1.3 Organizational Behavior

Welcome back to the Fundamentals of Management. I am Dave Nagy. I’ve hoped that you have had the opportunity to view other lessons in this Fundamentals of Management series. Today we are going to talk about organizational behavior and change. Part of the organizational management body of knowledge, such a huge topic. There’s no way with the limited time that I have available with you, that we will be able to even touch this vast body of knowledge. What I would like to do with you today is to answer three questions that you might have. Those questions include what are the drivers of organizational behavior? Why do companies do things when and why they do them? Also how does how do these drivers and these initiatives affect alignment throughout the organization? All the way from the top to the bottom and how do people react when there is a new change initiative. Today in this lesson we are going to talk about one, the drivers of organizational behavior. We’re going to talk about the effect on the organizational alignment. I would like to introduce you to one of those drivers, and that is a concept called lean. And then look at a change process, and how people respond when there is a change. So, let’s look at these organizational drivers. One that is all around us, you see it every night when you turn on the television. You see commercials for cell phones, for automobiles, for cell services. Competition drives people crazy. It forces executive and people throughout the organizations to respond quickly to changes in the market. Another driver is customer satisfaction. You may have had the opportunity to take your automobile into a dealership. Where you have been asked to bring your car in because there is a recall notice. I’m sure that does not make you happy, it doesn’t make me happy. So, and that effects your ability to be a loyal customer of that brand in the future. Another driver is financial. Financial pressures cause companies to make adjustments, whether it’s what’s going on in Europe or in Greece. Or whether it’s back to 2008 when we had the huge financial meltdown in the bond and the banking business. It caused companies to readjust their thinking, readjust their programs, readjust their offerings, and to take new courses of action. Another driver is mergers and acquisitions and the revolving door of executives, the global economy and geopolitical pressures. What happens when the interest rates go up? What does the stock market do? Maybe your own portfolio looks like a roller coaster. With all of the financial pressures and drivers that are going on within organizations, maybe in your own bond fund. And making a profit is certainly a driver. Companies need to make a profit unless they are a not-for-profit type of company. Even then, it still a revenue agent that is important. Also, process and product improvements. This is a significant driver of businesses. Maybe you, in your own world of work have been part of a process improvement, where you have been asked to be part of a team or to think about, can we do things better, to improve the value that we are giving our customers. And, how will that affect the ability to do more with less, less time, less resources. So, product and process development is improvement and development is a critical driver. Also, the concept of going lean that I would like to share with you a little bit about in just a few minutes. Also, the stakeholder interests. Stakeholders, the owners of the organization. The owners of the company. They want to have a say in what is going on and companies respond to pressure from stakeholders. So how do all of these drivers cause action? How do all of these drivers necessitate behavioral changes? Well, there has to be first a new plan. This new plan is going to create the framework for our actions. So the first type of planning is done at the very highest level of the organization with the Board of Directors, with the senior executives, with the c-suite officers and they create three different pieces of the planning hierarchy. First, they create the mission. Who are we? What are we? Who do we want to be? Essential questions that have to be framed, have to be answered in order for us to have marching orders and alignment and offerings. After the mission is created, then the vision is developed. The vision is a clear statement that can be replicated throughout the organization and says, here is what we need to do to achieve the mission. The third piece that the highest level in the company puts together, is the strategic plan. The strategic plan are broad strokes. However, they are what becomes the goal. We need to increase our business by 8% per year. We need to buy or to acquire one new accompany a year. We need to introduce our offerings into a new market every year. It could be as general as that, not a lot of detail a very high level. But clearly a goal that the rest of the organization needs to be aligned to. The next level of planning then, is done with the middle managers, the senior managers, the directors. And they put together the tactical plan, the tactics on how do we achieve our strategic plan. How are we going to grow our business by 8%? What offerings can we introduce? What’s the time line for introducing a new product? What products do we have that are ready to be introduced? What countries are possible targets for expansion into? So the tactical planning is done by the middle management and executives in the organization. The third level of planning is then done and is flowed down to the first level of management. And the operational plan is put together. This becomes the roadmap. This becomes the marching orders. This becomes the action plan, with all of the i’s dotted, all of the t’s crossed. This planning provides us the ability to be aligned to our organizational goals. It provides the ability to set forth an intended course of action. So we can achieve those goals. It provides the basis for which we can establish communication and provide clear direction on how we are going to achieve those goals. And also it answers some very important questions in the planning process: who, what, when, how, and how much? These questions are part of the planning process. So this planning process, this hierarchy of planning, sets forth what we’re going to do, it sets forth the course of action. And the executives in the company often feel that now things are in place and we have a perfect world. We now have one vision. We now have one goal. We now have one team. And everybody is marching in unison and aligned. In the real world, however, that’s not the case. This is another example of an organization with a very fuzzy and ill-defined strategic plan. Maybe not communicated. It looks like a cloud, a cloud that you might look up at into the sky and see a fluffy white cloud, and you sit there with your kids. Or you sit there and try to pick out, what do I see in that cloud? Maybe I see a mountain lion. And then you see it changing, taking a new shape. And that is the same with some organizations. The strategic plan is not structured, it is not firmly implanted. And it kind of like changes with the month, a new flavor of the month. And you see the small arrows on the inside of this cloud representing people going in different directions, confused and misaligned. Here’s an example of another strategic plan. Now we have structure represented by the solid block arrow. But this strategic plan is not well communicated. People don’t really know what they’re supposed to do. They don’t see the clear directions to achieve the strategic plan. The vision is not in place. You see still confusion, misalignment. And a misunderstanding of what we are going to do. Of course the goal is, what the executives want. A structured plan, where there is a strategic plan in place, it is clearly understood and communicated, and everybody understands. How do we go about achieving the strategic plan? That is the end of this section.