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Change Management

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Change Management ­MGMT625
This evolutionary phase is characterized by the use of formal system for achieving greater coordination,
and by top executives taking responsibility for the initiation and administration of new systems. For e.g.
decentralized units are merged into product-group-formal planning procedures are established and
intensely reviewed. Other features of this phase are:
·  Numerous staff managers are hired at headquarters (HQ) to initiate company wide programs of
control and review for line managers.
·  Capital expenditure related decisions are carefully made.
·  Each product group is treated as an investment centre where return on investment (ROI) is an
important criterion for funds allocation.
·  Stock options and profit-sharing schemes used to encourage identity with the firm as a whole.
HO-subsidiary dynamics (HQ- branch relationship) come to play as a factor in organization
growth or performance
4. Red Tape Crisis
Lack of confidence and trust between line and staff, and between HQ and field; systems, program and
procedures go beyond their utility, and become end in itself. Line managers resent heavy directions by
staffs, which are unaware of local conditions. Staffs on the other hand complain about uncooperative
and uninformed line managers. Therefore procedure takes precedence over problem solving, and
innovation is dampened
Lawrence & Lorsch highlighted this in their study as the problem of differentiation and integration. As
organizations become large, vertical and horizontal differentiation becomes pronounced. The problem at
this stage is higher the differentiation, higher will be the need for integration.
To overcome crisis of red-tape crisis ­ strong inter-personal collaboration is suggested in this phase.
Now the question is; what is the difference between Phase 4 of Coordination and Phase 5 of
collaboration? The difference is that Coordination phase was managed more through formal system and
institutional procedures while Phase 5 (collaboration emphasises greater spontaneity in managerial
actions through teams and the skilful confrontation of interpersonal differences.
Social control and self discipline take over from control. This transition is very difficult for those who
create and believe on the formal methods of report and answers. The phase evolution builds more
flexible and behavioural approach to management. Here are some of its features:
·  The focus is on problem-solving quickly through team-thinking and team-actions
·  Teams are combined across-functions
·  HQ-staff experts are reduced in numbers-combined in cross-functional teams to consult (not to
direct) field units
·  Formal systems and procedures are simplified to focus on tasks
·  Conference of key managers are held on major organizational issues
·  Reliance on educational and training programs for conflict-resolution and better team work
·  Real-time information system are integrated into daily decision-making
·  Rewards are geared more towards team performance than individual achievement
·  Experiment with new practices are tolerated and encouraged
Change Management ­MGMT625
The Crisis
What will be the revolution in this stage of evolution?
Many large and mature multinational (MNCs) are in this phase.
Any way whatever the answer is, the sole focus is that each evolutionary period culminates into a
revolutionary period, which is short and spasmodic and transformative for the existing managerial
system, and the processes are never ending and perpetual ones.
For Compulsory and Further Readings
Miles Raymond E., Organization Development Reading 8.1
_________ Developing an Organization that contribute to long run effectiveness Ch 8
Greiner, Larry E., Evolution and Revolution as Organizations Grow Reading 8.2
Also published in HBR July ­ Aug 1972 (can be accessed through J-Store HEC Digital Library)
Drucker, Peter F, The Need to Prepare for Growth, Reading 8.3