change was just returning the variable to its original state! As a result of these two studies, the Hawthorne team theorized that there was a key variable that managers had been ignoring, which had to do with workers' relationships, attitudes, feelings, and perceptions. By separating people into groups and then making lots of changes in working conditions, the researchers inadvertently did two things: 1. Made workers feel like management actually cared about them. They felt important and special. This is a problem with the experimental design. 2. They created bonds among people in the test and control groups -- in effect turning them into true groups as described above. People work better when they are part of a clear social structure. So an important conclusion (in spite of the experimental design problem) was that people did not necessarily behave according to models of economic rationality. Social processes within the group that formed were much more important than purely material gains. Also, even material goods or physical events or wages or work hours etc. were perceived differently by different people in different situations and so it's not so much the money or the hours themselves that matter, it's what meaning they hold for people, and meaning is something that is socially mediated. The group affects how the individual interprets things. An example occurs in the next phase of the experiments, the bank wiring room, where it turned out that workers conferred a lot of meaning on which chair people occupied (front or back of room). The front of the room was higher status. This was not something that management was even aware of. But it affected relationships among people in the room.

To really understand employee grievances, complaints, squabbles requires understanding employee's position in the group social structure. Employee complaints are subjective: they can't be treated as objective facts. Often, they are symptoms of other issues that may have little to do with the complaint itself. For example, suppose a worker refuses to be moved to another desk, claiming that the light isn't as good and it smells there. But it's really that that area is where the people of the out-group sit, and she's a member of the in-group, and she would rather die than sit with the out-group. If management isn't aware of this, they will simply think she is irrational. The meaning and value that employee assigns to his or her position depends on the degree to which position permits him to fulfill his social obligations to others in the group. A social organization provides a system of values that provide basis of action and satisfaction.

Bank Wiring Room [Maps pertaining to the Bank Wiring Room study are available here] The third phase of the experiments was designed to investigate the social structure of employees. How did it form, what did it consist of, how did it affect productivity, and so on. The room contained 9 wiremen, 3 soldermen, 2 inspectors, and the observer. Each solderman serviced 3 wiremen. wiremen attached wires to panels in a particular order, and soldermen soldered the connections closed. Then the inspectors would test them electrically with some test equipment. Also, among the 9 wiremen, 3 worked only on selectors and the other 6 worked on connectors. The connector stations were located in the front of the room. A basic question asked was, is the informal social structure based on occupations? The answer was "somewhat". For example, connector wiremen were all together at front of room. The men said they preferred connectors to selectors. Supposedly they were lighter to carry but they only had to carry two of them each day, so that sounded like an excuse). It also happened that new men were typically added to back of room. New men were slow, and had low hourly rates. People in front were old hands, more proficient, and therefore more status. So people preferred connectors cuz that's what the more prestigious people were doing. It was found that wiremen had higher prestige than soldermen. New people started as soldermen then became wiremen. Evidence for prestige was in things like who had to get lunch for everyone, some fights over the windows, and bits of conversation.

Another job was trucker: he brought wire and raw materials into the room each day and took away finished terminals. For each terminal who took away, he had to put on an id tag and a stamp. The men called him "goofy" and "gigolo" and would annoy him constantly: spitting on the terminals right where he had to pick them up, jogging his arm just as he was putting on stamp, holding on to the handtruck, tickling him when his hands were full etc. When a new trucker came on, they behaved the same way towards him. Note that it was not exactly in the company manual that wiremen should harass truckers. It was just something that developed. The inspectors reported through a different branch of the organization. They were better educated and wore nicer clothes. In the Bank Wiring room, they were higher status for most things, but considered outsiders. They did not have lunch with others and had no control over windows. Again, it was obviously not something management had mandated. One of main things going on in the room was games: matching coins, lagging coins, shooting craps, card games, bets on combinations of digits in the serial numbers of weekly pay checks, pools on horseracing, baseball, quality records. Also chipped in to buy candy, and they practiced binging (punching each other in the arm), and they did a special kind of arguing that was like a white version of playing the dozens: they would insult each other until somebody got mad. Whoever got mad lost. The games went on basically within two groups: a front-of-room group and a back-of-room group. Other things going on where conflicts over the windows: should they be shut or open? In-group members could control the windows. There was also job trading and helping each other out. A guy labeled w3 by the researchers was the most popular guy. He was also one of the fastest workers and didn't really need any help, but everybody wanted to help him. He didn't reciprocate much but that didn't matter. As in all groups, there were longterm friendships and antagonisms, whose effects come out practically every day. In general, the wiremen were antagonistic to the inspectors and vice-versa. But the men particularly hated I3, and eventually ousted him. In contrast, they liked I1. I1 would point out errors without charging them. The men also hated W5 for squealing on them. In the end, most of the relationships came down to two cliques, each with a hanger-on, and some isolates. The groups included several different professions. They seemed based more on physical closeness than anything else. These groups were recognized by the men themselves. They developed ideas about each other. In private interviews would say things like "we talk about interesting things, those guys in the back just horse around."

The basic determinants of clique membership:

y y y y

not a rate-buster: don't work too much not a chiseler: don't work too little not a squealer: don't let supervisor know anything that could possibly be used against operators not officious: don't act like an inspector

Clique membership/ostracism acted as a form of social control, forcing people to conform to group desires. If a person would have chosen to "disobey" their group, they would have been alone because the other group wouldn't have taken them in. Membership was also used to manage bosses. The men in a group would all stick together on stories, and would fudge reports so as to achieve uniform results. They also covered for each other. The groups established norms regarding output, treatment of supervisor, reciprocity and other interpersonal relations. effective controls and sanctions. But the main thing of course was to keep piece-rates from changing. By having group cohesion, they could resist change. The cliques served as a system for sense-making about organizational events. They developed their own set of beliefs, explaining things to each other like the complicated western electric payment system (which they had completely wrong). Consequently, employee logic didn't always agree with management or rational logic: eg. they restricted their output even though it cost them money. The investigators found that tests of intelligence, manual dexterity, physical health were unrelated to productivity. This means that social factors like norms of productivity overwhelmed any differences in ability among the workers. It should be noted that the social organization of the room had elements of the official structure (like relations between soldermen and wiremen), but also had entirely foreign elements. Overall conclusion: formal organizations are not as formal as they may seem, even if they are bureaucracies. When human beings interact with each other over a long period of time, they develop a social structure that is only partly based on the formal organizational structure.

Summary
y

Formal orgs develop informal groups within them. These informal groups have welldeveloped social structures, histories, culture etc. Group structure and processes serves specific purposes of controlling members, and of protecting group from management.

The informal social structure has as much to do with the way the organization runs as does the formal structure. The informal social structure may or may not work to the detriment of the organization. It is safe to say, though, that it is always in mgmt's interest to understand that social structure, both so that they can predict how workers will react to things, and to manipulate them Organizations serve several functions. o provide society with products/services o provide employment - money for its members o provide a framework for a social system. just like shipwrecks and coral reefs create habitats for millions of fishy creatures, organizations provide social habitats for people.

Introduction to Network Analysis

Social network data consists of binary social relations. That is, it records the presence, absence or strength of relationships among pairs of persons. There are many kinds of social relations. For example:
y

y y y

role-based. o brother of, father of, sister of, etc. o friend of, acquaintance of, enemy of, lover of o teacher of, boss of affective o likes, loves, hates, admires cognitive o is familiar with, knows interactive o has lunch with, sleeps with, talks to, plays games with o buys from, sells to derived o has subscription to the same magazine as, is taller than o distance between flows o moves to, flows to

Mathematically, social networks can be represented as graphs or matrices. In this handout we discuss graphs.

A graph is defined as a set of nodes and a set of lines that connect the nodes. This is sometimes written mathematically as G=(V,E) or G(V,E). Here is one way to draw a graph:

Figure 1. A drawing of a graph.

It is important to keep in mind that the length of the lines does usually mean anything. This is because all it is representing is that there is or is not a relationship. Similarly, the orientation of the drawing means nothing. For example, node e could have been placed in the middle of the drawing -- this would not mean anything different. The only thing that matters is who is connected to whom. There are many synonyms for the terms "node" and "line": Node
y y y

Line vertex point actor

y y y

edge link tie

The nodes in a graph represent persons (or animals, organizations, cities, countries, etc) and the lines represent relationships among them. The line between persons a and b is represented mathematically like this: (a,b). The network drawn above contains these edges: (a,b), (a,e), (a,d), (b,c), and (d,c). There are different kinds of graphs. For example, there are directed and undirected graphs. In undirected graphs, the ties have no direction. For example, in Figure 1 above, there is a

relationship between a and b, and this is the same thing as saying there is a relationship between b and a. We could refer to the line as (a,b) or (b,a) -- it makes no difference. In directed graphs (also known as digraphs), the ties do have direction. In such cases, we typically draw the graph with arrowheads, and refer to the lines as "arcs". For example, consider Figure 2. This might record the social relation "who likes whom". Persons b, d and e all say they like person a. Note that person does not say they like d or e, but they do reciprocate with b. Nobody says they like e.

Figure 2. A drawing of a directed graph.

Graphs can also be valued or non-valued. A valued graph has numbers attached to the lines that indicate the strength or frequency or intensity or quantity of the tie between nodes. For example, Figure 3 might record the amount of trade, in trillions of dollars, between some countries:

Figure 3. Valued graph.

If a line connects two points, they are said to be "adjacent". The two points connected by a line are called endpoints. An edge that originates or terminates at a given point is "incident" upon that point. Two edges that share a point are also said to be incident. A subgraph of a graph is a subset of its points together with all the lines connecting members of the subset. The subgraph of Figure 3 that includes the UK, Canada and Algeria has two lines: (UK, Algeria) and (Algeria, Canada). The degree of a point is defined as the number of lines incident upon that node. In Figure 3, the degree of USA is 3 because it has 3 ties. If a point has degree 0 it is called an isolate. If it has degree 1 it is called a pendant. In a directed graph, a point has both indegree and outdegree. The outdegree is the number of arcs from that point to other points. In Figure 2, the outdegree of node a is 1. The indegree is the number of arcs coming in to the point from other points. The indegree of node a in Figure 2 is 3. A path is an alternating sequence of points and lines, beginning at a point and ending at a point, and which does not visit any point more than once. Two (or more) paths are point-disjoint (also known as vertex-independent) if they don't share any nodes. Two paths are edge-disjoint (edge independent) if they don't share any edges. If they are point-disjoint, then they are definitely edge-disjoint. But if they are edge disjoint, they might not be point-disjoint. A walk is like a path except that there is no restriction on the number of times a point can be visited. A path is a kind of walk. A cycle is just like a path except that it starts and ends at the same point. The length of a path or walk (or cycle) is defined as the number of edges in it. The shortest path between two points is called a geodesic. It is not always unique (that is, there may be several paths between the same two points that are equally short). The graph-theoretic or geodesic distance between two points is defined as the length of the shortest path between them. [If something is flowing through a network (such as gossip, or a disease), the time that it takes to get from one point to another is partly a function of the graph-theoretic distance between them. Nodes that are not far, on average, from all other nodes, tend to receive what's flowing through the network sooner than other nodes. ] A graph is connected if there exists a path (of any length) from every node to every other node. The longest possible path between any two points in a connected graph is n-1, where n is the number of nodes in the graph.

A node is reachable from another node if there exists a path of any length from one to the other. A connected component is a maximal subgraph in which all nodes are reachable from every other. Maximal means that it is the largest possible subgraph: you could not find another node anywhere in the graph such that it could be added to the subgraph and all the nodes in the subgraph would still be connected. For directed graphs, there strong components and weak components. A strong component is a maximal subgraph in which there is a path from every point to every point following all the arcs in the direction they are pointing. A weak component is a maximal subgraph which would be connected if we ignored the direction of the arcs. A cutpoint is a vertex whose removal from the graph increases the number of components. That is, it makes some points unreachable from some others. It disconnects the graph. A cutset is a collection of points whose removal increases the number of components in a graph. A minimum weight cutset consists of the smallest set of points that must be removed to disconnect a graph. The number of points in a minimum weight cutset is called the point connectivity of a graph. If a graph has a cutpoint, the connectivity of the graph is 1. The minimum number of points separating two nonadjacent points s and t is also the maximum number of point-disjoint paths between s and t. A bridge is an edge whose removal from a graph increases the number of components (disconnects the graph). An edge cutset is a collection of edges whose removal disconnects a graph. A local bridge of degree k is an edge whose removal causes the distance between the endpoints of the edge to be at least k. The edge-connectivity of a graph is the minimum number of lines whose removal would disconnect the graph. The minimum number of edges separating two nonadjacent points s and t is also the maximum number of edge-disjoint paths between s and t.

Centrality The centrality of a node in a network is a measure of the structural importance of the node. A person's centrality in a social network affects the opportunities and constraints that they face. There are three important aspects of centrality: degree, closeness, and betweenness. Degree As defined above, degree centrality is simply the number of nodes that a given node is connected to. If the network consists of who knows whom, degree centrality is the number of people that a

given person knows. If the network consists of who has sex with whom, degree centrality is the number of different people that a person has sex with. In general, the greater a person's degree, the more potential influence they have on the network, and vice-versa. For example, in a gossip network, a person who has more connections can spread information more quickly, and will also be more likely to hear more stuff. This can be both good and bad. In a sexual network, high degree centrality implies a higher risk of disease. The greater a person's degree, the greater the chance that they will catch whatever is flowing through the network, whether good or bad. Closeness Closeness centrality is defined as the total graph-theoretic distance to all other nodes in the network. For example, in Figure 2 above, node "e" has a closeness score of 8 because it is one link away from "a", two links away from "b" and "d", and three links away from "c". The bigger the number the LESS central they are (because they are farther away from everyone). When a node has a low closeness score (i.e., is highly central), it tends to receive anything flowing through the network very quickly. This is because the speed with which something spreads in a network is a function of the number of links in the paths traversed. Since nodes with low closeness scores are close to all nodes, they receive things quickly. Once again, whether this is good or bad depends on the situation. In the case of information about what's happening in the company, this is usually good. In the case of a new disease that is spreading, it is very bad to be one of the first people to get it (because doctors have not worked out a treatment yet). Betweenness Loosely speaking, betweenness centrality is defined as the number of geodesic paths that pass through a node. It is the number of "times" that any node needs go through a given node to reach any other node by the shortest path. More precisely, if gij is the number of geodesic paths from i to j and gikj is the number of paths from i to j that pass through k, then gikj/gij is the proportion of geodesic paths from i to j that pass through k. The sum ck = gikj/gij for all i,j pairs is betweenness centrality. In a diffusion process, a node that has betweenness can control the flow of information, acting as a gatekeeper. This is the classic role played by the executive secretary, who can acquire a great deal of unofficial power this way. In a network of friendship relations, say, among top players in the personal computer field, the node with high betweennness can serve as a liaison between disparate regions of the network.

For example, Bill Gates, head of Microsoft, is part of a certain circle of friends. Larry Ellison, head of Oracle, is part of a different circle of friends. Bill and Larry violently do not get along. Whenever cooperation is needed between Microsoft and Oracle, as in developing standards for network computers, it has to be arranged by a third party that has ties with both camps. We can think of betweenness as a measure of the extent to which a node is in a position to exploit many structural holes. A structural hole is a gap in a network: a lack of connection between two nodes. A third party that is connected to the two unconnected nodes can sometimes exploit the situation.

Ego bridges hole between alter1 and alter2 There are two generic benefits to being in the middle. One is the information benefit from being plugged into different camps or regions of the network. If all your ties are to one group of persons who are all interconnected (a "clique"), all you ever hear is the same information being recirculated. The other is the control benefit of being able to play one person against the other. For example, if ego is a woman that alter1 and alter2 are courting, ego can let alter1 know that alter2 is buying her an expensive ring for her birthday. This may lead to alter1 trying to top that with an even better gift. Intra-Organizational Networks

What are Networks? In the abstract, a network is a collection of nodes, together with a collection of links between them. The links are all of the same type reflecting a single social relation. For example, we might look at the communication network among all employees in an organization. Each link between

any pair of persons A and B means the same thing: A and B communicate. Or you can look at the friendship network. Or the conflict network (in which if A and B are tied, it means they have had a conflict with each other). Any social relation between pairs of people form a network -from who goes to lunch with whom to who is having an affair with whom.

Paths & Distances A path is an alternating sequence of nodes and links, starting and ending with a node. For example, A and B might not be directly connected, but there might be a path that links them: A--B---C---D. The length of a path is defined as the number of links in it. The length of the path from A to D above is 3, because there 3 links between them. The path from A to B has length 1. The shortest path between any two points is called a geodesic. The distance between any pair of nodes is defined as the length of a geodesic from one to the other. In other words, the distance is the number of links in the shortest path between the nodes. If there exists a path of any length that connects a pair of points, they are said to be reachable from each other. A maximal subset of nodes that are mutually reachable is called a component. A link between nodes that would separate the networks into different components is called a bridge. In other words, a bridge is a link which ties together parts fo the network that otherwise would not be connected at all. A local bridge is a link between nodes A and B which, if removed, would mean that the shortest path linking A and B would be of at least length 3. The density of a network is defined as the number of ties present divided by the number of ties possible. It is the proportion of possible ties that actually exist. Cliques are maximal subsets of nodes that are completely connected: all members connected with all others.

Diffusion The speed with which information travels through a communication network from one node to another is a function of the number of links in the paths linking them. Denser networks have shorter paths, so they transmit information more quickly.

The shape of the network is also important: diffuse networks with little structure diffuse information more quickly than others. Networks broken up into subgroups diffuse information quickly within groups, but have trouble getting information moving between groups. According to Granovetter, weak ties are particularly important in diffusion. Studies show that most jobs are obtained through network connections, and that among those getting a job via connections, the vast majority get them through weak ties. The reason is that strong ties create dense little knots of people who share and reshare the same old information. Novel information comes in from connections with people outside one's clique. Connections with people outside one's clique (local bridges) are rarely strong ties. Hence, weak ties are especially important for network diffusion. At the individual level, the number of ties that a person has affects how quickly (and whether) information reaches them. The more ties, the more chances of hearing about something. (Note that this is not always a good thing: if what is flowing through a network is a disease, the more ties a person has the more chance of catching the disease.) Closeness provides a good index for how quickly, on average, a person in a network will hear information: it is an estimate of time-until-arrival of information. Closeness is proportional to the average distance from the person to all others via the fastest possible routes. The smaller the number, the more central the person. Closeness is also important for predicting the speed with which different network structures can solve problems. See the Bavelas & Leavitt experiments in the text.

Brokerage/Power Another measure of a person's centrality is betweenness. A person's betweenness is basically the number of geodesic paths that go through that person, divided by the number of geodesic paths in total. It can be seen as a measure of brokerage.

Influence Influence refers to the extent that people directly and indirectly affect others. Suppose we collect data on who seeks work-related advice from whom. If B seeks advice from A, we can speculate that A is in a position to influence B. If B in turn influences C, then A has a direct influence on B and an indirect influence on C. This can get quite complicated: As A influences B and B influences C and C influences D and D influences B who also influences E who influences A, the

influence system can become nonlinear. Furthermore, we can assume that influence declines with distance, so that A's influence on B may be quite strong, and B's influence on C may be strong, but A's influence on C is not so strong. To calculate A's total influence on the network, we have to calculate all these possible paths and strengths. Organizational Determinants of Structure Theory:

The objective here is to understand why organizations have the structure that they do. By "structure" I mean things like degree and type of horizontal differentiation, vertical differentiation, mechanisms of coordination and control, formalization, and centralization of power. See handouts page for more information on organizational structure. According to Taylor, Fayol, Weber and other classical theorists, there is a single best way for organization to be structured. Yet organizations vary considerably on structural attributes. The objective of much research has been to understand what determines these variations. Is it random or systematic? Are some organizations simply less perfect than others, or are different designs better for different situations? Contingency Theory In contrast to the classical scholars, most theorists today believe that there is no one best way to organize. What is important is that there be a fit between the organization's structure, its size, its technology, and the requirements of its environment. This perspective is known as "contingency theory" and contrasts with the perspective of classical theorists like Weber, Taylor, Fayol, etc. who thought that there probably was one way to run organizations that was the best. Size This refers to capacity, number of personnel, outputs (customers, sales), resources (wealth). Blau's studies show that differentiation (# of levels, departments, job titles) increases with size, but at a decreasing rate. In contrast, the % of the organization that is involved in administrative overhead declines with size, leading to economies of scale. Increasing size is also related to increased structuring of organizations activities but decreased concentration of power.

Managerial practices, such as flexibility in personnel assignments, extent of delegation of authority, and emphasis on results rather than procedures, are related to the size of the unit managed. Technology/Task Consider check processing at a bank. This activity is usually performed by a business unit that is highly formalized, has a great deal of specialization and division of labor, and high centralization of decision-making. In contrast, the creative section of an ad agency is usually not formalized at all, the division of labor is often blurry, and it is highly decentralized. It appears that certain activities naturally "go with" certain structures. Joan Woodward found that by knowing an organization's primary system of production, you could predict their structure: Unit production/small batch. Companies that make one-of-a-kind custom products, or small quantities of products (e.g., ship building, aircraft manufacture, furniture maker, tailors, printers of engraved wedding invitation, surgical teams).
y y y y y y

In these companies, typically, people's skills and knowledge is more important than the the machines used. Relatively expensive to operate: work process is unpredictable, hard to pre-program or automate. Flat organization (few levels of hierarchy). Ceo has low span of control (direct reports). Relatively low percentage of managers Organic structure (see handout)

Mass production/large batch. Companies that sell huge volumes of identical products (e.g., cars, razor blades, aluminum cans, toasters). Make heavy use of automation and assembly lines. Typically,
y y y y y y

bigger than small batch Taller hierarchies bottom level is huge (supervisor span of control is 48) Relatively greater number of managers (because hierarchy is so tall) Mechanistic, bureaucratic structure Relatively cheap to operate

Continuous Production. Primarily companies that refine liquids and powders (e.g., chemical companies, oil refineries, bakeries, dairies, distilleries/breweries, electric power plants). Machines do everything, humans just monitor the machines and plan changes.

y y y

These organizations are tall and thin or even inverted pyramid: almost nobody at the bottom At the very top there is an organic structure Lower levels more mechanistic, but because machines do everything, there is not much paper work, low level supervision, etc.

Chick Perrow '67 looked at how the frequency and type of exceptions that occurred during production affected structure. Two types of exceptions: (a) can be solved via orderly, analytic search process (like mechanic fixing car), (b) no analytic framework, rely on intuition, guesswork (like advertising, film-making, fusion research). Few Exceptions pottery, specialty glass, motel room artwork; plumbing; computer technical support (craftwork) routine work, but when problems crop up, it is hard to figure what to do Many Exceptions film making; aerospace; (non routine research) tasks that no one really knows how to do: work on intuition, implicit knowledge

Unanalyzable

Analyzable

custom machinery, building dams; routine, like screws; (routine (engineering production) manufacturing) the application of well-known the few problems that occur are usually principles and technologies to lots of easy to understand new and different situations

It turns out that bottom left organizations (analyzable and few exceptions) tend to be highly centralized and formalized -- in short, bureaucracies. Bureaucracies are the best possible organizational form when the task is well-understood, and how to best execute it can be specified in advance. At the other extreme, the top right organizations (unanalyzable and many exceptions) are not well handled by bureaucracies. There are so many exceptions and new situations that having a set of formal procedures which specify how to handle every situation is out of the question. Organizations in this box tend to be highly decentralized and use informal means of coordination and control. The reasons have to do with human bounded rationality. (Bounded rationality refers to the fact that since humans have limited brain capacity, we cannot always find the absolute optimal solution to a given problem -- we only have the time and capacity to consider a few possible solutions, and choose the best among those. But we can't consider all possible

solutions.) Really complex systems are difficult to pre-plan: there are too many contingencies. We simply can't figure it all out. Need to allow for real-time, flexible adjustment. Environment Adaptation Organizations actively adapt to their environments. For example, organizations facing complex, highly uncertain environments typically differentiate so that each organizational unit is facing a smaller, more certain problem. for example, if Japanese tastes in cars are quite different from American tastes, it is really hard to make a single car that appeals to both markets. It is easier to create two separate business units, one that makes cars for the Japanese market, and the other that makes cars for the US market. Natural Selection Organizations whose structures are not fitted to the environment (which includes other organizations, communities, customers, governments, etc.) will not perform well and will fail. Most new organizations fail within the first few years. If the environment is stable, this selection process will lead to most organizations being welladapted to the environment, not because they all changed themselves, but because those that were not well-adapted will have died off. Dependence The economy is a giant network of organizations linked by buying and selling relationships. Every company has suppliers (inputs) and customers (outputs). Every company is dependent on both their suppliers and their customers for resources and money. To the extent that a company needs it's suppliers less than they need it, the company has power. That is, power is a function of asymmetric mutual dependence. Dependence is itself a function of the availability of alternative supply. A depends on B to the extent that there are few alternatives to B that are available to A. Dependence is also a function of how much A needs what B has got. If the Post It's company starts to play hardball with you, and there are no good alternatives, it's still not a big deal because Post It's are just not that important. Organizations that have power over others are able to impose elements of structure on them. For example, GM is famous for imposing accounting systems, cost controls, manufacturing techniques on their suppliers. The sets of entities in an organization's environment that play a role in the organization's health and performance, or which are affected by the organization, are called stakeholders. Stakeholders

have interests in what the organization does, and may or may not have the power to influence the organization to protect their interests. Stakeholders are varied and their interests may coincide on some issues and not others. Therefore you find stakeholders both cooperating with each other in alliances, and competing with each other.

Figure 1. Unconnected stakeholders. When stakeholders are unconnected to each other (as in Figure 1), the organization usually has an easier time of playing the different parties off one another. For example, it can represent its goals and needs differently to each stakeholder, without fear of being found out. Or, such competitive stakeholders into outbidding each other (e.g., a university can tel one alumnus that another alumnus is about to give a huge donation). Furthermore, when the stakeholders are unconnected, they cannot coordinate their efforts, and so have trouble controlling the organization.

Figure 2. Well-connected stakeholders. In contrast, when the stakeholders are well-connected (as in Figure 2), the organization cannot represent itself differently to each one, or it will be found out. Furthermore, if the bonds among the stakeholders are closer than the bonds with the organization, the stakeholders may side with each other against the organization, and won't act in ways that negatively affect other stakeholders. Institutionalization Under conditions of uncertainty, organizations imitate others that appear to be successful. In other words, if nobody really knows what makes a movie successful, and then somebody has a blockbuster hit, everybody else copies the movie, and the organizational structure that produced the movie, hoping that they will get the same results. This can cause whole industries to adopt similar structural features. One reason why this happens is the fear of litigation or simply blame. If several well-known, successful companies start adopting some new management style -- say, self-governing teams -and you don't because you know its not appropriate for your company, and then things start to go wrong for your company, people will say 'see? you should have adopted self-governing teams. we told you so'. So to avoid that, if the top companies in a field all adopt some new style, then all the others do to to avoid being blamed.

In addition, diffusion of ideas due to personnel transfer and professional school training can create uniformity as well. 21st Century Organizational Trends

There are five key organizational trends that you should be aware of. Globalization
y y y y

Increasingly globalized sales, manufacturing, research, management Movement from direct exports to having sales offices in different countries to having manufacturing to all functions spread across the globe Increasingly globalized labor market Due to: o reduced cost and improved quality of international transportation and communication o search for unsaturated markets o exploit regional cost and expertise differences

Diversity
y y y y

Workforce getting more heterogeneous sexually, racially, culturally, individually, etc. Source of both innovation and conflict/communication problems Need to cope with different styles of interaction, dress, presentation, physical appearance Due to: o changing demographics o globalization of the labor market

Flexible
y y y y y y

Organizational systems and processes and people that can respond differently to different situations Fewer detailed rules and procedures Greater autonomy, encouragement for initiative Customizable employment relationships: telecommuting, job sharing, mommy tracks, pay for skills Lifetime employability, not lifetime employment Due to:

differentiated customer needs -- filling them exactly is source of competitive advantage o increasing diversity in workplace o increased pace of change in technology and markets
o

Flat
y y y y

Fewer levels of management, Workers empowered to make decisions Fewer differences in responsibility (not in pay) across levels Due to: o need for speed, which makes it helpful to empower employees to make decisions, which means fewer managers are needed o changes in information technology mean less need for the communication and control functions of middle managers o globalization means intensified competition, which increases the need to cut costs

Networked
y y y y

y y y y y

Direct communication across unit & firm boundaries, ignoring chain of command Cross-unit team structures Outsourcing & downsizing Strategic alliances with competitors and others o Now have firms that are your competitors, customers and collaborators all at the same time Close coordination among firms (e.g., JIT systems) and information sharing (open computer systems) Across the board contact with customers, not just official boundary spanners Customization Decentralization Due to: o new information technologies, especially groupware, client-server, distributed computing o fast changing customer needs and competitor offerings o more complicated products require better integration of manufacturing, design, and marketing functions

----------------------------------------Here is a diagram linking up all the concepts above.

The dashed arrows with blue heads mean "creates the need for", while the solid arrows with black heads mean "causes" or "enables". Global Trends in Organizational Structures in the 21st Century or Affecting

Technological change breeds technological change. This is because technological change is a function of knowledge, and knowledge is increasing rapidly. This is a function many things, including:
y y y

larger population (more minds working on problems) better tools for research (fast computers, ability to look up other people's work) more knowledge (it takes knowledge to make more knowledge)

The rate of change is itself changing (getting faster) because most innovations are produced not as a result of new knowledge, but of recombinations of old knowledge. And the number of possible combinations increases exponentially with the number of bits being combined. Here is a chart of the number of combinations of things, given that you have 1 thing, 2 things, 3 things, etc. up to 11 things. Bits 5 10 20 30 40 Combinations 32 1024 1048576 1073741824 1.09951E+12

Of course, most combinations of knowledge chunks are useless -- combining the technology in a hair dryer with the technology for door hinges probably gets you nothing. But if just 1 in one billion combinations produced something useful, the rate of new product innovation would be absolutely staggering. So it's not surprising that when we look at the number of innovations in human societies over the last 250 thousand years, we find very little change for 99% of the that time. By most estimates, there has been as much technological change in the last 250 years as there has been in the preceding 250 thousand years. So what does this have to do with organizations? Well, for one thing, organizations are strongly affected by the available technology. The fact that transportation, communication and information technologies have changed so much in just the last 50 years has completely transformed how business is done. Two hundred and fifty years ago it took months to get a message from New York to Japan. Today, you can talk to people on the phone, in real time, anywhere on the planet (and a little beyond!). You can get an object, such as a product, into someone's hands in any major city on the planet in about 20 hours. So now it is reasonable to not only have global customers, but to have offices around the world, and to have organizational functions, like manufacturing or design, spread out across the world. So, one huge trend of the last 250 years has been globalization -- the exponential growth of truly global organizations. The key benefit of global organizations is the ability to exploit regional differences in needs (customers) and production capabilities (worker expertise, costs, government aid, etc.). In addition, the markets in many countries have become largely saturated for many products. For example, to grow the market for televisions in the United States,

manufacturers either have convince users to have multiple televisions, or they have to make them obsolete over time, or convince people to have more children, because at this point, virtually every person who could conceivably afford and use a television has one.

Increased globalization has had a number of effects. In combination with changing demographics (e.g., minorities in the US have greater fertility rates, so the share of minorities in the workplace is increasing), globalization is causing a rapid increase in diversity in both the marketplace and the workplace. More than ever, people have to interact with and coordinate with people who are different from themselves on a number of different biological and cultural dimensions. This in turn has meant that employees need new relational skills to succeed. A typical manager at CitiBank has to be able to spend several years at CitiBank offices around the world, and not just places like Europe, but exotic places like Guatemala, or Ethiopia. While in those places, managers have to learn how to work with people that do things differently -- do things in ways that are personally repugnant to them.

At the same time, organizations need new coordinating mechanisms to accommodate different kinds of people in the workplace. For example, as more women have entered the workforce, organizations have had to deal with a whole range of issues, including sexual harassment and pregnancy. The response to increased diversity has, in many cases, been increased organizational flexibility. Some organizations allow different workers to have very different work and payment schedules, such as "fast tracks" and "mommy tracks", full-time and part-time. Many organizations (and workers) have found it convenient to treat some workers as independent consultants rather than employees. In certain occupations, advances in communication and information technologies have enabled "telecommuting" -- working at home via computer.

Another effect of globalization is increased competition. Back when national borders effectively sealed off national economies, the major competitors for any given company were usually local. For example, in the car industry, each industrialized country might have 3 or 4 major auto makers, of which one was usually dominant. Splitting up a market among 3 or 4 players, some of whom could be quite weak, was often a less than challenging affair. But once globalization made it possible for companies all over the world to compete, the number of players went up radically, and more importantly, the number of really good competitors (the top players in each national market) went up as well. With increased competition comes an even faster pace of change, as each competitor introduces innovations in order to outsell their competitors.

This in turn creates a situation in which organizational response time is at a premium -- those organizations that can develop new technologies faster, or which can adapt to changes in the market faster, are the ones that will survive the competition. To maximize response time, organizations have been flattening, downsizing, and networking. Flat organizations make decisions more quickly because each person is closer to the ultimate decision-makers. Smaller organizations are faster because there are simply fewer different things going on -- fewer competing goals, fewer people to coordinate, etc.

Organizations that flatten tend to simultaneously encourage horizontal communication among workers. Rather than work through the hierarchy, it is often faster for workers that need to coordinate with each other to simply communicate directly. (It can also lead to chaos -- there is a downside.) Such organizations are said to be highly networked.

Another meaning of network organizations refers to their relations to other organizations. Organizations that have downsized to just their core competencies must then outsource all the functions that used to be done in-house. To avoid losing time and effort managing contracts with suppliers, organizations have learned to develop very close ties to their suppliers, so that social mechanisms of coordination replace legal mechanisms, which are slow and costly. In many industries, such as the garment industry in Italy, strong relationships have developed between manufacturers and suppliers (and other manufacturers), so that considerable work is done without a contract and without even working out a firm price. Network organizations are particularly important in industries with complex products where technologies and customer needs change rapidly, such as in high tech. Close ties among a set of companies enables them to work with each other in ways that are faster than arms-length contracts would permit, and yet retains the flexibility of being able to drop the relationship if needed (as opposed to performing the function in-house). In summary, the end of the 20th century is seeing a sea change in the way business does business. This contrasts hugely with the relative lack of change that we saw in the first few million years of human history. Notes Trends in Organizational Structure on

Mechanistic vs Organic Organizations Burns & Stalker (1961) studied several firms varying in the kind of technology and environment faced. Examples: Rayon mill
y y y y y y

Used standard well-understood technology Had bureaucratic structure Factory bible explained all procedures A system of hierarchically linked job positions with clear responsibilities Treat problem situations as temporary deviations from the norm Sometimes ask sales dept to slow down so as to not overwhelm the production dept.

Engineering Firm
y y y y

Firm making switch-gears, The technology was changing steadily, and Market share was determined by firms ability to make improvements in design and cutting costs. Had hierarchical structure, but also made heavy use of meetings to coordinate work.

Medium-Tech Electronics Firm

y y y y y y y

Making radios & TVs, Technology was changing faster, and Customer needs changing as well. It was important to link developments in research with developments in production and with marketing. It was common to communicate across departments even at low levels of rank. Lots of meetings Use of project teams to deliver special products and to investigate and solve internal problems

High-Tech Electronics Firm

y y y y y y

Creating new industries, such as computers, space technogies, equipment, etc., There was an even more fluid organizational style Jobs allowed to shape themselves People hired for general expertise and brains and then allowed/encouraged to find their own place in the organization to make their contribution As situations changed, people would take on different activities but without changing jobs People continually inquiring into what they should be doing and then acting

Burns and Stalker saw the firms as occupying distinct positions along a continuum they called Mechanistic/Organic. You can think of it as machine versus biological models of organization. < Mechanistic Organic >

Model 1

Model 2

Model 3

Model 4

Model 5

Model 6

In order of increasing Organicness (i.e., decreasing Mechanisticness), we have:

y y y y y y

Model 1: Rigidly organized bureaucracy Model 2: Bureaucracy run by top management team Model 3: Bureaucracy with cross departmental meetings, teams and task forces Model 4: Matrix organization Model 5: Project- and Team-based organizations Model 6: Loosely coupled organic network

Virtual/Network Organizations

Virtual Organizations A firm that contracts out almost all functions. The only function retained by the organization is the name and the coordination among the parties. A virtual organization might not have even have a permanent office. Especially common in the fashion industry where you can have clothing labels that are just that. Say the label is "John Taylor". The label has a clear identity in the public eye, but when you try to track down the John Taylor company, you find there are no John Taylor designers, no John Taylor manufacturers. It's just 3 people in an office subcontracting out all functions. It is a network of firms held together by the product of the day. An open-ended system of ideas and activities and firms. Network Organizations A network organization is a collection of autonomous firms or units that behave as a single larger entity, using social mechanisms for coordination and control. The entities that make up a network organization are usually legally independent entities (separate firms) but not always. Some of the entities may be wholly owned subsidiaries. They can even be divisions within the company, but treated as separate companies that sell to outside customers. For the purpose of discussion, it is convenient to distinguish three types of network organizations: internal, stable, and dynamic. Internal Network Large company that sees its units as separate profit centers. It may encourage the units to sell its products outside the company as well (e.g., GM and its spark plug division). One reason for

doing this is the belief that if units have to operate with prices set by the market, they have incentive to improve performance and reduce prices. In these organizations, corporate headquarters acts like broker. A bit like role of government in business in Japan. Stable Network The stable network consists of a central organization that outsources much of its operations to other companies. For example, at BMW, they outsource about 65% of the total production cost of a car. The central organization often has longterm relationships with suppliers, who have access to the company's computer system and may be present at private planning sessions. The central organization may also have several joint ventures, alliances, long term contracts, etc. going with different companies. Dynamic Network The dynamic networks outsource even more heavily. Basically, an integrator firm identifies and assembles assets owned by other companies. Typically, the integrator is a downstream player whose core competence is understanding the market. For example, Nike is the center of a dynamic network. Their only functions are R&D and Marketing. Dynamic networks are common in the fashion, toys, publishing, motion pictures, and biotech industries. Market Networks There may exist a fourth type of network organization, which we might call the "market network". These organizations don't have a lead player that coordinates the others. Instead, a collection of organizations trading in the market fall into a stable pattern of relationships that gradually becomes solidified. Initially, members of the network may not be aware that they have fallen into this pattern. We can think of these organizations as natural "subassemblies of the economy.

Comparative Advantage of Network Organizations The first question to ask is, What are the alternatives to network organizations? There are two basic alternatives: vertically integrated firms, and the open market. How do firms decide what

functions to perform in-house, and which to purchase on the market? Why aren't all functions purchased on the market? Transaction Cost Analysis Think about a firm that makes a product based on a certain kind of computer memory chip. They buy the chips on a recurring basis from a few different suppliers. Demand for these chips varies widely from time to time so availability and prices are never givens. Also, there are wide variations in quality because the silicon wafer technology has not yet solved some basic production problems. Every batch of chips purchased has to be scrutinized carefully, and bad chips have to be sent back and replaced. The variations in availability and price force the company to overbuy and then maintain warehouses full of supplies so that their assembly lines do not have to be shut on and off with variations in the chip market. By maintaining a lot of inventory, they can buffer their core technological processes, doling out the chips in a measured, reliable stream. The trouble is, maintaining a lot of inventory is expensive, especially when the chips change over time and old chips are made obsolete. The problem is even worse when the company needs specialized chips from their suppliers, custom products that they have designed themselves. Or, the other way around, each chip company does things differently, and the manufacturer has to adapt their designs to specific chips (the way operating systems are built for specific families of processors). Under these conditions (frequent transactions, uncertainty of supply, and customization) organizations will elect to bring the process in-house. That is, they will vertically integrate. The reason is that contracting with outsiders under these conditions is costly. There are costs in maintaining inventories, costs in monitoring the exchanges for malfeasance, costs in searching for suppliers, costs in specifying legal contracts, etc. Furthermore, because they are working with this custom product, there are no other sources of supply that are ready-made. So they could be charged a premium price. In contrast, for functions that do not require frequent exchanges, that do not suffer from uncertainty of supply, and which do not require customization, organizations will contract with outside firms, because it will be cheap enough to do that. The costs of making and monitoring the transactions themselves will not be prohibitive, which allows the organization to take advantage of hiring specialists to do the job. These specialist firms can deliver a higher quality product, and can often do it more cheaply because of the volume they do. According to economic theory, in a perfect competitive market, it is always better to hire out a function unless the transaction costs make that too expensive.

What Conditions Favor Network Organizations Network organizations are a blend of market and firm. They are halfway between vertical integration and market disaggregation. The conditions that favor network organizations are: Frequent transactions. Infrequent exchanges are best negotiated on the market. Demand Uncertainty. Not to be confused with supply uncertainty. Demand uncertainty refers to the inability to predict how well an organization's products will sell. For example, the film industry suffers from the inability to predict which films will make it and which won't. Customization. Also known as asset specificity, exchanges that involve individually customized products or services. Task Complexity. How complicated is the product being created. Structural Embeddedness. The extent to which firms (and their members) are related to each other via a host of ties, so that information about each other is always flowing. This helps to coordinate and control the firms. As you can see, most of these conditions are the same as those favoring firms rather than markets. Network organizations are more like firms than markets. But they occur in situations where demand uncertainty makes vertically integrated firms a bad idea. When technology and markets are changing fast enough, it doesn't make sense for a company to invest in a whole division because when things change they are stuck this whole infrastructure that is now obsolete. So they decouple -- taking the highly volatile sections out. Yet, because of all the other conditions, they need to maintain control, so they don't just hire it out on the market. A network organization is like an ordinary firm which does not have a system of direct supervision, nor standardized rules and procedures that apply throughout the firm. Consequently, they have to coordinate and control the units in some other way. Some of the ways they do this are: Joint payoffs. Networks are organized around specific products or projects. Payments for work are arranged based on the final product, so that if the product doesn't make it, nobody gets any money. This provides incentives for everyone to do their best. Restricted access. By definition, network organizations do not hire just anybody on the market. Instead, they restrict their exchanges to just a few longterm partners. This makes the organizations more dependent on each other, so that their is more cost in defaulting. In addition, but increasing the probability of future exchanges, this creates the conditions for avoiding a bad

deal now so as to get future rewards. (If I take advantage of you on this deal, I'll make out like a bandit, but I'll never get work from you again, so I forgo all that future money.) Reputation. In the film industry, everyone talks to everybody. If someone is difficult to work with, or doesn't pull their weight, everybody hears about it and it affects their ability to get future jobs. Macroculture. The existence of a common industrial culture greases the wheels for coordination. Everybody speaks the same language, has similar expectations and understandings of the task, so more can be implicit rather than explicit. Organizational Culture

What do we mean by "culture"? Culture refers to the shared beliefs, values and norms of a group. It includes:
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Cognitive schemas (Scripts and frames that mold our expectations and help us assign meaning and order to the stream of experience) Shared meanings (Common interpretations of events) Perceptions (How the world is, how things work. Implicit theories of the market, of management, of politics, of human nature) Prescriptions and Preferences (What the best way to do things is; What they want to happen Behavioral codes (How to dress, how to act, what kinds of things you can joke about, is it cool to be late?) Basic values (What is really important; what is evil) Myths and legends (Stories about the past: knowledge of the stories identifies you as belonging, and often the stories have hidden points like this is what happens to people who...) Heroes and heroines. Emblems (objects that have meaning, like group t-shirts, gold watches) Rituals

Because individuals belong to different groups, they participate in several cultures simultaneously, which may be in conflict. In addition, the culture of an organization can derive key features from the larger culture in which it is embedded. In other words, American organizations may have certain characteristics that are drawn from the larger American culture.

Similarly, organizations in certain industries may have a discernable cultural style that derives from the industry. Organizational With Examples from Liar's Poker Culture

Definition Culture refers to the shared beliefs, values and norms of a group. It includes: Cognitive schemas (Scripts and frames that mold our expectations and help us assign meaning and order to the stream of experience)
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central metaphors like the jungle traders must eat or be eaten the market always has a fool. If you cant see one, its probably you. you work for Salomon, not the customer you dont get ahead by being nice, you get ahead by making money

Shared meanings & perceptions (Common interpretations of events; How the world is, how things work. Implicit theories of the market, of management, of politics, of human nature)
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these are often unique to the company, as in "equities" is more than just stocks, it means lower status, boring when the Chernobyl nuclear power plant meltdown occurred, traders immediately start buying things, because they know that the effect of a disaster will be to make certain things scarce, like uncontaminated foods (potatoes), and alternative energy (oil). a trader has to trust his gut best way to manage a trader is get out of his way blowing up a customer

Prescriptions and Preferences (What the best way to do things is; What they want to happen)
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Dont talk to the press we want to be the biggest, meanest most dominant force on wallstreet (vs, we want to be known as honest)

Behavioral codes (How to dress, how to act, what kinds of things you can joke about, is it cool to be late?)

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in mortgage dept., dress any way you want dont invite a senior mgr to have threesome sex harassment ok. blowing up customers is .. understandable pranks are ok swearing is ok

Basic values (What is really important; what is evil)

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success and courage not honesty, not integrity

Unmentionables
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arab blacklist

Myths and legends (Stories about the past: knowledge of the stories identifies you as belonging, and often the stories have hidden points like this is what happens to people who...)
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the liars poker story: the million dollar bet. the pranks (suitcase, cafeteria) incidents in the training class key moments like selling of the olympia and york bonds

Heroes and heroines.

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Meriwether: mythical status Rubin: iconic

Emblems & symbols & rituals (objects that have meaning, like group t-shirts, gold watches)
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41st floor big swinging dick victory lap equities in dallas Friday feeding frenzy

Aspects of Organizational Culture

Onion quality. Inner layers (e.g., fundamental values, basic technology) are slow to change. Outer layers (e.g. market tactics, perception of the customer) can change very quickly. Consequently, organizational cultures can be logically inconsistent.
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Compensation system at SB was based on the number of years out of training the person was, not a proportion of profits or revenues. This reflected the older, paternalistic Salomon Brothers that knew what was best for the company. Yet other aspects of the culture had changed into a survival of the fittest, money is everything kind of culture. The two are inconsistent and led to mass exodus of talent

Can also have subgroups with different cultures.

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Mortgage group

Because individuals belong to multiple subgroups simultaneously, they participate in several cultures simultaneously, which may be contradictory.

Where it comes from The culture of an organization can derive key features from the larger culture in which it is embedded. In other words, American organizations tend to be different from Japanese companies because they are embedded in different national cultures. Similarly, organizations in certain industries may have a discernable cultural style that derives from the industry. Another important influence on organizational culture is the professional culture of the more powerful players. Orgs are made up of functional occupations: lawyers, traders, etc. who go to school and get degrees like MBAs where they teach you a certain way of doing things and looking at things.
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a surgeon and a nurse can meet in the operating room and interact just fine because of professional training

Cultural items also diffuse through personal contacts: social networks.

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Mortgage traders separated from others, and developed own culture Lewiss understanding of markets and style came from his friends alexandre and dash riprock.

Training programs, such as the one at Salomon Brothers also (often unwittingly) train people in the culture of the organization. What it causes Culture is central: it helps to determine
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structure Compensation system HR policies Market strategy (domination of certain markets) Client relations (treat them like shit) Accounting procedures (no way to allocate costs) Individual behavior etc.

Way to use it Managerial point of view. What kind of organizational culture is strategically useful? SB developed a Darwinian, jungletype culture. Was that a good choice? An alternative might have been a more bureaucratic, machine-like culture. Each has its advantages. The jungle-like culture helps to unleash each person's potential. They are free to develop professionally, to think creatively. The interpersonal competition provides powerful incentives to work hard. The culture is also consistent with the business they are in, which is a high-risk, highly unconstrained business. The culture probably maximizes revenues and market share. However, this culture is not likely to breed good managers: rather than work together to improve the company, the fight for political turf. The machine-like culture probably prevents burn-out, lowers turnover, and smooths out financial performance. It probably minimizes costs. However, it requires a relatively slow-changing economic environment. When new opportunities present themselves, the organization moves too slowly to win the lion's share of profits. Studies show that firm profitability is determined in part by the "strength" of culture, but only in highly competitive markets (where clients are many and disorganized and producers are few and organized). These results are similar to the effects of leadership. When the market is expanding and there are relatively few competitors, it doesn't seem to matter too much who is running the organization. But when the market is mature, and there are many powerful competitors, leadership can make the difference.

A strong culture is one that (a) is internally consistent, (b) is widely shared, and (c) makes it clear what appropriate behavior is. An organization with a strong culture has a vision that everyone understands. Culture can then act as a hidden mechanism of coordination: everybody works in synch because they understand what the goals are and how the organization is going about getting to them. Career point of view Understanding your corporate culture better than others is a key source of competitive advantage
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not making faux pas phrasing your proposals in line with the central company values (not just the ones in the brochures) many times, there are many ways to go in a decision. The one that will seem right to top management is the one that fits with the way they see the world. By knowing how they see the world, you know whether you have hard sell or an easy sell.

A lot of what mentoring is is teaching someone the corporate culture (the other part is protecting them from politics). Politics is, in large part, manipulating the culture to your advantage.
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example in SB is the Opportunist use of the memo and the victory lap

Differences in Cultures

Increasingly, managers must deal with multiple ethnic groups with very different cultures. Thanks to globalization, you are likely to work with Japanese, French, Chinese, German and all sorts of other nationalities. It is important to recognize that people from different cultures have are different in a variety of ways, including
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different ways of looking at things different ways of dressing different ways of expressing personality/goodness In an ideal world ...
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the policemen would be English the car mechanics would be German the cooks would be French the innkeepers would be Swiss,

and the lovers would be Italian

In a living hell ...

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the policemen would be German the car mechanics would be French the cooks would be English the innkeepers would be Italian and the lovers would be Swiss

These differences can cause problems interpreting what the other person is doing. Some simple examples:
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In the US, a firm, short handshake indicates self-confidence and (heterosexual) masculinity. A limp handshake by a man can be interpreted (usually wrongly) as a sign of homosexuality or wimpiness. But in most parts of Africa, a limp handshake is the correct way to do it. Furthermore, it is common in Africa for the handshake to last several minutes, while in the US a handshake that is even a few seconds too long is interpreted as familiarity, warmth and possibly sexual attraction. In Britain, men do not look at women on the streets. The French do. Recently, a French public figure mentioned in a speech that the Brits are all gay -- the evidence was their lack of overt interest in women.

Some dimensions along which cultures vary: High Context vs Low Context A low context culture is one in which things are fully (though concisely) spelled out. Things are made explicit, and there is considerable dependence on what is actually said or written. A high context culture is one in which the communicators assume a great deal of commonality of knowledge and views, so that less is spelled out explicitly and much more is implicit or communicated in indirect ways. In a low context culture, more responsibility is placed on the listener to keep up their knowledge base and remain plugged into informal networks. Low context cultures include Anglos, Germanics and Scandinavians. High context cultures include Japanese, Arabs and French.

Implications
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Interactions between high and low context peoples can be problematic. o Japanese can find Westerners to be offensively blunt. Westerners can find Japanese to be secretive, devious and bafflingly unforthcoming with information o French can feel that Germans insult their intelligence by explaining the obvious, while Germans can feel that French managers provide no direction Low context cultures are vulnerable to communication breakdowns when they assume more shared understanding than there really is. This is especially true in an age of diversity. Low context cultures are not known for their ability to tolerate or understand diversity, and tend to be more insular.

Monochronic vs Polychronic Monochronic cultures like to do just one thing at a time. They value a certain orderliness and sense of there being an appropriate time and place for everything. They do not value interruptions. Polychronic cultures like to do multiple things at the same time. A manager's office in a polychronic culture typically has an open door, a ringing phone and a meeting all going on at the same time. Polychronic cultures include the French and the Americans. The Germans tend to be monochronic. Implications
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Interactions between types can be problematic. German businessman cannot understand why the person he is meeting is so interruptible by phone calls and people stopping by. Is it meant to insult him? When do they get down to business? Similarly, the American employee of a German company is disturbed by all the closed doors -- it seems cold and unfriendly.

Future vs Present vs Past Orientation Past-oriented societies are concerned with traditional values and ways of doing things. They tend to be conservative in management and slow to change those things that are tied to the past. Pastoriented societies include China, Britain, Japan and most spanish-speaking Latin American countries. Present-oriented societies include the rest of the spanish-speaking Latin American countries. They see the past as passed and the future as uncertain. They prefer short-term benefits.

Future-oriented societies have a great deal of optimism about the future. They think they understand it and can shape it through their actions. They view management as a matter of planning, doing and controlling (as opposed to going with the flow, letting things happen). The United States and, increasingly, Brazil, are examples of future-oriented societies. Quantity of Time In some cultures, time is seen as being a limited resource which is constantly being used up. It's like having a bathtub full of water which can never be replaced, and which is running down the drain. You have to use it as it runs down the drain or it's wasted. In other cultures, time is more plentiful, if not infinite. In old agricultural societies, time was often seen as circular, renewing itself each year. Implications
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In societies where time is limited, punctuality becomes a virtue. It is insulting to waste someone's time, and the ability to do that and get away with it is an indication of superiority/status. Time is money. In cultures where time is plentiful, like India or Latin American, there is no problem with making people wait all day, and then tell them to come back the next day. Time-plentiful cultures tend to rely on trust to do business. Time-limited cultures don't have time to develop trust and so create other mechanisms to replace trust (such as strong rule-by-law).

Power Distance The extent to which people accept differences in power and allow this to shape many aspects of life. Is the boss always right because he is the boss, or only when he gets it right? Implications
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In high power distance countries (most agrarian countries), bypassing a superior is unsubordination. In low power distance countries (US, northern europeans, Israel), bypassing is not usually a big deal. In the US, superiors and subordinates often interact socially as equals. An outsider watching a party of professors and graduate students typically cannot tell them apart.

Individualism vs Collectivism In individualist cultures, individual uniqueness, self-determination is valued. A person is all the more admirable if they are a "self-made man" or "makes up their own mind" or show initiative or

work well independently. Collectivist cultures expect people to identify with and work well in groups which protect them in exchange for loyalty and compliance. Paradoxically, individualist cultures tend to believe that there are universal values that should be shared by all, while collectivist cultures tend to accept that different groups have different values. Many of the asian cultures are collectivist, while anglo cultures tend to be individualist. Implications
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A market research firm conducted a survey of tourist agencies around the world. The questionnaires came back from most countries in less than a month. But the agencies in the asian countries took months to do it. After many telexes, it was finally done. The reason was that, for example, American tourist agencies assigned the work to one person, while the Filipinos delegated the work to the entire department, which took longer. The researchers also noticed that the telexes from the Philippines always came from a different person.

Problems Caused by Cultural Differences

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You greet your Austrian client. This is the sixth time you have met over the last 4 months. He calls you Herr Smith. You think of him as a standoffish sort of guy who doesn't want to get really friendly. That might be true in America, where calling someone Mr. Smith after the 6th meeting would probably mean something -- it is marked usage of language -- like "we're not hitting it off". But in Austria, it is normal. A Canadian conducting business in Kuwait is surprised when his meeting with a highranking official is not held in a closed office and is constantly interrupted. He starts wondering if the official is as important as he had been led to believe, and he starts to doubt how seriously his business is being taken A British boss asked a new, young American employee if he would like to have an early lunch at 11 am each day. The employee said 'Yeah, that would be great!' The boss immediately said "With that kind of attitude, you may as well forget about lunch!" The employee and the boss were both baffled by what went wrong. [In England, saying "yeah" in that context is seen as rude and disrespectful.] A Japanese businessman wants to tell his Norwegian client that he is uninterested in a particular sale. So he says "That will be very difficult." The Norwegian eagerly asks how he can help. The Japanese is mystified. To him, saying that something is difficult is a

polite way of saying "No way in hell!". Dave Barry tells the story of being on a trip to Japan and working with a Japanese airline clerk on taking a flight from one city to another. On being asked about it, the clerk said "Perhaps you would prefer to take the train." So he said "NO, I want to fly." So she said "There are many other ways to go." He said "yes, but I think it would be best to fly." She said "It would very difficult". Eventually, it came out that there were no flights between those cities.

Three basic kinds of problems: interpreting others comments and actions, predicting behavior, and conflicting behavior.

Some Perceptions of Americans Europe & especially England. "Americans are stupid and unsubtle. And they are fat and bad dressers." Finland. "Americans always want to say your name: 'That's a nice tie, Mikko. Hi Mikko, how are you Mikko' Indian. "Americans are always in a hurry. Just watch the way they walk down the street." Kenyan. "Americans are distant. They are not really close to other people -- even other Americans." Turkey. "Once we were out in a rural area in the middle of nowhere and saw an American come to a stop sign. Though he could see in both directions for miles, and there was no traffic, he still stopped!" Colombia. "In the United States, they think that life is only work." Indonesia. "In the United States everything has to be talked about and analyzed. Even the littlest thing has to be 'Why, why why?'." Ethiopia. "The American is very explicit. He wants a 'yes' or 'no'. If someone tries to speak figuratively, the American is confused." Iran. "The first time my American professor told me 'I don't know, I will have to look it up', I was shocked. I asked myself 'Why is he teaching me?'"

Try this experiment: Start by reading this: FINISHED FILES OF SCIENTIFIC EXPERIENCE OF YEARS ARE STUDY THE RESULT COMBINED OF WITH YEARS THE

Now, quickly count the number of "F"s in that sentence. On average, anglos find fewer F's than do others. Why? Perception & Attribution

What is Perception? A person's mental image of the world. What you think IS (as opposed to "should be"). The Perceptual Process Two key elements: attention and organization.

The Old Woman/Young Woman Illusion. Attention In any situation we only pay attention to a few things. Your mind unconsciously filters out most of what is going on around you. At some level, you mind is probably aware of a lot of things. Think about the people sitting next to you in a class. What are they wearing? What movements are they making (are they breathing?)? What do all the chairs look like? What's on the walls? What sounds are coming from outside? You're not really aware of all those things. Consider your

own body. Are you aware of your pulse, breathing, feel of the chair under you, the feeling of your clothes on your body? How come my dog doesn't wake up if I start petting her while she's asleep, but if a car drives into the driveway she goes from sleeping to barking in less than a second? Her mind is filtering things. So what does grab your attention?
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loud sounds: That's the principle behind fire alarms and telephones and alarm clocks bright lights and colors movement

What else determines what you will attend to?

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context: at meal time, every one of my movements triggers a huge reaction in the dogs training: o police trained to spot certain things in cars or in people's behavior o psychologists wait for certain comments, or signs of certain problems o doctors run through whole laundry list of deviations from health state

Organization Even when you do become aware of these things, there is considerable pre-processing that is done by brain before it reaches your consciousness. If you are watching a professor in class, do you see him or her raising and lowering his arm in front of the blackboard, or do you see him writing on the blackboard? We see the world in terms of meaningful, functional units, not simple movements. When my mouth is moving and sounds are coming out, I am speaking. Animal perception is not like computer/machine perception. There is filtering and meaning all the way down to the simplest level. It is not like the eye is a video camera, and the brain then makes sense of the images. Instead, even the eye filters things. Perception is affected by knowledge -- by what the brain already knows. Knowledge is itself organized. For example, similar things are stored together. The mind also creates schemas, frames and scripts. After going to enough restaurants, you learn the pattern of how things go: 1. (i) stop just the door and wait for someone to greet you 2. (ii) you tell them how many in your party 3. (iii) may be asked if smoking or non-smoking

4. (iv) follow person to table 5. (v) if fancy restaurant allow waiter to pull out seat for your, push it back in, lay napkin on lap . Etc. All situations have behavioral norms that get internalized by participants so that they know what to expect. This is turn determines what they find to be unusual or special. For example, a person screaming and rolling on the floor is not a big deal in a mental ward, but it would be highly noticeable in a classroom. It's not just behavior its presence and absence of features: types of clothing, such as uniforms on waitresses in cocktail bars, color of walls in schools, size of hallways, sliding doors to porches, swinging doors for kitchens etc. Some schemas are cultural -- you learn them from others, from books, TV, institutions. Others are experiential -- from mundane, what happens at restaurants, to how to have a romantic relationship. Perceptual Distortions The fact that mind stores information in schemas which in turn are built from experience means that you can comprehend and recall situations extremely well. For example, one glance at a new restaurant and you understand the whole layout, because you understand restaurants in general. Another example is language acquisition by children. But schemas are also a source of errors, in particular false recalls of usual events and omission of unusual ones. Two interesting papers you can read:
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Freeman, Romney and Freeman. 1987. "Cognitive Structure and Informant Accuracy." American Anthropologist 89:310-325. Shweder, R.A. and R.G. D'Andrade. 1980. "The Systematic Distortion Hypothesis." New Directions for Methodology of Social and Behavioral Sciences. 4:37-58.

Schemas also facilitate and hinder learning. For example, experiments show that people have trouble memorizing who is friends with whom in a group unless the friendships are transitive: that is, if A is friends with B, and B is friends with C, then it is also true that A is friends with C. Stereotypes are a kind of schema that often have problematic consequences in terms of justice. In the past women were seen as too flighty and flaky to be entrusted with voting, so they were not allowed to vote. Blacks are often seen as dumb, violent and lazy. Men are often seen as aggressive, competitive and sexual predators. The consequences of these stereotypes, besides the obvious, is that stories about individuals are often judged as true simply because they fit preconceptions about the class. For example, it is easy for people to believe that a crime was

caused by a black man. Similarly, accusations of sexual harassment tend to stick even without evidence because people believe that "men are like that". Another interesting phenomenon is the halo effect. This is where one characteristic of something or someone affects perception of all the other characteristics. For example, if medical doctors are often asked their opinion about financial matters. Consumers often buy a product because it is by a company that makes other products they like. A curious characteristic of human thinking processes is projection. This is where you perceive others in ways that really reflect yourself. For example, dishonest people tend to see dishonesty in others.

Attribution Attribution refers to how people in situations like the workplace construct explanations of other people's behavior. People are not exactly rocket scientists: these explanations can be highly simplified and strongly biased. What is interesting and helpful is that people's biases tend to be systematic and predictable. For example, people tend to overestimate personal/individual causes (abilities, motives, morals) and tend to underestimate situational causes, like nature of the job, compensation system, the economy, luck, the percentage of the population who are young. For example, people attribute the state of the economy to the President. But scientific work on the topic suggests that Presidents have little effect on the economies during their tenure (but can have big effects on the economy years later). Another kind of bias occurs with the nature of a person's participation in a situation, and how it comes out. For example, if a student gets an A on a test, the student thinks it was because he or she is so smart. But if they get an F, it's because the teacher is a jerk, or the book is lousy, or some other reason. In general, people seem to think this way:
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if my outcome is good (I become president of company), I'm responsible for it (my hard work, my brains) if my outcome is bad (I'm homeless), it's society's fault: I'm just a victim

Another basic principle is that people tend to attribute motives to people's behavior. So when people don't behave as you expect them to, you think they are doing it on purpose (usually, just to annoy you). In other words, people tend to assume a common understanding of a situation, but different motives and interests. They also tend to assume that other people do everything consciously: no oversight is truly an oversight, no inconsiderate action was just thoughtless.

Gender Diversity in the Workplace

In the past, all women in the workplace were automatically assigned to temporary or part-time or low responsibility jobs because it was understood that their first priority was taking care of their families. Unmarried women were likely to quit as soon as they married (often to an up-andcoming executive in the company), and married women were likely to quit as soon as the became pregnant. Women with children were understood to care more about the children than about work. In addition, there was a widespread belief that women were not as capable as men, either physically or mentally or emotionally. Today, women are not generally seen as inferior to men (in fact, it is common to hear that men are inferior to women). And there are women who want to put work first and family second. Most women in the workforce do not see it as temporary -- something to do until they "catch a man" -- nor as "extra" income. Organizations have been slowly adjusting to these changes, learning to treat women as the equals of men and not as a pool of potential dates. Both discriminating against female employees (in terms of hiring and advancement) and treating them in a sexual manner (sexual harassment) are now against the law. However, since there remain some women in the workforce who do place family first, Felice Schwartz has suggested creating a "Mommy Track" which would allow them to have more flexible and shorter hours and lesser responsibility in exchange for lower pay and limited career growth. In other words, recognize the wider diversity of needs of employees today and set up systems to accommodate them all. Feminists worry that creating a Mommy Track effectively licenses corporations to discriminate against women. They feel that women (and presumably men!) should be allowed to have flexible work arrangements and remain on the fast track Notes Teams on

Teams are THE way to organize these days. They provide a new way to coordinate people and tasks in large organizations. The popularity of teams in modern organizations is one reason why there is so much emphasis on team assignments at BC -- employers want to hire college graduates that have experience working in teams.

Let us consider two questions about teams. First what typically happens in teams? Second, how can we make them work better? What happens in Teams Teams go through four predictable stages: Orientation, Conflict, Group Formation, and Differentiation. 1. Orientation: The team is formed. Member behaviors: most comments directed to leader. Lots of questions about direction and goals. Status in the group mostly determined by roles outside the group (sex, age, race, position in the company) and by majority/minority status (only male in group of females). People fail to listen, resulting in non sequiturs and repeats. Member concerns: what is my role? Can I do this? Who is the leader? Ideal leader behavior: provide structure and clarity. Establish norm of non-domination by anyone. Share all information. Facilitate members learning about each other. 2. Conflict: Conflict over control with leader and with other members. Member behaviors: attempts to gain influence. Suggestions, proposals. Subgroups and coalitions form, with possible conflict between them. Leader tested and challenged. Members judge and evaluate each other, shoot down ideas. Task avoidance. Member concerns: what is my place in the pecking order? Who likes me? What are my issues? Ideal leader behaviors: engage in joint problem-solving. Establish norm of supporting expression of different view points. Discuss the group's decision-making process. 3. Group Formation: Development of solidarity. Member behaviors: Members can disagree with leader. Group laughs together, has fun. Jokes made at leader's expense. A sense of we-ness develops. Group feels superior to other groups in the organization. Member concerns: How close should I be to other group members? How do we compare with other groups? Can we accomplish our task? Ideal leader behaviors: Start sharing issues and concerns like any other member. Have members manage agenda items (especially those in which you have a stake). Give and request

feedback. Assign challenging problems requiring consensus (e.g., budget allocations). Delegate as much as possible. 4. Differentiation: Development of differentiation and productivity. Member behaviors: Roles are clear and each person's contribution is distinctive. Members take initiative and accept initiative of others. Challenging each other leads to creative problem solving. Members seek feedback to improve own performance. Member concerns: None. Ideal leader behaviors: Jointly set goals that increase group's scope. Question assumptions and traditional ways of behaving.

What Makes a Good Team? Researchers have studied hundreds of successful and unsuccessful teams and compared them. Here is a list of characteristics shared by most successful teams and lacking in most unsuccessful teams. Awareness and attention paid to group processes.
y

This means that not only do you talk about the task and how you are going to do it, but you also discuss yourselves and what is happening in the group. This is often embarrassing and painful but turns out to be enormously beneficial

Common goal or vision

y

Being clear about the underlying vision is extremely important because otherwise each individual works in ways that are subtly inconsistent with others, causing a great deal of time to wasted pounding everything back into a coherent whole A common vision is also a tremendous motivator which releases energy and creativity. Conflicting visions tend to demoralize

Discipline
y

The team has the will to stick to the task and not degenerate into a social club.

Communication
y y

Teams need to ensure that everyone gets heard. Often, there are members who can't say anything unless specifically asked and given the floor: they won't fight for attention. Teams need to spend enough time chatting about each other's lives to give everyone a feel for who they are and where they are coming from

Shared knowledge of the groups goals and methods

y

People often assume that their view of what the specific goals of the team, and the procedures they will employ to get there, are shared by all. But this is rarely the case. Teams need to explicitly discuss not only their goals but their style, their approach

Awareness of the group's place in the larger organizational context

y y y y y

Meaning of success: tuning to the real needs of the organization Getting resources from the rest of the organization Develop list of outsiders that matter Interview outsiders about their expectations for the team's performance Schedule initial and final meeting with management

Personal security of individuals not an issue

y

People need to feel safe in the team. This means they are not afraid that they will be made fun of or treated badly if they say something stupid or unpopular. Without this, people are not free to think and contribute ideas.

Manual for Working in Teams

This manual contains a number of suggestions that have been found useful for working in teams in general. The suggestions are not particular to this class: they apply to working in teams in general

1. Getting to Know One Another This may sound elementary, but many teams screw this up. One thing you will eventually learn is that team members have very different abilities, motivations and personalities. For example, there will be some team members that are totally involved, and others that just want to disappear.

If you let people disappear, they become dead weight and a source of resentment and frustration. You must not let this happen! Here is something that you should try to take to heart (but will be very hard for many to accept): When team members disappear, it is not entirely their fault. It is your fault too. Take someone who is introverted. They find it stressful to talk in a group. They like to think things through before they start talking. They consider others' feelings and don't want to tell them when they are wrong. In a group full of extroverts, this person cannot find a way to participate: it is not in their nature to fight for attention. It is the extroverts' responsibility to consciously include the introvert, to not talk over them, to not take the floor away from them. If you want the team to succeed, you have to accept that you must actively manage others. If you think "Why should I do that? It's their responsibility to carry their own weight. I'm doing my part, they should do theirs" you are dead meat: you will need all the human resources at your disposal. One of the first things you should do as a group is make sure everybody knows everybody's name. Don't just introduce yourselves once because some people will immediately forget the names or never quite hear them the first time. So make sure that everyone has written down everybody's name. Then go on to talk about each other -- what major, where you live on campus, who you know, etc. Since teams are not (just) social groups, it is also important to get an idea about what each person is good at, and what resources they can bring to bear. For example, one person might have a conveniently large apartment where the group can meet. Another might have great computer skills, useful for creating presentations and typing papers. One thing to realize is that when teams are new, each individual is wondering about their identity in the group. Identity is a combination of personality, behavior, competencies, and position in the social structure of the group. Some people will fight for dominance. Some want to be seen as smart. Others play the role of comedian. Others want to be liked. As you watch this process occur, it is helpful to think that much of what people do is not so much a choice as a need or a habit. The person who seems hellbent on dominating everyone has a strong need to do this, and won't feel comfortable not doing it. Thinking this way will help you to be less judgmental, which in turn will help you to avoid unproductive hatreds. Remember: it is just a team, not a marriage.

2. Vision If the word "vision" makes you want to puke, think instead "what are we really trying to accomplish? Besides the explicit tasks, what are our real goals?". For example, for a class team, does the team want to do whatever it takes to get an A? Or is having a comfortable workload

more important? Does the team want to really get involved with each other socially, or keep interactions to just what's required to do the work? Does the team want an atmosphere of military efficiency, or do they want to horse around and have a good time? A useful exercise is to create a vision statement. This is basically a short paragraph that says what you're about, what your strategy is, what you are ultimately trying to accomplish. Think of it as a description of your positioning in the market place. The best vision statements are usually those that synthesize each individuals team-member's personal vision for what they are trying to accomplish, not just in the team but in their careers. In other words, each person should separately figure out what they think the team should accomplish, then the group should get together and see if there are any common elements out of which you can build a single, coherent vision that each person can commit to. The reason why it is helpful to use common elements of the individual visions is that part of the purpose of writing a vision statement is to provide common direction and to motivate team members. But if nobody believes in the vision statement, it will just be words on a piece of paper. It has to be real to be useful.

3. Structure It is difficult for teams to succeed without a leader. So you should designate someone to play that role. However, you don't need to make the leader omnipotent. There are certain task & maintenance functions that need to be performed, and you can have one person do all of them, or you can split up the job among different people. One key function is that of facilitator/coordinator. This is a person who calls meetings, keeps people on track, and pays attention to group processes. For example, the facilitator makes sure that everyone is involved and notices when someone is upset. Here are some of the things that successful facilitators try to do:
y y y y y

focus team on task engage participation from all members protect individuals from personal attack suggest alternative procedures when the team is stalled summarize and clarify the team's decisions

Here are some tips for accomplishing these goals:

y

stay neutral

y y y y

don't let the meeting run too long, even if it's going well (or people will try to avoid coming next time) express out loud what seems to be happening (e.g., "nobody seems to be saying much since Jenny suggested ... ") don't let snide comments, put downs, etc slide by without comment after a person has been quiet for awhile, ask them for their opinion

Another key function is that of boundary manager. This is a person who serves as liaison between the team and the rest of the world (the team's "stakeholders"). In the context of class teams, this person interacts with the professor, and keeps an eye out for what the other teams are doing, they also make themselves aware of the obligations that team members have to others (like boyfriends/girlfriends, part-time jobs, etc). The boundary manager is responsible for learning who the key stakeholders are (a stakeholder is someone who affects the team, or is affected by the team), and working out a strategy for dealing with them (e.g., sucking up to the professor). Finally, there is the project manager. The project manager organizes the work plan and sees that it is implemented. In the context of class teams, there might be different project managers for each assignment, or a single one that organizes all the assignments. Project managers need to be able to take a whole task, such as a paper assignment, and break it down into bite sized pieces that can be doled out to people to do. Project managers have to be able to figure out time budgets and get people to do their part at the right time.

4. Process Meetings can be useless if not done right. One simple thing that helps a lot is having an agenda. Having a written agenda makes it easier for the facilitator to steer things back to the task. Otherwise, if, say, two popular and dominant people in the group start talking about sports, it may difficult for a third party who is not as socially central to bring them back. But if there is an agreed-upon agenda and an agreed-upon length of meeting, a facilitator can say 'I don't know about you guys, but I really want to get out here at 5: if we really want to talk about all the things on the agenda we kind of have to get going...'. The first item on any agenda should usually be a "check-in" which is where the facilitator asks each person how things are going and whether there is anything on their minds that needs to be discussed.

For certain kinds of meetings it is useful to go into brainstorming mode. Brainstorming is a process of generating ideas (e.g., for a paper). There are certain dos and don'ts for good brainstorming:
y y y y y

don't evaluate until much later in the process. accept all ideas, no matter how stupid they appear encourage mental hitchhiking (building on other's ideas) don't stop at the first silence. just wait a bit, no matter how uncomfortable for hard problems, it helps to summarize the problem, then let people think on their own and write down some answers, then get together and pool them on a blackboard after you get a bunch of ideas, ask each person to vote for two or three of them. Take all the ideas that get at least one vote, and start classifying them according to similarity. This will usually get you down to just a few basic types of ideas, which you can then make decisions about.

There will be many situations in which you need to give feedback to others in the team. Like, they have just written a draft of a team paper, and you need to suggest changes and point out problems. When you give feedback it is extremely important to avoid any negative comment that would seem to be about the person, rather than the work or the behavior. You should also focus on yourself and your objection rather than on them and their problem. For example, you might say "I don't understand why on this page we jump from this topic to that, and then come back to the first topic" instead of "You made a mistake on this page" or "You are not being logical here". The moment you say "You" people's defenses go up. It is very important that teams assess their performance from time to time. Most teams start out ok, and then drift away from their original goals and eventually fall apart. This is much less likely to happen if from time to time, the team facilitator or leader asks everyone how they are feeling about the team, and does a public check of the performance of the team against the mission/vision statement. Dependency Theory

Power is the ability to make others do things they wouldn't otherwise want to do. We tend to think of power as being a property of the person, but this is really shorthand. Power is really a relation between two people. When we say someone has power, we should really specify over whom. One reason is that power is not necessarily transitive: you can have p(a) > p(b) and p(b) > p(c), yet p(c) > p(a). This can happen, for example, if person c has a powerful friend d who hates a. So when b pushes c

around, d does not get involved. But when a tries to do it, d steps in. Consequently, it is better to think of power as a relation between two people. We can symbolize this by represent the amount of power A has over B by using notation like p(a, b), rather than thinking in terms of p(a)-p(b), as we did above. What is the basis of power? According to Emerson (1962), the basis of power is dependency. A depends on B if A has goals and needs that B can fulfill. For example, an employee depends on her company for a paycheck. Similarly, a company depends on its employees for labor, skills and brains. The dependency of A on B {D (A, B)} is a function of two things: supply and demand. Demand Defined as the motivational investment by A in goals mediated by B. In other words, how much A needs what B controls. 1. 2. 3. 4. Supply Defined as the availability, quality and cost of alternative means of satisfying needs. In other words, how easy it is for A to go elsewhere to get what B controls. Supply is inversely related to dependency (A depends more on B if there are few alternatives available to A). Examples: 1. Phone company used to have a monopoly, and was not customer driven 2. The only factory in a small town is only source of employment Importance/prestige of certain professions in society is a function of both values and availability 1. Doctors do lifesaving work, and they actively limit their numbers 2. Teachers are critical for society, but their effects are not immediate, and they are plentiful 3. The post-it company might have a near monopoly on the product, but it's not a crucial product Balance of Power Dependency may be mutual: Doctors supply life-saving functions Universities provide critical work credentials Bosses supply raises and promotions Dogs provide unconditional love.

1. Married couple may depend on each other for all the same things. 2. Or, A can depend on B for some things, and B depends on A for others A has power over B if A is less dependent on B than B is on A. For example, Bill and Sally enjoy going out together. But bill knows a lot of other girls who will go out with him, but Sally really hasn't met a lot of guys that she likes (maybe she's new in town). 1. Demand side is equal, but supply side is not, so Bill has more power

Exercise of power
Power use tends to provoke two forces in the power system: cost reductions and balancing operations. Cost reduction This is where the party on whom power is being used adjusts to make that use bearable 1. Bill wants sally to sleep with him. 2. She wants to save herself for marriage. If she sleeps with him, she will feel bad. If she doesn't, she will feel lonely, cuz bill will be out with someone else. 3. A lot of things could happen, but one of them is that sally redefines the situation so that she won't feel bad. She could change her moral views. She could convince herself that since he's the one she's gonna marry him anyway, its ok. Another example, using companies as actors. Suppose you supply hub caps to general motors. They say we have some other suppliers that are cheaper than you. Either you give us a lower price or we walk. So you lower the price. To do it, and maintain your comfort level (your profit margin), you must literally reduce costs. 1. You re-engineer, restructure, downsize, layoffs, job sharing, early retirements, retire the corporate jet, stop subsidizing the company cafeteria 4. Other examples: victim sees rape as her own fault; POW sees captors as saviors Note that cost reducing operations do not change balance of dependency -- don't change the power situation

Balancing Operations Balancing operations are forces that neutralize differences in dependency, reducing power of one over the other. Given the definition of dependency, there are four different kinds of possible balancing operations. Assuming A has power of B, then 1. B could (not necessarily on purpose) reduce his/her need for what what A provides 1. When the arab nations put the screws on the West in the oil embargo, the US rationed gas and lowered speed limits, thereby reducing need for oil 2. Sally could lose interest in dating B could find alternative sources for the same services 3. Sally joins a wine-tasting club, where she meets a lot new guys, or she starts hanging out in bars, or starts dating women 4. The hub-cap maker makes a trip to japan to see if he can get some japanese companies for clients 5. Employee keeps his resume circulating 2. A could increase his/her need for B's services (perhaps not on purpose) 1. Japanese make an effort to open some markets, to buy some US parts for their cars 2. B makes his/her services better: US parts manufacturers increase quality control to be more attractive to Japanese 3. B satisfies additional needs of A's, kind of buy this and get this other thing free 3. A reduces # of alternative sources for what b provides (not necessarily on purpose) 1. Coalitions, groups, unions. 2. Sally makes friends with the other girls bill dates. They start refusing to go out with him out of consideration for her.

A Closer Look at the Supply Issue Suppose we hold demand constant. Then the only source of variation in dependency, and therefore power, is in supply. But supply is not as straightforward as you might think. Consider, for example, the following network: A----B----C Actor B clearly has the advantage in this network, because B has two sources of supply, while A and C each have only one. But now consider this network:

A----B----C----D----E Based on the number of connections, it looks like B and C and D should all have equal, relatively high, power, while A and E should have equal, relatively low power. But that's not the case. In fact, what happens is B and D have all the power, and A, C and E are fairly powerless. We can easily see why A and E are powerless: they face a monopoly situation because they only have one actor to work with. And we can see why B and D have power: they have a monopoly situation going with A and E. But why is C powerless? The reason is that C is connected only to people who are connected to people who are poorly connected. B and D can always trade with A and E instead of C, so C can never drive a hard bargain with them. As a general rule, in these kinds of situations (where demand has been held constant), you can only have power if you are connected to people who have low power, and vice-versa.

Sources of Power

Ability to satisfy needs of others or withhold "hygiene" factors like health, freedom from pain
y

y y y y y y y

Position in organization (authority) allows control of resources that other person needs o Authority is legitimate power. Carries with it threat of expulsion from organization Expertise in important area provides help/information that the other person needs o Education o Talent o Experience Centrality in gossip network Warmth, openness, ego-security allows person to satisfy needs for affection, intimacy, respect, etc of the other person Attractiveness Physical strength (possibly augmented by weapons) Wealth or control of wealth Power over others who can do things for the other person Ability to touch the "oceanic" emotion: religious ecstasy, being part of a greater power

Ability to forgo own needs 1. The more needs you have the more vulnerable to power use 2. Get used to a certain lifestyle, start doing things just to maintain it 3. Temper need for power, respect, money, etc.: go live with the monks

Ability to find alternatives to the people one depends on 1. Organization that is too dependent on an individual can hire someone else with similar skills 2. Example of the advice network with the low stake person who was so central 3. Networking in the industry 4. Restructuring so that services filled by a person are now filled another way 5. Develop one's own skills so that oneself is an alternative source

Ability to reduce the alternatives of others 1. Kill off rival drug dealers 2. Develop unique "product line" of products, skills, behaviors that are valued but not generally available

Negotiation

WAR STORIES & ABOUT INTERACTIONS BETWEEN PERSONS OR NEGOTIATING AS BEFORE IT GAVE WAY TO LAW SUITS Joe Borgatti / Notes for class lecture WE

OTHER

ANECDOTES

KNEW

IT

The bibliography on negotiating grows each month. Titles like: Negotiate like the Pros, Negotiating your Compensation Package, Advanced Negotiating, Conflict Resolution: Getting to

Yes, Beat the Car Salesman, Secrets of Power Negotiating, How to Negotiate Anything with Anyone Anywhere in the world. On the Web found 73,542 documents on the subject. Negotiation possibly more associated with managers than leaders. Managers are seen as seeking solutions. The leaders are characterized as people creating new approaches and imagining new areas to explore, projecting ideas. Where they come together --leadership and management-- is when you want to effect change in an organization like Reengineering. It has to be negotiated at several levels. You have to deal with resistance to gain commitment, and this means negotiating the matter.
y y

Negotiating is a way for parties to a transaction to confer in order to satisfy their mutual needs. Technique of secondary importance. Of primary importance is listening, communicating and being comfortable with compromise. Negotiating is about persons of differing requirements finding common ground on which to effect a transaction --any kind of transaction. While negotiating extends to all kinds of human interactions, my talk today is about business negotiating. There is a lot of negotiating in business because the issues between parties to a business transaction usually include several factors --often complex. The more complex a transaction, the more useful this approach. Hence its great application to business. Perhaps more art than science but there are rules or principles

OUTLINE

ARGUMENT

ANECDOTE In "The Art of The Deal", Donald Trump calls it the art of persuasion (this may be more true of real estate deals than of others), of overcoming

WHAT IS NEGOTIATING Conferring, explaining requirements, hearing others' needs, seeking common ground. A process of discovery and adaptation A scientific process or a social Not (yet) done by modem - that's chess - a relation series of moves to win advantage, until the Its known as a process because other cannot go on. there are sequential steps The law suit is its opposite

obstacles Mediation use of an intermediary agent between conflicting parties, is a form to an extent & occasionally serves a useful purpose Arbitration a form of it: comes between negotiation and law suits employee rights at Polaroid are settled by an outside arbitrator arbitration (JRS and the royalties case with INCO - part of regular remuneration or outside it? WHY DO WE NEGOTIATE? Because a deal as presented, as it stands, doesn't fit one of the parties' needs or requirements -to find out what the other one What's there to negotiate? wants. Wall St lawyer: its about improving your position

Another lawyer: What do people assume when they proceed to negotiate? Is Need may be psychological or substantive Negotiate a settlement. there a hidden agenda? Thus never Sometimes its the way things are done - as in got to a buying a house or getting an executive job lawsuit My question to a veteran financial executive. Why do you negotiate? To get what I want. We will see what he intends by this. RAM with Innovation luggage in NY

Baseball players and the owners CAN ANYTHING NEGOTIATED? BE Conflict; resolving controversy The recent agreement Labor negotiations between Disney and corporations negotiate to gain permits, access New York to something City to invest significantly contract negotiations to revitalize Times Square

Mining rights, tax regime, Ex of INTEL months Environmental conflict negotiations Tanzania - to negotiate their acceptance of under change (Reengineering) took them to an simplified animal preserve environmental permits in exchange for Permission to set up shop. a company doing better than the law requires or a proposed sale of pollution credits, or between a chemical plant and its neighbors Negotiation between a company and a city or state to keep that company there. Or to being it in; ditto re ball clubs

Negotiations with Somoza to open a branch

Negotiating with Dictator Stroessner HOW DOES IT WORK? Depends on parties and circumstances -can Simple: IIC be simple or complex management reaction to report

Exmibal ex of Essentially - parties meet at a specific time in complex and WORKS BEST WITH WIN a determined place and talk it out. Can be formal -3 yrs WIN formal -set a place, time, agenda, stipulate & many items who will attend. Works best wen the parties are comfortable with the arrangements

I win you lose conflictive approach Zero sum? eventually reach a compromise Win-win?

My negotiations with Kristjanson and Sopko in a car

Sam Goldwyn, head of a Hollywood studio and another studio chief wanted a certain big star at the same time. In the end, someone suggested that

the dispute be settled by arbitration. Goldwyn agreed reluctantly: "Okay, as long as its understood that I get him". ANY RULES PRINCIPLES? Prins. No winners or losers Be flexible Compromise Compromise Give to get as in El Sal You have to prepare - be clear about what is for bank to be negotiated How to prepare for it? They say learn people skills; learn negotiating tactics, be one up on the other Probably best preparation is to further your understanding of human behavior and OR Principles confused with rules of conduct Principles:

Rules: Preparation

Define

the

issues

get

the

facts.

Planning

follow the basic principals On-the-job Understand other's position training vs myriad of courses and Know your own needs (what you need to get books on how out of it) - psychological or real? What might to do it you be willing to give up to get out of it what you need? - can't expect to get exactly what Role playing you want. Develop a strategy that takes both to gain Donald Trump would agree on preparation Execute with flexibility and patience but would add that you have to keep pushing and pushing and pushing until you get what you want sometimes settling for less. The key he says, is you have to be born with it. 57 varieties an ex of poor preparation. Former owner held rights to brand names

Execution

Kashoggi Yacht

This carried the day in Exmibal

Negots with miners in Nicaragua 20% converted into 100% of 1 mine in jnt venture El Sal opening bankgave them savings accts, got opening and rediscounts

Clearest exs of good negotiations are the labor management negotiations in auto industry. Exmibal took 3 yrs.

The Contract with America broke the rule. The proper course would have been to negotiate a program that would have benefitted America and involved compromise by both parties. Instead they polarized, passed 1/3 of the program and wound up shutting down the government. ARE THERE TECHNIQUES? SPECIAL Depends on with whom negotiating -the inscrutable east How DDR negotiated with the Japanese

A lot of tricks. Books full of What about style & approach? Ex. them. Quote from internet pull Competitive vs collaborative; combative vs give a reason passive; adversary tactics why its to down their Team approach -good cop bad cop advantage Gain rapport understand your point but Info sharing - provide negotiators with a I can't do it shared body of knowledge this way how it saved

Communicate Street smarts do's and

the day in purchasing a don'ts corporate jet

Who should do the negotiating? -hired gun? -top person?

Someone who has a real stake in the outcome Baseball owners using a surrogate to body language negotiate, instead of one of their own an impersonal mode that encourages equally impersonal approach on the other side. The players too. hope for an intelligent adversary problem with the Nic miners or at least an honest one -Neville Chamberlain, Britain's Prime Minister, went to Munich to see Hitler in 1938, came back waving

an agreement he had negotiated with he Nazi leader and said, "I believe it is peace for our time". Less than a year later, Britain and Germany were at war after Hitler disregarded the promises of nonaggression he had agreed to.

GLOSSARY:

ARBITRATE to judge or decide as in the manner of an arbitrator ARBITRATOR: a person chosen to settle the issue between parties engaged in a dispute or controversy ARBITRATION: the process by which the parties to a dispute submit their differences to the judgement of an impartial person. A form of negotiation BARGAIN: to bargain is to negotiate the terms of a sale or agreement; fitsd a psychological need in some cultures or among some people CONSENSUS: Consensus is simply a process of discerning the sense of the group. Reaching consensus is not necessarily reaching unanimity or 100% agreement on everything by

everybody. Consensus isn't uniformity. Rather, consensus is the mutual feeling that all concerns have been addressed. What is required is that everyone has been heard and understood. Time lost in collective decision making is regained at the implementation stage.

The consensus process is fostered by valuing and encouraging individual differences. Adhering to this rule works to reduce or avoid judgements, competition and arguments. A group comes to consensus on the best decisions after its members have understood as many different perspectives as time permits. In this way, the group works cooperatively to make the best decision in support of the matter at issue. MEDIATE: to resolve or settle (differences) by acting as an intermediary agent between two or more conflicting parties. MEDIATION: a form of negotiation NEGOTIATE: to confer with another in order to reach agreement Notes on the Challenger Disaster

Click here to see blow-by data. Was it a communication problem? Probably not. The engineers at Thiokol noticed the problem and communicated it to top management. NASA was also aware of the problem. It had more to do with decision-making under uncertainty and responding to stakeholders.

What were some of the reasons for making a poor decision? Previous successes led to over confidence and the belief that observed problems, such as o-ring blow-by, were not serious (since it had happened many times without serious consequences). Looked for proof that the flight would fail, rather than proof that it would succeed (i.e., success had become normal) They concentrated on analyzing just flights where something went wrong, instead of all flights. See the data they used.

Pressures from the White House. Thiokol wanted to be on good terms with NASA because of upcoming booster rocket contracts. Avoiding appearing incompetent -- there had been several delays and cancellations already. NASA under severe budget constraints, is concerned about losing funding. Couldn't delay much longer without canceling (other launches scheduled), losing the teacher-inspace photo-op The notion that you cannot control all the risks. Attitudes towards engineers: they are perfectionists, they are not risk-takers, they always want to collect more data, and they do not see the big picture. Their input is important but if you listen to them too much you will find that you never do anything. Astronauts were not part of the decision process, so loss of life did not loom particularly large in decision-makers' minds.

The Need for a Decision-Making system Bounded Rationality. Human beings are rational within limits. Rationality means that you consider all the possible courses of action and choose the one that has the highest expected value (probability of success times payoff). But humans cannot consider all possible courses and cannot calculate probabilities of all outcomes. We have minds that think with relatively simple heuristics and have biases. For example, in testing hypotheses, people have a strong tendency to seek confirmatory evidence, and don't even know where to look for potentially disconfirmatory evidence. So we create systems to help us make the right decisions. For example, we divide up problems into smaller chunks and assign each chunk to a different person. In a way, the purpose of organizations is to overcome the limited cognitive capacity of human beings. GroupThink. Small groups of homogeneous managers, such as a small group of white males from similar backgrounds who have worked together for years, can develop groupthink, which is an artificial kind of consensus where they see the world exactly the same way and do not allow innovations or contrary evidence to really enter their consciousness. They tend to devalue the opinions of people who are different from themselves (such as engineers). (This is known as homophily -- the appreciation of those similar to oneself.) It's what allows things like the Bay of Pigs initiative to seem like a good idea when any outsider would see that it was not.

The new system. Since the disaster, NASA has constructed a pre-launch system that actively gathers input from diverse groups including the astronaut crew, engineers and operations crews and does not allow them to be easily over-ridden. And the final decision to launch is now made by a single person who is an astronaut. Being an astronaut makes it easy for that person to keep the best interests of the astronauts in mind, rather than the budget, the politics, public opinion, scientific needs, etc. Leadership

The Difference Between Leadership and Management According to the dictionary, management is conducting, coordinating, being in charge of, having responsibility for. Managers master routines and create efficiency. In contrast, leading is influencing: guiding in direction, course, action or opinion. Leaders acquire vision and judgment and become effective. According to Warren Bennis,
y y

managers are people who do things right, and leaders are people who do the right thing.

Another way to think about it is in terms of single-loop and double-loop adaptation. Single-loop adaptation refers to adjustments made to keep moving along a predetermined course. Like the action of a thermostat: you set it at 68 degrees, and when the temperature goes below 68 it turns on the heat, and when the temperature gets much above 68 it turns on the air conditioning. A manager has a set of goals (responsibilities), and set of tools (authority) and they use the tools to accomplish the goals. In this sense, a manager is like a thermostat or single-loop governor. Double-loop adaptation refers to adjusting not the actual temperature, but the desired temperature. Think of a smart thermostat that would notice that, in the winter, at night you often dial the temperature down to 60 degrees, but at 7am you turn it back up to 68. Then, when you leave the house, you turn it back down to 60, and so on. So it sees that and changes its desired setting based on the time of day and the activity level in the house. In organizational settings, double-loop adaptation refers to reacting to situations not by fixing things so that everything is back to normal, but instead re-evaluating priorities -- looking beyond the way things have always been done and asking whether more fundamental change is needed. This is the job of a leader.

Strategies of Leadership (according to Warren Bennis) Vision. Vision refers to the management of attention. The creation of focus. The provision of an agenda of agendas. Vision creates commitment, interest and motivation. One kind of vision is a new and captivating idea of what is possible. Example: DEC remade itself as a networking company. Negative examples: the railroads did not have vision and died. Communication of Meaning. Manager communicates know-how. The leader communicates know-why. The leader provides the interpretation of events. Meaning comes from relating events to past events, to individual lives, and from touching emotions. Symbols and symbolic action can be used to communicate meaning. Examples: the metaphors that Martin Luther King was fond of (see speech). Another example is provided by Admiral Rickover of the Navy (now retired) who did not permit senior officers to have have a rule book. When he would take over a new post, he would publicly and literally throw the rule books in the trash. Development of Trust Through Action. Leaders wears his or her vision like clothing. Leader becomes living epitome of their visions. This is another way of saying they have integrity -- they are internally consistent and reliable with respect to key elements that they stand for. Examples: Martin Luther King's non-violent approach to creating non-violence between races -the message is in the method; Rickover's legendary (and very abrasive) honesty. Deployment of self through positive self-regard. Recognize and utilize your strengths and compensate for weaknesses. Nurturing of skills with discipline: keep developing talents. Do not dwell on the possibility of failure. Simply trust that it will work out if you work steadily toward that goal. People who are happy with themselves can make others happy. This is related to Vision, and Communicaiton of Meaning above. Part of leadership is causing others to be touched by what Freud called the "oceanic" feeling: an almost religious feeling of being part of something truly grand. Empower Others. Big things cannot be done alone. You cannot achieve great things without great help. Even if they end up getting the credit, it is better to be an unrecognized part of a successful enterprise than lord of a failure. And by empowering others, they feel greater due to their connection with you. Work the Network. The social world does not consist of independent atoms or molecules, like a truckfull of sand. Instead, people are linked together in a vast network of communication and influence. To get things done, it is important to manage all the inputs that individuals have, rather than just the direct connection with the leader.

Example: Admiral Rickover befriending the wives of congressmen. Study Final Exam Questions for the

The final exam is cumulative -- it includes material that was already covered in the midterm. However, the emphasis will be on the new material. The format will be very similar to the midterm: mostly multiple choice, with some short answers. The content will be a little bit more conceptual and less detail-oriented than the midterm. Pretty much everything that was discussed in class will be on the final. The textbook (Jones, Organizational Theory) will not be emphasized. There will be several questions about Deborah Tannen's book Talking 9 to 5. The following study questions only cover the material after the midterm, but the exam itself is cumulative.

Decision-Making 1. What cognitive biases and heuristics affect how people make decisions? (see perception handout) 2. What is GroupThink? 3. Explain "bounded rationality". 4. Explain the notion of stakeholders and how it relates to corporate decision making. 5. What went wrong with decision-making in the Challenger case? Negotiation / Dependency / Power 1. 2. 3. 4. 5. Teams 1. What are the stages that teams typically go through? 2. What can be done to improve the performance of teams? What is negotiation? What is power? What is dependency based on? What are balancing operations? What are cost reduction operations?

3. How do you reward individuals for work done in teams? In other words, if most of your organization's work is done in teams, how do you work out salary increases and bonuses at the end of the year? Diversity 1. What kind of diversity do we find in organizations today? (sex, race, national culture, personality, age, etc.) 2. Discuss the dimensions along which national cultures differ. 3. What kinds of problems can we expect when people of different national cultures work together? 4. What kinds of problems do organizations encounter as a result of the increased gender diversity in the workforce? 5. In what ways do people's personalities differ? (MBTI, and see also the text, starting page 73) 6. What kinds of problems can we expect when different specific personality types interact? E.g., a perceiver and a judger working on the same team. 7. What are the pros and cons of adopting flexible employee contracts (telecommuting, mommy tracks, part time work, flexible hours, multiple compensation systems, making jobs available for spouses, domestic partner benefits, etc.) Organizational Trends 1. What are the key trends affecting organizational structures today? 2. What are the pros and cons of the new organizational forms? 3. What the causes of consequences of the key trends? Cultural Differences 1. What are the dimensions along which human cultures vary (e.g., high/low context, power distance, mono/poly chronicity, perceptions of time, etc.) Cognition 1. What kinds of heuristics do humans use to think through complex problems? 2. What are attribution, halo effects, projection, and stereotyping? 3. What is bounded rationality?

Hypothesis 1. A postulated relationship between a pair of variables. The reason for expecting the variables to be related should come from a theory. 2. Any theory-based prediction about some measurable data. Organization 1. A corporation, government, club or similar entity whose membership is well-defined and consists of individuals or other organizations. 2. Abstractly, an orderly pattern or principle, as in "Is there any organization in this mess?" Structure 1. Who reports to whom in the organization: the organization chart. 2. More generally, how the organization is divided into departments, how centralized the decision-making is, what rules and procedures are followed. 3. Sometimes, organization culture is seen as part of structure. Theory A general explanation of how something works. A theory says what is related to what and why. A theory is, in part, a collection of related hypotheses. However, a theory also contains a sense of process and mechanism -- a sense of understanding of why and how the variables are related the way they are. Desirable characteristics of a theory include: falsifiability, parsimony, truth, fertility, and beauty.