report document Hammouri 4850695 (FInal)

Organizational Structural Change Management

TBS 903

Managing People in Organization

Assignment No.2, Topic 2

Ahmed Hammouri

4850695

1st October 2014

Executive Summary

This report provides various approaches to perform structural change in the non-governmental organization Medair-Jordan branch. To begin, an introduction about the Medair-Jordan branch whose background is as a relief emergency response organization with dynamic work nature, then defining organizational structure and the different types and then this will be related to Medair-jordan branch that has a hybrid structure which consists of both functional and divisional structure.

Theory behind change is explained in both two ancient perspectives, Parmenides (5 BC) viewpoint which considers change to be in a static state, and Heraclitus (535-475 BC) viewpoint which states the opposite, that nothing stays still. These two philosophical viewpoints underpin theoretical models of change, for example, Dawson and Kottor's Models. The two models will be related to practice and how they justify the organizational structural change (Andriopoulos & Dawson 2009).

Various approaches have been suggested to enable structural change and these approaches have impact on employees’ motivation and engagement. The first approach is Downsizing. It is a big process that could consists of many smaller processes; work redesign, workforce reduction, resource reallocation and systematic change. The impact on employees motivation and productivity is significant because they will assume there’s a big possibility that they will be the next ones to leave the organization. Another problem will arise as a result of the feeling of threat that some of the people remaining will start looking for new job which could leave the organization without the required workforce to complete the job (Gandolfi & Hansson, 2011). The second approach to structural change is outsourcing which “occurs when an organization decides to contract a service provider who specializes in a particular area of service provision to do more economically and efficiently something that it previously did itself. Such as catering cleaning, maintenance, or IT” (Clegg Kornberger Pitsis 2012, p. 666), it can be emotionally hard on outside people as they have to stop doing something they used to, and at the same time hard on people are staying because it means losing co-workers who are friends as well (Carbone, 2004). The third approach is employment variation which it transferred through different types of employment replacing full-time employment such as, casual, part-time, temporary, fixed-term contracts (Sutherland & Santos, 2010). This approach could reduce the cost by getting the necessary employment when the work is needed to be done. However there are motivational and engagement problems as the hired person won’t have the required motivation and commitment because it’s only temporary job for them.

The report will discuss and analyse the current status of Medair- Jordan branch.Currently, the report finds the prospects of the company in its current position are not positive and recommendations will be made. The major point of weakness require further remedial action by change management to reduce the impact of change on employees involved.

Recommendations discussed include: Establish a sense of urgency in head of people who is involve in structural change, Form a powerful guiding coalition: creating a group that have enough power to lead the structural change by encouraging this group to work as a team, Create and communicate a vision, Empower other to act on the vision, Plan for and create short-term wins, Consolidate improvements to produce more change, and Finally providing technical and emotional support for both leaving and staying people (Kotter, 1995).

Page | 1Ahmed Hammouri 4850695

Table of Contents

Executive Summary............................................................................................................................1Table of Contents................................................................................................................................21 Introduction..................................................................................................................................3

1.1 Purpose................................................................................................................................31.2 Background.........................................................................................................................31.3 Method................................................................................................................................31.4 Scope...................................................................................................................................41.5 Limitations..........................................................................................................................4

2 Organizational Structure..............................................................................................................43 Theory behind change.................................................................................................................5

3.1 Models describing the organizational change.....................................................................64 Organizational Structure Change................................................................................................6

4.1 The Need for organizational structure change....................................................................64.2 Challenges resisting the change.........................................................................................7

5 Various Approaches to structural change....................................................................................76 Recommendations.....................................................................................................................107 Conclusion.................................................................................................................................118 References:................................................................................................................................12


1 Introduction

1.1 Purpose

The purpose of this report is to present different possible approaches to structural change within a

Non-Governmental Organization Medair-Jordan branch. In evaluating these approaches, the

following criteria should be considered: Models in the literature talking about organizational

structure change, the way dealing with the uncertainties, possible disruption to employees, the

durability and the recommendations.

1.2 Background

Medair is Non-Governmental Organization that works in the world’s most devistated areas, to help

relieve people who suffer from different crisises. This report will examine the Jordan Office. This

office employs 89 full-time employees and between 50 to100 paid casual volunteers and provide

different types of emergency relief services through a variety of programs; Health Program, Cash

and NFI “Non-Food Items” distribution program and shelter repair program.


Medair programs depends on the funds that receive by the donors. Since it’s an emergency

response based organization, the nature of its programs is dynamic and need to be changed to

meet the donors’ vision (Medair 2014). This dynamic nature of programs needs to be

accompanied with structure change to satisfy the needs of the edited programs, so the

programs will be performed successfully. This report will focus on the different possible

approaches to structural change inside Medair.

1.3 Relevance

As with many aspects of life, organization structure change is necessary to survive. In cases where

it’s done properly, it will has several benefits; such as improving the organization performance, cost

reduction and meeting any suddenly appearing market and technology demands. The other side,

which is resistance of change, can cause many problems that could lead to the detriment of the

organization's fate.

1.4 Method

Two Major theoretical models of change will be used to suggest the optimum approach; Dawson

and Kottor's Models. Philosophy theories which underpin the change models are explained. The

first one is Parmenides model which describe the change as event in the static movement of reality

while the second model; Heraclitus talks about describe the change as permeant character for

reality days (Anonymous, 2003). The information used in this report was collect from one of the

current program Managers in Jordan office, relevant books and journal articles and current program

officer.

1.5 Scope

This report will start by defining organizational structure, then present and compare theory for the

two different Philosophies describing the change; Parmenides and Heraclitus. This report will go on

to discuss the relation between the theory and practice. It will then discuss the possible approaches

to perform the structure change in Medair successfully and the outcome benefits on the

organization performance. After recognizing the current Medair organizational structure, the

approaches will explain the theory and will link it to practice. After analysing the current

organizational structure, recommendations will be made for the best implementation of the

appropriate approach to structural change in Medair-Jordan branch in a way it will reduce the

negative impact on the employees and get them more involve in the process of change.

1.6 Limitations


Because the nature of Medair’s Mission which is translated through its programs, which is fast and

dynamics due its relation with emergency response, all local employees work with Medair through

short time contracts. Contract length are no more than 12 months. This is considered a limitation

because the easy solution to take when consider any structural change is to let go people. Another

limitation is the information that used to write this report is obtained form program manager and

officer, for better recommendations, a further studies could be made on Medair-Jordan branch.

2 Organizational structure

The reason behind forming organizations is that when people are not able to reach their goals by

them self’s, they need to do it using other people's help. So formal organizations unite many trained

people's efforts in specialized areas by integrating and co-ordinating them, (Anand & Daft, 2007).

Three important elements of formal organizational structure are; job structure which is by

describing individual job, what’s required, who’s they are working with, who’s authority they are

under, finally set the communication relationship, and all that can be done by organization charts

and positions description (Harris & Raviv, 2002). After describing each individual job, it’s easy to

group people together by knowing who does what together. Then linking and coordinating these

groups, who these groups working together. The second element of forming organization structure

are the rewards, which is emphasised by financial compensation, interesting work, hiring criteria

and meaningful relationship. The third and last element is measurement; it’s procedure of

establishing the profit centre and cost centre which very important part of informal structure of

organization design because it decide who gets to be profit centre and who is only led by cost

(Clegg et al, 2012).

The way the individuals are grouped determines which type of organizational structure is going to

be, because in the grouping process group individuals and subunits who works interdependently

are costly to manage. Depending on where the tax complexities are highest, two types of structure

are produced; functional structure which group each individual with same skill together and

divisional structure which combine more than skill in one group for different purpose like serving a

certain client, product or region (Jung & Seok, 2014). Out of these two organizational structures,

many other organizational structures can be created, a typical hybrid structure blend divisions and

functional staff.

Linking this to the aimed organization for this report. Medair- Jordan branch which considered

project-based organization (PBO). Rapid and constant innovation is required for PBO to cope with

business environment. PBO structure take functions and operation from hierarchies based

organization. PBO uses a matrix organization structure where organization functions are looked Page | 5

Ahmed Hammouri 4850695

after using management structure. In contrast, project-based groups that have hierarchical

structure carry out the work. Medair has three programs that have been running by three individual

functional groups: Health group, Cash and NFI “Non-Food Items” distribution group and shelter

repair group. At the same time there is a human resource group and logistics group who are

individual functional groups but at the same time connected to the three other groups as divisional

structure. So one employee will have a supervisor for project-related work, at the same time he can

have another supervisor for benefits and promotions. This type of structure is known for its flexibility

and its responsiveness to the business environment. (Jerbrant 2013; Medair 2014; Oliver, 1997)

3 Theory behind Change

After reviewing, the current Change Management literature pertaining to organizations, one can

easily observe that there’s a strange pattern, a lot of researcher talking about the change

management with perspective to culture and global strategy and totally forget about the

organization structure, organization structure is very important element that must be address to

have successful organization development (Fassoula, 2004).

The concept of change has been discussed for ages. Through the years two successful

philosophical viewpoints have emerged and been used to describe the change and link it to reality.

These philosophical viewpoints used in models explained the change. The viewpoints were written

by two classical philosophers thousands of years ago. Heraclitus (535-475 BC) was the first known

philosopher who talked about change; he emphasised “things are flowing”, and: “Nothing endures

but change”, and: “Nothing stays still”, and: “Nothing ever is, everything is becoming” (Heiner 2006,

p. 2). Another philosopher talked about change Parmenides (5 BC); he described the change as a

station through the permanent static state (Bostock, 1978).

3.1 Models describing the organizational changeFew models were developed to describe and explain the change, these models don’t provide a

recipe for performing change. Rather they explain the framework for understanding the change.

Dawson’s model for instance explains the change process by linking three elements: politics of

change, context of change and substance of change, taking in consider past, present and future.

The context of change is divided into internal and external then depending on politics of change

which divided to external and internal activities as well, will draw the substance of change. As

external environment changes depending on politics of change, it produces the substance of

change by doing the scale and scope, defining characteristics, make timeframe, and finally

perceiving centrality. The present will change the past into future (Andriopoulos & Dawson 2009).


4 Organizational structure change

The purpose of this report is to present different possible approaches to structural change in Non-

Governmental Organization Medair. Before presenting possible approaches to structural change,

it’s very important to identify the need for change. Another necessary item is to define the possible

challenges which could occur during the implementation of the Organizational structure change.

4.1 The need for Organizational structure change

There are many reasons to perform organizational structural change. But these reasons are divided

in to external and internal forces, and mainly the reasons exist because of trend, trigger and or

innovations. These three causes are the reasons for change such as customers taste, changes in

technology, productivity, competition, availability of resource and changes in regulation. These are

main reasons for change but it doesn’t include every reason for change (Millar, Hind, Magala, 2012)

Relating this reasons with Medair-Jordan branch, it can state that one main important reason for

change is availability of resource, because Medair programs depends on the funds that receive by

the donors. The type of funds received vary from year to year and this changes what type of

programs to be funded and what’s not (Medair 2014). Another important reason for change in

Medair is customers’ tastes which in this case the beneficiaries, during and after each program a

feedback is taken and based on this feedback. The decision of changing some programs is made.

To summarize, when the environment changes and organization keeps the same structure it

creates opportunity gap like offering a new program in Medair-Jordan branch, and very often if this

opportunity gap is not taken, overtime this gap will develop into performance gap meaning that the

performance become so bad that you had urgently to change, otherwise the organization will not

survive (Lawrence, 2006).

4.2 Challenges resisting the change

People who have been doing the same things in a certain way for long time, don’t like to do it

differently. People tend to think change is not a positive circumstance for them. So resistance

results due to one, or a combination, of following factors: psychological threats, reduction in job

displacement or economic security, constant change in job or skill requirements, disruption of social

arrangements, and lowering of status by redefining authority relationships. Dowson’s model

recommends eight general lessons to overcome resistance; be flexible, question, success

obsession, no one best way, not everything, timely training, Taylor program, contextually aware and

seek support (Andriopoulos & Dawson 2009; Edgelow, 2011).


5 Various Approaches to structural change

There are plenty approaches to preform of structural change, but the following three approaches

will be the most effective for Medair- Jordan branch:

5.1 Downsizing

There are many reasons for organization to downsize, such as changing customer demands,

technology replacing manual functions, economic conditions, mergers and acquisitions, surplus

staff due to productivity efficiencies, ending product life cycle and or function of the organization no

longer required (Gandolfi & Hansson, 2011). In Medair, the possible reasons are, resource

availability which represented by funds received by the donors, ending program life cycle because

programs budgeted to certain number of beneficiaries, changing the customer demands which

represented by beneficiaries feedback about programs, and finally the function of the organization

is no longer required as the crisis that Medair is working on ends (Medair 2014).

Downsizing is a big process that could consists of many smaller processes work redesign,

workforce reduction, resource reallocation and systematic change (Gandolfi & Littler, 2012). The

following will discuss the best two of these two process to Mediar-Jordan branch. The first thing is

the work redesign by considering the type of programs to be done, kind of knowledge and expertise

these programs need, the type of resources needed for each program and the cost of resources to

be hired. A way of preforming work redesign is delayering which means removing layers from the

hierarchy system by considering these factors; work similarity ,interaction requirements,

competency level, duties of manager, assistance available and motivational work. The second of

option is workforce reduction, which means letting people go. A way to do that is natural attrition

which includes not replacing employees who leave accompanied by employment freeze and may

require reallocation of personnel.

Downsizing has a big impact on employee's motivation, especially the employees who are staying

because the will assume there’s a big possibility that they will be the next ones to leave the

organization. This problem will transfer to productivity problem, because having this feeling of threat

is not the ideal environment for work productivity (Gandolfi & Littler, 2012). Another problem will

result due to this feeling of threat; the people remaining will start looking for new jobs which could

leave the organization without the required workforce to complete the job and this could affect the

organization reputation which will make it harder to hire new people despite the fact this will be

more costly on the organization due time delay and training costs (Gandolfi & Oster, 2009). Another

impact is the emotional impact on both people leaving or staying. Discrimination from work can be

emotionally hard on people as they have to stop doing something they used to. At the same time its

hard on people who are staying because it means losing co-workers who are friends as well.


5.2 Outsourcing

The second approach to structural change is outsourcing which “occurs when an organization

decides to contract a service provider who specializes in a particular area of service provision to do

more economically and efficiently something that it previously did itself. Such as catering cleaning,

maintenance, or IT” (Clegg et al 2012, pp. 666). Medair-Jordan branch is using this option as hired

subcontractors manufacture and supply materials. But this option could be expanded as using

outsource services such as human resources which is a concern about recruitment, It support and

transport process.

The outsourcing option will have many benefits for the organization such as, lowering the cost in

many ways, as less money spent on training and development administration, saving the direct

wages for people doing the work that has been outsourced and save by only paying for the work

that has need to be done (Duran & Duran 2009). Another benefit is increasing the innovation by

talented people who cannot work as full-time employee. Finally, it increases flexibility by giving the

choice of change.

Outsourcing is not always the best solution as it can be more risky and more stressful for the

organization. This is because it has to be controlled in very improved system with appropriate

communication ways. Outsourcing means letting people go it, and will have similar impact on

employees that downsizing has; productivity problems, emotional problems and major problem

about human resource that it needs time to build (Carbone, 2004). So taking one step to

outsourcing means risking the existing human resource which in case the outsourcing didn’t work

correctly, will take time to rebuild.

5.3 Employment variation

Finally the third approach is employment variation, which is transferred through different types of

employment by replacing full-time employment such as, casual, part-time, temporary, fixed-term

contracts. This reduces the cost by getting the necessary employment when the work is needed to

be done (Sparks, 1992). However, there are few challenges with this approach; innovation which

will be at the minimum as the hired person won’t have the motivation because it’s only temporary

job, vulnerability will be an issue as casual workers seem not to have the same commitment as the

full-time employees, organizational culture will be a problem as it get to be affected by causal

employees and at the same time it’s hard for them to be part of, and finally the recruitment which

cost time and money (Sutherland & Santos, 2010).


6 Recommendations

As this report presented the various approaches to structural change, it is mentioned that the

change impacts employment engagement and motivation. Following is few recommendation which

such impact could be minimised:

1. Establish a sense of urgency: this mean the organization has to examine available funds

and competitive realities, then identify and discuss crises, or opportunities in local idiom.

Which mean create a sense of urgency in head of people who is involve in structural

change.

2. Form a guiding powerful coalition: creating a group with enough power to lead the structural

change by encouraging this group to work together as a team.

3. Create and communicate a vision: because change means things are going to be different,

and people losing their orientation and ambiguity so providing this new vision will direct

people and change effort. Strategies should be developed for achieving this vision. Then

using every possible medium and venue to communicate this vision and strategy.

4. Empower other to act on the vision: everyone should be involve in structure change by

getting rid of obstacles to change, and changing the system that undermine or divert the

new vision and encouraging non-traditional ideas, action and activities because if the feeling

of making a mistake stays that will make people more afraid of change.

5. Plan and create short-term wins: people like to feel accomplishment, so dividing the big goal

into sub-project will make it easier for people to change. Performance improvements should

be celebrated and people involved in this improvement should be recognized and rewarded

as well.

6. Consolidate improvements to produce more change: if change is started, it shouldn’t be

stopped and the momentum gained should be used to establish constant change.

7. Finally providing technical support for both leaving people by helping them to find new jobs

and the existence people to fill the space that is been left. Emotional support should be

provided using consultant and listening to people to talk. As golden rule always treat people

to be outside well, be generous because people inside will know how would they be treated

when they leave (Kotter, 1995).


7 Conclusion

Change can be scary and ambiguous as it has a lot of uncertainty but at the same time it is a

necessary as the environment change so fast and adaptation is needed to survive. Three

approaches are suggested to perform structural change: Downsizing, Outsourcing and Employment

variation (Clegg et al, 2012).Through these three approaches there is an impact on people motivation

and engagement. Before preforming change re-organization, increasing profit and improving

efficiency should be considered. A different ways have been recommended to accomplish change

successfully. After preforming structural change, change increased credibility should be used to

change system, culture and policies. In a way that constant change will be established.


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