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Organizations in the

New Economy
(HRMG200, Spring of 2009)

Conducted By:
Professor Ralph Katz
Northeastern University
Boston, MA 02115
617-373-4724; <R.Katz@neu.edu>

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

Group versus Individual


Is a group likely to make a riskier or less
risky decision than the average
individual member of the group would
have made?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

Group versus Individual (cont.)

Group

Average
Individual
Member

Group

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

Risky Shift Phenomenon


Group versus Individual

(cont.)

If the group values risk with respect to a


particular issue at a given time, the group
is likely to be riskier
However
If the group values less risk with respect to
that issue at that time, the group is likely to
be less risky.
But
If there is no consensus of norms or
values with respect to the given issue, it is
unpredictable.
And so
A group is an amplifier but it can only
amplify around the groups consensus of
norms and values.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

Group versus Individual (cont.)


Implications
If you want decisions to accurately reflect
the current norms and cultural values
within the organization, then group
decision making is more likely to achieve
that result.
However
If you want decisions to break free of the
groups existing norms and cultural values,
then group consensus is less likely to
achieve that result. Instead, individual
leadership in decision making is more
likely needed to achieve such an outcome.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

MANSON

POST
Plant Managers

LARSON

Purchasing
Executives

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

What advice would you


give to Mr. Post about what
he did or did not do?
(In other words, how would you frame the
problem areas and issues for Mr. Post?)

Remember, the way you define the problem


focuses you on where you look for a solution.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

What Someone Behaving


Entrepreneurially Should Be
Doing Is:
Identifying Who and Where the Initial Targeted
Market Need Is
Then Identifying How it is Going to Diffuse
Through the Rest of the Marketplace Over
Time

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

There Are Two Different


Kinds of Autonomy:
(Strategic Versus Operational)

You Want Strategic Clarity


Coupled With
Operational Autonomy
But Not Wide Latitude

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

The More You Are Asked to Do


Something That Has Never Been
Done Before, the Stronger the
Sponsorship Has to Be!

(Note: One of the most commonly asked


questions by a team is: How do we
strengthen the nature of our sponsorship?)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

10

Sponsor(s) Are Needed To:

Help Clarify Priority Differences


(resolving quickly emerging conflicts)

Help Clarify Authority Relationships


(holding others accountable for support)

Help to Remove Obstacles


(providing necessary air cover)

Help to Free-up Resources


(solidifying commitments especially at out-of-cycle
times)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

11

What Kinds of Questions Do You


Think the Purchase Executives
Are Asking Themselves?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

12

What sources of
information might
the average
purchasing
executive use?

Supportive of
the Memo

Not
Supportive of
the Memo

a)
b)
c)
d)
e)
f)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

13

Is a System More Receptive or


Less Receptive to Negative
Information the Closer It Gets to
the Deadline?

(Note: A primary purpose of a team is to try to


surface problems as early as possible. The
earlier you can surface them, the earlier you
can deal with them.)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

14

Why Wont We Call Mr. Post, the


Optimal Source of Information?

(What Is It About Our Organizational


and Life Experiences that Makes It
Difficult or Prevents Us From Making
That Phone Call?)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Information Seeking Criteria

Familiarity and ease of use

Geographical distance

Minimize psychological cost

It is only after the effects of the above


criteria that people might seek a more
optimal source(s) of information

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Innovation, Change, and


Motivation Are All Related to
the Generation and
Reduction of Uncertainty...

But In Very Different Ways

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

17

The Management of
Uncertainty

Innovation requires the positive


energy, i.e., the creative tension,
between the full cycle of the generation
and reduction of uncertainty
BUT
Motivation and energy are related to
the reduction of uncertainty while
stress and anxiety are related to the
generation of uncertainty

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

18

Generation versus
Reduction of Uncertainty
1-Way vs. 2-Way communication
Separation of planning from
implementation
Solution vs. problem orientations
(substantively-based differences
become emotionally-based conflicts)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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The Fundamental
Attributional Error
When we watch people behave, we
tend to see their behavior as being
caused by something about their
personality or dispositions. When we
explain our own behavior, we are far
more conscious of the pressure of the
situation (e.g., deadlines, rewards, the
opinions of others).
In general, we are not sensitive to how
powerfully our behavior and that of
others is shaped by the situations we
are in.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Effects of Stress on Teams


Without the Active Involvement or
Intervention of Leadership, What
Does stress Tend To Do?

Without Involved Leadership, Stress


Tends to Exacerbate Differences in Priorities,
Backgrounds, and Values that Exist Within
a Team Or Cross-functional Group.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Conventional Model of
Motivation
This approach:
As individuals we have
Values
Interests
Needs
Personality

Fits our intuition


Makes us feel good
Doesnt work very well

These shape our


Expectations
Goals
Attitudes
Feelings

Which lead to
Consistent
choices and
behavior
Personality

Attitudes

Behavior

In this model, the information used to


reduce uncertainty is within the individuals.
Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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An Alternative Model of
Motivation
This approach is:
less intuitive
more useful to managers

We work in settings with

more powerful

Strategies
Structures
Reward Systems
Leaders

Which get us focused on


Specific tasks
Subunit objectives
Salient information
Coworkers
Which shape our
Expectations
Choices
Interpretations
Behavior
Attitudes

Behavior

Context

In this model, the information used to reduce


uncertainty is outside the individuals.
Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Generation versus
Reduction of Uncertainty (cont.)
Formal structures and procedures are
needed by the routine, functioning parts of
the organization, while more flexible,
informal structures and procedures are
needed for innovation (that is, for
accomplishing those things that have
never been done before).
Structure does not integrate, it
differentiates! Informal integrative
mechanisms (such as common problem
definition, leadership, norms, information
sharing, etc.) are therefore needed to link
across the differences that result from
formal structures.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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What is Heaven From A


Product-Line Point-of-View?
Manufacturing Marketing

R&D

Finance

HRM

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Do You Want
Marketing People?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Who Makes Money


in an Industry?

Who Controls the Technology?


and
Who Controls the Complementary
Assets?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Profitability Winners
Complementary Assets
Freely Available

Tightly Controlled

Freely
Available

No One Wins
(Commodity Business)

Complementary Asset
Holders Win

Tightly
Controlled

Intellectual Property
Holders Win

Profitability Based
on Alliances

Intellectual
Property

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

28

You Dont Want


Team Players,

You Want People


Playing Together As a Team!

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

29

Managing Socialization
Socialization can be thought of as the period
of time in which individuals, teams, change
efforts, products, and services function to
reduce uncertainty.
1. Establishing ones situational identities
2. Learning to deal with ones boss & building the
necessary information networks (build
sponsorship above, trust below, & credibility
throughout)

3. Learning, deciphering or creating and


reinforcing the appropriate (or changing the
inappropriate) organizational and situational
norms

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

30

Managing Socialization (Contd)


Socialization must take place.
It is a social relationship and development
process that takes place primarily through
interpersonal communication and interaction.
Early experiences are disproportionately
influential and long-lasting.

Because individuals are most malleable during


socialization, it is the best opportunity to clarify
expectations and legitimize possible future
problems and issues as discussible.
It can be consciously influenced and assisted
or it can simply result through evolving
circumstances and happenstance.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

31

What Might A Technologist Do


When Talking With Customers
That Would Make An Organization
and/or Marketing Incredibly

Nervous?

1. Tell the Truth


2. Abuse the Customer
3. Overpromise

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

32

The Need Hierarchy


Principal #1:
Met needs do not motivate
Self

Actualization

Principal #2:
Needs emerge in order

Ego

Social
Principal #3:
Most are working
on ego needs

Security

Safety

Survival
Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

33

Satisfaction and Dissatisfaction

Satisfaction Axis

Dissatisfaction
Axis

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

34

Elements of a Highly Motivating


Professional Work Environment*

1. Skill Variety
2. Task Identity
3. Task Significance
4. Autonomy
5. Feedback

*Adapted from model by Hackman and Oldham

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Sources of Tension Between


Organizational & Professional
Demands and Orientations
Skill Variety:

Skill utilization vs. skill extension

Task Identity:

Member of organization vs.


member of profession

Task Significance: Whats important to organization


vs. whats exciting in the
profession
Autonomy:

Strategic clarity vs. operational


freedom

Feedback:

Subjective feedback vs. objective


feedback

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Job Longevity Stages


Uncertainty

AREAS OF
CONCERN
REALITY
CONSTRUCTION

SOCIALIZATION

INNOVATION

STABILIZATION

a. To build ones situational


identity
b. To decipher situational
norms and identify
acceptable, rewarded
behaviors
c. To build social
relationships and become
accepted by others
d. To learn supervisory,
peer, and subordinate
expectations
e. To prove oneself as an
important contributing
member

INFLUENCE AND
ACHIEVEMENT

Certainty

a. To be assigned challenging
work
b. To enhance ones visibility
and promotional potential
c. To improve ones special
skills and abilities
d. To enlarge the scope of ones
participation and contribution
e. To influence ones
organizational surroundings

MAINTENANCE
AND
CONSOLIDATION

a. To routinize ones task


activities
b. To preserve and
safeguard ones task
procedures and resources
c. To protect ones
autonomy
d. To minimize ones
vulnerability
e. To cultivate and solidify
ones social environment

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

37

NOTE:
Socialization is not orientation or
socializing.

It is the building of identities,


relationships, networks and norms
through on-going, early interactions.

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

38

Correlations With Job


Satisfaction

Socialization

Innovation Stabilization

Skills Variety

0.02

.40*

0.03

Task Identity

0.20

.31*

-0.04

Task
Significance

0.44*

.43*

0.10

Autonomy

-0.20

.45*

0.08

Job Feedback

0.33*

.41*

0.14

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

39

Correlation Between Task


Complexity and Job Performance
for 194 R&D Professionals
Responsiveness

0.59

0.6
0.5
0.4
0.25

0.3
0.2
0.07
0.1
0
1.5

1.5-4.5

4.5

Job Longevity Category (years)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

40

Implications
Managerial and leadership requirements can
change over time and differ in each stage.

Autonomy, empowerment, and self-motivation


are influenced by stages and clarity of
expectations
Movement is toward predictability and less
uncertainty. Stabilized workers may be
satisfied but not necessarily performing
creatively.
Reorganizations and rotations only provide the
opportunity for a new socialization stage

How are individuals paired or grouped together


across the stages (i.e., group longevity or
group age)?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

41

Managing Socialization
1. Characteristics of project task assignments
and informal opportunities
2. Communication processes and networks
a. matrixed vs. non-matrixed assignments
b. reporting and collegial relationships
c. office & work station location

3. Reporting Relationships
a. more realistic previews and clearer expectations
b. technical expertise & credibility
c. interpersonal skills for defining meaningful
tasks, providing constructive feedback, and
being an effective translator of the
organizations norms

4. Socialization agents and programs

5. Pre-socialization activities
6. Individual differences in ability to deal with
uncertainty
7. Desocialization for creating uncertainty

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Turnover of Young
Engineers (<30) After 5 Years
Relative communication frequency with
immediate supervisor at the beginning of the
study:
Stayers
Leavers

26.2
8.6

Relative communication frequency with


departmental supervisor at the beginning of the
study:
Stayers
Leavers

4.0
0.8

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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% PLANNING TO LOOK FOR


NEW JOB DURING NEXT YEAR*
Employees Reporting
A. Dissatisfaction with Company
Mentoring

35%

B. Good Mentoring Within the


Company

16%

__________________________________
Employees Saying
A. Company Offers Poor
Training Opportunities

41%

B. Company Offers Excellent


Training Opportunities

12%

(* 1999 Emerging Workforce Study by Louis Harris & Associates)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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But Success Can Be


A Double-Edged Sword:

Organizational

Internal

Growth

Forces

Success

for
Stability

SIZE

STRUCTURAL INERTIA

AGE

SOCIAL INERTIA

These Processes Can Be Accentuated


in High-Performing Organizations

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

45

Organizational Trends
Associated With the
Reduction of Uncertainty
1. Social and structural inertia are
functional as long as environment
conditions remain stable
2. However, when threatened there is
Increased commitment to status quo
Decreased search, vigilant problem-solving
Increased conformity

OR WE DO MORE OF WHAT
WE DO BEST!

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

46

Group Trends Associated


With the Reduction of
Uncertainty
1. Problem-Solving Processes
Increased rigidity
Increased mainlining of strategies
Increased commitment to establish
practices and procedures

2. Information Processes
Increased isolation from critical areas
Increased selective exposure
Increased selective perception

3. Cognitive Processes
Increased reliance on own experience and
expertise
Increased narrowing of cognitive abilities
Increased similarity

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

47

Influence of Components
Over Time on Performance
Project
Performance
Team Building
Component

Not Invented Here


Component

Group Age
(i.e, average length of time (yrs) group members
have worked together)

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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Individual Reflections
Choose one of your more challenging
leadership problems, change efforts, or
innovative activities. In what areas and in what
ways are uncertainties being generated with
respect to this problem or effort?
To what extent and how are these
uncertainties being reduced and how are they
affecting the effectiveness of your
organization?
What activities and information can you (and
others) initiate or provide so that these
uncertainties are ultimately reduced in a more
timely and productive manner?

Organizations in the New Economy by Professor Ralph Katz

Northeastern Universitys MBA Management Program

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