Foundation of Organization Design (MGMT673) Reading Material Building Motivation Communicate Why the Redesign is Needed People need a compelling reason to change. With all of the changes being requested and demanded of people in the current world, people must be convinced that change is necessary.  Even when leadership initiates organizational change, it is often experienced as just one more unrealistic and often absurd demand. Employees are likely to respond in a passive-aggressive manner and simply do things the same. The previously engaged workforce may suddenly start misplacing things, ignoring e-mails, and spending hours talking with colleagues about what is happening. It is the leadership’s responsibility to not only have a vision but to also see that motivation for the change effort is high. Consultants can be helpful to management in this regard, but ultimately it is management’s responsibility. An offhand announcement of a redesign can literally bring production to a halt in a business. Even though management feels the redesign is in the employees’ best interest, if they are not properly prepared and brought in, the employees are likely to respond to the news in a way that will not move things forward. In fact, without a timely and wise explanation of why changes are needed, they may see the redesign as irresponsibility on the part of management. Communicating Credible Reasons and Expectations for the Redesign Management must take the time not only to provide a clear vision of the redesign but to also communicate why the redesign is necessary. The cost of not taking time to communicate credible reasons as to why the redesign was done and providing credible expectations of what it will take to realize the benefits of the redesign, will cost the company dearly. One way to build support is to involve employees and other stakeholders in the diagnosis and redesign. This takes time, but it helps employees understand why the redesign is important and builds motivation for making it work. However, if management already has its mind made up and is going to do what it wants to do regardless, involvement can backfire in a big way.  At the least, a communication campaign is essential. The campaign must be honest because employees and other stakeholders can see through the spin and hype. Do not Ignore Resistance Resistance is feedback. Figure out why it is there, and do not force it. Like the plumber or mechanic who forces a part to fit, the likely result is generally a broken part. Force generally does not work and is nearly always expensive and time-consuming. Resistance is natural. Ohm’s lawapplies to human behavior much like it does in physics—there is always resistance. Good managers and consultants learn from the resistance and manage it. Managing the Changing Relationships Acknowledge Changing Relationships and Responsibilities Redesigns nearly always change relationships and responsibilities. Not addressing these lead to conf.

1. Foundation of Organization Design
(MGMT673)
Reading Material
Building Motivation
Communicate Why the Redesign is Needed
People need a compelling reason to change. With all of the
changes being requested and demanded of people in the current
world, people must be convinced that change is necessary.
Even when leadership initiates organizational change, it is often
experienced as just one more unrealistic and often absurd
demand. Employees are likely to respond in a passive-
aggressive manner and simply do things the same. The
previously engaged workforce may suddenly start misplacing
things, ignoring e-mails, and spending hours talking with
colleagues about what is happening. It is the leadership’s
responsibility to not only have a vision but to also see that
motivation for the change effort is high. Consultants can be
helpful to management in this regard, but ultimately it is
management’s responsibility. An offhand announcement of a
redesign can literally bring production to a halt in a business.
Even though management feels the redesign is in the
employees’ best interest, if they are not properly prepared and
brought in, the employees are likely to respond to the news in a
way that will not move things forward. In fact, without a timely
and wise explanation of why changes are needed, they may see
the redesign as irresponsibility on the part of management.
Communicating Credible Reasons and Expectations for the
Redesign

2. Management must take the time not only to provide a clear
vision of the redesign but to also communicate why the redesign
is necessary. The cost of not taking time to communicate
credible reasons as to why the redesign was done and providing
credible expectations of what it will take to realize the benefits
of the redesign, will cost the company dearly.
One way to build support is to involve employees and other
stakeholders in the diagnosis and redesign. This takes time, but
it helps employees understand why the redesign is important
and builds motivation for making it work. However, if
management already has its mind made up and is going to do
what it wants to do regardless, involvement can backfire in a
big way.
At the least, a communication campaign is essential. The
campaign must be honest because employees and other
stakeholders can see through the spin and hype.
Do not Ignore Resistance
Resistance is feedback. Figure out why it is there, and do not
force it. Like the plumber or mechanic who forces a part to fit,
the likely result is generally a broken part. Force generally does
not work and is nearly always expensive and time-consuming.
Resistance is natural. Ohm’s lawapplies to human behavior
much like it does in physics—there is always resistance. Good
managers and consultants learn from the resistance and manage
it.
Managing the Changing Relationships
Acknowledge Changing Relationships and Responsibilities
Redesigns nearly always change relationships and
responsibilities. Not addressing these lead to confusion that can
undermine the change efforts and will possibly derail the
redesign or its champions. Often this means that new job

3. descriptions will need to be developed; some people may even
be let go or be assigned to new managers and supervisors. It
may require new skills, focus, or training. For example, some
employees will need to develop negotiating skills when moving
to a matrix organization or adapt to a new focus when switching
to a customer-centric or process-centered redesign.
Addressing Role Conflicts and Ambiguity
Role conflict often occurs because of the ambiguity caused by
the change. Sometimes, employees and other constituents work
these issues out on their own, but it often takes outside
intervention. Left unaddressed and unsettled, it can lead to the
redesigns’ demise. Even if not that extreme, role conflict
without intervention will lead to increased operating cost, lower
quality of services or product, missed deadlines, irate
customers, and disgruntled employees.
Beware of Subsystem Optimization
A critical issue of all systems, but particularly human systems,
is subsystem optimization. This is when one subsystem
optimizes its work at the expense of the whole. An example
might be when the accounting department or legal division
requires new procedures to manage the work load more
effectively, but the new procedures require that the customer
service's workload increases.
Subsystem optimization happens far more often than
admitted. It is habitually written off as corporate politics and
left unresolved. Not dealing with subsystem optimization is
very costly.
Support for the Redesign
Overcoming Resistance to the Redesign
Overcoming resistance begins with a diagnosis of why the
resistance exists. Diagnosis is a continuing process. The

4. development of good diagnostic skills is important for a
manager but critical for a consultant. There are a few questions
that need to be asked when resistance is encountered:
· Is there something they need to know that they do not know?
· Are they capable of doing what is asked?
· Do they have the requisite tools to do what is necessary?
· Do they have the time to do what is required?
· Do they have adequate support?
Create Inclusion of all Stakeholders
Inclusion is critical and if done well, does not take much time.
When unaddressed, it can lead to delays and aborted attempts
for change initiatives. For some change efforts, there may only
be 1–2 people who need to be included, but for something as
far-reaching as a redesign with multiple stakeholders, more
people may need to be included. An example of a redesign that
was done well is the redesign of the information technology
(IT) department in a Fortune 100 company. The vice president
(VP) of IT realized that to meet the IT needs, he would need to
not only engage his employee group but also the key managers
throughout the company who were dependent on IT.
The VP organized a working group made up of his four
department heads and the managers of the 6 major functional
areas they served. He met with the working group and explained
why he felt the current organization was not functioning well.
He said he wanted to redesign his division so that it could meet
the company’s IT needs. He then had his company’s
organizational design consultant facilitate the working group.
He made it clear that he wanted a workable design and he would
make the final decision, but that if the new design was going to

5. work, it would have to serve the entire company, not just the IT
department.
The committee met regularly for six weeks and discussed its
departmental needs. After determining what the needs were, it
created a tentative redesign for the IT department. The redesign
could not achieve everything that was desired, but they agreed
on a new design and put together a report on why they felt the
redesign was needed and what it could achieve. They also listed
several issues that the design could not impact immediately
because the company did not have the talent to accomplish
everything at that time.
Demonstrate That You Have Listened
The VP liked and accepted the redesign and then sent the report
out to the entire company and arranged listening sessions for
anyone who wanted to participate. A number of issues emerged
in those sessions that the working group had not addressed in its
report, but those issues had more to do with IT project priorities
than with the redesign itself. The VP said that if that were the
only concern, then he would go ahead with the design and have
the same committee devise a plan for how it could establish
priorities for IT projects. Addressing the long-standing problem
of prioritizing IT projects became an added benefit of the
listening sessions.
The redesign of the IT department was implemented quickly and
without any problems. The company president even commented
on how smoothly the redesign went.
Global Strategy: ETEC
Global Strategy: ETEC (11:53)
http://www.swlearning.com/management/video/movie19.html
Motivation

6. Topic Introduction
Organizational behavior is a field of study in business that has
grown out of the traditional social sciences. Organizational
behavior is the study of human behavior, attitudes, and
performance in organizations. It is interdisciplinary, drawing
concepts from the social and clinical psychology, sociology,
cultural anthropology, and organizational psychology. It is a
field of study that focuses on observable behaviors and internal
mental states. Studying organizational behavior will help you
attain the competencies needed to be an effective employee,
team leader, and/or manager. The knowledge and skills you gain
should help you diagnose, understand, and explain what is
happening around you in your job.
Work Motivation
Motivation is the set of forces that cause people to choose
certain behaviors from among the many alternatives open to
them. The success of every organization depends on the ability
of managers to provide a motivating environment for its
employees. Motivated employees are more productive, happier,
and stay with the organization longer. Work motivation is the
direction, intensity, and persistence of work-related behaviors
desired by the organization or its representatives. This
emphasizes the determinants and processes that underlie
behavior. In his 1998 article Management's New Paradigms,
Peter F. Drucker (1998) argues against the traditional view that
the essential managerial task is to tell workers what to do. Thus,
managers today must direct people and lead workers instead of
managing them.
Theories of Motivation
Motivation theorists assume that motivation is involved in the
performance of all learned responses; that is, a learned behavior
will not occur unless it is energized. The most common theories
of motivation in organizational behavior include Abraham

7. Maslow’s need hierarchy theory, Douglas McGregor's theory X
and theory Y, Frederick Herzberg’s motivation-hygiene theory,
and the contributions of Elton Mayo that encouraged researchers
to study human motivation and the managerial styles that lead
to greater productivity.
Job Design
Job design is defined as determining the most efficient way to
execute tasks. An employee's job is made up of a set of tasks
grouped together under one job title. Thus, tasks represent the
most basic building blocks of the relationship between
employees and the organization and are composed of the set of
prescribed work activities a person normally performs during a
typical work period. Job design can be traced back to views that
emerged in the United Kingdom around the time of the
industrial revolution. Some promoted the division of labor, or
the breaking down of complex jobs into simpler jobs as a way of
enhancing performance. The added advantages of such job
simplification include the requirement of less skilled, and hence
cheaper, labor.
Goal Setting
Instead of giving people vague tasks, specific and pronounced
objectives help in achieving them faster. The clarity is high, so
goal orientation also avoids any misunderstandings in the work
of the employees. The premise of goal-setting theory in
organizational behavior is that specifying, setting, and
assigning difficult goals for employees, when accepted or
generated by the employees, usually leads to improved and
increased performance. Thus, the goal-setting theory states that
when the goals to be achieved are set at a higher standard, then
in that case employees are motivated to perform better and put
in maximum effort. It revolves around the concept of self-
efficacy—in other words, an individual’s belief that he or she is
capable of performing a difficult task. Thus, goals motivate by
focusing employees' attention, increasing their effort, and

8. increasing their diligence. Nonetheless, there are drawbacks of
the goal-setting approach. Theory such as goal setting will be
adversely affected if the employees' tasks become less
enjoyable as a result of unattainable and rigid goals. This will
retard and impede the organization’s progress.
Performance Appraisal
One of the most controversial and powerful tools at a manager's
disposal is the performance appraisal. It can be used as a tool of
negative power or one of positive powerful feedback.
Traditional performance appraisals are hierarchical. The most
effective performance appraisals do not just occur annually;
informal versions occur continuously via casual feedback.
Ideally, performance appraisal allows management to specify
what employees must do, and combines feedback and goal
setting.
Reference
Drucker, P. F. (1998, October 5). Management's new paradigms.
Retrieved from
http://www.forbes.com/forbes/1998/1005/6207152a.html
The Human Resource Element
How is the science of psychology applicable in the workplace?
Every workplace consists of both physical resources as well as
human resources. Even though it may be straightforward to
manage physical resources through proper maintenance,
location, and having properly trained operators, managing the
human resources element properly is far more complex.
In any organization, there are individual human behavior issues
as well as group behavior issues, and maximizing performance
from both of these relies on the sciences of psychology and
sociology.

9. Even a company of one individual involves human behavior, as
that person's degree of self-motivation will largely determine
the results of the organization.
Applicable Concepts to Individual Behavior
The concepts of human behavior that will affect an organization
include things such as what motivates people in general and
how motivators for one person may be demotivators for another.
· Are they more comfortable in a Theory X or Theory Y
corporate culture environment?
· Do they prefer to be an individual contributor, working alone
most of the time, or do they prefer constant group interaction?
· How do an individual's values form and manifest themselves?
· Is there a strong or weak alignment between an organization's
corporate values and individual employee's values? Some
employees may value women in the workplace, while certain
individuals may be unable to tolerate women in positions of
authority.
· Which is the more effective method to motivate employees?
The golden rule or the platinum rule?
Applicable Concepts to Group Behavior
In addition to the concepts that help to understand individual
behavior, when individuals are put into groups, a whole new set
of forces are at work, requiring additional conceptual
framework. These include the following:
· The role of leadership in group behavior
· There is ample evidence as to the degree of influence
that leadership can have on the performance of any

10. organization. This begins with the organization's culture and
values established by its leader, so his or her values will almost
always become the organization's values and shape
organizational behavior.
· The differences between formal and informal leaders
· In almost every group, there will be a formally assigned
leadership person. However, in many work groups there will
also be one or more informal leaders who can exert great
influence on the group's behavior. The wise leader will
recognize the importance of this and not only make sure to
identify this person but make an overt effort to make sure the
informal leader's opinions/values are in good alignment with the
formal leaders and the organization.
· The dominant method of decision making: autocratic,
democratic, participative, or consensus building
· Whereas in the 1950s–60s, the dominant leadership style was
autocratic, in recent decades there has been a conscious shift
among managers to adopt a more participative approach,
tapping into the brainpower and experiences of employees at all
levels before decisions are made. Not only does the
participative approach improve and increase the ideas brought
to the table, but it serves as a strong motivator for the
workforce feeling it is now involved in shaping the company
and its policies and direction.
· To some degree, decision-making methods chosen may be
situational and vary depending upon the circumstances.
· Regardless of which management style is chosen by the senior
managers, it's best that it also practice situational leadership;
this involves changing decision-making styles, on occasion, to
fit the occasion. An airplane pilot, whose preferred decision-

11. making style is the slow, consensus building method, may need
to become very autocratic if there is an engine failure in
midflight or some other emergency.
Goals and Motivation
Introduction
Organizational Psychologists strive to understand how both
motivation and reward impact employees. Some individuals
seem more focused on external rewards, such as compensation,
recognition, and promotional opportunities, yet other
individuals are more motivated by what they do, with whom
they work, and other factors based on their personal interests.
Organizational psychologists apply these concepts when
designing jobs and setting goals to motivate performance.
Motivational Need Theories
Need theories are oriented around the concept of fulfilling
physical or psychological deficiencies. That is, individuals are
motivated to fulfill their needs that are not being met. As one
level (such as safety) is met and achieved, another set of needs
gradually emerges.
Abraham Maslow proposed a Needs Theory in 1943 comprised
of five needs. The needs are arranged in a hierarchy from lowest
to highest: physiological, safety, love, esteem, and self-
actualization, or the desire to be the best one can be in life.
Other researchers proposed different need-based theories of
motivation. Clayton Alderfer focused on three needs which are
known as "E" existential needs, "R" relatedness needs, and "G"
growth needs. Finally, David McClelland also proposed a need-
based theory. His theory defined three types of needs: need for
achievement, need for affiliation, and need for power.
Goal Setting and Motivation
Goal setting has long been a part of effective management, but

12. until recently, little work had been conducted to clarify how it
actually works. Edwin Locke was one of the first to propose a
goal setting theory of motivation. According to his model, goal
setting has four motivational components. Goals direct
attention, regulate effort, increase persistence, and foster
strategies and action plans.
Locke's model has led to five accepted insights into how goals
influence motivation (Latham & Locke, 1979).
· Difficult goals lead to higher performance.
· Goals that are specific and difficult lead to higher
performance for simple tasks but not complex tasks.
· Feedback enhances the effect of specific, difficult goals.
· Participative goals, assigned goals, and self-set goals are
equally effective.
· Goal commitment and monetary incentives affect goal-setting
outcomes.
Equity Theory
Equity theory is another area related to both motivation of
individuals and organizational reward systems. This theory
stresses fairness and justice in relationships between
individuals/employees and the organization. Equity theory is
based on the concept of cognitive dissonance, which is the idea
that individuals strive for consistency between their beliefs and
their actions. Equity theory states that people seek a fair
balance between their effort and their expected rewards. Any
perceived inequity will cause either increases or decreases in an
individual's effort or expectations.
Reward Systems

13. Individuals are motivated to do well on the job for many
reasons. Some are motivated by intrinsic rewards and gain
satisfaction by performing the work and interacting (or not
interacting) with others on the job. Others seek reward only by
the financial aspect of what they earn. Still, other employees
feel most rewarded by being assigned and accomplishing
challenging work. Organizations must consider all of these
factors when designing effective reward systems. Good reward
systems attract excellent applicants and motivate them to stay.
Generally, rewards can be classified into two types: extrinsic
and intrinsic. Extrinsic rewards are financial, material, and/or
social rewards, while intrinsic rewards are aligned to the
individual's internal values and beliefs. Examples of extrinsic
rewards include yearly salary, annual bonus, profit sharing, and
team-based pay. Intrinsic rewards may come from the sense of
satisfaction from completing the job itself.
Summary
Having a strong understanding of what motivates individuals
can have a significant impact in the design of an organization
and the jobs within it. This, in turn, can have a positive impact
on what is accomplished by those in the organization and the
satisfaction of all employees that comprise it.
Reference
Latham, G. P., & Locke, E. A. (1979). Goal setting: A
motivational technique that works. Organizational Dynamics,
8(2), 68–80.
Building Supportive Systems
I. Building Supportive Systems
Make certain organizational and individual goals are aligned
with the new design.
A new design often accompanies a new strategy, which dictates

14. new goals. Even if the goals remain the same, they now may
need to be achieved utilizing different departments or
individuals. It is essential to make certain that the organization
has goal realignment. Just like it is important to get a car
realigned after changing struts or working on the front end, it
essential to check for the shifting of organizational and
individual goals after a redesign.
Create and install feedback systems to monitor progress.
It is important for management to know how the organization is
functioning under the new design. Without a systematic way of
seeing how the redesign and the organization are doing, the
company can have a severe crisis. This does not necessarily
demand a new high-end computerized dashboard for controlling
the operation. One small company simply included a segment in
its weekly newsletter asking how the new design was working
and if anyone had noticed problems. Generally speaking, the
larger the company, the more complicated the feedback systems
will be.
Install reward systems that compliment the redesign.
The redesign changed the reporting responsibilities and work
demands for several key managers and employees in a hospital,
but the reward system remained the same. For the first few
months, the key employees were excited about the change and
continued to do their old job as well as carry out the
responsibilities of a promoted department head, so that she
could do her new work. Eventually these key performers started
feeling resentment and complaining among themselves. Because
the economy was bad, they worked harder as the anger and
resentment grew. After about six months, one of them quit and
the others soon followed, finding higher paying and better jobs.
The hospital had to conduct a costly search to find new
qualified employees. The hospital suffered for over a year until
new employees were hired, trained, and adequately
compensated.

15. Because redesigns often change workloads, work skills, and
management responsibilities, the reward systems need to reflect
these changes. An equitable reward system could have
facilitated the acceptance of the hospital's redesign, kept hard-
working and skilled employees there, saved the company both
money and time, and would not have destroyed the morale of
those left behind.
II. Evaluating the Redesign
Get feedback from employees, customers, and other
stakeholders.
Getting feedback on how the redesign is working and being
experienced by employees, customers, and other stakeholders is
essential. Too often, managers are so glad to have the redesign
in place that they ignore the fundamental principle of getting
feedback and evaluating the redesign. Failure to evaluate comes
from the idea that it is too costly and not necessary. It need not
be costly, but it is always necessary. There is not a business
around that does not have an accounting system for measuring
profit. Many businesses have elaborate systems in place to
monitor such things as cost, market shares, and absenteeism, yet
they fail to evaluate something as critical as an organizational
redesign.
Ensure the redesign is accomplishing what was intended.
Often, the answer to the question "Is the organization
accomplishing what it intended?" is "no." Even before the new
design has been created, the evaluation approach must be
considered. If leaders do not know what is wanted from the new
design, it is impossible to evaluate it. Getting clarity at the
beginning on what management intends to accomplish from the
new design simplifies both the design process and the
subsequent evaluation of the effort. The key question is "What
is the redesign intending to accomplish?" Without the clarity of
intention, little else matters.

16. Let employees and others know how the redesign is working.
Everyone affected by the redesign will have his or her own
evaluation of it, and his or her views may not adequately
represent actual effectiveness. Ignoring what everyone already
thinks they know can lead to some very dysfunctional behavior.
Everyone views effectiveness from his or her own point of
interest and seldom takes the entire organization into account.
By doing a thorough evaluation, it is possible not only to
manage the system effectively but also to increase efficiency,
profits, and satisfaction.
Leading and Managing Redesign
Establishing a Vision for the Redesign
The consultant must work closely with the client organization to
establish a vision for the redesign. Indeed, the vision must be
created by top management. The vision should already have
been well articulated by the client in conjunction with the
consultant once the diagnosis was initially completed. However,
as all effective managers and consultants know, consulting and
management are “messy endeavors” and neither are simply
linear processes. People often want them to be and talk about
them as if indeed they are linear, but in reality, it is not that
simple. Leading or managing requires a clear vision. A
constantly changing vision can lead to confusion and chaos. The
vision needs to be regularly examined to see if it is still
appropriate for the current situation.
Communicate the Vision
Simply having a clear vision for the redesign is not enough. The
ability to communicate the vision clearly in terms that the entire
organization and its various stakeholders can understand is
essential.
Too often, a company will send a corporate-wide e-mail of the

17. new design to employees and then wonder why nothing happens
and why there is so much resistance. Many executives become
furious when employees do not carry out their directives. One
might even hear things like, “Well, if it is good for the
organization and the employees—why don’t they get on
board?”
E-mail or even a simple employee meeting is not enough. The
vision must be communicated repeatedly using different modes
and methods of communicating. Just think of how an advertising
campaign is run. Does a company send out one long e-mail to
all of its customers and then wait for the sales to roll
in? Hardly, and it is irrational to believe that such an approach
would work for selling people on the new redesign.
Listen to Employee and Stakeholders’ Fear and Concerns
If the consultants and managers take the time to listen and hold
back from making quick rebuttals to employee and stakeholders’
complaints, they will learn a great deal. Not only can they
learn about how they are experiencing the change and whether
the redesign has major flaws, but they can often make minor
adjustments that will ensure the design accomplishes what had
been intended if they listen. The redesign of a major automobile
company to respond to the federal government’s concerns is a
good case in point. Generally, such large organizations do not
do a very good job of listening to employees, customers, and
other stakeholders. In this case, the stakes were so high that
management did listen, modifying its redesign and responding
to many other critical concerns of its stakeholders. This turned
the corporation around.
Keep Communication Open
Communication should never be thought of as a one-time
event. It needs to be seen as an ongoing process involving all
parties. Though people hear this era referred to as
the communication age, it seems like there is less true

18. communication than ever before. People have added much noise
and interference into the communication process. Certainly, our
age is bombarded with messages, advertisements, and demands
that do little more than add to information overload. Good
communication depends on taking the time to see if the intended
audience has received and understood the message, and even
more importantly, accepted it. To be effective, this takes time.
However, if one does not stay in communication with
stakeholders, there will be serious problems with the redesign.