Contemporary Management

Education Is Power
Lecture 2 6/5/2024

Learning Organization
“Called Flat Management which means
Hierarchy is Horizontal”

Many managers are redesigning their

companies toward something called the
learning organization.
The learning organization promotes communication and collaboration so that
everyone is engaged in identifying and solving problems, enabling the organization
to continuously experiment, improve, and increase its capability.

*Also called Learning Organization / Flat Management /

*From Up to Down Hierarchy Decentralized Coordination
*Linear line () * Non Linear Line (Unpredictable)
 Organic Vs. Mechanistic
 Structure  Communication
 Tasks/Roles  Hierarchy versus Collaboration
 System Formality

Mechanistic Organic
Generally little collaboration occurs
across functional departments, and In the learning organization, the
the whole organization is vertical structure promotes
coordinated and controlled through horizontal workflows or
the vertical hierarchy, with decision processes rather than
Structure making authority residing with departmental functions.
from Vertical upper-level managers. It is effective. teams include members from
to Horizontal In a rapidly changing environment, several functional areas.
Top executives are not able to
respond rapidly enough to problems Flat Management
or opportunities. means Communications

*A task is a narrowly defined piece of

work assigned to a person. *A role, in contrast, is a part in
*In traditional organizations, tasks a dynamic social system.
Tasks/Roles are broken down into specialized, *A role has discretion and
from Routine tasks separate parts, as in a machine. responsibility, allowing the
to Empowered Roles *Tasks are centralized at the top of person to use his discretion and
the organization, and employees are ability to achieve an outcome
expected to do as they are told or meet a goal.

In young, small organizations

communication is generally informal In learning organizations, all
and face-to-face. because employees have complete
the top leaders of the company information about the company
System Formality usually work directly with employees so they can act quickly.
From Formal Control in the day-to-day operation of the
Systems business. However, when organizations maintain
to Shared Information organizations grow large and open lines of communication
complex, the distance between top with customers, suppliers, and
leaders and workers in the technical even competitors to enhance
core increases . learning capability
 In the learning organization, in
contrast, the accumulated
actions of an informed and
empowered workforce
In traditional organizations designed
contributes to strategy
for efficient performance, strategy is
development.
formulated by top managers and
Since all employees are in touch
imposed on the organization.
with customers, suppliers, and
Communication new technology, they help
From Competitive Top executives think about how the
identify needs and solutions
To Collaborative Strategy organization can best respond to
and participate in strategy
competition, efficiently use
making.
resources, and cope with
They make the results public
environmental changes.
through conferences and
reports. companies often
forming partnerships to
compete globally.

In a learning organization, the

culture encourages openness,
equality, continuous
Hierarchy versus
A danger for many organizations is improvement, and change.
Collaboration that the corporate culture becomes the organization becomes a
From Rigid fixed place for creating a web of
to Adaptive Culture relationships that allows people
to develop and apply their full
potential.
Organization Size: Is Bigger Better?
Pressure for growth

• Compete on a global scale

• Invest in new technology
• Control distribution (Mass production – low cost/unit)
• Guarantee access to markets (huge capital)
• Stay economically healthy
• Power & increased revenues
• Attractive for quality employees

What size organization is better to compete in a fast-changing

global environment?
Small Organizations:
Large Organizations:
EX: Royal Dutch/Shell
10% of the division’s research budget for “crazy” ideas.

1. Entrepreneurial stage:
• Org is born
• Emphasis is on creating a product or service
• Surviving in the marketplace
• Devote entrepreneur´s full energies
• Org is informal and non-bureaucratic
• Long working hours
• Growth comes from creativity
Crisis: Need for leadership
 2. Collective stage:
• Clear goals and direction
• Hierarchy of authority
• Job assignments
• Hiring skilled executives
• Members feel part of a collective
• Informal Communication
Crisis: Need for delegation

3. Formalization stage:
• Rules, procedures & control systems.
• Formal communication
• Decentralization to improve
coordination
• Top managers focus on strategy while
middle managers on operations
• Incentive system
Crisis: Too much red tape

4. Elaboration stage:
• New sense of collaboration and
teamwork
• Social control and self-discipline
• Work within bureaucracy
• Simplify formal systems
• Org spit into divisions
Crisis: Need for revitalization
 Organizational Characteristics during the Life Cycle

 Entrepreneurial.  Collectivity.

Initially, the organization is small, non- This is the organization’s youth.

bureaucratic, and a one- person show. Growth is rapid, and employees are
excited and committed to the
The top manager provides the organization’s mission.
structure and control system.
The structure is still mostly informal,
Organizational energy is devoted to although some procedures are
survival and the production of a single emerging.
product or service.
Strong charismatic leaders like Jeff
Bezos at [Link] provide direction
and goals for the organization.
Continued growth is a major goal.
 Formalization.  Elaboration:

At this point, the organization is The mature organization is large and

entering midlife. bureacratic, with extensive control
Bureaucratic characteristics emerge. systems, rules, and proceducers.
The organization adds staff support Organization managers attempt to
groups, formalizes procedures, and develop a team orientaion within the
establishes a clear hierarchy and bureaucracy to prevent further
division of labor. bureaucratization.
Major goals are internal stability and Top managers are concerned with
market expansion. Top management establishing a complete organization.
delegates, but it also implements Organizational stature and reputation
formal control systems. are important.
Innovation is institutionalized through
an R&D department.
 Max Weber

• Bureaucracy
• Org more efficient & a rational

Bureaucracy could be GREAT

• Most efficient possible system of organizing

• Allowing organizational activities to be predictable
• Clear tasks
• Sensible mechanism for supervision and control
• People are hired based on technical competence
• Memory and continuity over time
• Allows work to be conducted fairly, efficiently,
and according to established rules.

How to overcome the problems of bureaucracy in rapidly

changing environments?

Innovative structural solutions where there is temporary structures to

respond to an emergency or crisis. Hence, maintain the efficiency and
control benefits of bureaucracy yet prevent the problem of
S L O W response

During times of high uncertainty, the most effective structure is one that loosens
the lines of command and enables people to work across departmental and
hierarchical lines to anticipate, avoid, and solve unique problems within the
context of a clearly understood mission and guidelines.
Organization Decline

A condition in which a substantial, absolute decrease

in an organization’s resource base occurs over time

What are the causes?

1. Organizational atrophy
2. Vulnerability
3. Environmental decline or competition

1) Organizational atrophy

Atrophy occurs when organizations grow older and become inefficient and overly
bureaucratized. when org takes success for granted, becomes attached to
practices and structures that worked in the past, and fails to adapt to changes in
the environment.

2) Vulnerability

Inability to prosper in its environment. Happens to small companies that are

not yet fully established. unable to define the correct strategy to fit the
environment and are vulnerable to shifts in consumer tastes
3) Environmental decline or competition

Environmental decline refers to reduced energy and resources

available to support an organization. Thus, the organization has to either
scale down operations or shift to another domain.

Downsizing Implementation

Intentionally reducing the size of a company’s

workforce
1. Communicate more, not less.
2. Provide assistance to displaced workers.
3. Help the survivors thrive
Communicate more, not less

Rumors can be much more damaging than open communication. Managers should
remember that it is impossible to “overcommunicate” during turbulent times.
Remaining employees need to know what is expected of them, whether future
layoffs are a possibility, and what the organization is doing to help co-workers who
have lost their jobs.

Provide assistance to displaced workers.

The organization has a responsibility to help displaced workers cope with the loss
of their jobs and get reestablished in the job market. counseling services for both
employees and their families can ease the trauma associated with a job loss. allow
employees to leave with dignity, giving them an opportunity to say goodbye to
colleagues and meet with leaders to express their hurt and anger.

Help the survivors thrive.

“Layoff survivor syndrome” Many people experience guilt, anger, confusion, and
sadness after the loss of colleagues, and leaders should acknowledge these
feelings. Survivors also might be concerned about losing their own jobs, lose
confidence in company management, and grow depressed. It is key to help
developing coping skills such as flexibility, curiosity, and optimism