Organization And The Level Of Strategic Change example essay topic

Strategic Change in Government Based on Organization Hierarchy University of Texas at Permian Basin March 22, 2005 The literature supports the position that there should be a relationship between the structure and organization change. This study was undertaken to determine how different organization roles, hierarchy, and sizes affect planned strategic change. A survey instrument was administered to top federal government agency leadership to assess change in their organization. The intention is to draw common relationships between organization change and specific categories or sizes of organizations.

Role of Change Business strategy and structure have always been related. Organizational change involves innovation, process improvement, and organizational redesign (Galbraith and Lawler, 1993). They also noted that the hierarchical structure is related to changes in speed, quality and productivity. In recent years, the pace of change has accelerated so drastically that most organizational structures and management principles have no hope of adjusting or adapting (Hammer and Champs, 1993).

Today's changes are discontinuous and happening at a geometric rate. Organizations must be sufficiently agile to be instantly reconfigurable to meet new demands (Tetenbaum, 1998). Change efforts involve attempting to reduce discrepancies between the real and the ideal (Hersey and Blanchard, 1993). The change could be a first order change that occurs in a stable system that itself remains unchanged. It could be a second order change when fundamental properties of the system are changed such as the fall of communism (Hersey and Blanchard, 1993).

Evolutionary changes are gradual and tend to be first order while revolutionary changes are second order. Both of these events could be driving the changes described in this study. Some changes are limited and incremental in nature. Strategic, system wide changes implemented under crisis conditions are highly risky. Nadler and Tushman (1990) found that all strategic organizational changes initiated under crisis conditions with short time constraints were by far the riskiest. Such changes usually require a change in core values.

Some recent trends that have generally lead to significant changes in corporate culture are re engineering, shift to horizontal forms of organizing, total quality management (Daft, 1998). These should not negate the importance of the vision statement as these are tools to assist in bringing about the change. Some organizations are more able to change than others. Nutt and Backoff, (1992, p. 112) explain that some types of public organizations that can control change and other types that cannot easily control change. Professional agencies such as the IRS and FBI have considerable prerogative to act in a prescribed arena and have a protected budget. Political agencies, such as the State Department, have high control over their actions and may have legislation to protect it.

Thus, change may be in the hands of parties outside of the agency. In examining change, Lewin identified three phases of the change process - unfreezing, changing, and refreezing. This involves getting people ready for the change, providing new patterns of behavior, integrating the behavior into the individual permanently. Tushman and Romanelli (1985) noted that "only executive leadership has the position and potential to initiate and implement strategic change".

There are four levels of change in people: knowledge, attitude, behavioral, organizational change (Hersey and Blanchard, 1993). This research focuses on the organizational or group performance changes. Change in Organizations Organizational change is considered to be the adoption of a new idea or behavior by an organization (Pierce and Delbecq, 1977). The Amburgey and Dacin (1994) study found that strategic and structural changes occurring throughout the history of a firm affect the rates of change in strategy. Strategic change is a change in the firm's strategy, mission, and vision.

This change should influence other organizational changes in technology, structure, and culture (Nadler and Tushman, 1990). The vision is inclined to drive important organizational changes (Belasco, 1990). Strategic organizational changes are usually triggered by factors outside the organization. External challenges, such as dramatic technological innovations, may cause strategic changes.

"Strategic organizational changes affect the entire organization and usually change the strategy and the structure, culture, people, and processes" (Nadler and Tushman, 1990). Burns and Stalker (1961) found that a stable, unchanging environment demanded a different type of organization than did a rapidly changing one. A stable environment can be portrayed as predictable demand for the organization's service, technological innovation is evolutionary, and government policies regarding regulation change little over time. An innovative environment is portrayed as having service demand change drastically on short notice, technological innovation occurs rapidly, and government policies and regulations change suddenly.

Important Burns and Stalker (1961) findings led to the concept of mechanistic and organic organizations. Mechanistic organizations have adherence to the chain of command, functional divisions, high specialization, formal hierarchy, detailed job descriptions, interaction is vertical, and behavior governed by instructions. Organic organizations are the opposite and have little concern with chain of command, jobs not clearly defined, and lateral communication. Ban (1995) noted that the traditional model of bureaucracy does not appropriately fit all government organizations. Some are far more formal and impersonal, while others are smaller, more informal, and stress the importance of personal relationships.

Most organizations "differ in the extent to which they stress use of formal regulations for control" (Ban, 1995, p. 23). Stereotyped views of public bureaucracy in terms of change varies greatly among individual administrative institutions (Goodsell, 1989). He relates that to the Department of Commerce, advocating change means improving the productivity of American industry while to the Department of Defense it means rearming an alarmingly weak military establishment. Boeker and Goodstein (1991) found organizations that have recently been successful will resist changes in their basic strategies and missions. Tushman and Romanelli (1985) found that a buffeted organization, such as the EPA, is highly subject to changes as they have a low internal capacity and low control over their affairs. A proactive agency uses key stakeholders to fold into tasks with important issues.

Tushman and Romanelli also note the longer firms have been successful, the greater the extent to which resistance to change and inertia will prevail and the less likely it will be that changes in external conditions will lead directly and immediately to change Types of Change Stereotyped views of public bureaucracy on the meaning of such words as "advocacy" and "change" varies greatly among individual administrative institutions. To the Department of Commerce, advocating change means improving the productivity of American industry and advancing U.S. exports overseas. To the Department of Defense, championing change means rearming an alarmingly weak military establishment and closing the security gap open to the Russians. To the local police department, it is conducting an all-out war on crime and perhaps at the same time running a campaign to improve departmental communication with ethnic groups (Goodsell, 1998). Restructuring may be the result of downsizing, merger, or buy-out. Uncertainty is created as they try to create something different (Kanter, 1989).

Where management is risk averse, the range of strategic choices is limited and risky alternatives are eliminated before strategic choices are made. Top managers in highly volatile industries absorb and operate with greater amounts of risk than do their counterparts in stable industries. In making a strategic choice, risk-oriented managers lean toward opportunistic strategies with higher payoffs. Risk-averse managers lean toward safe, conservative strategies with reasonable, highly probable returns. (Pearce and Robinson, 2000) Technological change and diffusion of that new technology are moving at an incredible pace.

This in turn increases the importance of innovation for organizations if they are to be competitive (Hitt, 2000). McCann (1991) best summarizes the categories of change in a simple way that capsulate the concepts of many authors. He found that there are four types of change within organizations: services, strategy and structure, people and culture, and technology. These four types were measured in the survey instrument. Services were measured by inquiring about new services provided to customers and by what degree does management reward employees for developing improvements in services. The organizations were asked if they had recently undergone a major restructuring or if they had any plans for restructuring.

People and culture changes were evaluated by looking at management's ability to accept risks involved in change and efforts to improve employee's abilities. Technology change was sampled by inquiring about organization use of new computer software and the degree of automation implemented. Some very general questions about whether top management felt they were responsive to changes in the external environment. We also asked if top management had received any formal training in organization change techniques. Taxonomy of Organizations First, it is important to recognize that there exist many different types of public agencies, and they exhibit, correspondingly, a wide variety of relations to their publics (Pearce and Robinson).

There are no federal laws that define the form of organization powers, classification, or roles. The number and variety of institutional arrangements presently used by the federal government almost defies classification (Seidman, 1998). Each major grouping contains important sub-categories, and significant differences may be identified within any of the sub-categories. Government organizations can be classified in a variety of ways. The federal government executive branch is huge and employs 2,789,495 workers (U.S. Government Manual, 2000). The largest executive department is the Department of Defense with 717,901 civilian employees and 1,420,152 military employees.

Some of these independent agencies are quite small, such as the Japan US Friendship Commission, with only four full time employees. Obviously, the size of the government agency in terms of employees or budgeted dollars can also form another method of categorizing organizations. Pfeffer (1991) maintained that larger organizations have more power and leverage over their environments. Gold and Campbell (August 1988) confirmed that the size of the organization has a strong effect on the degree of organization formality, management style, and the purpose of its planing system. Therefore, we hypothesized that the size of an organization will be related to the amount of strategic change that occurs. Hypothesis 1: There will be a positive relationship between the employment size in an organization and the level of strategic change.

It is important to recognize that there exist many different types of federal government agencies, and they exhibit a wide variety of relationships to the public. The United States Government Manual (1999) specifically uses the term "Executive Agencies" to refer to all of the organizations falling under the President of the United States. These agencies specifically include not only the fourteen departments, but also the executive office, independent establishments, and government corporations. Boards, commissions, and committees as well as Quasi-Official Agencies do not fall under the Executive Branch. Research by Seidman (1998) explains that differences among the types of federal government organizations relate to areas such as the composition of the directing authority, source of funding, audit procedure, and the executive establishment.

The primary method of division by Seidman is based on organizational types, which is divided into executive departments, executive office of the President, independent agencies, foundations, institutions and institutes, regulatory commissions, government corporations, intergovernmental organizations, independent nonprofit corporations, university affiliated research centers, and an advisory category. Fritschler and Ross (1987) describe government agencies in terms of necessary institutions and ground rules to promote a competitive environment for everyone. This includes areas such as money supply management, enforcement of private contracts, protection of private property, and a guarantee of pure food and drugs. Other agencies support social and environmental roles of the federal government. This largely relates to issues on civil rights, consumerism, and the environment. The theories supported by these various authors for categorizing organizations are not all complementary.

The best compromise to combine all of these into just a few categories develops into the following agency roles: 1. Regulatory agency - that promotes competitive & fair conditions in business and society 2. Service agency - that provides for funds, or supports social and environmental programs for society 3. Operations - Military, manufacturing, and services that do not provide social or environmental programs 4. Support agency - that supports or provides assistance for other government agencies These four roles broadly categorize the overall purpose of the agency. The first two roles typically translate into external operations conducted for the nation's public.

Operations include agencies such as the US Mint, St. Lawrence Seaway, and military combat units. Support roles are used to assist the parent agency or other federal government agencies. In the context of this study it suggests the following two hypotheses: Hypothesis 2: There will be a positive relationship between the role played in an organization and the level of strategic change. Hypothesis 3: There will be a positive relationship between the hierarchy level in an organization and the level of strategic change.

Government Leadership Characteristics Murray (1975) researched whether public and private management were inherently different and found that they were generally the same in most areas. They main difference was in their values and attitudes. In a comparative study of public and private sector managers in 1998, Bozeman and Kingsley looked at the risk propensity that they were willing to accept and found no significant differences. They felt that risk aversion is not unique to government. They related that similar circumstances in the private sector tended to produce the same less risky culture results. A central premise is that top executives in all types of organizations are more alike than they are different.

Harrison noted that. ".. recent findings from the public sector make it defensible to generalize the mainstream values of business executives and to apply them to most managerial decision makers" (1999, p. 121). The basic characteristics, motivations, values, and concerns of corporate executives appear to be similar to those of public sector top executives. The concept of risk taking by leaders in certain parts of the government sector may have some limited but unique differences compared to their corporate peers. Conclusion An understanding and an appreciation of the relationship of strategic change to common categories of organizations provides a proper starting point for leadership. As strategies are developed or changed, the concepts in this paper provide some understanding of common change concept matches for organizations based on size, role, and placement in the hierarchy of an organization.

Certainly, more than matching change concepts to organization categories is involved. One limitation is that this research focused only on the executive branch of the federal government. The study is one of the few quantitative studies executed to determine if there are any relationships between government change and taxonomy. Additional studies examining stakeholder theory relationships would further the understanding of strategic change in of various types of organizations. The organization strategy is a network of integrated steps culminating in desired change. In sum, a better understanding of strategic change was developed that implies that organization structure does have a bearing on change.

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