Organisational Theory - a practical approach

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 Henriette Bjerreskov Dinitzen
Lars Krogh Jensen

Organisational Theory
a practical approach
In english by Clem Luxford

Hans Reitzels Forlag

Organisational Theory
- a practical approach

First published 2010, first edition

© The author and Hans Reitzels Forlag

Authors: Henriette Bjerreskov Dinitzen and Lars I<rogh Jensen

Translated from danish by Clem Luxford
Cover: Lisbeth Neigaard Content
Fotos: Kirk Holm and Cheminova
Illustrations: Special-Trykkeriet Viborg a-s

Graphic design and printing: Special-Trykkeriet Viborg a-s

Printed in Denmark 2010

ISBN 978-87-7675-846-2
Introduction ..................................... 9

Ch. 1 Organisational theory in an historical perspective . 11

The classical school . 11
Making copies from this book can only be done by institutions or Modern organisational design . 14
companies which have entered an agreemet with Copydan, and only
according to the conditions outlined in the agreement. Part 1 Strategic analysis . 19

Ch, 2 External environment and structure 21

External Environment .. ... .... ..... . ..... ..... .. 22
Dealing with uncertainty. ... .... ..... ......... ... 28
Mechanistic or organic structures. . .... .... ..... ... 32
Dependency 38
How do you structure an organisation for knowledge
knowledge sharing and innovation? . . . ... ..... ... 39

Ch. 3 Groups and teams . 43

Group Types . 44
Application of organisational groups . 46
How to create effective teams . 48
Optimal composition of the ad hoc team . 56
Development ofteamsjteam building . 60
Are all projects performed in teams? . 63
Discussion Questions . 64

Hans Reitzels Forlag Ch. 4 Individuals and Motivation . 67

Sjceleboderne 2 Personality . 68
1122 Copenhagen K. Learning . 71
hansreitzel.dk Communication . 72
 ! r (,i 7

Values and norms 75 Part 3 Strategy Implementation 175

Motivation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Modern motivation theories . 80 Ch. 9 Organisation Strategy . 177
Implementation - how the method of motivation What is strategy? . 178
is chosen? . 87 The strategic process . 180
Discussion questions: . 88 Situation analysis . 181
Strategy . 183
Ch. 5 Management . 89
The modern manager . 90 Ch. 10 Designing organisations . 191
Four leadership styles . 91 Organisational design . 193
The leader as a person . 93 Organisational effectiveness . 198
Managers' attitude to employees . 94 Signs of design problems . 202
Leadership Characteristics . 96
The Managerial Grid . 99 Ch. 11 Change Management . 205
Leadership roles . 103 When does a requirement for change occur and thereby
Leadership Situations . 108 a need for managing changes arises? . 207
Decisions . 108 What is managing changes? . 207
Discussion Questions . 113 The process . 221
Outcome . 225
Ch. 6 Human Resources (HR) . 115 Appendix . 227
Human Resources . 116 Example of change communication's content . 227
Personnel Policy . 120 L'iterature . 231
Appendix . 124
Part 4 Case studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Part 2 Assessment of corporate strategy. . . . . . . . . . . . . . 127
Case 1: Team building at Cheminova . 237
Ch. 7 Corporate Culture and Ethics . 129 Case 2. Aarhus City Council . 242
Corporate culture . 133 Case 3. Almeco CM Lab . 246
Schein's culture model . 133 Case 4. Dana Lim ................................. 249
The cultural web . 135
Culture Types . 140 Index . 253
Ethics in a business context . 144

Ch. 8 Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

What is innovation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Innovation versus creativity. . . . . . . . . . . . . . . . . . . . . . . 155
Creative destruction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Different levels of innovation 156
The creative process. . . . . . . ...................... 159
Types of innovation . . . . . . . ...................... 164
Sources of innovation 166
The innovative company. . . ...................... 168
 Introd uction

The intention of this textbook is to give readers the knowledge and

understanding of what, in practice, takes place in an organisation.
Therefore, you have a broader and more nuanced view of why people
and groups act as they do, why an organisation is structured, as it
is, what happens when changes are made, etc. At the same time, the
book forms the basis for a theoretical foundation of organisational
learning at an advanced level.

This should therefore give the reader a basis for:

Analysis and assessment of a company's organisation in order to
identify different problems of structural, strategic and effective
nature
To analyse and assess the processes that are a result of the com-
pany's core values, management styles and corporate culture
To develop proposals for changes in the organisation and address
the impact of changes
To acquire tools for innovative approaches.

The book solves this problem by bringing to the reader concepts,

theories and models of organisation theory concerning organisa-
tional structure, management processes, collaboration, leadership,
individual and motivation, as well as processes, culture, organisa-
tional structure, leadership, motivation, human resources, organisa-
tional change, innovation and idea generation. These topics can be
used in practice in relation to the examples.

The book's structure and content

All chapters begin with a learning objective and a brief case story
to illustrate the theme of the chapter. Individual chapters' academic
 ! (;
10
content is described via models and illustrated by cases. The reader
has the opportunity to apply the models on an ongoing basis by
resolving the exercises in each chapter. To ensure full understanding
of the chapter's contents, each chapter ends with a few discussion
questions.
The book is divided into three parts:
Strategic analysis
Assessment of the corporate strategy base
Strategy implementation.
In addition, the book ends with some major cases and accompany-
ing exercises.
Part 1 Strategic analysis
Aims and depth: After the first part, the reader will be able to pre-
pare an analysis of a business organisation and supply chain. The
reader will be able to analyse and assess the location of supply chain
elements, their relevance to logistics efficiency, as well as the overall
interaction between business relationships and the organisation.
Part 2 Assessment of the corporate strategy base
Aims and depth: The reader will be able to assess the company's struc-
ture and networks in relation to core values and objectives, including
internal targets for efficiency and flexibility and external objectives,
such as innovation, internationalisation, and partnerships.
Part 3 Strategy implementation
Aims and depth: The reader will be able to identify different ways to
change the organisation and identify various reasons for the neces-
sity of organisational development.
Supplementary material
On the publisher's homepage, www.hansreitzel.dk, there are addi-
tional exercises with thematic proposals for solutions. There will be a
teacher-forum with access to a selection of the book's figures, tables,
and bullet-points that can be used for teaching. The website contains
literature and references on the elaboration of certain topics.
1
::'_-:---_-.- .
Orga nisational theory ..in aft
historical perspective
After reading this chapter, you will have:
Insights into organisation theory's historical development
I<nowledge of what is meant by modern organisational design on
a global perspective
Knowledge about factors that affect the company's organisa-
tional development.
It is important to keep in mind that organisation theory is not con-
cerned with facts. Theories allow for a deeper analysis of patterns
and systems within an organisation and thus a better understanding
of the observed actions.
The classical school
Organisation design is closely linked with trends and patterns in the
external environment. Therefore, there are also certain historical de-
velopments in organisation design. The establishment of factories
during the Industrial Revolution, around 1900, represents the start
of modern organisation design. We went from small, family owned
businesses, where the focus was local and production was for own
or local consumption, to larger and more complex structures, which
required a more elaborate command and control.
The classical perspective had, as a starting point, to build organi-
sations with a focus on efficiency and used elements, such as bu-
reaucracy and hierarchy, as central elements of the structure. The
external environment was assessed as being stable and predictable,
and management's main task was to ensure stability. If the manager

!: C,i i< "I'
12
Industrial production
was efficient at this, the organisation would eventually grow - and
growth was for the classical school, defined as the ultimate criterion
of success.
Over time focus shifted from organisations as well-oiled machines, to
organisations where employees' demands and expectations of their
jobs and the outside world are constantly changing. This situation
describes the evolution from the classical school of human resources
perspective to today's flexibility-oriented, knowledge-based, and
knowledge-sharing organisations. Companies have also gone from
being locally-oriented rather than nationally-oriented, to globally-
oriented.
Organisation as a science
One of the key theorists of the classical school is Frederic Taylor and
his theory of Scientific Management (Daft, 2007). Taylor's idea was
for organisations and jobs to be based upon accurate, standardised
methods: Employees should be chosen for specific skills and trained
to perform simple tasks as quickly and as accurately as possible. The
reward for a job well done was a salary. The advantage with Taylor's
theory was that work was planned down to the smallest detail. The
management of the organisation could manage and predict exactly
how and when a task was to be done, and in that way, the organisa-
tion was designed to work as a machine. Members of staff were a
'cog' in the machine and a good employee was an employee who did
their job exactly as described without any changes.
-.----------------~-----------
..
1 I'j l' (') f" \1
13
If you visit Jensen's Steakhouse and order their lunch-steak, you are
sure that your plate will have exactly the same food on every time.
Based on the principles of Scientific Management, Jensen's Steak-
house can plan the content and processing of the food. Thus, you
can always be sure of getting a steak to a particular size and qual-
ity, where the potatoes are similar in both appearance and quantity,
and the whiskey sauce tastes as it should. The benefit to Jensen's
Steakhouse is consistent quality and minimal need for intervention
in employees' work, i.e., fewer resources.
Hierarchy and bureaucracy
Another key theorist of the classical school is Henry Fayol. Where
Taylor's Scientific Management focused mostly on the technical sub-
system, representing the workers, Fayol's theory is on administrative
principles - how to build a system where workflow and management
are based on rational principles, which are clear and logical for both
management and employees. Fayol's theory contains such principles
as an employee may only have one direct superior and tasks, which
are similar, and grouped together. In that way, Fayol wanted to build
an organisation where sharing of responsibility and authority were
clear and unambiguous; rules were clearly described and the same
for everyone. Fayol's organisation was therefore impersonal and ra-
tional: All had the same rights and duties, and no employee was in
doubt about where they belonged in the organisation.
Fayol's administrative principles are in use in the military. A private
has one and only one direct superior and it is he, who can give or-
ders. This is necessary in a war situation where it is crucial that the
division know who performs what and when to shoot at whom. An-
other example could be an operating room, where everyone has a
specific responsibility, and where it is essential for the operation's
success that everyone follows orders from the head surgeon, accu-
rately and instantly. Again, the benefit is minimal resources: With
assigned tasks, the employee knows where their place is and whom
they refer to. In both cases, however, it is essential that the principles
be combined with a high degree of professionalism and skill: Both
the military and the operating room's hierarchy function on a base
of professionalism, where each employee, in addition to a clear un-
derstanding of their position, they have a high degree of competence
and extensive knowledge within their field.
People
For the classical school, the systems and processes were in focus. The
effective organisation was a matter of optimising the technical and
administrative resources and had nothingto do with trade, surround-
14
ings, or people. The people in the organisation were, if anything, a
necessary evil. Personality, desires, and needs were not expected to
influence an employee's work, and the 'real' organisation was inde-
pendent, whether it was a small trading house or a large industrial
manufacturing company.
However, this changed during the 1960s, when an increasing focus on
people within the organisation, appeared to have a positive impact
on productivity and motivation. The Hawthorne studies in Chicago
(Daft, 2007), analysed how workers at a power plant were affected
by light levels in the room where they worked. The researchers turned
the lights up and down in the room, and measured the impact of
each change on the employees. What is interesting in the study is
not that they were influenced positively, so their motivation and pro-
ductivity increased, but that the positive effect was independent of
whether the lights were turned up or down. Productivity increased,
even though employees were asked to work in near darkness.
The Hawthorne studies concluded it was not the work environ-
ment that was the decisive factor in motivation and productivity: It
was the focus on the employee. When an employee felt important
enough to be the subject of a study, they were more positive, more
motivated, and ultimately more productive. Today the results of the
Hawthorne studies are central to development of, among others,
motivation theories, leadership, and HRM.
Competition and instability
The classic principles focus on efficiency through hierarchy and
standardisation, worked fine until about the 1970s, when a surge in
global competition changed the world where organisations would
operate. Companies had to focus more on customers and principles,
such as organisational culture, Lean, flexibility, and quality, all of
which originate from this period. Since then the Internet has been of
great importance for organisations and today the concepts of agil-
ity, network design, and e-business are key elements in the design of
organisations.
Modern organisational design
Modern organisations still operate on the classical school's back-
ground. Although the requirements and the situation today are
dramatically different from the 1930s , the administration " hierarchy
standardisation, and management remain an important part of
organisational design. There are very few organisations, which can
function optimally by only focusing on bureaucracy and efficiency.
15
Today, demands of the market, customers, and employees, mean
that organisations have to be designed to cope with key development
trends.
Globalisation: Developments in technology and communication mean
that customers and suppliers can be located anywhere in the world.
The company can exploit geographic advantages by placing parts
of the business, where it 'suits best' and should thus be able to
handle their duties without any geographical limitation. India has
for example, built up such a great knowledge in programming and
computing that many companies choose to place their programming
projects with Indian partners. These employees are still a part of the
organisation, they have the same rights of a work environment and
rewards, adjusted for national cultural differences, and they must
have the same understanding of quality and service.
Ethics and Social Responsibility: Companies today sell not only products:
Their image and attitudes have a significant impact on customers'
assessment of their value. In recent years, we have seen several cases
in the media, where companies have used child labour, produced
products using underpaid employees, working under slave-like con-
ditions, or where production is dangerous or polluting.
Nokia, Aria, H&M, Nike, FairTrade, and Mattei have appeared in the
media with stories of irresponsible production in Asia. Customers
expect that a company have control of their processes - regardless
of geography and location of the supply chain. Moreover, a subcon-
tractor who does not live up to the company's requirements and reg-
ulations are still the company's responsibility. Most companies now
have a policy for social and ethical rules that apply internally, and to
supply chain partners. The concept of Corporate Social Responsibil-
ity (CSR) is now a central part of most organisations' core values.
E-business and Internet: The amount of activity that takes place over
the Internet is increasing. Digital processes replace the physical. Just
think of the banking industry: A few years ago, withdrawing money
was a physical process; you went into the bank, were served by a
bank clerk, and received the requested amount of money. Today it is
a digital process of using online banking to transfer money between
different accounts and pay via credit card. One of the consequences
of digitisation is disintermediation, where the 'middleman' is re-
moved. There is less need for intermediaries in transactions where
customers can deal directly with the manufacturer. Instead, organi-
sations rely on managing a complex network of partners, who work
together to serve the customer.

When you buy a computer through Dell's website, the product is the
result of many different manufacturers, each of which has produced
their specialised areas of the computer and sent them to Dell, who
then ensure they are assembled correctly and on time. Sony handles
packing and shipping. For the customer, though, it is a Dell compu-
ter - it is Dell, who is the guarantor of the brand, regardless of how
many partners have been involved.
Figure 1.1: Organisations as networks
New technology that changes rapidly and knowledge as a key resource: Infor-
mation is a company's most valuable resource today. The volume of
new products, customer demand, and increased competition means
that organisations rely on employees who with their own knowledge
can respond to these changes quickly and competently. In the tradi-
tional organisation, changes in the outside world were so few, and so
slow, that it was possible for management to draw up formal plans
for how and when things should change, but today it is necessary to
react quickly - and that fits poorly with a formalised and bureau-
cratic decision-making process. Therefore, knowledge is crucial for
success.
Employees who require motivating and challengingjobs that are suited to the
individual and with clear opportunities of growth: It is a challenge with the
increased diversification of employee strength. The same company
has to offer interesting and motivating jobs to a young woman with
two children and a man who travels a lot, an older woman without
I,>" , 17
a formal education, but with many years experience, men with dif-
ferent ethnic backgrounds, whose formal qualifications are high, but
with limited foreign language skills and a disabled employee in a flexi
job. These employees must work under the same organisational cul-
ture and with individual requirements of the reward system, career
plan, and flexible working hours.
The result is that today there is no road map for organisational de-
sign. There is no one correct way to put together an organisation -
and the same method does not work equally well for all businesses or
at all times. Organisation design has become a dynamic discipline,
where it is not a matter of building the 'perfect' structure, but un-
derstanding the requirements of the organisation from the outside
world, employees, shareholders, customers, etc., and as a result, be
able to constantly adjust and adapt the organisation. Organisation
is not a geographically defined unit, but may consist of departments
in different countries, employees who work at home with direct con-
nectivity to company systems and tasks undertaken by employees of
partners or subcontractors.
A modern organisation is a complex organism that must be able to
adapt. An organisation should not be looked at as a well-oiled ma-
chine, but rather a well functioning organism.
Today we see more and more organisations with flat, decentral-
ised structures, where collaboration across functions, information
sharing, and adaptability are essential for success. Managers try to
design learning organisations, focusing on communication and coordi-
nation, and where employees, transverse of location and position,
are working to identify and solve problems. The structure is based
upon equality, open information sharing, very little hierarchy, and
an adaptation-oriented culture with an emphasis on participation -
elements that serve as the basis of a better capability for innovation.
In this way, success criteria in modern organisations have moved
from the classical school's effectiveness to modern princi pies of
learning and problem solving.
 Part 1
Strategic analysis

Aims and depth: After part one; the reader will be able to prepare
an analysis of a company's organisation. The reader will be able to
analyse and assess the location of the organisation's elements, and
the overall interaction between the company's relationships and its
organisation.
 : .. ,::.

External environment
2
and structure

After reading this chapter, you will be able to:

Identify key trends in society that affect the organisation's struc-
ture
Classify the organisation's external environment from the dimen-
sions of simple/complex, stable/dynamic and poor/rich
Give suggestions on how organisations can handle uncertainties
in the environment
Describe the difference between mechanistic and organic struc-
tures and give examples of both
Identify communication and coordination challenges in organisa-
tions and identify basic dependencies between departments
Give suggestions on how a company can use its structure to in-
crease knowledge sharing and innovation
The cornerstones of tomorrow's hospitals are the common acute
admissions. The plan is that all acute patients must enter through
the same door at the hospital and whatever time of day and year,
a team of specialists who can provide them with fast and quali-
fied help will greet them. This is one of the biggest upheavals in
the health service in Denmark in recent times and will have con-
sequences for patients and staff, as well as the physical layout of
hospitals.

As one ofthe first hospitals, Lillebaelt Hospital opened an acute admis-

sion unit at Kolding Hospital in August 2008. Five specialties (gynaecology,
general medicine, organ surgery, vascular surgery, and orthopaedic surgery)
were merged into one department. The aim was that the department could
receive 20 patients a day, that no patients would be hospitalised in the
emergency department more than 48 hours and that 50 percent should
have their treatment completed in the department and sent directly home.

To be continued on next page

22

Figure 2.1: Factors in the external environment that affects the

At the same time, communication, health informatics & data and HR de-
velopment (human resource) were centralised. The aim of the restructuring
is that patients will see specialists first, and that treatment should be stan-
dardised and time-controlled, so in the long-term, 70-80 percent of patients
can eventually receive complete treatment within the acute admissions unit.
This will mean patients will go home quicker and the number of beds in
hospitals will be reduced.

Source: www.fremtidenssygehuse.dk

The purpose of working with organisational structures and environ-

ment analysis is to be able to design effective and more efficient or-
ganisations - who can achieve their objectives with maximum utilisa-
tion of their resources.

Unfortunately, the relationship between the organisation, the en-

vironment and efficiency, is not logical and straightforward. Since
organisations can be affected by many factors, including customer
demand, technological development and competition, the structur-
ing and design of an organisation becomes a balance between ef-
ficiency and adaptability:
Customers will preferably have an organisation that provides Source: Own design with inspiration from Daft (2007)
them with customised products at low prices
Technological development requires that the company is quick to
incorporate new methods and technologies Human Resources/Hklvi: Labour market, recruitment opportunities,
Competition requires that the company is efficient and in control types and levels of qualifications, union power.
of its economy, so it can offer better products at lower prices.
Financial resources: Stock markets, banks, savings, loans, private funds
These factors make different demands on the organisation's struc- and investors.
ture and function.
Market: Customers, potential users.

External Environment Technology: Manufacturing technology, research, computers, IT, e-

An organisation's external environment can be identified by the fac- commerce.
tors that the organisation is in contact with that have direct or indi-
rect influence on the organisation's design. Economy: Growth or recession, unemployment rate, inflation, invest-
ment rates.
These factors cover the following:
Government: Region, city, nation, laws and regulations, taxes, serv-
Industry: Competitors, industry size, type and level of competition, ices, legal systems, political systems.
related industries.
Socio-cultural development: Age, values, attitudes, education, religion,
Raw materials: Suppliers, manufacturers, separation of powers. ethics, environmental awareness, social responsibility.
 f I /" I 25
24

The international market: Competition from international organ isa-
tions, risk of take-overs, opportunities for internationalisation, cus-
toms, rules, exchange rates.
To a certain degree, these ten factors will affect a company. There-
fore, it is necessary to identify the organisation's 'domain'. A domain
is the niche or market area the organisation operates within, i.e.,
products, customers, and markets that thereby define the contact
the organisation has with the factors mentioned.
degree of contact with for example, the HRM factor (human re-
sources management) and the international factor, varies greatly.
Similarly, a fledgling company with high focus on innovation and the
need for external investors will be affected more by the degree of
investment readiness capital on the market, than a well-establisher]
company with high equity.

As an example, a small butcher in a provincial town with two em-

ployees is a somewhat different domain than the butchers at a large
company, such as Tulip. They produce the same products, but the

Figure 2.2: Examples of the different domains from two different companies

The small innovative company

A company may choose to adapt its domain by changing its struc-
ture. Alternatively, a company may try to change its domain. This can
be done by changing position and thereby the target group, lobbying
Industry to influence legislators, national or within the EU, or working actively
with your brand to change the competitive position. Usually, compa-
nies will attempt to do both things simultaneously - structure itself
Socio-cultural HRM Resources so that it best suits the situation and actively work with affected
development stakeholders. The central argument is that the more a company's
domain matches the company's strengths and market opportunities,
Government Financial resources the stronger the company's position and hence the situation is as-
sessed as less precarious.
Economy
Technology A situation is uncertain if the amount of information and knowledge
the company has available, is below the amount needed to make the
right decision (Daft, 2007). If a decision is very complex, involving
The international company with its own capital many parts of the organisation and the environment, and has high
standards for quality; decision-makers will need vast amounts of in-
formation in very diverse areas. An environment of uncertainty is a
Industry consequence of how many factors influence a company, and how
quickly the factors change.

Socio-cultural HRM Resources Environmental uncertainty

development Overall, three dimensions can classify an organisation's external en-
vironment: simple/complex, stable/dynamic, and poor/rich.
Government Financial resources

Technology

Figure 2.3: Identification of environmental uncertainty
Poor
Source: Daft (2007); Robbins &Judge (2009)
The external environment is assessed as being simple or complex by
how many of the ten factors affect the organisation. A manufacturer
of mobile phones will be affected by many factors - technological
developments, population composition for instance, age and values
(socio-cultural), industry (competitors), the economy (consumption
rates), the market (customers and especially the possibility of finding
new customers) and finally the international factor (international
competitors and the risk of a take-over). Therefore, a mobile phone
manufacturer's environment can be summed up as being complex
- it requires a large overview and high knowledge to cope with all
the development trends and correlations between them. A local
hairdresser, on the other hand, will often have a simple environment
with a few key factors: Technology (methods, processes), the mar-
ket (customer demand, fashion), and industry (competitors). It will
thus be easier for the hairdresser to cope with her environment than
the mobile manufacturer. It is quite realistic for a single person, the
boss, to monitor the market and 'translate' trends for the rest of the
organisation.
The second dimension, stable/dynamic, is about the degree of change
in the ten factors. If the changes in the factors are many and unpre-
i'l: i /:",[, i F' 1,) ( "j 27
dictable, the environment is defined as dynamic. If the changes are
few and predictable, the environment is stable. A manufacturer of
fashion clothing has a very dynamic environment, where new devel-
opments and trends occur constantly, and where the ability to pre-
dict sales a year ahead is very difficult. At the other end of the scale ,
we find the likes of a container ship manufacturer: Requirements
and trends change very slowly, and product lifetimes and production
time is so long that it is relatively easy to predict what the company
will produce the following year.
In the Harry Potter films, a staircase construction that periodically
changes direction, connects the common room to the four differ-
ent dormitories. It is not always the same way Harry must go to
find the Gryffindor dormitory. In relation to the above theory, the
number of stairs is comparable to the evaluation of simple/complex,
and the number of times they move, to stable/dynamic - in other
words, a complex/dynamic situation. It is mostly due to the changes
that make it difficult for Harry to find his dormitory - the number
of stairs is not directly a problem. Similarly, it is often the amount
of change in an organisation's external environment, which makes
it difficult to deal with - the number of factors, is mostly concerned
with how big an information management system the company shall
use. Today, computer systems handle information and the primary
problem is which factors to gauge. Market surveillance systems are
then developed that can handle the amount of information.
The third factor, rich/poor, is an assessment of the amount ofresourc-
es that a company has available in the environment. In rich environ-
ments, companies have no problem with accessing the necessary
resources: There are many suppliers wishing to supply, raw materials
are unlimited, you can choose between qualified employees, etc.
Resource poor environments occur in two different situations: Com-
panies operating in poor countries/regions, or companies that are in
fierce competition for scarce resources.
In Denmark, we have experienced very high competition for engi-
neers and doctors. The companies who need these kinds of employ-
ees had to look at alternative means to find new staff In some cases,
they paid large bonuses to current employees who could find a new
employee, not already employed, for example, by a subcontractor.
Hospitals outside of major cities have had to recruit people from
India or Poland, and put them through intensive language training in
order to fill their vacant doctor positions. Both cases fit the descrip-
tion for poor environments.
28 (i fi ': i l' I' :.\(
For all three factors, it is important that the assessment to determine
whether the environment is simple or complex, stable or dynamic,
rich or poor, is a subjective assessment. There are no fixed number
of external factors or changes that define position. Therefore, it de-
pends on the analyst's ability to understand the situation. A good
rule of thumb is that if the number of factors and the degree of
change exceeds what a 'normal manager' can cope with, the environ-
ment will, as a starting point, be most complex and most dynamic
and will require structural solutions.
Dealing with uncertainty
When the environment is analysed and the amount/degree of uncer-
tainty defined, the question arises: How do we deal with uncertainty?
Since uncertainty is a consequence as a result of lack of information,
the solution is either to reduce the required amount of information
or increase the amount of information the company has available.
Taking the classical school's problem-solving principle, uncertainty
is minimised by creating the right structure, i.e., by restructuring the
organisation, so that each part of it should only deal with a small
part of the necessary amount of information. This reduces the need
for information. Please refer to Figure 2.1.
Six key factors describe an organisational structure:
Formalisation describes the amount of written documentation within
the organisation, e.g., job descriptions, rules, procedures, and poli-
cies. A company, which, through an 1509000 quality certification
has documented procedures for all tasks in the organisation, will
therefore have large quantities of written records - and a high degree
offormalisation. In a small family restaurant, the quantity of written
documentation is limited and most decisions will be based on 'good
practice and tradition'. Here the formalisation level is low.
/":J .. h! [; '.:, Pi 1 29
Specialisation assesses the degree of subdivision of tasks within an or-
ganisation. An organisation with a high degree of specialisation will
have employees who only perform one, or very few tasks. At a hospi-
tal, doctors have their specialty. When a patient is treated, doctors
concentrate on their medical specialty. When a road traffic victim is
admitted to the emergency department, there would be more doc-
tors treating the patient - one to look at the gastrointestinal region,
one focuses on broken bones, one on the head and brain, etc. An-
other example could be McDonald's, where every employee has their
area of responsibility (fries, customer expedition, drive-in, etc.). A
low specialisation describes the situation where the employee per-
forms, a large variety of tasks in their job. In smaller companies, it
is often customary for the sales manager to also answer the phone,
make coffee, submit budgets, meetings with suppliers and meetings
with production - all within the same job. The degree of specialisa-
tion can also be referred to as horizontal division of labour.
Hierarchy describes the distribution of responsibilities and authority,
and is sometimes known as vertical division of labour. It describes
who is responsible for what and who can give orders to whom.
One way to assess hierarchy is by the span of control, or in other
words, how many employees a manager is directly responsible for.
At the SAS Institute's headquarters in Cary, North Carolina, CEO
Jim Goodnight has 22 direct Deputy Directors. This is a relatively
high span of control and shows a relatively flat organisation with
focus on delegation. It is not possible for the boss to have direct
control of all 22 employees, so he must trust that they are able to
take key decisions themselves. In an organisation with a low span of
control, where the manager has few direct subordinates, hierarchy
is often high, with many levels and a higher degree of control and
bureaucracy.
Centralisation describes how much of the decision-making authority is
concentrated at the top of the organisation. In centralised organisa-
tions, the boss makes the decisions. In decentralised organisations,
the decision-making authority is given to those employees closest to
the situation. In most sales organisations, the sales representatives
are allowed to negotiate prices and payment terms, within a centrally
defined framework. Here decision-making authority is decentralised.
Professionalism is concerned with employee education and formal
training. When an employee needs a lot of training and education
to perform the job properly, people talk about high professionalism.
This applies, for example, to lawyers and accountants. It can also be
business-driven training, such as riding masters, or a combination of

formal education and training/experience, e.g., medical practition-
ers who have been through several internships.
Personnel quota assesses the number of employees in, respectively, the
operational part of the organisation and the planning part. Either
you can assess the number of production workers vs. the number
of administration employees or the number of managers at all levels
vs. the number of employees. The aim is to draw a conclusion on the
balance between different parts of the organisation. The assessment
may also be combined with a value chain analysis that identifies the
number of employees of primary functions vs. the number of sup-
port functions. The aim is to deduce the relative sizes of, respect~v~ly,
operational, technical, and administrative staff, thereby providing
an understanding of the processes and working methods that will
dominate the organisation. An example might be a production de-
partment that switches from assembly line work to automation with
robotics. Here the personnel quota changes from a majority of pro-
duction workers to a majority of administrative staff, who will be re-
sponsible for the programming and management of the technology.
One way to reduce uncertainty by structure is, as mentioned, by in-
creasing the number of departments and jobs. This could help cre-
ate more specialised positions, which would only have to cope with
a few functions. You can then create standardised and specialised
skills, thereby reducing the amount offactors from the environment
that have to be directly monitored and which require a response.
This specialist thinking we know for instance, from banking. A bank
advisor specialises in either private or corporate client consultancy
advice. At the same time, they will often have a specialty area, such as
pensions or investment advice. In this way, it reduces the employee's
external environment and hence the level of complexity is reduced
_ they will now only concentrate on the factors that influence their
type of customer, and therefore they only have the need for informa-
tion that concerns them. If they have for example, responsibility for
young private customers, then factor four, financial resources, will
not be as relevant to them as it would for their colleague in charge of
older private customers with larger shareholdings.
A secondary consequence of increased specialisation is that the or-
ganisation becomes dependent on a high level of integration, i.e.,
horizontal interconnections between functions and departments. In
the bank, it is therefore necessary to establish communication and
coordination between the various functions' employees, so customers
who need more products, get comprehensive, professional treatment,
and so the bank ensures homogeneity in the service customers receive.
II
31
Uncertainty can be limited with specialisation
By focusing on the degree of formalisation and control
can be reduced. A company that operates in a simpl~ and
exte~nal. environ~ent can often reduce uncertainty through
monitoring and tighter control. In this way, rules and systems are set
up for conduct and limiting the number of decisions that employees
must take themselves in a given situation.
Uncertainty can be reduced by [ormailsinq
Finally, the uncertainty resolved through the company's access to
a.nd control of.resource.s, i.e., the way you ensure supply through
either stock or information. A company who cannot predict future
demand, or where the quantity of resources is limited, can choose
to build 'safety' stocks. In this way, the company is less dependent
on being able to predict sales accurately and thus ensures greater
supply. Alternatively, you can enhance the organisation's ability to
process information accurately and quickly. By using barcodes and
POS1 data, supermarkets are able to record sales of a particular
product in connection with an advertising campaign and later, be
able to predict the response to a similar campaign more accurately
than without the recorded data.
Uncertainty can be reduced by establishing control over resources
Besides the structural factors, an analysis should also involve key
contextual factors, such as the organisation's size, production meth-
od, - manual or high tech, and culture, i.e., values and standards,
as described in Chapter 7. There is a mutual dependence of factors
which means that a large organisation with very high tech production
and a performance culture, usually scores high on formalisation, cen-
tralisation and specialisation. A small organisation, where the tasks
are carried out manually, will be more specialised, decentralised, and
have a low degree offormalisation.
To be continued on next page
Point-of-Sale
 I.
" i! CTU I
33

tration of power at the top of the organisation. Burns and Stalker

called this the mechanistic organisation. When the environment changed
rapidly and unpredictably, the internal structure focused more
horizontally with unwritten rules, few established procedures, and
Specialised tasks 9 10 Broad tasks and freedom with responsibility and very little hierarchy. In these organi-
and roles roles sations, decision-making was decentralised and power was distribu-
Hierarchy I span of tion at different levels within the organisation. Burns and Stalker
High hierarchy! 1 2 3 4 5 6 7 8 9 10 Flat hierarchy,
called these organic organisations.
low span of high span of
control control Figure 2.4: Mechanistic and organic organisations
Techno Organic
High-tech, 2 3 4 5 6 7 8 9 10 Manual labour,
roduct service

Stable 8 9 10 Dynamic

Clear standards 1 2 3 4 5 6 7 8 9 10 Loose standards

and values and values
Professionalism
High professio- 1 2 3 4 5 6 7 8 9 10 Low professiona-
nalism, training! lism Mechanistic
education
Source: Own design inspired by Daft (2007)

Examples of mechanistic structures - efficiency and control

We find examples of mechanistic structures in traditional forms of
organisation:

With a functional structure the staff are specialised in a specific func-

tion and coordination is through a manager. Employees have knowl-
edge of their own territory, but not necessarily knowledge of others.

Figure 2.5: An organisation with a functional structure

Mechanistic or organic structures

Burns & Stalker (Robbins &Judge, 2009) identified. a correlation be-
tween the degree of uncertainty in the external environment and the
internal structure of a company.

espeople have a high degree of specialisation and a clear division

When the environment was stable, the internal structure was c.har-
tasks - they must sell the product, but have no direct influence
acterised by rules, formal systems, procedures, a~d a cI.early defined
the choice of materials or production. Communication is via the
hierarchy. Control and management was centralised With a concen-
Director, who has centralised decision-making authority.
 35
Another example is a product divisional structure, where speciali-
enhance horizontal communication and coordination
sation does not occur for functions, but for products, markets, or
information systems for meetings, to team structure.'
customer types:
them a" . is .that they are a way to move the organisation fro ma
mec h arustic structure towards a more organic structure.
Figure 2.6: An organisation with a product divisional structure
Figure 2.7: Methods for horizontal coordination and communication

Teams

Coordinators,
group leaders

Meetings, direct contact

Here, an employee in the marketing department's tee~s-divis!on !s

Common IT system
a specialist in marketing clothes for teenage g.irls. Agal.n: the JO~ IS
relatively specialised and formalised, centralised decision-making
and coordination and communication vertical from manager to em- Q)

ployee. F
Resource requirements - time and people
There is no requirement on HOW mechanistic organisations have to
Source: Own design with inspiration from Daft (2007)
be divided. Usually organisations use a combination offunctions and
products, depending on the type of division that allows for t~e best
use of resources, such as procurement and production functions of
~he struc.ture of organ!c b?dies is built upon focussing on adapta-
sales as a product by geographical area or types of customers. Th.e
tion, hon~ontal coord.matlon: decentralised decision-making and
key is to manage through a formal hierarchy with a high degree o~ di-
broad, vaned tasks. By ImprOVing the organisation's ability to handle
vision or specialisation. This creates some very controlled organisa-
large amounts of information, uncertainty is reduced.
tions, where employees have precise job descriptions, ~an~gement
plays a central role in both communication and coordination, and
Group-based organisations are organised as small, more or less autono-
tasks are to be done according to precise rules and procedures. The
mous groups, responsible for much of the planning and practical
disadvantages are that mechanistic organisations perform ~oorly in
tasks. A g:~up can have responsibility for planning, ordering materi-
highly dynamic environments - decisions often tal~e ~ long time and
opportunities for innovation and knowledge are limited because of als, o~ganlsmg s~aff, meeting times and breaks, quality improvement,
employee's lack of oversight of the organisation's tasks. supplier ~va~uatlon, etc. Within the group, it is central for this type
of org.anls.atlonal form that there is a very high degree of horizontal
coordmatlon and comm~~ication, and the group gets given a very
Examples of organic structures - knowledge sharing an~ innovation
large amount of the declslon-~aking authority. Employee require-
In very dynamic and complex environment types, environmental un-
ments are that they can, and WI", take responsibility for the process
certainty cannot be resolved structurally, but must be solved by ~et-
an~ they get the freedom needed in order to adapt to changes in the
ter information management: It is therefore a matter of enhancing environment.
the organisation's ability to manage information.

Here it is necessary to shift more over to a more organic organisa-

tion , where the focus is communication. There are many ways to
 r j':' i, ,! (' lij 37

Figure 2.9: Matrix structure

Figure 2.8: Illustration of an organisation with autonomous groups
Autonomous groups
»
o »
()
o o ;0
o a u;.
No leader designated c c A

6.
::J
6. ()
3
OJ
::J
()Q ()Q a ::J

::J
r
OJ
::J
e-r ~ro
e+
~ »
C ~ro
d 3
::J a.. ::J
ro
~ ;;. V1 ()Q
::J
r-t

Copenhagen

London

New York

Seattle

Tokyo

The horizontal focus and adaptation means that the employees in-
volved can bring special skills or special knowledge into a project. An
Coordination within the
engineering company that designs offshore platforms organise the
organisation's framework in a matrix, where the staff have their own specialty: pipes,
electricity, or steel. They collaborate on different projects
are paid hourly, according to the number of hours used on that
In this way, the company can take advantage of specialist
but also achieve a higher degree of coordination between
The machine manufacturer Rival A/S (www.rival.dk).whDpr?duces
ever thin from the smallest cDmpDnents for the electronics Industry, to. .
projects within the organisation.
larg~ piec:s for the machine industr~, has intrDduced autDnDmDUS teams In
production. The grDups are respDnslble for: virtual network organisations are known as organic-inspired
Planning Network structures arise because of outsourcing and col-
Process methDds and choice where companies outsource functions to contractors. In
Quality control the company is not one physical entity, but a network of
Delivery time that cooperate to complete a specific project. The cus-
- Training perceives the company as a single unit with a brand, but in
Machine maintenance
and structuring terms, the company is dependent on
Safety.
able to coordinate the creation of value in a number of com-
Rival's experience with this type of structure is that they have achielved · h often located in different countries and with very different
hi her motivation and greater commitment among the staff, but a so. h Ig er
This creates a challenge for management because the task
q~ality, more efficiency an~ le~s dependence on key personnel - thus a bet-
ter knDwledge of the DrganlsatiDn.
now involves both their own and others' employees,
people in different time zones and geographical locations.
newspapers and magazines use freelance journalists, who then
Matrix organisations are a second type of horizont~l-controlled ~r- part of the magazine's organisation, insofar as they deliver
anisation. Matrix organisation attempts to combln~ the au~h~nty and materials. Articles must be suited to the magazine's
~f functional specialists with horizontal product/project speCialists, and strategy, while the journalist can easily submit articles to
who then take the central coordination role. magazines within the same week.
 j i I i'i 39

Typical network structures are known from for instance, Microsoft and functions (reciprocal). In the latter case, such as in a hos ital wh
Amazon, both of which are companies that act as constellations of a number of different doctors each with their 0 ~ I' ere
t he nati ' wn specra ty would
individual partners, who provide parts of a product for a coordinat- reat t e patient,
. X-rayed "me
scanned direate d ,etc., requires
.' a str
ing entity. Thus, Amazon has a wide range of partners, publishers, ture t h at IS very much focused on th e hori onzonta I connect' uc-
manufacturers, printers, etc., who supply and sell products through other words, an organic structure. Ions, In
Amazon, and thereby in the customer's eyes are a part of Amazon's
brand, but not actually employed by Amazon and thus cannot be
controlled by Amazon's management team.

Dependency
For all organic structures, focus is on horizontal coordination and
communication. The key is no longer, where in the organisation an
employee is placed, but how that employee shares information and
knowledge with staff in other parts of the organisation. One way to
deepen relationships between various departments and people is by
using Thompson's definition of mutual dependencies (Daft 2007).

Thompson's analysis focuses on the extent to which there exists a

dependency between different departments in an organisation. Co-
ordination between departments is a consequence of how much the
departments need each other.

Figure 2.10: Thompson's classification of mutual dependencies

ow.do you structure an organisation for knowledge

harmg and innovation?

Source: Daft (2007)

e.chart shows the link between the characteristics of the external
vrronrnent and the organisation's structure:
Based on the division of pooled, sequential or reciprocal, a company can
assess the extent to which a customer is treated by a single entity
(pooled), a chain of activities (sequential) or by a team of persons/
 ;! (" "1 41

Discussion Questions:
Figure 2.11.' Relation between external environment and structure Can yo~ make objective criteria for the classification of the exter-
nalh environmental
. types in relation to Figure 2 . . xp I'am.
3? E
W .y IS the degree of innovation often low in mechanistic organi-
sations?
Gi~e examples of companies who need a high degree of centrali-
sation and formalisation.
What k:nd of mutual dependence do you think are found at: Mc-
Donald s? A hairdressers? A four star hotel? Explain.
Give examples of how a company can use control of resources as
a way to reduce uncertainty.
Giv.e exam~les. of what 'products' a company can use to divide
their organisation. What determines which product is relevant to
use?
What are the advantages and disadvantages of using matrix
stru ctu res?
Can knowledge sharing be formalised, so you can make rules and
p~ocedures that promote the sharing of knowledge? Explain.
Source: Own design with inspiration from Daft (2007) ~Ive examples of the three forms of uncertainty reduction from
Figure 2 '.11: Structure, information/knowledge, and the influence
Foran organisation, it is a matter of: of domain.
Identifying the factors in the environment that are essential to the
organisation's structure
Identifying the transformation process within the company, in
proportion to how and to what extent the organisation's depart-
ments are mutually dependent
Choosing the optimal structuring strategy
Mechanistic structure for a high degree of efficiency and control
Organic structure for knowledge sharing, learning and innovation
Working actively to influence its domain/market area, so that
market opportunities are constantly exploited and the company's
position is a positive match between these opportunities and
company strengths.

If this analysis exploits the options optimally, the structure of the

company should be adapted to the external environment in such a
way that allows the organisation to exploit market opportunities and
avoid major threats.

Structuring and changes are not a one-time task: Because the exter-
nal environment is constantly changing, it is necessary for manage-
ment to create a structure that adapts to change, or at least, is able
to handle adjustments and changes on an ongoing basis. This can
be done through an organisation design to fit the environment and
the task, and through a management style working actively with em-
ployee adaptability. The latter is elaborated in Chapter 11.
 Groups and teams

After reading this chapter, you will be able to:

Identify different types of groups
Describe the four elements that are critical to building effective
teams: Context, composition, motivation and process
Identify roles in a team and to assess whether the team's roles are
optimal
Identify conflicts in a team and give suggestions on how they can
be resolved
Assess whether teamwork can ensure the project's efficiency.

_
~6EJD

.,"'......t-... '.
~"\!
'"

Not so many years ago, the National Board of Industrial Injuries in Den-
mark used the traditional method where every caseworker would sit with
their own cases, and work through them.
This changed when the Board started to work in teams. Team structure
means that employees do not have their 'own cases' - they are the 'team's
cases',
Today, several caseworkers in the same team often handle a case. Therefore,
it is important that everyone in the team has mastered the art of working
together during a busy day. This means that there is a need for a high degree
of autonomy and it is very different how each team will organise their work
- depending on what suits its members best.

Source: www.ask.dk. (National Board of Industrial Injuries in Denmark's homepage)

One of the strongest forms of horizontal coordination is the estab-

lishment of a team structure. The dynamic market conditions that
44 ! i;' 45

most companies operate in, makes it possible to respond and adapt You can hence distinguish between different group types, e.g., pri-
quickly. Team structure helps to support this. mary/secondary groups, formal/informal groups, professional/
multidisciplinary groups, and project groups. Group types are seen
Theoretical distinction between groups and teams, where groups from the point ofview of the person participating in the group.
are described as a functional community that perceives itself as an
entity, but not necessarily generates better results than its members Primary groups are the 'main' groups for individuals, i.e., those groups
could have achieved separately. A typical example is all the students that have the greatest impact on the person and where the highest
in a team, members of a sports club, or any employees of a marke- degree of interaction takes place. It is often family or close friends.
ting department. Secondary groups are further out, in terms of importance and inter-
action. It may be friends, close colleagues or other members of the
A team is also a group, but differs because members are chosen for local old-boys football team.
their individual strengths and skills that they shall use to achieve the
team's common goals. A team is a more binding and objective con- Formal groups are deliberately formed for a specific purpose. It may be
trolled unit. a department within a company or a class on a course. Character-
istic of the group is that if you draw an organisational chart for the
Through the synergy of the group, a well-designed team can produce organisation, the group will be a part of it as well. Formal groups
better results than a collection of individual performances. can be found within both a department, such as project teams with
a specific purpose, or between departments. This is based on cross-
An example of a team is the Danish national football team, a team of functional groups - often with development or deployment purpos-
doctors in an acute admission unit, a team of teachers for a college es. Project type groups are often called ad hoc groups.
class, etc.
Reference groups are formal groups that the individual would like to
In practice, the distinction is not always between the different con- become a member of, in other words, a group the person identifies
cepts. The concept of 'team' is often used as a general description with. An example of this is, as an employee, you have a desire to be a
for all forms of formal group structures. However, it is important manager and consequently be a part of the management group.
to be aware of the increased demands for collaboration and com-
position that are required for a successful team structure. It will be Figure 3.1: 7Jpe of groups
described later how these will affect the team structure.

First, a general introduction to groups.

Group Types
Both as a private individual and as an employee, you are in different
groups. Some groups you are in because of your job, others are due
to family relationships and interests outside of the job, orvoluntarily
with colleagues.

The different group types affect how involved you become. In the
family, it is because of your familial affinity, the sports club because
of your interest, and work because of your skills and interests. To
find the structure of group types and their function, it is possible to
divide them into wide-ranging group types.
 47

Info~mal groups arise spontaneously - often through a shared interest

all potential problem areas and implications of the new
or simply because the members want to be together. These could in-
beforehand, and therefore will need representatives from all
clude those ,:"ho meet for the 'Friday bar', smokers, or those employ-
and levels within the company.
~es who are Interested in football. Characteristic of the group is that
It does not appear anywhere on the organisational chart and is not
advantage of cross functional teams is their breadth of skills, so
part of the formal division of the organisation. Yet it may be a group
are sure to highlight the issues from many angles. A major disad-
type the company can cultivate, for example, improving corporate
culture. See Chapter 7. can be a very lengthy decision making process and possible
problems.
All persons within an employee's area of contact can be character-
ultidisciplinary teams often require many administrative resourc-
ised base~ on these two dimensions: A husband/wife will be a part of
- both for planning of time; all participants have to come from
~oth a pnmary group and a formal group (family), and a colleague
departments, calendars to be coordinated, and where the
In the sales department will be part of a formal/secondary group.
solution calls for many discussions and negotiations/com-
to be implemented.

3.2 illustrates different types of functional and cross-func-

teams in an organisation. All teams are formal, but project
C and D are functional. In this case it means from within the
department, while project Z, which is digital implementation
is cross-functional, as it requires members from other departments.
Application of organisational groups
In Chapter 2, we looked at the organisational structure, and if you
look at an organisational diagram, it shows a series offormal groups.
For example, sales department, finance department, product de- Director
partment, etc. In addition to these formal group types, you can, in
~ con:pany, put together groups of teams to strengthen the business
In various ways, e.g., by putting together teams of functional or cross
functional groups.
.. Depa~me~t~;:
, (function~,I/"··""·
formal group)
Functional g~oups are groups or teams, whose members represent the
same function or area within the company. An example of this could ,
,
be a team of salespeople, who must work on a new market or a
grou~ ofblacksmit.hs who cooperate on a project. The advantage of ... Project D

functional groups ISthat the members represent the same function

and create e~pert skills. As a consequence, functional groups are
an opport.u~'ty for a company to concentrate specific knowledge,
thereby gammg a competitive advantage. Individuals in groups
Every person at some point will be a part of several different ~roups.
In each of the groups a person participates in, they play different
Cross-functional groups or teams, in contrast, take members from dif-
roles, i.e., the person has a different status in different groups.
ferent functions or areas of the company. They often have deploy-
ment 0: d~velopment purposes, and therefore require the problem
For example, a sales director in a company has one role and s.tatus
to ~e highlighted from many different angles. An example maybe a
when he sits in the management team, and another when he ISthe
project team, who are responsible for the implementation of a new
boss of his sales team. When he plays tennis with a group of peers
IT system, as illustrated below. They will be relying on being able
in the club, where he is not the best player, he again has another

role; his status is as a sales director, but only as a mediocre tennis
player. When he comes home to his family, it is yet another role, as a
husband and father.
A company can constructively use knowledge of these role types.
Partly by giving employees formal roles, such as head of a depart-
ment, and partly by taking into account the roles to avoid the emer-
gence of various conflicts in the company. If management is not
aware of the different roles in a group, it may cause a role conflict.
An example of a role conflict can be if an employee in a team 'nomi-
nate' themselves as informal leader, because management has not
pre-defined beforehand how the collaboration should work and
who takes the decisions.
How to create effective teams
When we work with organisations, we focus primarily on those
groups or teams who have influence on the organisation's daily
operations and the ability to handle the tasks. As mentioned, it is
primarily formal groups that we can design and manage, so they sup-
port the company's project. However, informal groups often contrib-
ute greatly to organisational culture, and must not be ignored (see
Chapter 7). At the same time, the need to create teams increases that
are better able to function effectively and evolve with the project.
Effective teams are generally created by focusing on these four dif-
ferent areas:
Figure 3.3: Performance model for a team
Job desigl1:
Process:
Auton°rTlY' . Common
skill variety; .
objective,
taskiderltity;
specific goals,
efficacy,
number of
and type of
conflicts,
social loafing
Source: Robbins &Judge (2009)
ii 49
Context
External factors can affect a group, just like all other parts of the
organisation. The organisation's external environment/ plays a role
in the basic structure of the organisation and therefore, also for the
way that groups or teams approach their tasks. For that reason, it is
important that:
The team must have a supportive environment
The team will have access to appropriate resources in reasonable
quantities
Management must be appropriate and supportive
The structure must be adapted to the task at hand and the people
People in the team must have clear and relevant feedback of their
work
People shall be rewarded for achievements in the team, in a fair
and appropriate manner.
A team working in a very dynamic and complex environment, where
it is difficult to get an overview of the project and requires many
diverse resources, must be organised more flexibly than a team with
a relatively simple project in a stable environment. In this way, think-
ing about the context/environment for a team, is not much differ-
ent from the considerations we must make in relation to the entire
organisation.
An organisation's strategies and objectives also apply to the team,
just as leadership of a dynamic team" often requires a high degree of
autonomy. Therefore, management's behaviour has to be adapted to
support the team's needs.
EXAMPLE:
Jyske Bank's strategy focuses on advice and experience. The bank's decor
is characterised by transparency and customer focus with group tables,
soft chairs, free coffee, internal television, etc. Therefore, it is expected of
project groups in jyske Bank to incorporate the culture and strategy in their
work, thus, operate relatively democratic, and be cooperative orientated,
with low formalisation and a high degree of customer focus. In contrast,
a project group in Danske Bank are expected to have a more hierarchical
structure and a higher degree offormalisation. The two banks operate in
the same environment, but through their strategy, objectives and organisa-
tional cultures, have very different attitudes, requirements and expectations
of employees.
Source: www.jyskebank.dk and www.danskebank.dk
2. See Chapter 2 on dynamic/stable and complex / simple environments.
3. See Chapter S.
50 51

Composition
The team will be composed of the right people with the relevant
skills. They must encompass all roles, which are allocated according
to personal preferences and strengths. There must be an appropriate
distribution of the different types, backgrounds, and cultures, and
the group must not be too large forthe project, and employees must
be able to adapt and adjust their behaviour to suit the situation.
It does not necessarily mean the larger the group is, the better the
group's results will be. As a rule of thumb, working groups should
not exceed more than four members. There is truth in moderation.
If the group must resolve specific operational projects, then it should
be small. There is no provable advantage in having many people if
coordination is primarily structural, and the project does not have
a developmental or creative nature. At the same time, it may be dif-
ficult to coordinate specific tasks among more than three or four
people.
However, if the group's project contains a requirement for develop-
mental and creativity problem solving, where it is important to get
as many different contributions for the problem as possible, then
numerous members can be beneficial. Here, large groups of very dif-
ferent people will often be able to highlight an issue from multiple
perspectives, discuss the consequences for very different parts of an
organisation, and ultimately be better at solving complex problems
than smaller groups.
For example, for many years LEGO involved teachers and educa-
tors in developing their products. In this way, they ensured that new
products were incorporated into the children's real life and fit games
that engage children of all ages.
A group of employees, who will be responsible for arranging the an-
nual summer party, typically consists of two to five employees from
different parts of the organisation. They will quickly have an idea for
the party or a theme, and then delegate tasks to different members
- one finds the place, one takes care of food, one arranges decorat-
ing and one organises the cleaning afterwards. In this way, tasks are
completed easier, and there is no immediate benefit in increasing
the group size. The party is not any better, and time flies arranging
meetings and discussing back and forth.
In contrast, a group has been given a project to rethink the com-
pany's products. Here the group will consist of several persons and
for the project to be successful, it is crucial that all areas of the or-
ganisation are represented, and that all ideas and thoughts are taken
under consideration before taking a final decision. This group will
use innovative forms of cooperation, such as brainstorming, asso-
ciation techniques" and similar, to ensure that all possible solutions
are brought to the table. Much of the time will be used on discuss-
ing and identifying the preconditions for the modified products or
target group.

Another aspect is the members' backgrounds and skills - a kind of

demographic profile of the group. A group with relatively simple op-
erational tasks and focus on efficiency, will often consist of relatively
homogeneous people - it is fairly easy to get four engineers to agree
on how to modify a product in order to meet some new legal require-
ment.

On the other hand, if the group has to solve complex problems, then
heterogeneous skills and backgrounds can be necessary. If the prob-
lem involves various disciplines, has broad influence on the organisa-
tion, or requires an understanding of many parts of the environment,
it is easier solved by putting together a group of very diverse people
- see the discussion on functional versus cross-functional teams.
Development departments in companies, to a high degree, consist
of people with widely different backgrounds: Engineers, production
workers, economists, philosophers, sociologists, teachers, etc.
4. See Chapter 8.
 , I,,'
53

Job Characteristics
The third requirement for an effective team is that the project is de-
signed so that it lives up to the basic elements for a motivational jobs:
It should contain a degree of freedom (autonomy)
It must provide the possibility to use different skills and abilities
(skills variety)
It should be clear what the project's purpose is in relation to the
rest of the organisation (task identity)
It must give the person/people a sense of responsibility for results
(task significance).

For a team it is important that they know the goal of their project
and that they have the necessary resources in terms of money, time
and knowledge to complete it. Another key element is that the team
has the freedom to organise the work optimally. This is a big part of
the considerations in connection with the organisation of autono-
mous teams.

An autonomous team" is a group of employees - often connected to

a specific part of production - who would be responsible for plan-
ning and organising their work. This motivates the employees, be-
cause it increases the degree of freedom in the job. At the same time,
it avoids having some middle management positions that would re-
quire resources.

EXAMPLE:
The nursing and care sectors have widely used autonomous teams. Many
home help departments are organised as autonomous teams, where each
team cover members of the public within a specific geographic area. The
team consists of, for instance, two nurses, a social and health assistant,
as well as five to seven social and health helpers. In addition, the team can
draw upon extra resources in the form of group coordinators and area
managers. Often a number of teams will also share external resources, such
as doctors and psychologists.

Autonomous groups can also be found in industry. JELD-WEN, an

international manufacturer of doors, has established autonomous
teams at their factory in Herning:

S. See Hackman'sjob Characteristics Model, Chapter4.

6. See Chapter 4.
54 55

In a cafeteria, employees often have their regular seat at the lunch

tables. It is the norm to sit in the same place every day, so it can be
very difficult for a new employee to choose whom he will sit with. At
exclusive women's clothing shops, there maybe a strict dress code:
Hair must be short or set-up, earrings may only sit on the ear, not
hanging, nails should be short and clean, and moderate makeup.

Norms have a behavioural effect: Employees will try to adapt to both

Source: Conmoto: 'Team Development - from hierarchy to autonomous team'
the formal and informal norms in a group. The ability to adapt to
formal and informal norms in a group is a potential source of high
status in the organisation. This has a strong socialising effect, where
new members sneak into the group's behaviour, without any real
need for leadership. If an employee, for example, experiences that
production mistakes are ignored and are sent further in the system,
without proper reprisals for the employees, he will quickly come to
the realisation that this is 'normal' in the organisation. However, if
the employee experiences that mistakes are stopped and resolved
once identified, it will influence his conduct in the same direction.

Figure 3.4: Prestige and status

Process
Last, but not least, the team's workflow has to be appropriate: They
must have a common purpose and goal. They must have a common
standard for efficiency and quality in the process. Conflicts in the
team must be manageable and focus on development/progression,
t t t
Provides the opportunity Ach ieved via titles
Level depends on
as opposed to personal conflicts that are devastating for the team's to influence norms and formal roles
- meeting standards
work. Finally, social loafing? is kept to a minimum level. - proper filling of roles

Norms can be described as formal and informal rules of behaviour in Strong norms may also have a negative effect on an employee's own
the group. Is it okay, for example, to come ten minutes late? Can you opinions, in that he suppresses his own opinion and meaning in fa-
take a sick day without really being bedridden? What do you do if vour of the group, so as not to appear opposed to the general norm.
you discover a fault with a product? And is it okay to sit and look out These are known as groupthink and groupshiit, and are concepts that
of the window during working hours? describe either the tendency to suppress a different position in or-
der to appear as part of the group (groupthink), or the tendency to
Teams are naturally subject to a number offormal rules established reinforce one's own position when feeling support from the group
by the company. They often deal with work place rules, such as (groupshift). A small irritation at a manager can quickly become a
meeting times, breaks, holidays, productivity, and working methods. huge crisis, without the situation actually changing.
There are also a number of personal norms concerning cooperation,
appearance, and dress code. Conflict types in teams can be both constructive and destructive.
Constructive conflicts are beneficial for the team's work, often lead-
ing to discussions about methods or solutions, which can lead the
team to a better or new solution to a problem. Characteristic of con-
7. Social loafing is a term describing the tendency that individual productivity may be lower when structive conflicts are that they involve resources and processes - not
working in groups, because the ability to identify the individual's contribution to the group's work,
is not so great. In other words, someone works less or slower, in the belief that it is not as visible in
people. We can thus discuss how to complete the task, or how to
relation to the final result. allocate time, but never personal characteristics. These conflicts ex-
56
ist both within the team, and between the team and its environment
(typically around resources or the budgets, for example).
Destructive conflicts are conflict types, which harm cooperation.
Typically, they are personal and can be very difficult to resolve. It
typically concerns who has a particular role (e.g., the manager), or
a lack of consensus about standards in the team. A participant who
does not deliver the project on time or who repeatedly arrives late for
group meetings and does not want to change their behaviour, can be
very destructive for the overall cooperation within the team. These
conflicts exist within the team and only rarely involve people outside
the team.
Optimal composition of the ad hoc team
When the company, in connection with the project team, other ad
hoc tasks, or innovative projects, such as product development, has
to assemble team members together, it is essential that the right skills
be applied.
In this context, skills of team participants are professional knowl-
edge, collaborative ability, and personality. With personality, it refers
to basic personal characteristics that can help to provide drive, mo-
mentum, and greater certainty of success.
There are varieties of theories to find the right personality, including
the two presented here: Belbin's team roles and Adizes' leadership
roles.
Belbin's team roles consist of eight different personality types that pref-
erably should be represented in the team group. Personality types
/\ 57
are called team roles. To find out whether all team roles are in the
team, a test can be conducted. The test will provide a result for each
participant, which tells about the their primary, secondary, and terti-
ary team role.
To discover whether team roles are represented as primary, second-
ary, or tertiary team roles, the group has to be examined. In this case,
the group will probably function optimally. With the test you will
also find out if there are too many or too few, or perhaps none at all
ofa certain type of team role. Ifso, the group should be reorganised.
When the group is complete, the team's work can begin.
Figure 3.S: Belbin's team rolls
Shaper
Implementer
Source: Own design with inspiration from www.belbindanmark.dk
Each role represents an important job in the team, and each role has
its strengths and weaknesses. Roles can be divided into four groups:
Implementer and Shaper are the roles that ensure a high level of activity
in the group. The Implementer can be described as hardworking, fo-
 '.1'-
59

cused, and practical. The Shaper is competitive, energetic, authori- Producer is a role that focuses on progression and goals. It is this role
tative, and responsible. that ensures the work goes in the right direction, qualitatively and
quantitatively, and to maintain efficiency and productivity in the
Plant and Resource Investigator are the team's
creative roles. The Plant project. Often it is the Producer role that ensures the project is com-
can be described with words like inventive, imaginative, and intellec- pleted on time and with the level (professional and quality), which
tual. The Resource Investigator is curious, enthusiastic and network was agreed. A good Producer must be goal orientated and energetic.
seeking.
Administrator ensures structure and systems. It is in the Administrator
Coordinator and Team Worker are the roles that focus on the external role that manages the methods and resources. The Administrator
environment. The Coordinator is fair, democratic, and delegating. will focus on and ensure things are done properly, carefully coordi-
The Team Worker can be described as a relationship builder, has nated, and they should generally be thorough and detail oriented.
situational awareness, and socially oriented.
Entrepreneur is the innovativerole. This is where ideas originate, new
Finally, Monitor Evaluator and Completer Finisher are who keep the team projects, and thinking ahead. The Entrepreneur role is both a su-
together internally. The Monitor Evaluator has oversight, is analyti- pervisory role (development of key external environment factors,
cal, objective and levelheaded, while the Completer Finisher is dili- which affect the project) and a creative role (new opportunities, new
gent, a perfectionist and cares about detail. projects). The Entrepreneur must be willing to take risks and be crea-
tive and open.
Belbin concludes that if all roles are present in the team, it has a good
foundation to be effective. If just one of the roles is missing, it will Integrator is the social role. This is where coordination and coopera-
be noticeable in the team's performance. Therefore, the Plant is im- tion are managed. A good Integrator ensures that all members work
portant for innovation and creativity, the Implementer is important optimally, that there is a good atmosphere in the team, and that
to keep the team running and the Complete Finisher is important to conflicts are resolved in the best possible way. An Integrator must
ensure that the project is completed. According to Belbin's studies, therefore be a people person, empathetic and compromise focused.
one person typically has two to three roles, and so a team of three to
five people can easily represent all eight roles." In Adizes' theory, the goal is that all four roles are represented in the
team. Ifso, the team should be able to maximise efficiency. Therefore,
Adizes' leadership roles applied to the team each member is assessed by how well that person plays the four roles.
Another way to consider the roles of a team is based on Adizes' lead- For this purpose, a coding system is used, where PAEI represents a
ership roles (Hansen, Heide & Riis, 2000)9. Originally, Adizes' theory person who is strong in all four roles, and paei is a person who has a
was used to define the different roles of a manager, but it can also trace of all roles, but no strong representation. If the person has no
contribute to an understanding of the effectiveness of a team. In trace of a role, it is defined with a zero (0). In this way, a person who is
Chapter 5, roles are elaborated in a management context. analysed as PaOi, will be very strong in the Producer role and to some
extent, could fill an Administrator and Integrator role. The person
Adizes works with four basic roles in an organisation or in this case will not have a focus on the creative or evolving part of the project (0
in a team: in the Entrepreneur role). A person, who is assessed as pOEO, will take
Producer (P) on the typical Entrepreneur's role: Strong focus on new ideas and
Administrator (A) projects, a certain interest in putting projects in motion and achiev-
Entrepreneur (E) ing results, but no focus on structures or collaboration.
Integrator (I).
According to Adizes, the optimum combination, PAEI, cannot be
found in one person. However, by careful selection of its members,
it is possible to assemble a team that has strengths in all four roles.
8. More information about Dr. Meredith Be!bin's team role test, etc., are available at the website
Theoretically, this will result in optimal cooperation. In practice,
www.potential.dk.
9. See Chapter 5 on management/ where Adizes illustrates from a management perspective. grouping people together with very different strengths and areas of
 61

3.6: phases in the development of a permanent team

the
of
Elite team

to
IS

ct

Time

re
~s group may also encounter problems if there are differences in the
understanding of ,right' and 'wrong' behaviour. This is compounded
if the team consists of several different cultures, see, for instance,
p Uncertainty Avoidance from Hofstede's Culture Theory (Hofstede,
w 1999), which can cause very big differences in the need for long-term
agreements and plans.

d Team success is achieved through their ability to reach the goals the
e organisation sets for them. A secondary effect is that the members
in effective teams (an 'elite team') will develop professionally and
socially. At the same time, an effective team often becomes an im-
3. portant part of members' identity - that is, they feel at home, the
role they are most comfortable with and the partners they work best
with. You can say that an effective team becomes a part of members'
primary group.

An alternative model can be used to describe the development of

project groups, where the deadline for the group's disbanding is
known. Here there is a leap in development, where efficiency in the
first half of the project's lifetime is very low. When half of the time
is gone, there is a jump in performance, when the team suddenly
realise that they must work hard if they are to complete the project
within the stipulated time. Then, work continues until the end, with
a somewhat higher efficiency.

focus (e.g., the strong technician (large P and A), together with the
pe~p.'e oriented humanist (large I)), often requires a great deal of
training and focus on cooperation.
Development of teams/team building
A team undergoes a series of stages in development from start to
fi.nish - we can s.ee them as the team's lifecycle. Life expectancy is
dlffere~t depending on whether the team is permanent or project
based, In other words, with a clear end date.
Permanent teams typically go through five different phases:
Start-up: The group is established and objectives and resources are
determined. Usually, members are somewhat insecure about roles
and norms, and behaviour is characterised by uncertainty.
Love.: Members begin to feel like one of the group, and leadership
begins to take shape. Everyone in this phase is very positive and show
great kindness to each other.
Community: The group's structure and standards are established and
role division begins. Members experience themselves as a part of the
group, and effectiveness of the group's work improves.
Elite Team: Roles and norms are in place. The team functions as a
well-oiled machine, and synergy is at its highest.
Break-up: The project is completed and the group is disbanded.
In the transition between each phase, there lies a potential conflict.
Typi~a'.'y, confli.cts occur in the Love phase, where the group's lead-
ership IS established. There is often disagreement about who is the
leader of a team. Also in the Community phase conflicts arise in con-
ne.cti~n with the establishment of norms and roles. Usually problems
exist If the group has a majority, or minority, of certain personality
ty~es, e.g., many extroverted salespeople, but no economy/detail
orientated persons, according to Adizes so-called POEi group. The
i I 61
3.6: Phases in the development of a permanent team
Time
group may also encounter problems if th~re are ~i~ferences in the
understanding of ,right' and 'wrong' behaviour. This IScompounded
if the team consists of several different cultures, see, for instance,
Uncertainty Avoidance from Hofstede's Culture Theory (Hofstede,
1999), which can cause very big differences in the need for long-term
agreements and plans.
Team success is achieved through their ability to reach the goals the
organisation sets for them. A secondary effect is that th.e members
in effective teams (an 'elite team') will develop professionally and
socially. At the same time, an effective team often becomes an im-
portant part of members' identity - that is, they feel at home, the
role they are most comfortable with and the partners they work best
with. You can say that an effective team becomes a part of members'
primary group.
An alternative model can be used to describe the development of
project groups, where the deadline for the group's ~i~band!ng is
known. Here there is a leap in development, where efficiency In the
first half of the project's lifetime is very low. When half of the time
is gone, there is a jump in performance, when the team sudd~nly
realise that they must work hard if they are to complete the project
within the stipulated time. Then, work continues until the end, with
a somewhat higher efficiency.
 i j,

Figure 3.7: Phases of a project team with a fixed deadline

established teams, these types of activities can also serve as a
Efficiency
function, where members experience something to-
- either as general preservation of the social environment in ;1

the group or as part of a conflict resolution process. The purpose of

this type of activity is to move team members from the secondary
'acquaintance' group, to the primary 'friend' group.

During the team's lifetime, there may also be a need to work more or
less structured with the team's culture, teamwork processes or roles
and norms. Some of this work may be performed as social activities,
(see improvement suggestions for established teams, in the ~revious
section), while others can also take place as formal consultations. At
times, the team may have the need for an external consultant, who
can offer support in areas, such as communication, roles, problem
solving and conflicts, norms or leadership and hierarchy.

0rskov AjS, a company in Skjern, who inter alia, work with man-
agement and organisational development, has 25 years experience
in conflict management in private and public companies. "It's not
always about fulfilling expectations", says Gunnar 0rskov on the
company's website (www.oerskov.dk). 0rskov AjS offers courses
that can, through coaching and mediation, train team members and
managers to have the courage to engage in conflicts and to use con-
Strengthening the team flicts constructively in the processes of change.

The big question in work groups and teams is how we create an ef-
fective team that can work with both high quality and high efficiency. Are all projects performed in teams?
There have already been suggestions on this in the form of how to
The answer is NO! In theory, team structures are an advantage for
select the people, and how management provide the right framework
companies, who need to exchange knowledge and. information - i.n
for the team. However, some teams continue cooperating, and every
other words, a great need for horizontal connections. However, It
now and then, new input is required.
looks very different in practical reality. Many Danish companies have
tried team structures, autonomous groups, or project groups, and
To impr~ve a team's performance or ability to cooperate, we can
many have failed.
take action on several levels. Teambuilding is a term used widely in
management theory today, and covers a range of activities from ab-
On paper a team can increase efficiency and motivation of employ-
seiling to coaching sessions to teamwork exercises.
ees but frustrations and conflicts in start-up phases are often much
higher than the anticipated results. The consequence is that many
In the start-up phase of a new team, there is often focus on the
companies give up establishing team structures before they reach th.e
types of. exercises that create unity and team spirit in the group.
stage where, in principle, they should begin to see the results of their
Here various outdoor activities are available, such as survival and
efforts.
sporting ~ctivities. Their primary purpose is to give participants an
opportunIty to get to know each other and to uncover some of the
Teamwork requires more resources than individual jobs. Communi-
personal strengths and weaknesses that the team will be dependent
upon later. cation and conflicts put demands on management and the structure
- demands that may incur necessary costs. However, despite these
 increased costs, team structures are often preferable. They increase
the motivation of participants, allow for better and more creative
project resolution, and reduce the need for middle managers in the
organisation - just to name a few positive arguments.
A good exercise to identify whether a team structure is preferable is
to ask your self:
Is it better to have more than one person working on the project?
Can the project's goals be defined clearly enough to be resolved
in a team?
- Will the project create mutual dependence among members?lO
Football is a typical team sport: A match can only be won if all play
together and have the same objective for the match. In contrast
there are situations, swimming for instance, where members act as
individuals, with the backing of a team, but without real collabora-
tion i~ completion of the project '200 meter free'. Another example of
a ~roJect best done individually, is work-roster planning for holidays.
It ISa task that contains a political element: Who has children, who
was off last year, is it better to work 12-18 or 14-20, etc. It is rare to
make ~ roster that can please everyone. Therefore, a manager, who
then dIctates the solution, is better to take these types of decisions."
iob types and the necessary strengths in Belbin's theory? Should a
Ieader for example, be strong in the 'Shaper role'? Explain.
Describe the four roles in the Adizes model. How do you think
your neighbour will score? Compare your results with the results
from your online test.
Give suggestions on how to design a reward system that ensures a
balanced focus on all four Adizes roles.
How can you avoid social loafing? . .
How many members do you think an optimal project team will
consist of in your studies? Explain.
What is the difference between destructive and constructive con-
flicts? Give examples of some conflicts you have experienced, and
suggestions for how to resolve them.
How can the leader of a team help the team through the five
phases of development? Give examples.

However, there is a general trend in Danish companies towards

tea~. structures. Employees crave responsibility and challenges in
their Job, and combined with a high education level, the move is to
more and more horizontal organisations, i.e., organisations where
cooperation is widespread. The degree of autonomy in the team var-
ies greatly: From teams who 'only' see to the practical coordination
(break times, assignment of employees in relation to tasks), to teams
who have almost full responsibility for planning, administration hir-
ing, firing, rewards, etc. '

Discussion Questions
.- Describe the difference between a group and a team.
What. is easiest to manage, a group or a team? Explain.
Why IS teamwork for most people more motivating than group
work?
- D~scribe the.eight roles in Belbin's theory. How do you think your
neighbour wIll score? Do you think there is consistency between

10. See Chapter 2.

11. See Chapter 5 on manager authority.
 ,.;
..
....•......•...

Individuals and Motivation

After reading this chapter, you will be able to:

Analyse individuals in the organisation with a focus on personal-
ity, values, learning and communication
Understand basic and modern theories of motivation
Identify factors that influence motivation, both on the individual
and the organisation
Design motivati ng jobs
Give suggestions for motivation improvement measures for em-
ployees in different parts of the organisation.

There was once a business owner, who for years had run his business with
the philosophy that one must take the good with the bad. Therefore, this
meant that everybody were forced to accept they had to do some annoying
and boring tasks, in order to be able to have the tasks they were most ent-
husiastic about. And what happened? All employees were equally dissatis-
fied; the arduous tasks filled their time disproportionately and overshado-
wed the joy of the good and exciting ones. At one time, even the business
owner noticed that he did not think it was fun to go to work anymore.

Therefore, he decided to conduct an experiment.

First, he asked the employees to write down all the tasks that they were
currently dealing with. One task on each page. Then he asked the employees
to choose the pages for tasks they would ideally like to do. Then he had a
conversation with employees to discuss their choices. In each case, a little
training maybe required. It turned out that there were a few employees,
who had no wish to do any of the tasks, although there was a free choice. In
these cases, a good solution, outside of the company, was found for them.
Most employees could actually get to work with all the tasks they most desi-
red. However, a smaller number of pages remained with tasks that nobody
in the company would choose voluntarily. The business owner found out
that these tasks could well be resolved in another way, partly by subcon-

To be continued on next page

 ! ! 69

tracting some of the tasks out to external companies, partly by hiring some os ital emergency room: Patients with co~plet,ely dif~er-
employees who wanted to work on exactly these tasks, and finally, some of ah p d injuries stress levels are high and time IScrucial.
the tasks disappeared by changing the workflow,
dan 'Ide who 'must be treated first, who should be sent
The experiment was a success, Effectiveness and job satisfaction incre- must ec , hil Th ual
ased and the Company's results were clearly improved, ' who can wait a little w I e, etc. e q -
Into th~ syst~m, t conse uence of the doctors at admission,
Source: Teglkamp (2009) the w~rk ISa direc I' hqocan handle a high stress level, are
h nght persona rty, w h h
t e tructured have the right experience to ass,ess w et er a
An organisation is made up of people, who work together to achieve , ~ d er or not and is able to interpret different symp-
' IS In ang "
iven context, Remove Just one 0 f the above competences 'II
a common goal. To steer the organisation in the right direction and , .
In
' a gl, h vlng a secretary assess the injuries _ quality WI
to improve its results, it is therefore necessary to control and predict
Instance, a
The example 'I
, obvious
IS y extreme, but the ,principles are
each individual's behaviour, We can create optimal conditions for
each individual by giving them the opportunity to fully utilise their The result of a completed piece of work is a ~unc,tlon of person-
skills and knowledge, If we can motivate them to do it, and we are perception, knowledge/experience, and motivation,
able to coordinate their individual efforts towards the common
goal, the result should be a strong and effective organisation, The , be analysed in many ways, Researchers fundamen-
can
rty " of some innate charac-
company in the case study gives an example of a manager, who with
agree tdhat p::~:;I~~el~e:rcnoe~~e::i:~; conditioned traits and
courage and vigour, and by focusing on individual skills and motiva-
an som , , 'that
t h e com biIna tion of these characteristics or traits, make us
tion, has been able to improve his organisation,

Personality
of the main ways to analyse personality is with the help of per-
Personality affects behaviour, The first step, if we are to understand
employees' behaviour in the organisation, is to understand their
background and why, they react as they do, If We know the basic , f ' f uestions designed to iden-
A personality test consist,s ~ a s~n~s ~o~e redefined categories. A
strengths and weaknesses in their personality, experience, and ways tify personality char~ctenstlcs wlth~n 'r :,ndicator (MBTI) (Rob-
of understanding the world, we are more likely to understand their
~idely used ;~t;~: :s~h;T~r~:~-t~~~sg~a~Fc personalit~ tr~its b,ased
reaction, and ultimately influence them to respond in a certain way
within the organisation. bins 100
on & Judg ,
questions)on how ,IndiIVIid ua Is react
,. in , certain situations.
From the responses, individuals can classified as,
As mentioned in Chapter 2, organisations are leaning more and more
towards a horizontal focus, with consequences such as, lower de- Extrovert or Introvert (E/I): Extrovert Pdeo P,Ie are
, outgoing
d are and
oftensocial,
very
grees offormalisation and widespread decentralisation. The organi- they clearly expresses their views an OpiniOnS, a~ ,
sation is dependent upon employees being able to make informed, self-conscious, Introverted people are more shy an qUiet,
independent, and quick decisions, Management is dependent on
having dedicated employees with the right skills and experience in ,, '\' Sentient individuals are practical, detail-
Sensing or Intuitive (S/N/, d der Intuitive people rely
the right position of the organisation. It is these employees, who on d f tines systems an or .
oriented an ~re, er :ou If' blems ~heoretical possibilities or crea-
a daily basis, have to make the decisions that drive the organisation
forward. on aand
tive moreunusua
hollstllc
sovile,,:,
uuons. 0 P~~ey are' often not particularly interested

in practical, everyday solutions.

In this way, behaviour becomes a consequence of personality, percep-
tion, and motivation. The right person, with the right background,
who interprets the situation correctly, and is dedicated and focused
on his task, should provide effective high quality results, h balance between innate characteristics and socially learn~d
12, There is much debate about t e , 'I'd' dk) That discussion goes beyond what will
' onality (www.wikipe la. .
characteristics in shaping a pers . 'Robbins &Judge (2009).
be covered in this book. For more details see, e.g.,
70 1-1·[ ,'o'_': i
Thinking or Feeling (T/F): Cognitive personalities use logic and rational
arguments to make decisions. Emotional individuals rely more on
their personal opinions and feelings.
Judging or Perceiving U/P): People with an evaluating outlook on life
want control and would prefer a world that is structured and man-
aged. They would rather work with one task at a time, are methodical,
and make long-term plans. People with a perceptive vision of life are
flexible, make plans along the way, and often react spontaneously to
situations they encounter.
Collectively, the four indicators describe how a person prefers to act,
communicate, make decisions, meet people, and tackle tasks. Per-
sonality types are defined by four letters, and result in 16 different
personality types.
An ESTJ, for example, is an organiser - realistic, logical, analytical,
and decisive, and will often work well in commerce. An ENTP is
more innovative, flexible, and development-focused and can act as
an entrepreneur in the company. INTJ is a visionary, focusing on his
or her own ideas and visions. They will often be stubborn, critical,
independent, and enthusiastic about their own inventions and ideas.
MBTl is widely used in organisations as a personality assessment.
Although, it does have its problems; for example, there is no middle
level in the factors; personalities are either extrovert or introverted,
but in practice, a person can often be both one thing and the other.
In addition, MBTI cannot be used directly in employment situations,
because it does not examine personality types with focus on a spe-
cific job, but only as general factors.
A more well documented method of identifYing personality in a work
situation can be found in the Big Five Model of Personality (Robbins &
Judge, 2009). The Big Five analyses personality using five factors:
Extroversion: To what degree are tasks preferred that have the
possibility of social contact.
Emotional stability: Ability to handle stress.
Agreeableness: Good interpersonal skills, warmth, and confi-
dence.
Openness: Creative and curious.
Conscientiousness: Responsible, trustworthy, and organised.
The relationship between these five factors and professional achieve-
ments has been documented far more than MBTI. Researchers have
demonstrated a link, for example, between conscientiousness and
71
job related results - probably because indivi~uals. with ~t~ong
are working harder, are more responsible In their Jobs
consequently create better results. At the same time, often a
degree of agreeableness can demonstrate good results, when
are more popular among colleagues, which in team
provides a better base for cooperation and thus better
Openness affects learning and flexibility and gives positive
especially in volatile and change-oriented businesses, a~d
people with good emotional stability are generally more sans-
with their life, more positive in the job and have a lower sense of
(Robbins &Judge, 2009).
focusing on the Big Five are not as widespread as MB-:I;
MBTI is often the starting point for revealing personality
in connection with, for instance, recruitment.
Learning
Behaviour is learned. We react to situations based on patterns that
we have learned through our experiences and interpretations. Learn-
ing takes place if:
An individual behaves, reacts and answers as a consequence of an
experience in a way that is different than the way he reacted before
that experience (Robbins &Judge, 2009).
From an organisational perspective, learning takes place in the social
context at work and this we will concentrate on. Work-based learn-
ing occurs because of observing colleagues' behaviour and through
one's own direct experience. A manager can influence employee be-
haviour by responding directly to the negative and positive beh~vi~ur
in the organisation. Employees will see the consequences oft~elr and
colleagues' actions, the manager's reaction, reward or punishment
and as a result, learn to adapt their own behaviour according to the
organisation's values.
 73

The manager's effect on employee's learning, acts as a reinforcement "Nielsen, this is the third time you are late this week. You had better buy
of the opinion that the employee has of the organisation. Positive an alarm clock! We cannot have people who cannot meet on time".
reinforcement occurs when behaviour is followed by a pleasant re-
sponse. It may be praise from managers or colleagues. Negative rein- Figure 4.1: Conversation as communication
forcement occurs, for example, when a teacher asks a question to a
student, who is sitting and looking down at the desk, hoping not to Person wishes to disclose
Message Recipient hears
some information. the message.
b~ asked. Punishment is the third reinforcement method and is a very - Form (verbal, written)
direct way to stop unwanted behaviour. An example of punishment - Style (quiet, aggressive,
Information is Message is interpreted.
polite, reproachful,
is a student being barred from an exam due to lack of attendance. selected/ defined
objective/subjective, etc.)
Finally, managers can choose to ignore certain behaviour. This kind The interpretation is
The choice is a consequence again dependent on
of reinforcement, or lack thereof, has the result that the behaviour
of a person's background, the person's
will dis.appear .over. tim~ - the lack of reinforcement sends a signal attitude ~nd understanding background and
that this behaviour IS uninteresting to the organisation. of the situation personality, attitude
and the other towards the situation
(personal context) and the other
Both positive and negative reinforcement creates learning. Modern
(positive / negative).
~rgani.sational thinking puts more focus on managing the posi-
tive reinforcement than the negative. Negative reinforcement has a
higher level of control and surveillance, and reminiscent of the more
authoritarian management style and mechanistic structure. How-
~ver, positive learning is central in the development of, for instance,
In~~vative cultures and learning organisations in which employees'
ability to understand and manage their own learning is crucial to its
development.
The negative reinforcement is that in the recipient's interpretation,
he will note the value 'meet on time' as a necessary behaviour in or-
Communication der to stay in the company. He will have learned that if he wants to Ii
keep his job, he must not arrive late.
Much of the learning in an organisation is through communication
and communication serves as the control and motivation mecha- However, ifhe were to send a positive message, it could be:
nism for managers.
"Nielsen, I would like to rearrange your tasks a little. I have a vacant
Wh.en ~ colleague says something to me and I choose to react, my position in Group B, with responsibility for the contents of our latest
action IS due to an interpretation of what has been said to me , and products. It would probably require a little more work in the begin-
an assessment of what I expected to do in this situation. Conversa- ning, but it will give you some challenges. What do you think?"
tion thus becomes a central element of positive and negative rein-
forcement, as mentioned in the section on learning. Here, the manager's relaying of information will based on a positive
interpretation of the employee'S behaviour - he meets late because
One example is a manager that must communicate with an em- he is bored, and the goal of the conversation will be to increase his
ployee, who has arrived late for work for the third time in a short motivation by challenging him. It requires that the manager assesses
period. The information is that it is not acceptable to be late. The the employee as conscientious, and he will be positive towards the
manag~r may c~oose to phrase this message positively or negatively, work and the organisation.
depending on his goal with the conversation and relationship to the
employee. If he chooses to say it as negative reinforcement, the mes- In principle, conversation is a central behaviour parameter in mod-
sage could be:
ern organisations, where rules and systems are minimised. Often it is
only through conversation and communication that employees will
have direct feedback of their behaviour.
 (,11'.,1,
75

One of the latest theories that continues the work of conversation

is a very useful motivation tool, since it allows a more individu-
as a key learning factor, is AI (Appreciative Inquiry)!", or the Appre-
alised and proactive use of communication as a management tool.
ciative Conversation. AI is based on participants' different attitudes
and points of view, and works by focusing on the positive in the con-
versation to reinforce positive behaviour in the organisation. Values and norms
To use the understanding of personality in an organisation, it is
The theory is based on a four-phase model: Discover, Dream, De-
necessary to link it with an understanding of the values and norms,
sign, and Destiny.
which are found within the organisation.

Figure 4.2: The four elements: discover; dream) design and destiny
Although personality and values are connected, they are not identical
- personality is concerned with behaviour, and values are at.titude.s.
We may have, for instance, good attitudes that are not evident In
our behaviour. Most have the opinion of supporting children in poor
loute to the gold
countries, but that does not mean we are actually doing it.

An organisation's values and norms are a central part of the organi-

Dream sation's culture (see Chapter 7); they define what the organisation
Hope and dream regards as right and wrong behaviour and with increasing focus on
about the future socialisation as a central coordinating mechanism'", it becomes a
functioning system of values that govern and affect behaviour in
the right direction, crucial for the organisation's success. However,
Fantasia not only the organisation's values and norms affect individuals. The
outside community also has an influence (as defined by the external
environment in Chapter 2). Current attitudes and norms in society
influence a person - for example, money under the table, i.e., cor-
ruption is unacceptable in Denmark, while in China, it is considered
Mount Everest as a natural part of getting things done, a bonus. Another example
would be criticism - you do not criticise a superior in Southeast Asia,
because it calls into question his authority, whereas this is a natural
The aim of AI is to explore and develop a situation by focusing on
part of cooperation in Scandinavia (Hofstede, 2009).
the positive, instead of the problematic and negative. In this way, the
conversation is more constructive and creative for those taking part,
than conversations that only focus on problems.

An example could be the situation with the late employee. In an AI

conversation the manager, instead offocusing on the issue ofpunctu-
ality, would start the conversation by finding out what the employee
is happy about with the job (discover). Then the conversation turns
to the employee's wishes and visions with his job or career (dream).
Together, the employee and manager make a framework for changes
in the employee's job (design), and finally change the employee's job
description to suit the new situation and the change is implemented
(destiny).

13. Source: www.appreciativeinquiry.case.edu

14. See the difference between organic and mechanistic organisations, Chapter 2.
 (') i
The individual must fit in on two fronts: In relation to the job and in
relation to the organisation.
Job fit-analysis assesses whether personality matches the require-
ments of the job. For example, a salesperson would be outgoing and
social, and an accountant would have a high degree of detail focus.
Organisation fit-analysis focuses on the interaction between a person's
norms and values, and the organisation's values. For example, very
innovative individuals work better in organisations where creativity is
the focus, than places where standardisation is central. It also con-
cerns a match between what the organisation considers as correct
behaviour, and what the person believes is the correct way of doing
things, where the attitude towards the job is created - if the employ-
ee feels that the company and management treat him fairly and take
his wants and needs into account, his behaviour will improve. Where
there are differences in values and attitudes between organisation
and employee, the employee will not be satisfied. The employee will
try to change the values of the organisation, change their own posi-
tion, or eventually leave the company".
A key argument for focusing on values is that the organisation's
ues also strongly influence the way employees are motivated.
Motivation
Motivation is a psychological processes derived from inner needs or
external incentives and structures that steer our actions. Motivation
is the driving force behind these actions, and the impetus for achiev-
ing goals.
When we analyse motivation, we distinguish between the following:
- Inner needs
- External incentives and structures.
Inner needs are primarily a consequence of individual personality,
values, and lifestyles. External incentives can be a consequence of
the outside community, such as the attitude of a 'good life', or the
company can create it.
Historically, we have seen an evolution from the very needs-focused
theories from the 1950s and 1960s, to an increased focus on struc-
turing, management and job characteristics.
1S. The concept is called Cognitive Dissonance, and it describes the correlation
behaviour. For details see Robbins &Judge (2009).
i \i 77
Early motivation theories
In the 1950s and 60s, as a consequence of increased focus on people
within the organisation (see Chapter 1), there originated a series of
motivational concepts, which all had the common element of work-
ing with an individual's wishes and needs as a basis for motivation.
Today, these theories are criticised harshly for having insufficient
documentation. However, they are still relevant to know because
they are the basis from which all other motivational theories have
developed, and are still widely used by managers to explain employee
motivation.
Maslow's Hierarchy of Needs
Abraham Maslow's Hierarchy of Needs is probably the most well
known motivation theory. Maslow's theory was that humans have
five basic needs:
Physiological: hunger, thirst, shelter, etc.
Security: protection against physical and psychological danger.
val- Social: togetherness, sense of belonging, acceptance, friendship.
Esteem: internal factors, such as self-respect, freedom, the feeling of
achieving something and external factors, such as status, recogni-
tion, and attention.
Self-realisation: growth, achieving goals, the feeling of success.
Maslow's theory was that systematically we move through these
needs. Only after step 1, when physiological needs have been met,
can we begin to focus on step 2. A person will not feel fulfilled until
all the underlying needs have been met to a reasonable degree.
Maslow's theory is well known and widely used. It has not been pos-
sible to prove the theory, and especially the ranking of needs has
received much criticism. In several cases an upside down pyramid
is used to illustrate the theory, because people in the western world
have a fundamental achievement of the lower needs and are there-
fore more focused on the possibility offulfilling themselves.
between attitudes and
 79

Figure 4.3: The traditional theory and the inverted needs pyramid Herzberg concluded that it was not possible to motivate people un-
Traditional Inverted less they were in or above the neutral zone. If an employee is dissatis-
design design fied with his job, the first task is to meet his needs for Hygiene Fac-
Self-real isation tors, good working conditions, no bullying, etc. Only when they were
satisfied, can work begin to motivate the employee through Motiva-
Esteem
tion Factors. Similar, it does not help an employee's motivation by
Social increasing the number of Maintenance Factors, because they have
no connection to his sense of satisfaction. Here one should focus on
Security
the more performance-focused Motivation Factors.
Physiological
Herzberg is comparable to Maslow's Hierarchy of Needs.
Source: Own design with inspiration from Robbins &Judge (2009)
Figure 4.5: Comparison of Maslow's Hierarchy of Needs and Herzberg's Two
Factor Theory
We are so sure of our physical and security situations, that it is not
necessary to focus on these. Instead, we seek the possibility of hav-
ing to meet the upper needs: Esteem and self-realisation. Maslow's
theory does not have direct focus on jobs, so this makes it difficult
to relate the Hierarchy of Needs directly to a job situation. Despite
this criticism, Maslow's theory is still in widespread use among the
world's managers.

Two Factor Theory

Another of the early theories, which is easier to use for organisations,
is Frederick Herzberg's Two Factor Theory. Herzberg analysed using
the questions: What do people seek in their jobs? Which factors can
lead to satisfaction of the job, and dissatisfaction of the job? Pivotal
in Herzberg's theory is that the same factors do not create satisfac-
tion and dissatisfaction. Herzberg called the first Motivation Factors
and the second Hygiene Factors.
Figure 4.4: Motivation Factors and Hygiene Factors
Employee's level Employee's level
of dissatisfaction of satisfaction
Job content Individual's needs
However, Herzberg's theory has contributed to a clearer understand-
ing of the difference between satisfaction and dissatisfaction. In or-
ganisational contexts, Herzberg's theory provides the possibility to
distinguish between problem solving for dissatisfied employees and
development of satisfied employees, who 'just' need to be motivated
even more. Herzberg's theory has also been criticised for being un-
proved. The theory is especially criticised for not taking into account
the difference between satisfaction and productivity. Despite the
criticism, Herzberg's theory, is however, widely used and known by
most managers today.

Influencing factors: Influencing factors: McClelland's Theory of Needs

Company rules and systems, leadership Results, success, the work content, The third traditional theory is McClelland's theory of the three basic
and supervision, relationship to responsibility, opportunity for psychological needs:
management, working conditions, pay, advancement, growth
relationship with colleagues, personal Need for Affiliation (A)
factors, status, security Need for Achievement (A)
Need for Power (P).
 81

McClelland links motivation to personality types and concludes that

and comparisons with others. Adams's theory focuses on
differences in personalities, lead to differences in the needs that are
comparison. If an employee believes that there is an imbalance in
most important to that person. A person with a very outgoing per-
input/output ratio compared to others, he will exp~rie~ce a neg~-
sonality is more likely to be motivated by social working conditions,
tive motivation in the job. He will feel under rewarded if his output IS
teamwork, group structures, etc., than an introverted person would
lower, and feel guilt when his output is higher. Motivation would be
be. In an MBTI analysis, a person with an evaluating attitude to life
affected in both cases.
(see Section 4.1), will be more inclined to seek power in his job with a
background of desire for control, than a perceptive person. Like the
In theory, the crucial factor is with whom the employee compares
other traditional theories, McClelland's theory was also criticised for
himself. Adam works with four different frames of reference:
being unproved. However, it provides a good, intuitive method for
evaluating various peoples' focus on needs, coupled with personality
Inner-self An employee's experience in another position within the
analysis and possible form of authority through the analysis of man-
agers, it is a good supplement to understanding behaviour.
Outer-self An employee's experience in another company.

Inner-other: Other employees in the same company.

Outer-other: Other employees in another company.

When a student has completed his education, Adam's theory is often

helpful in clarifying the assessment of various jobs, which he applies
for. They look at salary levels and compare what others with ~~eir
qualification and class year, are offered. They look ~t .t.he position
and responsibilities, and compare how much responsibility they had
in their previous job, before qualifying, etc. A job is attractive if the
applicant believes that he gets a fair output relative to his input,
compared to others.

For an organisation, it is essential that staff evaluate the organisa-

Modern motivation theories tion as fair. They must have the perception that management access
employees fairly and that everyone receives the same, obje~tive treat-
What characterises modern motivation theories is that they consider
ment in the distribution of, for instance, rewards and punishment.
external factors as key elements of motivation. Therefore, the future
situation or reward, determines the degree of motivation, but it is
For management in an organisation, there are two key elements to
still combined with an assessment of the internal needs of Maslow
focus on:
Herzberg, and McClelland. Three of the key theories are Adam'~
Who uses an employee as a referent in the comparison, and can
Theory ofOrganisationaljustice, the Objective Theory of Locke, and
that person act as a reasonable and realistic basis for compari-
Porter & Lawler's Expectations Theory.
son?
Organisational Justice Ensures communication and values of the company, that all
employees are briefed on procedures, requirements and e~pec-
A typical way to evaluate a job is to look at the relationship between
tations and have a real opportunity to understand the basis for
what w.eput into the job, working hours, effort, etc., and what we get
punishment and reward.
out of It by way of salary, status, etc. Employees specifically assess
their own job input, e.g., experience, effort, training and skills in rela-
An example might be a computer science graduate, who by focuss-
tion to job output, such as salaries, bonuses, recognition and self-
ing on the extremely high salaries among highly skilled computer
 j.j
programmers in early 2000, has an unrealistic expectation of start-
ing salary. His comparison basis is wrong; his qualification is not
equivalent to a computer programmer, and times have changed:
There is no longer the same money in companies as there was in
early 2000. Another example may be a newly qualified staff member,
who compares themselves with experienced staff members with no
formal qualification. The basis for comparison is not objective - how
do you weigh formal qualifications with experience? - And it is up
to management at the company to set out clear procedures for the
assessment.
Goal Setting Theory
In the late 1960s, Edwin Locke put forward his Theory of Goal Set-
ting as an important motivational factor. His theory was that clear,
challenging goals gave employees precise knowledge of what they
were and how hard they would have to work to achieve them. At the
same time, studies have shown that difficult/challenging goals the
employee has accepted will bring better results than easy goals and
that goals with clear feedback give better results than goals without
feedback.
The art for a manager is to strike a balance between challenging
goals and employee competencies. A goal that the employee con-
siders unattainable will act as a disincentive and produce a worse
performance than having no goal. In some cases, by the employees
themselves participating in determining the goal, it increases motiva-
tion, but this comparison is not always evident.
Goals are familiar as motivational factors in sport. A swimmer will
take part in competitions with a clear goal of either a ranking or
improving his best time. It will be motivational for him that he has
the opportunity to improve his best time by 3/100 of a second and
as a result be among the top ten in that class. Likewise, a football
team who stands to get promoted if they win the next match, are
much more motivated to fight than a team, which has already won
the tournament and are only playing for glory or the team, who will
be promoted no matter how much they win the match by.
The general conclusion is that employee motivation increases when
they have a clear expectation of what is expected of them and when
they determine that it is necessary to make an extra effort to reach
the goal. In part, motivation is influenced by the employee's assess-
ment of the situation. This is described further in the Expectancy
Theory, which precisely takes subjective assessment as a central fac-
tor.
i I) !i
Expectancy Theory
The last theory to be reviewed is the Expectancy Theory, developed
by Victor Vroom and enlarged upon by Porter & Lawler.
The theory's basis is that an employee will be motivated to make a
good effort if:
They expect that effort will lead to success
They expect that the result will lead to an organisational reward
- Rewards satisfy a personal need of some importance to them.
The theory has three stages and the link between each step is es-
sential for motivation. It is necessary that the employee sees a clear
connection between effort and result, between result and reward and
between reward and fulfilment needs. Motivation will be negatively af-
fected, ifjust one of these contexts is missing.
We know this example from teaching. A student who works hard,
studies, hands in work, comes to lessons, etc., and has ambitions of
a high grade average for the course, will experience negative motiva-
tion, if in the first exam, he notices that a lazy student, who did not
put in the effort, and had not been to lessons, gets a higher grade.
Here there is a lack of correlation between effort and result.
Another example may be an employee with young children, who as a
reward for hard work in connection with making a deadline, receives
a financial bonus. This bonus may be uninteresting to the employee
if he has missed a lot of time with his family in order to achieve the
deadline. Here, some holidays or the possibility to leave early over a
period of time, might be a more appropriate bonus. The example is
of inconsistency between reward and needs fulfilment.
For management of an organisation, the Expectancy Theory is a
relevant tool to gear reward systems towards individual employees.
It explains why the same reward may give very different results for
two different employees, making it possible to target the manager's
work. For further discussion of management and motivation, see
Chapter 5.
Research in motivation has increasingly focused on how the way
work is structured, affects motivation. One of the key theories in this
is Hackman & Oldham'sJob Characteristics Model.
Job Characteristics Model (JCM)
JCM is based upon any job being defined through five central dimen-
sions:
 85

Skill variety
The breadth of activities within the job. A job with a high variety
of skills gives the employee the opportunity to exploit several differ-
ent competencies (practical, managerial and social), and the job has
several different types of tasks. An example might be a self-employed
hairdresser, who cuts, advises clients, does the accounts, orders
products, advertising and communication, deals with employees,
etc. An example of a low variety of skills is an assembly line worker,
who packs products in boxes.
tonomy gives the employee a sense of personal responsibility. Overall,
the goal is to give individual jobs as high levels of the five dimensions
as possible. Theoretically, this gives the best basis for motivation.
However, jCM takes in no account of individual factors, such as
wants and needs, but works only on a structural level. It is therefore
a basis for motivation and not the result, which is characterised.
Figure 4.6: Hackman & Oldham's job Characteristics Model

Task identity
The extent to which the task results in a complete product/result or
is only sub-processes. A high task identity, e.g., is a hairdresser, who
takes care of the entire process from the customer's decision to the
finished hairstyle. A low task identity is the employee, who mounts
fuses in electronic equipment, but never sees the complete product.

Task significance
The extent the task influences others' lives or work. An important
task is, for example, the teacher at a school who can see how his way
of doing things, has a direct impact on pupils' learning. The cleaner
at the same school will probably assess their tasks to have a low
impact on student learning.

Autonomy
Freedom to decide within the framework of the task. It may be the
freedom to determine the pace of work, breaks, methods, etc. An
example is an independent consultant, who may choose to take most
of the week off and then work hard the other days. jobs with low
autonomy are, for example, telephone sales people who ring custom-
ers up, working from a list of phone numbers and a standardised
interview script.
Feedback
To what extent will the employee receive direct and precise feedback?
This factor has strong correlation with the Expectancy Theory's
result-reward factor. A job with high feedback is, e.g., an emergency
department doctor, who immediately sees whether the patient re-
sponds to treatment. An example of a job with low feedback is the
cleaner from the school, who rarely gets feedback from students
about the standard of cleaning.
jCM is illustrated in Figure 4.6. Be aware of the correlation between
factors. If the first three dimensions are met, the employee experi-
ences the job as meaningful, important and worth doing. High au-
Source: Robbins & Judge (2009)
How can jobs be redesigned based on JCM?
jCM allows us to work with the general restructuring of the com-
pany's work-sharing principles (see Chapter 2). We can increase mo-
tivation of employees by focusing on the way we assign tasks among
employees, the degree of specialisation, decentralisation, and stand-
ardisation. Specifically, there is a direct correlation between highly
specialised and standardised jobs and a low variety of skills and for
example, highly centralised organisations, and a low autonomy.
The goal of structural redesign is to increase motivation among
employees. Elements such as job rotation, job development and job
significance, all have focus on increasing motivation and are clarified
byjCM.
 ()

Job rotation describes the situation, where an employee has training Motivation theories essentially deal with. the same basic problem:
in various types of tasks, and then switches between them on a fixed 'he employee to make an Improved effort? However,
How d 0 we ge t t . I' h"
schedule. One example is a production group during the transition they have different approaches to the problem. This re ations 'P IS
to autonomous teams, who will face a requirement to perform all illustrated as follows:
functions within the group. They no longer have a fixed position at a
particular machine, but must be able to operate all machines in that c: 4 7' The relationship between organisational theories
,tgure . . / .
area. The purpose here is to increase the variety of skills during the
day and thereby reduce their sense of routine and boredom.

Job expansion is based on the same situation, but here the same
employee does both tasks. In the example, it would mean that the
same employee must now deal with maintenance and repair of the
machine, for instance. In the previous system, a specialist' was called
if the machines broke down. Now, the same employee has to both
operate and maintain machinery. Job expansion influences not only
skill variety, but also task identity, because the employee now has an Personal needs
Result
overview of several sub-elements within the organisation.

,
and goals

Job significance has the most extensive influence. Where the first ...-.-..
'" '.''"' ...-~~~
...-...
Personal needs
two work with tasks on the same level, job significance is concerned (Ability, expenence, ! analysis - what is
with increasing the employee's sense of autonomy through increasing backgr ..ound, skills, I.. most important?
self-determination and management of his own job. In the example I .
I Job/fit
etc.
)
I

of the autonomous group, the old middle management position is \."""..""" ...".".",, ...,,..., ..
Objectives
removed, giving employees the responsibility for planning and man-
agement tasks. Here, each employee feels more responsibility and
freedom to affect their job and through this experience increase mo- Source: Own design with inspiration from Robbins &Judge (2009)
tivation. In relation to Herzberg's factors, motivational factors are
increased for individual employees, who now have the opportunity
to meet their needs for status, development, and self-realisation. The Implementation - how the method of
employee, who only performed familiar, set tasks before, now has motivation is chosen?
managerial responsibility. The weakness with job significance is that
the requirement for job significance increasing motivation of an em- What the presentation above makes apparent, is that there ar,e,~any
ployee, is that the employee is already satisfied with their job. They ..
different ways to ana Iyse motivatIOn.. None of them covers ad situa-1_
must feel that an acceptable number of hygiene factors satisfy their tions and organisations, and they all have their strengths an weak
basic needs.
nesses.

The trick is to choose the correct model for ~ given situation. The
Expectancy Theory is good for clarifying cholc~s that "" emplo:ee
faces' the Organisational Justice and Goal Setting theone; a;e ~t-
ter at' redicting these choices. Meanwhil~, th: n.eeds-base t eones
are b:rter for analysing problems with dissatisfied ~mployees, than
the Ex ectancy Theory that focuses more on behaviour and not s.o
much ~n attitudes. Problems of a high turnover a.mong employee~ IS
explained better with the Expectancy Theory for Instance, than with
needs-based theories, such as Maslow's.
88

In orderto work with motivational improvements, it can be appropri-

ate to analyse the situation with the help of the following checklist:
Diagnosis. What is the problem? For example, differences in pro-
ductivity, the expected results in relation to actual results. How
important is the problem? If not assessed as critical, ignore it.
Does it originate from situational factors or competencies? If it
is situational factors, such as an old machine or an uneven mix
of personalities in one department, solve it. Otherwise, focus on
training, job fit assessments, etc.
Choose a strategy. What motivation-based systems are involved?
Are there needs, processes, reward systems, etc? Can the prob-
lems be traced to one or a few individuals? Focus on selection
and job descriptions. What motivational techniques could be
used? Which methods have we the resources for? Is the target
individuals, groups or both? Adapt models so they can be used.
Make a decision and implement solutions.
Discussion questions:
Describe the components of MBTI and the Big Five, and deter-
mine which elements you think should be strong in, for example,
a sales job or an accounting job.
Explain the link between behaviour and attitude.
- Give examples of situations where communication/conversation
can serve as a motivating factor.
Describe the difference between internal needs and external in-
centives, and give examples of situations where you believe they
have been central.
Give examples of, respectively, hygiene factors and motivational
factors from Herzberg'S theory.
Which jobs do you think it is appropriate to hire people with high
power needs (P from McClelland's theory)?
How does management ensure that the employee uses an appro-
priate frame of reference for example, salary negotiation?
Explain the relationship between an employees's needs fulfilment.
Use either Maslow's inverted Hierarchy of Needs or Herzberg's
factors and output elements that he uses to compare himselfwith
others (salary, responsibility, freedom, etc.). How can managers
use this connection in the motivation of employees?
Give examples of good and bad goals in the Goal Setting theory.
- What is the difference between results and rewards? Can there be
an overlap between the two concepts?
Give examples of each of Hackman & Oldham's five dimensions
inJCM.
Management
After reading this chapter, you will be able to:
Explain the difference between leadership and management
Understand why there is correlation between personal character-
istics and leadership
Explain managers' different views of human nature
Have an opinion about what good leadership is
'\ Explain what modern management is about
Explain the different leader roles significance for management
Distinguish between different forms of management
Using management theory as an analytical tool
Explain the concept of self-management.
i·
Thinking back to the Olsen Gang, the Danish peoples' best-loved gang of
crooks, who went through so much, and if their goal were the millions in
cash at the other end, one automatically thinks of Egon Olsen. He was the
leader of all leaders, who possessed all the qualities a leader should have,
but success was not forthcoming, because 'nitwits and boneheads', as he
called them, surrounded him.
What leadership qualities did EgoY! have?
He was a natural born entrepreneur with the possible, perhaps impos-
sible, vision that he knew how to motivate and always had a plan; he had
the competence and courage to improvise. He had an open door policy;
there was no hidden agenda - the mission was clear: He was able to apply
theory to practical problems, dared to delegate tasks and recruit. Although
he worked with a diverse group of accomplices, he believed in their skills
as well as his own. Women were involved in his plans that resulted in some
confrontations, where he had to use his innate 'emotional intelligence'. He
was an honourable man, who took his punishment, even though it was his
accomplices who had failed - only to eventually get sent down for 18 years,
where he of course conceived the last plan, 'the final sting'.
90
What is leadership?
Egon wa.s not s~~cessful even though he possessed a wealth of good
leadership qualities. Why was that? At one time or another, he al-
ways became the focal point and solutions and carrying out of tasks
were his idea. Although he worked in a team, he was the leading force
and the goal of easy money was more an ideal for him than it was
a realism of the team. Maybe he should have made sure the team
functioned better as a unit, i.e., utilising their competences, rather
than simply giving out orders.
There are many ideas of what leadership is. A general definition is
"Leadership creates results - together with others." (Hildebrandt:
2003,6 November)
It is a simple definition, which opens a discussion about goals,
means, methods, and morals. These are the topics this chapter will
try to provide some basic theories on, in order to achieve an under-
standing of management's dimensions.
The modern manager
To understand the concept of 'the modern manager', it is necessary
to look .at some general concepts of management theory. English lan-
guage literature talks about management and leadership. The best
way to see what they cover is by looking at the difference between
the two concepts.
Figur 5.1 Leadership versus Management
recruitment::
Deter-mlhe structures
ah.d all.62ate ~taff;
develop rules, proce-
dures·and ril6nitor them.
To he continued on next page
91
inspiration
Gives staff the power to
solve difficult tasks.
Satisfy human needs.
R.esults inpositive and
sometimes dramatic
Source: Based on Kotter (1990)
From the table one can define leadership as, "Leadership is the proc-
ess that affects the activities of a team to set goals, and achieve them", while
management is defined as, "Management is the style of leadership that
tries to achieve the defined goals)).
What is the difference? Some will consider the two forms of manage-
ment as synonymous, since they are merely two opposite sides of the
same coin, namely leadership. Others argue that there is a clear dif-
ference; the two play different roles, resulting in extremely different
employee types. Leaders have employees who are working towards
the same goal and managers have subordinates.
Leaders develop visions and generate new initiatives, while managers
achieve stability. Some even claim that managers 'make things right',
while leaders 'do the right thing'.
Four leadership styles
The newest leadership styles are the result of a need to attract good
and active employees, in sync with companies finding themselves in
dynamic markets.
All the four leadership styles are based on motivation of employees,
but as markets are often dynamic, the need for the 'transformational
leader' is greatest, as companies are going to expect that change
management is a necessity.
92
93

Figure 5.2: The new leadership styles The study, which is the basis of the table, showed that many of these
New leader Superleader Transactional Transformational features were feminine, and not surprisingly, it was often female
leader leader leaders with this style of management.
Is inspiring and Is able to develop Is a leader who Is a leader in
visionary, pre- leadership capa- considers the re- handling staff
occupied with city in staff, dele- lationship to staff relationships
building common gate responsibi- like a trade-off, by motivating
understanding of lities and reduce because staff gets and expects
the objective. Is their reliance on what they want, active partici-
preoccupied with formal leaders while delivering pation. Involves
creating an under- and stimulate results the leader and inspires staff
standing of corpo- motivation, par- wants. Staff must to do their best
rate objectives and ticipation and follow specified to improve the
that staff have the creativity.
Although the above leadership styles can be ideal for a manager, it
tasks and meet company's per-
skills, responsibility set targets. formance.
is far from certain that the leadership styles are prevalent in compa-
and opportunity to nies. There are other perspectives of leadership and the rest of this
achieve common chapter will seek to clarify this. Generally, prospects/theories will be
goals.
used in the analysis of leadership.
Source: Huczynski & Buchanan (2007)

A 'transformational leader' is based on 'The four I's' The leader as a person

Intellectual stimulation; encourages employees to look at the things There are many suggestions of what characteristics a good leader
they do from a new perspective must possess, and many studies have concentrated on the personal-
l~e~/ised influence; the leader highlights the company's mission and ity traits that determine a good leader.
vrsion
lndividuallsation of the employee by giving them the opportunity to A leader's personality traits
improve themselves for the benefit of the company However, it is difficult to generalise the results of the studies, be-
Inspirational motivation; the manager motivates employees to put cause situation conditions vary from study to study. The personality
the company's interests before their own. that has success in one type of company may not necessarily have it
in other companies.
To achieve the above points, some demands are made of the man-
ager. These demands can be divided into three categories, as shown Personal characteristics taken in isolation are not particularly inter-
in Figure 5.3. esting - they must always be seen in the context of the leadership
situation. So, what is it then that personality traits should do for a
Figure 5.3: Competences for the transformational leader manager in a work situation?
Managing staff Personal qualities Organisational
The Garuda model in Figure 5.4 IS based on the head, heart, and
To show real interest Be sincere Use and be part of a
leg's importance in order to lead.
Delegate responsibility Respect integrity network
Be present Be resolute Encourage teamwork The head symbolises the structuring capacity of the manager's job,
Invite changes Inspire others Create common where the manager's intelligence, intellectual flexibility, and individu-
Solve complex visions
ality are used in unison with the other skills listed in the figure.
problems Supporting a
development culture
Support change with The heart symbolises the manager's skill in interacting with colleagues
emotions intact. in general. Along with the skills listed in Figure 5.4 under contact
form, also to be included here are personality traits, the ability of
Source: Alima-Metcalfe & Alban-Metcalfe (2003) linguistic formulation and enthusiasm.
94
95

Figure 5.4: Garuda model for leadership opportunities Douglas McGregor has developed the XY Theory about this. The
starting point is the attitude that motivates people to work, and Mc-
System flexibility.
Gregor came to two opposing views of human nature.
Detail oriented.
Abstract thinking. Structuring ability
Risk taki ng.
In Theory X the manager believes that people are generally innately
Supportive. lazy and have no career ambition; they just turn up at work to get
money to live. People do not want to take responsibility; they are
Empathy. selfish and lack self-discipline. X people do not like change and to
Social contact. avoid this they will become an opponent or directly sabotage the
Social flexibility. Social interaction organisational work of change.
Self-control.
Confidence - trust.
However, in the Theory Y, the manager has the opposite opinion;
Competitive. people have a responsibility in relation to work - to be growth and
Influence. development oriented. Employees like to work, to exercise self-man-
Self-confidence. Pervasiveness agement and identify with organisational goals. Here the starting
Desire for freedom.
point is often the top elements of Maslow's Hierarchy of Needs.
Psychological
Physical energy.
A manager's view of human nature has an impact on the manage-
Source: Based on Havaleschka (2002)
ment style used; see the section on Leadership Characteristics.

Managers' power base

The legs symbolise strength. In addition to the skills listed in the A manager has an opportunity to use power. Power is often a nega-
figure, abilities such as intelligence, enthusiasm, dominance, self- tive concept, but in this context, it is a natural consequence of the
confidence, intellectual flexibility, linguistic formulation, initiative, authority, which lies within the concept of management. Authority
individuality and charisma, must also be included here. stems from charisma, skills, and power.

The power base consists of different types of power and the man-
ager's opportunities to use this power, such as rewards in relation to
employees. The power yielded is due to the person's appointment as
a manager and their personality. The power base also addresses the
position, both formally and informally, that the manager can exer-
cise in the company.

One can define power as a manager's strength to resist employee

resistance and the ability to get them to accept the use of power as a
necessity and get them to work towards common goals.

Power base is an expression of different types of power. The different

Source: Hildebrandt (2003, Seven provocations on leadership)
types express the employees' faith in a manager's ability to manage
the department and the ability to implement decisions.
Managers' attitude to employees
Power to reward - the manager has access to rewards, which can be
The manager's method of management largely depends on a series awarded for complying with agreements.
offundamental assumptions about human nature and the manager's
attitude towards employees.
 !. I)
97

Re~rence power - the manager has desirable abilities and personality

authoritarian manager
traits that can and should be copied.
authoritarian manager's human perception corresponds to the
Leadership based on authority] status] and use of power to
Expert power - the manager has greater relevant knowledge of the
situation and task. tasks. The authoritarian manager sets goals and assigns
to the employees. They lay down rules and procedures for work
guidelines for cooperation. The manager provides. onl~ the .most
Power through others - the manager works closely with other powerful
information to their 'subjects]. Their focus IS primarily on
people or colleagues] whose authority can be exploited.
related tasks and results; the manager is not concerned with
satisfaction and their needs. The manager knows exactly
Power to coerce - the manager can 'punish] his team In the form of
various kinds of sanctions. be done and why] can instruct their employees

Legitimate power - the manager has power to issue orders that em-
Productivity in the department is high and employees have a great
ployees have an obligation to accept.
dependence on the manager. The manager's negative attitude to e~-
ployees and their ability to perform the job is often due to a hostile
Information power - the manager has access to information that is not
public knowledge. culture] which often results in blatant aggression. Employees are not
very motivated to make an effort and react with indifference] apathy]
and repressed discontent.
Group power - the manager has collective support from a team or
group.
The democratic manager
The democratic manager is often referred to as 'the consultative
A manager can then apply the different types of power in relation to
manager]. The democratic manager's human perception. corre~ponds
employees] colleagues and the company as a whole.
to the Y-view. Employees and the manager collaborate In setting ob-
jectives forthe department and job content. Most of the topics come
under discussion in working groups] which define the methods and
principles for division of labour. They work together towards com-
mon goals for the department and company as a whole. Decisions
are often only made after they have been discussed with] and ac-
cepted by those involved. Collaboration is paramount: just as people
and performance are. The democratic manager sees himself as a part
of the group and uncritically passes on almost all information. The
manager tries to develop individual employees in the department and
support them in this process. High quality and efficient staff. are a
leadership Characteristics result of a democratically led group. With regard to culture In the
department] it is characterised as friendly] relaxed.] ther.e is a .feeling
Management style of well-being and cooperation. There is great satisfaction with the
results. Employees are not very dependent on the manager on a daily
Kurt Lewin]s. t.heory of forms of management is probably the best
basis. The manager is often all for self-management among staff.
known. He divides management into three types that express the way
leadership is exercised.
Self-management occurs when employees have been delegated re-
The three forms of management are: sponsibility and the opportunity for decision-making] so in their
daily work they function as their own manager.
Autocratic/authoritarian manager
Democratic manager
Laissez-faire manager. To use self-management the employee must experience:
Being professionally competent and have the desire for tasks
 99
98

- There is access to information to solve tasks, and that it is pos-

sible to solve them
To organise the work themselves and they can see a correlation
between performance and reward
There is consistency between their values and corporate values,
as well as a desire to work towards the company's goals
- The organisation is spatial enough to develop each employee.

The Managerial Grid

This means that the company creates a framework for the employee
and clearly defines management's role in relation to autonomous
staff. In addition to the democratic manager, it requires that leader-
ship be based on the company's values. This is known as practised,
value-based management.
What does self-management mean for managers? Firstly, necessary and suf-
ficient leadership is to be exercised. To a high degree, this is achieved
by coaching one's staff, which means that the manager makes him-
self available as a professional and work related sparring partner
for employees. The manager must provide the framework for their
work. In the framework, there are agreements on expectations for
performance and results. It is essential that individuals continue to
feel a part of the community in the company, but also have the op-
portunity to make decisions about their own work.
The Managerial Grid created by Blake and Mouton takes a differ-
ent approach to management style than Kurt Lewin. The Managerial
Grid looks at information from two factors; 'Concern for the task'
to be solved in the department and 'Concern for the employees' in
the department.
If you set the two factors up against each other and evaluate them in
relation to the degree of concern a manager has, the result is shown
in Figure 5.5.
From the figure, it is possible to derive five different forms of man-
agement:
Figure 5.5: The Managerial Grid

Laissez-faire manager
A laissez-faire manager is characterised largely by failing to be
present, often because they are not interest in the department. Their
view of human nature is not very pronounced, but may be a kind of
Y-view.You could say that there is passive or even no leadership. The
manager presents the problem and leaves the solution to the staff.
Laissez-faire managers generally lack interest in people and perform-
ance, and would rather staff do not contact them.

A department exposed to this management style will not feel par-

ticularly dependent on the manager and will try their utmost to per-
form the job as best as possible. Under such conditions it is possible
for employees to make decisions themselves, but there should still be
rules and restrictions that generally have to be respected. Therefore,
culture in the department is marked by great irritability. There are
often cases of aggression between workers, because autonomy often
results in power conflicts.
Consideration of production

Source: Blake & Mouton (1991)


100
1.1 No respect for people and tasks. One can say that in this situation
the manager makes as little work-related effort as possible and has
no interest in employee welfare. The department survives by ac-
complishing just enough to ensure that the department will not be
streamlined away. The management style is very similar to laissez-
faire leadership along with the inconveniences this causes.
1.9 Management consideration for employees. A management style where
the manager takes great consideration and cares about their employ-
ees. There is a huge desire from the manager's side that employees
must develop and work well together. This leads to a comfortable
and friendly department, with a calm pace of work.
9.1 Management with great consideration for results. A management style
where efficiency is paramount and where well-arranged conditions
are created, to such a high degree, that employee needs and satisfac-
tion are largely over looked. This management style is similar to the
authoritarian manager, and the result of this type appears in Figure
5.2.
9.9 Ambitious consideration for results and employees. This management
style creates fired-up employees, who in collaboration and in unison,
aim to achieve the objectives of the department and the company
as a whole. The work culture is based on mutual respect and social
zeal. The management style is described as democratic, but also a
'transformational leader' (see Figure 5.2).
5.5 Counterbalancing consideration against results and employees. This man-
agement style ensures that there is a balance between the depart-
ment's performance expectations and employee satisfaction. Man-
agement style is similar to the democratic style and creates a culture
of satisfied employees.
Situational leadership
The forms of management described above are based on factors,
which are primarily concerned with the manager's personality. That
is, abilities and attitudes, but the manager must operate within the
company and under the conditions of the company. One cannot
say that one or the other form of management is 'right', the 'best',
or most 'optimal'. The company's market conditions, staff, nature
of the business, culture-related placement and much more, means
the management of the company must be able to lead their team to
where they are.
101
EXAMPLE:
The director of LEGO's facility management department is responsible for
managing the staff in the department at the parent company in Billund
and its subsidiaries in the Czech Republic, Hungary, and Mexico. Although
LEGO try to create uniform rules for all employees, the cultural differences
in the four countries means that management is different and reflects such
things as the employees' point of view at work. One could imagine that the
manager's expectations of employees' autonomy, social zeal, etc., in the
four countries are not necessarily the same. There may also be situations
where some tasks are to be completed faster than others: Here, it is ma-
nagement style that can be used in the different cultures/countries.
In essence, a manager at LEGO will be democratic, but with certain
sions in different cultures, a different management style is necessary.
This means that there is a need to look at the factors involved that
influence which management style is to be used.
The following factors are crucial to find a management style that
suits the situation:
What types of tasks have to be done?
When should they be completed by?
What cultures should be taken into account?
How big is the possibility that staff will have the necessary skills?
What are the market requirements?
Overall , it means that in some cases there is a need for situational
leadership.
Tannenbaum & Schmidt's theory in Figure 5.6 on situational leadership
is based on the extent to which the manager can or should make
decisions themselves, or whether they can leave the decisions to em-
ployees.
Figure 5.6: Situational leadership
102

These decisions depend on their style of management, and if they
are authoritarian, the manager will be positioned to the left in Figure
5.6. At the opposite end, We find the laissez-faire manager, and the
democratic manager will be somewhere in the middle and a little to
the right.
What the theory is really about is that the manager could be in a
situation, where it is vital for the decision making process, to deter-
mine whether the manager is to the right or left in the diagram. If a
manager is able to move from one side to the other of the diagram,
they will be a democratic manager, who uses situational leadership.
103
order to take into account these employee considerations, the
behaviour will be crucial. In this theory, the manager can
supportive or controlling, and in both cases, their behavi~ur ca.n be
or weak. A combination of these creates four possible Situa-
which generate four different management styles, as the figure
nctrurtionot management style .
Employees are not motivated for the task and at the same time do
not feel qualified to solve them.

The manager defines what, how, when and where tasks are to be
done. The manager gives detailed instructions for staff and closely
monitors task implementation.

Persuasive management style

Hersey & Blanchard's theory of situational leadership takes a differ-
ent approach than Tannenbaum & Schmidt, in that a manager must
adapt their management style according to employee skills. This is
done by looking at their needs, knowledge and experience in relation
to a specific task.
Employees do not feel qualified for the job, but have the courage to
complete them.
The manager decides, outlines directives, and s~pports staff. The
manager explains decisions and asks for suggestions from employ-
ees, but continues to manage and support.

Figure 5] Hersey & Blanchard's theory of situational leadership Participating management style .
Employees are professionally competent and reasonably well moti-
Strong
vated. Manager and staff share decision-making. The manager makes
decisions together with employees, and supports efforts towards
Supportive completing the task. The manager will have a consultant role.
behaviour

Weak
Delegating management style
Employees are motivated and competent to sol,:,e the task. The man-
ager gives only limited directives, and suppo:t .1:
not necessar~. The
manager leaves partial decisions and responsibility for completion of
Weak
Strong the task to the employee. The manager acts as a consultant.
Controlling behaviour

According to Hersey and Blanchard, a manager with high social and

professional experience, will be able ~o .master al~ four. managem~nt
styles, whereas a manager who has difficulty coping with uncertain-
ty, will often use an authoritarian approach to management.
Competent, but
not willing
Leadership roles
Source: Hersey & Blanchard (1988) The manager will, in addition to the management style pr.actic.e? on
a daily basis, have various different roles. Based on their abilities,
 105

interpersonal role consists of a manager, who as the leader of the

holds and waves the flag. In this context, the manager is also
who ensures a connection to the company's other de-

Information role is the manager's ability to inform the group of their

results and filter the material the group receives, to both eliminate
irrelevant information, but also to ensure sufficient information.

Decision-making role is the ability to get decisions made to the highest

optimal level. Based on initiative and being goal seeking, the man-
ager negotiates decisions and participates in the division of labour
between staff.
The ma 'b·l· .
. nager. sa. I rtres, skills, and personality will be useful ele Mintzberg points out that the manager can easily seem like a puppet
In a leadership situation. The daily routine of leadership mea:et~t; or the victim of external events in relation to the group they lead.
manager takes on different roles.
Similarly one must also remember, 'Knowledge is power', and that as
a leader, one must be 10 percent better prepared than his colleagues,
Mintzberg's leadership roles
because this often has a major influence.
He~ry M~ntzber? has developed a theory on leadership roles In this
cont;ext, ~ was Interested in the work functions a manager ~ctua"y Managers act according to Mintzberg situational leadership in rela-
per orrns, I.e., actual management activities. tion to roles.

Mintz.berg divides manager activities into 11 Adizes' leadership roles

tere d Into three main groups:
Figure 5.8: Leadership roles of H. Mintzberg
areas that he has clus-
Adizes" states that management must be efficient and result mak-
ing, and four leadership roles are included in his theory. Adizes says,
"Effective leadership requires that all roles are represented within the
company, and it will lead to mismanagement if only one of the roles
are not filled."

The four leader roles are as follows:

Entrepreneur role (E)

To perform this role, the manager sets new activities in motion,
thinks long-term, is strategic, and sees opportunities and threats for
the company in an unstable and complex environment. They must
To be continued on next page
16. See Chapter 3 on role conflicts.
 107

therefore be a creative and innovative person, who can take risks on

a realistic basis. The focus here is on long-term solutions and results.

Integrator role (I)

The purpose of this role is to create collaboration within the organi-

sation and to ensure consensus on decisions and division of labour.
Organisationally the manager must be able to form effective groups
in relation to the company's various projects. The manager must
safeguard integrity by coordinating the various, often conflicting
goals, towards the company's overall common goals and actions.
Focus here is on long-term goals and processes.

Producer role {P}

Here it concerns creating results in the short-term. The manager must

therefore have high performance needs, where decisions are quickly
translated into action. The manager is diligent, busy and has high
professional expertise. Focus here is on results and the short-term.

Administrator role {A}

This role requires a manager who can develop strategies and targets
forthe company's various functions, coordinate and prepare detailed
plans for the necessary activities and consider their implementation.
The manager is systematic, has a sense of order, and likes to work
with detail. The focus here is short-term and the processes.

Although Adizes believes that all four roles must be present for effec-
tive leadership, there will still be management tasks where some roles
are more pronounced than others. To this end, he has, as mentioned
in Chapter 3, developed some codes to show to what extent roles
must be represented, see the section on 'Adizes' leadership roles ap-
plied to teams' in Chapter 3.
Example of the use of Adizes' codes:

If we look at the CEO of a company, their focus will often be on

long-term projects. They are willing to take risks and must ensure
cooperation among line managers. They are characterised as paEI,
but the line managers must ensure the daily running of the company,
where their role codes will be PAei.
 109
Leadership Situations
is a matter of the manager possessing humanity, a personality,
Leadership is, as stated, an advanced tool used in many different
management style, which establishes their ability to delegate
contexts, both in the private sector, such as leaders of sports clubs
making to their employees.
and associations, and in professional business. Theories can help a
prospective leader to find a standpoint, just as we can use it to un-
decision-making process
derstand the managers we encounter along the way.
decision may only take a short time to make, and often it does n~t
much information and it is perhaps not of great economic
Here are some examples of management areas in the professional
sector: If an employee, for example, has to decide to buy ~ s.pe-
tool for their department. A decision may also be slow If It ISa
situation that needs to be addressed. Here, the amount of
Team management. Managing a team where interaction is vital.
'will be greater and the economic impact of the decision
may be quite large. For example, deciding on the purchase ~f.a new
Project management. Can be development projects where staff is
machine in production, or when top management take a decision on
brought in from different departments, and when the project is fin-
ished, return. next year's budget.

Apart from the time factor, the amount of i~formation and the eco-
Change management. Projects in which major changes in the company
nomic impact, the decision-making process ISthe same.
take place, such as implementing a new organisational structure.
Figure 5.9: Rational decision-making.
Sales management. Managing a number of sales people and structuring
of the sales department's organisational structure.

Decisions
Who makes decisions in the company? Philosophically, we could say
that all do, because everybody is constantly making decisions about
what to do next. Not taking a decision is also a decision.

In the context of an organisation, it concerns employees and manag-

ers making decisions that have some effect on the work to be done.
The sum of all these decisions is therefore the company's decisions.
Thus, decisions and especially the actions that are a result of these
decisions, help to fashion the company both internally and exter-
nally.

The rational decision -making process has five steps:

Who should then take decisions in the company, decisions that will
have an impact on the company? It is up to management to decide.
Decision-making situation. Here the need for a decision is apparent, be
Management may delegate decision-making to the employees to an
it big or small.
~xtent ~hat is appropriate and beneficial for the company. By do-
In~ so, It saves the manager having to consider many very detailed
Searching for alternative options is the next step, where the decision-mak-
things, and why not be confident that staff can take decisions that
are sensible. ' er is trying to find various options to the problem. The result may be
several possible alternatives: Should I take the first, second or third?
In the following chapters on groups, teams and in this chapter, we
Normally, all alternatives will be considered, but often t~ere are too
will look at many different ways to involve employees. This involve-
many, and here the danger is that important alternatives are not
 111

considered, because they do not appear in the decision-maker's con-

makes the decisions?
sciousness. This requires interpreting skills from the decision-maker.
in the company can be divided into three groups:

The third step is to find information on alternatives to discover the best al-
ternative. This is done by searching information, e.g., by asking your
colleagues, using your experience to think back to similar situations
in the past, look it up in a manual, etc.
on the situation, it may vary as to whom takes the de-
and it is very complex to generalise. However, looking at
There may be a danger that the information the decision-maker ob-
from the situation-based leadership model of Tan-
tains n:
ay not be .correct, only partially applicable, or they can be
nenbaum & Schmidt's theory and linking it with Lewin's leadership
expe.nslve to ac~ulre, so the decision is made based on inadequate
forms, the r,esult will be shown in Figure 5.10.
and Incomplete Information.

Figure 5.10: Decision-making dependent upon management style with

This requires talent and/or intelligence from the decision-maker.
situational leadersh

Alternatives are assessed, and the most optimal option selected.

Often i~ is impractical to evaluate every alternative, since it is time

consuming to 'calculate' all the options.
Authoritarian Democratic Laissez-faire

This requires a competence to act in order to decide and to some Lead er takes Leader gets Leader gets Leader gets Leader and group
extent, courage from the decision-maker. all decisions information information, collective or group alone
and provides from ideas and information, take decisions.
information employees and suggestions ideas and Leader provides
The choice of alternatives means initiating action and the decision-maker about these leader takes the from employees. suggestions information to
now has some experience in the type of problem to be addressed. decisions. decisions. Leader takes the from employee the group and
That experience helps them next time a decision has to be taken. decisions. groups. Leader acts as a
and group take consultant.
the decisions. Decisions are
It t.ak~s dr!ve t~ act and learning abilities to exploit this knowledge in delegated.
a similar situation in the future.

Decision-making Models
There is a variety of decision-making models that have their founda-
tion in various places. The actions resulting from these decisions will
depend upon the situation in which they were taken, both in-house
and in relation to the company's external environment.

In Figure Sb, some decision-making models are mentioned that will

not be reviewed here.
 113

Figure Sb: Different decision-making models

transferred from decision-maker to decision-maker, such as political
- Intuitive
- Political models and rational models.
- Creative
- Goal compromise
- Value-based Models based on structural) administrative) and professional relationships.
- Middle compromise
- Anarchist Here there is a division of labour and specialisation, and decisions
- Rational
- Dust bin model based on the experiences of decision-makers, which are based on
- Emotional
- Muddling through their own learning. This requires a form of organisation where some
- Instinctive
decisions are delegated, such as intuitive models, creative models
and value-based models.
The models can - based on four elements:
The reason for the decision-making situation
The problem to be solved
Solution suggestions
Decision-makers.

- be described in terms of three main general types:

Anarchist models are decisionsthat are uncontrolled and random

which means that the decision is marked by great uncertainty. Fo;
example, the dustbin model and muddling-through model.
Discussion Questions
Figure 5.11: Muddling-through model
Is there a difference between political leaders and business leaders?
How can a leader build trust generally?
Is there always a need for managers?
What is meant by the visionary leader?
Is there a difference between women and men's method of lead-
ership?
What different types of power displays are there?
Does the display of power vary depending on management styles
and roles?
Is there a correlation between management styles and Adizes'
Source: Based on Lindblom (1989) leadership roles?
What leadership roles are best suited to 'the modern manager'
see Figure S.2? .
Is there a link between Mintzberg's leadership roles and Hersey &
The model may seem a bit chaotic, and the decision-makers should
Blanchard's theory of situational leadership?
be beware when taking this approach. Occasionally, they should
How can a decision-making process be used to improve the com-
stop and then apply other decision-making models that are more
pany's decisions?
~ar~eted. See the description of the rational decision-making process
In Figure 5.9. What connections are there between management styles and the
consequences of decisions?

Experience-based models. Where the decision-maker has been in similar

situations before. These models require that learning is an integral
part of the organisation. Experience is structured into rules to be
 Human Resources (HR)

After reading this chapter, you will be able to:

Have insight into what Human Resources provide
Understand the reasons for using HR Management
Have knowledge ofHR activities
Have knowledge of HR goals
Have the ability to develop a personnel policy
Have knowledge of the elements of a personnel policy.

Dronning/und District Council's Brenderslev District Council's

coat of arms coat of arms

Draft of the future HR function for Br0nderslev-Dronninglund District

Council
In connection with Brenderslev and Dronninglund District Councils merger
into one larger entity, it allows them to develop and design personnel func-
tions to include an effective HR function. Management now have a unique
chance to put the HR function on the strategic agenda, so that there is a
deliberate link between the council's overall strategy, development efforts
and staff resources.
It is important to put the HR function and its role on the agenda for the
final adoption of the administrative structure. If Bronderslev-Dronninglund
District Council is to exploit the synergies arising from continuous organi-
sational and staff development, it requires that business managers have had
some thoughts beforehand concerning HR function and its future role.

Source: Brenderslev-Dronningjund District Council Shared Project H, 31. 2006.

 !(

117

Human Resources
RM is a series of activities that ~n individual company can irnple-
Management and individual managers have responsibility for ensur-
The main activities are considered below.
ing that employees are motivated and satisfied as a prerequisite for
them to be efficient and productive within the organisation. Chap- HRM process"
ters 3, 4 and 5 gave an overview of motivation and leadership models
ImplementatIOn. f HRM means that the company I initiates
d HR ac-
si
that can help the manager in improving conditions and results for 0 ..
. .. h believe are relevant. HR activities ea to some po -
their staff. For many companies, this work has a broader definition,
which is why they have established an HR department. ~:~~tlreess~~t:t:al~~d
HR results. Eventually, these HR results will lead to
some organisational improvements.
Organisationally, the HR department will often act as a staff func-
tion that provides advice and guidance to all departments concerning Figure 6.1: The connection b:t~:e~ ~_R~ ~n~ ~r!!~n~s~t~o~a}_
~esults
r - - - - - - - - - - - j
personnel matters. The HR department has the overall responsibility
for developing and implementing the company's personnel policy. HR
Performance-based rewards Motivation Profit
HR metrics Training and development Market value
HR includes all activities dealing with planning, acquisition, develop-
Recruitment Organisational commitment Market share
ment and termination of staff resources in the company (Kuvaas, and loyalty
2009). Teamwork Turnover
Staff appraisals Job performance Product and service quality
Training and . Turnover intention - - - - Customer satisfaction
In this way, the HR department's work is often the place where you development tactics Social environment Innovation and creativity
can clearly see the company's approach to staff motivation, struc- 360-degree assessment and cooperation Etc.
ture and management. Leadership development Etc.
HR strategy and internal
Consistent HR
Research in the field shows that it is profitable to invest in HR. The
companies that have recognised this introduce HR Management
Source: Kuvaas (2009)
(HRM). This means that managers must respect and work according
to the personnel policy, which the company has adopted. Thereby, it
is the vision to create a well functioning organisation with satisfied
employees. Internal results of HRM have been so successful that it The company mus t se lect an HR strategy that fits . its vision
hei HRand trat
rnis-
also has external effects on relationships with suppliers and custom- . If the company operates in different countries, t err s -
ers. sion. 5
egy should be adapted for each country. ome 0 f the parameters
f d'
that apply here are of a cultural nature - refer to Geert Ho ste e s
HRM can also be beneficial within the company. For example, if a cultural dimensions."
company introduces staff appraisal interviews and through these
they receive criticism from the staff. It could be the company were The HR strategy is the company ,s c.hoi orce 0 f HR
. activities, as shown

not aware that an employee is dissatisfied with their working condi-
tions. It may be the case that the situation can easily be put right,
so the employee is happy, even without high costs and no hassle. It
would indeed be a win-win situation for both parties.
On the other hand, in the same situation you could discover that a
group of employees have some skills that you need in the company,
which you have never used because you were not aware they were
there.
. F'Igure 51
In ., The list is not necessarily exhaustive.
How the company uses the activities and v:hat t~ey will .pu: into
t h em, .IS up to the individual company. Here ISa brief description of
HR activities:
A performance-based reward is the ability to use rewards, if an employee
makes an extra effort or achieves certain agre~d _performance tar-
gets. It can take the form of bonuses and commissions.

17. See Figure 6.1.

18. Source: www.geert-hofstede.com
118
119

HR metrics are a way to check whether the HR strategy works. For

exam.p.le, a measurement. of. how employees feel towards working After the interview: A summary takes place of the agreements made, to ensure
conditions and th~ organisation. These could include employee sur- they are implemented and not forgotten.
veys and work environment studies.
Agenda for the meeting:
- Follow up on last year's development agreements
Recruitment concerns the situation surrounding the employment
- Work-related issues
of st~ff: Procedures for this can be put into place. For example, a - Strategy and goals
recrultn:ent agency should recruit executives, but the line manager - Cooperation matters
c.oul.d.directly employ hourly-paid staff. Here economics is often a - Miscellaneous
significant factor, because recruitment mistakes are very costly for Development and training.
the company.

Teamw~rk is a working method)' see Chapter 3 on groups, which in most

An example of how to go into depth with these points is in the ap-
~ases Increase productivity, motivation and quality of work. The
pendix to this chapter.
Introduction of this will ~ften give good results for the company.
Teamwork should be applied at all levels of the organisation.
Training and development tactics are systematic learning and develop-
ment activities, designed to improve individual and team-based per-
Staf! a?praisa~ interviews are annual interviews where the employee and
formance at work. These could include further training within the
t~elr Imn:edlate manager have a meeting. There must be sufficient
company where the employee will learn new skills, both in ord~r to
time to discuss the various matters. To ensure that the issues which
better equip the employee and get employees that are more flexible.
the company hopes to dis~uss are covered, the meeting has a rigid
structure and agenda. Topics of the meeting are often:
Employee satisfaction with the manager A 360-degree assessment of the manager is a study, often made once a
Manager's satisfaction with the employee year, in which the manager's performance is under review. It involves
all relevant parties. This includes the manager them self, employees,
Employee satisfaction with colleagues and the workplace
superiors, peers and often outside people, such as suppliers and
Colleagues' satisfaction with the employee
customers. This gives a general picture of the manager and they are
~ctivities for the coming year are agreed, such as objectives, train-
Ing, etc. made aware of focus areas to strengthen for the future.

Leadership development is a plan for the skills we want all managers, as

A structured example of the content for a staff appraisal interview: a minimum, to possess. In addition, leadership development means
that as a manager, one has some specific expectations, e.g., it could
Guidelines for a staff appraisal interview be a promotion to a more significant management jo.b, or th~t a
360-degree assessment means leadership development In a particu-
Purpose: Explain the reasons for the appraisal interview.
lar direction is required.
Before the interview.: Here the employee and manager are encouraged to spend
some time preparing for the meeting by using points 1-6 below. All these actions result in some HR results, see Figure 6.1, which
should be beneficial to all parties in the company.
During the interview: It is explained that the meeting's content is confidential
and the meeting's agenda is presented.
Many companies talk about what it is like to be employed ~y them
in order to attract staff. This means the company only receives ap-
To be continued on next page plications from candidates who have a real desire to work for the
company. Therefore, neither the candidates nor the company wastes
time and energy. An example is nyidanmark.dk (new in Denmark).
120 F,'(.
121

Induction of new employees
It is important to us that new employees feel welcomed and quickly come to
function professionally and socially in the Immigration Service.
As part of your reception as a new member of staff, you will receive a
welcome folder containing useful information - and a welcome from our
director.
As a new employee you will be part of a mentoring scheme, so you always
have an experienced employee you can approach with both academic and
practical challenges. The mentoring scheme ensures that you receive a pur-
poseful induction to your specific work area.
As a new member of staff you will be invited to an informal interview with
both our director and our centre/deputy directors, just as you will come to
participate in an introduction day, where all new employees are introduced
to our values, working methods, etc., and are greeted by key people within
the organisation.
Personnel Development
The Immigration Service is a job in continual development, which places
heavy demands on employees. You are expected to be efficient, professional
and service oriented.
It is of great importance to us that you as an employee experience both
professional and personal development. We are very aware that you develop
the right skills, both to perform your job, but also so that you can take
advantage of the opportunities our area offers, including the 6 monthly
internal course catalogue and internal vacancies. There are also opportuni-
ties to apply for posts in the Ministry of Integration, as we have a rotation
agreement with other ministries.
As an employee of the Immigration Service, we will do our best to sup-
port you in turning your qualifications into skills.
Your development in the Immigration Service will be linked closely with
future requirements and expectations of our work place. We are working,
for example, with new ways of organising the work (teams, delegation of
responsibility and competence, more project-oriented and Lean) and all
employees are expected to participate actively in all processes. We work
with ourselves as a workplace and as an employee you must have the desire
to evolve through open dialogue with your manager about your professional
and personal development.
Our focus is always on your continual progress, among other things,
through your annual staff appraisal interview and by providing you with
appropriate further training, possible participation in talent programs':_jnd
through learning on the job by offering you exciting projects.
~~"'==~~~==--=<'::===='=~=~~~';T--=~= __
~""",,,,_~ ~~
all in his head, while a larger company, such as Grundfos A/S, has
a detailed and written personnel policy, which is further divided up
according to job function. Most importantly, is that the company
prepares its own personnel policies to suit its particular conditions.
Personnel policy is the executive values, principles and operational
guidelines, which the company provides as a basis for the manage-
ment and development of its staff (Stordal &S0rensen, 2009).
Personnel policy is therefore a framework of staff resources needed
within the company.
There can be many objectives of a personnel policy:
To attract talented staff
To provide a framework for employees
To provide a framework for managers
To regulate conduct within the company
To show partners how the company treats its employees inter-
nally (positive signal value) . .
So management can use it in their managerial work (communi-
cate attitudes, increase commitment and motivation)
To build a foundation of common values, whereby bringing em-
ployees closer to each other and closer to the company.
A central factor in the development of a personnel policy is that it
takes its root in the company. This can be done by management and
employees working together to create it and the outcome will be
communicated to all company employees.
Stakeholders of the policy are all employees, from directors to the
man on the floor, but also future employees and external partners.
The contents of a personnel policy
Overall, the three areas can be divided in main and partial policies.
The main policy area outlines goals and general attitudes.
I
Partial policies are the specific part that is tangible and can be princi-
pal for the company's actions.

Personnel Policy
One area ofHR is personnel policy. All companies have one, but they
all have different descriptions. For example, in a small building busi-
ness, there will often not be anything in writing, as the boss has it
 '{ I: !'.::
I /\
3
12

Figure 6a - Personnel policy areas

i'AHr'i1ct: a.i1drecruit Retain and develop PIli1seout
-=~,--.=.-,-~...
.;";,;.,;,.;,,;.;,..;.;,;,,,,;.,,,_;._~~-~,~=,,~~~=~.~=-~>=-.-=~=-
•• --,;";";'';'';'''''';;'''-=<''-~~:~~'~"=:-'';''~~~~~'=--'="~-=~Y==-==- __ -'''~'_-''''''''r'~'~'~~j'~"~= __
,~,

- Marketing of the - information Rules/procedures in the partial policy: All appoi.ntments to permanent
- S~rliorschemes
company to potential -;..Green policy and work posts must occur after prior notification to the ~nlon representatlv,e, follo-
(~canhg down,
candidates environment d by external and internal job vacancy advertisements. Notification must
co.nsula.nd light
- Recruitment Aicoho] and smoking include a needs analysis. In exceptional cases, a position maybe filled solely
duties)
- Induction - ~qualrights based on internal job vacancy advertisements.
- L~y()ns. As soon as possible after appointment, permanent teachers start on a
- Holidays', days oft; - Pension schemes
sic::krl~s~,maternity paedagogical foundation course, unless they have already completed one
- Self~rance interviews
Hours ()fwork,travel before employment. ,
polityandteleWorking The academy naturally likes to see its staff con~lnue to learn and educate
-r .. Salaries,ipensions, fringe themselves. However, the school cannot automatically guarantee that ac-
.b~~etits and employee quiring further theoretical qualifications can result in a change of employ-
services ment conditions,
- StaFfappraisal
irlt:erlfiews Overall purpose of the personnel policy: Here ar.e some general conditions on
l"r~rrlingand
.-C .•·...
Business Academy Aarhus' idea of the policy.
development.

Source: Stordal & Sorensen (2009)

Fragmented example of the personnel policy at

Business Academy Aarhus

General:
The academy's management and employee representatives designed the
personnel policy at Aarhus Business Academy and it applies to all who have
their primary employment at the academy - both management and staff
It is a very important prerequisite for the academy to live up to its own
objectives [."J

Main Policy:
The organisation and personnel composition at Aarhus Business Academy
shall have the necessary skills to solve current and future projects, in order
to achieve the academy's mission and goals.
Competent, committed and responsible employees are Aarhus Business
Academy principal asset.
Discussion Ouestions:
Partial Policy: What is most important with staff appraisal interviews in a com-
The starting point of recruiting staff at the academy is an assessment of the pany?
school's short and long-term requirements, as well as established needs. What can HR contribute to a company?
The decision of which applicant will be employed in a particular position, What is the link between managers and HRM?
is taken on the basis of a needs and requirements evaluation in conjunction Which HR activities are most important for a company?
with an assessment of the applicant's qualifications, so that the best quali-
Is it true that a personnel policy promotes motivation in the com-
fied candidate is selected. For the sake offlexible use of staff and the most
secure working conditions for employees, newly recruited members of staff pany? . ?
to permanent posts should have a broad range of skills. What is difference between HR and a personnel policy.
We seek to provide the best possible job security [... J

To be continued on next page

124 125

Appendix
development plan as set out in Annex 1, and submits them for approval to
the manager. Both parties keep a copy of the agreement.
Exam pie of the content of a staff appraisal Both parties are responsible for ensuring that the agreements made jointly
during the interview, are followed up.
interview:
1. Follow up on last year's development agreements
Guidelines for a staff appraisal interview
The intention is to discuss the realisation of last year's agreements and goals.
How has it gone? How has it gone with the agreed development goals?
Purpose
It is important that there is mutual agreement about the purpose of the ap-
Good experiences and successes since the last interview.
praisal interview's expectations.
Business Academy Aarhus' purpose with staff appraisals is that it will
2. Work-related issues
serve as a good, honest interview, where the common aim is to create goals
To highlight the employee'S strengths and development potential as seen
that support employee development and motivation, and produce results
from the employee and manager's perspective, and discuss job wellbeing.
for the employee and the organisation. Staff appraisals are interviews where
Before the interview, both employee and manager must decide their own per-
the manager and employee exclusively discuss employee development and
ception of the employee's good performance, strengths and competencies.
therefore they are not used for salary negotiation.

In what situations have you experienced things are going well in your work
Before the interview
and that you use your skills, qualities and competencies in a good way?
The manager has the responsibility to initiate the appraisal interview, but
both sides have equal responsibility for the realisation and end result.
2.a. What characterises such situations?
Both the employee and the manager must have thoroughly planned and
be prepared for the interview. There is a questionnaire for both the em- What do I and your colleagues do in these situations?
ployee and the manager to fill out beforehand. What strengths and qualities do you use in these situations?
Devote ample time to the interview. Experience shows that it takes bet-
ween 1-111:2 hours and there should not be any interruptions. 2.b. What is it that I, your colleagues and students see when you do a good
The interview is based upon equality, but it is a conversation taking place job in this way?
between manager and employee. Thus, it is not between equals. What will it take for your working day to be marked by more ofthese
Both parties will seek an appreciative, open and honest approach with a kinds of situations?
focus on the interview contributing to the employee developing in a positive
direction and that the manager supports them in this. 2.c. What would you like to contribute to create change in that direction?
The interview takes place in a professional context and within a fra- What changes would you like to introduce?
mework of what the planned interview should and must be about. How do you experience the correlation between your job, your skills and
Any practical problems concerning cooperation or job performance your work-time?
are expected to be discussed as they arise, and not saved for the appraisal
interview. 2.d. How can you tell that I have found that things are moving in the desired
Similarly, it is expected that throughout the year there is constant dia- direction?
logue between the individual employee and manager.
3. Strategy and goals
During the interview The intention is to provide maximum consistency between the employee's
The interview covers the previous year and implementation is based on job and Business Academy Aarhus' strategic objectives to discuss aspirati-
the notes the employee and manager wrote in their questionnaires. The ons and the need for new challenges, together with ideas for innovation and
conversation is confidential. It only takes place between the manager and to get a long-term and open dialogue concerning the employee's wishes and
employee. ideas.
Provided you have given your consent, others may be informed of certain
parts of the agreement, for example, professional development. 3.a. How do you see that your work contributes/may contribute to Aarhus
Business Academy's strategic objectives?
After the interview
What is needed to strengthen th is relationship?
The employee writes a summary of the interview and all conclusions reac-
hed, as well as agreements on projects, job and skills development in the

To be continued on next page To be continued on next page

126

3.b. What goals and aspirations have you for your work in the coming year?
What are your expectations of Aarhus Business Academy and how can
you contribute to the academy's continual development?
Do you have any innovation ideas regarding the organisation of work in
your department, your team or division or innovation in other func-
tions?
What would you like to do be doing in five years time?
Part 2
4. Cooperation Issues
The intention is to have an open dialogue concerning the working relation-
ship between manager and employee, and the employee's relationship with
Assessment of corporate
colleagues or others at Aarhus Business Academy.

4.a. How is collaboration with colleagues in your department?

strategy
What have you done to create good relations and good cooperation in
the team, the department and with others outside the department?
Do you feel well equipped to handle conflicts with colleagues? '

4.b. How does our cooperation function? Aims and depth: The reader must be able to assess the co~p~ny's
structure and networks in relation to core values and objectives,
4.c. What do you think managers and colleagues should do more of? including internal targets for efficien? an~ fl.exibility and exte~nal
What can you do to ensure a good work environment in future? objectives such as innovation, internationalisation and partnerships.
5. Miscellaneous
The intention is to accommodate opinions and desires not covered in the
other points.

5.a. As a whole, is there anything you could imagine being different?

Here and now or in the long-term?

6. Development and training

The purpose of job and skill development agreements is to ensure that the
individual employee's development is in line with the school's strategy, while
helping to equip each employee to provide high quality job performance
and to develop their skills.

6.a. What can we arrange in the way of more precise development and trai-
ning that would be relevant to your job at Aarhus Business Academy?

6.b. Do you have any long-term wishes for your job and skills development,
which may be relevant to discuss?

Development plan

Agreements on development and training

(Remember to agree who is responsible for ensuring that the agreement

is implemented, and in what manner any monitoring/follow up must take
place).
 Corporate Culture and Ethics

After reading this chapter, you will be able to:

Identify key elements that influence a corporate culture
- Use Schein's culture level model to describe and analyse the three
levels of culture: Artefacts, espoused values and basic assump-
tions
Use the enlarged cultural web to describe the factors influencing
corporate culture and value perception
Classify a company after making a culture web analysis from a
culture type model
Relate to the concept of ethics and morality in relation to the
company's stakeholders
Evaluate Corporate Social Responsibility (CSR)
Assess which ethical areas should be included when defining ethi-
cal codes.

There are many examples of Danish and foreign companies who have
a clear position on corporate culture. They work constantly to im-
prove, monitor and actively apply it in their daily work.
'30
Kamstrup
Values
Kamstrup's fundamental values and attitudes support the development of
the decentralised organisation and all employees are committed to cus-
tomer orientation and decisiveness.
Customer Orientation
It is important to us that all employees see themselves in a supplier/cus-
tomer situation, where the next step is a customer who must have their
expectations met. We demonstrate credibility and responsibility to keep our
promises to clients, colleagues, work-related tasks and the environment.
All employees in Karnstrup must contribute to our customers experienc-
ing good quality.
Decisiveness
We appreciate the active accountability among our employees. 'Take self-
initiative, and do not expect your manager to do it'. It is important to us
that employees use their personal skills to the best effect. 'If there is a need
to do something - do it'.
If there are hurdles that mean an employee cannot perform their job
properly, they can always report it to their manager, who will ensure that
the problem is resolved.
All employees at Kamstrup must ensure they are aware of action plans
within their area ofwork.
Our management react quickly to market changes and show decisiveness
and the capacity to make decisions in everyday life.
It is important to us that division boundaries are not an obstacle that
prevents action.
Employees
Kamstrup is constantly growing - an attractive workplace with a visible and
consistent business philosophy.
Many functions are performed by a mix of ad-hoc teamwork and struc-
tured, visible organisation.
All employees follow individual as well as company-targeted develop-
ments.
Accountability, decisiveness and decentralisation are essential elements of
our personnel policy, with focus on the individual employee.
We do not have a centralised personnel function - each department man-
ager is responsible for both staff recruitment and staff development.
Environment and Labour Policy
Karnstrup has focus on both people and the environment.
Kamstrup seek to have a low impact on the environment and want to be a
company with a high level of health, safety and welfare for our employees.
To be continued on next page
We will:
Prevent pollution, injuries and accidents in connection with the
company's activities and products
Use energy, water and materials wisely
Be aware of relevant regulatory requirements and ensure compliance
with these
Set targets for continuous improvement
Educate our employees and encourage them to actively take an interest
in the outside environment and the work environment
Communicate openly on environmental and health conditions, both
internally and externally
Use subcontractors who are environmentally responsible
Ensure that suppliers working with Kamstrup live up to relevant regula-
tory rules and Kamstup's own rules.
Environmental Management
Kamstrup A/S has an environmental management system according to 05/
EN ISO 14001 Certificate No.: 42.
All products and services fall under this registration.
Source: www.kamstrup.dk
All organisations and companies have a history. It may be short,
because the organisation is young and can be long and contain a
legend about the founders, such as the two founders of Bang & Oluf-
sen, Lars Larsen, founder ofJYSK, and many more.
The organisation's life consists of a variety of incidents that have
occurred over time: The difficulties, different leadership figures and
influences on the organisation, expansion of the product portfolio,
acquisitions of other organisations, mergers, etc.
In addition, within the organisation there are members of staffwith
different levels of education, attitudes to the organisation, attitudes
to work, etc. In the organisation's immediate environment, there a
number of other stakeholders: Customers, suppliers or people who
have daily contact with the organisation. They have different expec-
tations and attitudes towards it. All this lays the foundation of how
the organisation works internally and is seen externally.
Internally, it means through time the organisation's way of function-
ing has been determined by many factors: How employees talk to
each other, how they dress, whom they can turn to with problems,
132

the degree of motivation, direct and indirect expectations
effective from the organisation's side and much more.
The organisation makes some things formal, while others come to be
informal over time - this is known as organisational culture.
The concept of corporate culture appears in literature: It is consid-
ered as the overall culture of a company, but as companies consist
of a number of departments/organisations, there may be various
organisational cultures in a company.
that are Corporate culture
As previously mentioned, many external and internal factors form
corporate culture, which will be discussed later in this chapter. Th~re
are many different definitions of corporate culture; the following
definitions are used in this book:
'A dominant and consistent set of common values, driven by symbols
such as stories, myths, legends, slogans, anecdotes and fairy tales'
(Hansen, Heide & Riis, 2000).

This chapter will provide instructions on how it is possible to analyse
and change corporate culture. With organisational changes within
the company, there will always be interaction with the organisational
cul~ure. It is up to management to make organisational changes,
while at the same time considering what it means for the culture:
Can it be strengthened, or will it deteriorate?
Corporate culture is a way to understand an organisation or s~me
parts of an organisation. The common values that .are determined
and accepted in the corporate culture help to determine what proper
behaviour is, how to relate to each other internally and externally,
and how the organisation perceives itself in relation to its surround-
ings.

Schein's culture model

Schein examines a company culture on three levels:
MAERSK
A written example of AP. Moller-Maersk's definition of their corporate Figure 7.1: The three levels of culture
culture.
Artefacts
AP. Moller-Maersk is a multicultural company. We respect and use our
diversity as a strength in everyday life.

With employees all over the world understanding and accepting different
Cultures and religious beliefs is a natural part of our mentality and conduct. Strategies, goals,
This respect for diversity is reflected in everything we do and we try to activities and routines
ensure that individual departments and employees have the opportunity to
follow local customs and traditions.
Fundamental values
Perceptions, thoughts, feelings,
Employees are our most important asset and we strive to create a chal- expectations of the com pany
lenging environment where as far as possible, everyone has control over
their work and even plan their career based on skills, achievements and
opportunities. Source: Bakke og Fivelsdal (2004)

As an employee of AP. Moller-Maersk, you will cooperate with talented and

dedicated colleagues in an international environment. Our daily lives are
busy and challenging, we are structured, and result oriented with quality Level 1. Artefacts. The visible elements of the company that can be
and service in mind. observed. Design of buildings and furnishings, staff dress and ap-
pearance, design of communication material such as websites, bro-
Collaboration with colleagues and management is based on honesty, dia- chures, external communication, etc.
logue and mutual respect. We appreciate initiative, ability and performance
as the way to influence and managerial positions.

Source: www.maersk.com
 135

The fundamental values at level 3 reflect the national and perhaps

regional cultures and are extremely difficult to change. The values at
EXAMPLE
~~ETTO level 2 are created by and between the people in the organisation,
where management tries to provide a framework and opportunity
for expression, which means the values and attitudes, will help the
In Netto supermarkets, all employees wear the same T-shirt, so it is easy
for customers to see who are employees and therefore who to approach if company achieve its goals. Artefacts at levelland the signals these
necessary. send are often very aware of the organisational level, where the com-
The layout and placement of products is virtually the same in all Netto pany wants to signal an attitude or a position to the outside world.
shops. The logo is also an example of a visible element of the company. The
Scottie dog symbolises economy, and the yellow colour denotes low prices.

EXAMPLE

Most people recognise the logo of the now global company JYSK. Lars
Larsen, the charismatic founder, is an artefact from his activities and media
performances. Virtually everyone knows through him and the words 'a
great deal', what the company stands for. He has also strengthened the The cultural web
company's brand by being the only person who has published a book about To understand what creates a corporate culture, among other things,
himself, and then distributed it to all households in Denmark.
the organisation can be analysed using the enlarged cultural web.

Level 2. Values. The values that apply in the organisation.To under- Figure 12: The cultural web
stand these values one must normally have been in the company for
some time. How is the tone, how is contact between managers and
staff, how do you act externally: Do you see opportunities or prob-
lems?

EXAMPLE
In Fetex, the structure is clear, because employees in each shop are dele-
gated responsibilities. Each individual is responsible for certain product
categories, there is an informal tone between managers and staff, and the
staff is friendly and helpful to each other and to customers.

Level 3. Fundamental values. Many of the trade patterns that we have

and the way we look at our fellow human beings and the world
around us is shaped by our upbringing and the culture we come
from. Our religion, our history, our democracy, our construction of
the welfare state, etc., all combine to provide us with some basic Source: Own design with inspiration from johnson, Scholes & Whittington (2008)
values that we bring with us into our work.

A variety of internal and external conditions determines the corpo-
rate culture. The traditional cultural web focuses mostly on company
conditions, which directly or indirectly, the management of the com-
pany may have affected.
How corporate culture is put into practice, is also a product of such
factors as national and regional cultural conditions, industry and
market conditions and individual factors. This is illustrated in the
outer ring of the enlarged cultural web model.
National and regional culture conditions
How is society's culture? How do we see our fellow man? Is it a
culture where there is great emphasis on the individual or a group?
Geert Hofstede" is a person often referred to when it comes to na-
tional cultures and differences. Hofstede describes national cultures
through five cultural dimensions.
Power Distance Index (POI)
Is the power distance index large or small? How far is it from the top
to bottom of the organisation? Can an ordinary employee unsolic-
ited approach management? Is there a very formal or more informal
tone between managers and employees, etc.?
Individualism (lDV)
Individualism or collectivism. In an individualistic society, it is up to
individuals to take care of themselves and their loved ones. 'Everyone
makes their own happiness'. In a collectivist society, the focus is on
the group and the company, and the group's goals come before one's
own ambitions and goals.
Masculinity (MAS)
Masculine or feminine dominance. In a masculine culture status
symbols are important in showing the world that you have power;
there is focus on career, salary and benefits. In a more feminine cul-
ture, there are values such as job security: Good, safe and meaning-
ful work conditions.
Uncertainty Avoidance Index (UAI)
Are there large structural needs, or are people happy not knowing
the future work situation in detail?
19. Source: www.geert-hofstede.corn
137
Long-Term Orientation (LTO)
How much thought is there about the future and is it planned for?
Is it a culture that lives and acts here and now, or is it a culture and
thus a population, who think further ahead?
What Hofstede describes are some common, national culture traits.
In each country, there are also regional differences. Even in such a
small country as Denmark, there are significant cultural differences,
depending on whetherthe company is located in Jutland or in central
Copenhagen.
Industry and market conditions
The industry, which the company is in, also has an impact on com-
pany culture. Is it a hospital or a factory in heavy industry? Is it a
stable industry that produces long-term forecasts, or is it a company
who manufacture to order and therefore should be more flexible?
Is the company in an expanding market where there are many orders,
and hence relatively good job security, or is it an uncertain market
where tomorrow can seem intimidating?
Individual Factors 20
The people working in the company have a great affect on corporate
culture, because culture is, after all, a product of the staff's values,
attitudes and behaviour. Their age, education and gender influence
culture. What values and attitudes does the staff have? Is there any
subculture in the company, for example, a sales representative cul-
ture, a workshop culture or an entirely different culture among the
administrative staff?
The six areas of internal culture
The followi ng describes briefly the six internal areas that according to
the cultural web, affect which corporate culture the organisation has.
20. See Figure 7.2.
 139

Stories An example of different standards that affect the culture:

The stories that are repeated in the company and which say some-
thing about the business. Danfoss on Als, who is one of Denmark's Figure 7.4: Positive and negative standards in an organisation
largest industrial companies, often tells the story of how Mads
Clausen in the 1930s founded Danfoss in his parent's hen house. The
old family farm and Mads Clausen's office from that time still exist in
the factory grounds and are used actively by the company to support
and show that Danfoss is based upon a culture of achievement and
an innovative corporate culture.

Figure 7.3: Example from Danfoss' website

.\1:" ~I"l>.,:, ,r_r_o_d,~<:.'.,~
..~~'.!~,ll~~, ,~,~.~~~_~~__
':':~~.~_~
,\ ,~.~~~.~_~,~'.,~~~ LJ,~.~.~_~_-::~,~_«.~_L'?~~:.~~:
II,.,,, _'A~0"11..:. ,'OCrll"lo!} Son.tripLlt.i!.Vllitb y()q~-.i.l1l.ag'l1<lti()h·
g;fU~ 8e1p>'\'ur c61Ieagu~{.
o SHARE '~~_V;i_:i't~
I
Try.solliethillgne'N, -.i.tWilldeveI6Fl.Y6u(. [)6h'8t·tal~~···cha.n2~sth~t·bea.krrsk~'·

TIlII Story abaut nantcss, til"

peop'enndpro<:lucts
oenress touncer '·lads cteoseo I'I~S
Th~ old t~rmhQU5e. \'Ih~r" oenross bom tn 1905 In H"~nbJ~r!l, Denmark, lnl9JJI-!J!lSdaU5enestJbllsh~the
fQuMerl'la~sClilli$cn was born and at rne rarrn wrucn now bcuscs tne {ompJny, DJf\Sk K~lca~tomatlk- og
started nts company, has hOU5~d tMe. DnnloSs ~:U\:eum. Apparat-r abrtk.
ncercss NU5~um smce 1991. rue !n19]], atrcr eraduaunqm The first ARV Jnd rav vaives were
museum IlIU5tr.1tCS mare man 6~ eng!ne~rlng, "\3<1$ CI~V5en retuIned sool\supplemer,t,,-d ~,tthJ"tomall{
yea.so(tcchnoIQD":.llacv>,.Iopmc(lt to Ill. birthplace. The U1SIS 01 the AV and AV~ verses. nctwccn 19]5
and arsc tells tnc storv oJ nilll, 19JO'S Mol lett customs earners nnd and 19)U, a long list or new pmuucrs
cuuscn. The museum tstocated at Import ban:; and he sal', the ,',('re Introduced - aurcmattc spring
the company headquarters In opportunity tor prouurmu aM seiling veives, ball neat valves,
I~Qroborg, ocnmare automatic varves forrelrtgeratlon {hCnnost3t:s, cresscre-ccmrcuce
In addition the Danlo.s rcosecm ptaras - production I',hldl unlll th~n valves, dlaphrJgm valves, suction
(caw! ..... a Tc~no ... ma e.here coucren
ann auuns play and tcarn rrum the
e.~()IJngVior1dortCc.Mology.
took place Irltllt'c Unltea states. So
~~tl~et up J company In 111~p3rcnts'
v~lv"", ",om mermozaats.
pr<:~5ureyal"UJnddrylng
(Oll9ant-
nncrs Organisation Design
.·Rcad full story
;..pantorsUnlverscl'icbsltc
What is the formal organisation structure and what is the informal
organisation structure? The size of the organisation. Is it a very
mechanistic organisational structure or is the structure more or-
ganic? (See Chapter 2).

Source: www.danfoss.dk Control

How is control and rewards within the organisation? Is there much
focus on detailed reporting, or is there a trend towards self-regula-
Symbols tion? Where does the control take place and how?
Design of the logo, the layout and location of the company's head-
quarters and branch offices, employees' clothing, cars and other Rituals and Routines
machinery, that the company has: All this and more, signals what the What traditions are there in the company? Is there a tradition of stay-
corporate culture is or what management require. ing after working hours to 'solve everyday problems', or is it straight
out the door at 5 o'clock? What are the seating arrangements in the
Power Structure canteen: Is it by profession, job title or common interests?
What is it that gives power and status to the organisation? Is power
based on titles or behaviour? Is the management style authoritarian Paradigm
or more democratic? Depending on this, employee standards will How we perceive ourselves and our company, depend upon the com-
develop and influence the company's efficiency. mon values that exist. This paradigm is a product of the six areas
above and areas of national and regional culture, industry and mar-
ket conditions and individual circumstances.

Culture Types
All companies are different and hence their corporate culture, but
there can be some general types for individual companies. In order to
place the company in a culture type, it will necessitate an analysis of
the factors that influence and create the corporate culture.
The purpose of placing the company within a specific culture type is
to assess whether there is consistency between the cultural profile
the company wants, and reality. At the same time, the company can
use this to consider adjusting the culture.
The four main culture types:
After 20 years of experience in observing organisations worldwide, I have
concluded that there are four main culture types, all ofwhich are relevant
and effective in their own unique way. In the following, I describe them and
in addition, I will present a theory as to why the four types work as they do.
1. The Power Culture
This culture is dependent on a strong personality and/or manager, who
create a 'spider's web' organisation with a central power centre. Power
emanates from the centre of the web and the person sitting in the middle
distributes promotion, power and influence arbitrarily. The team require
elbowroom and minimal restrictions, so that they can achieve results, status
and power.
2. The People Culture
In this culture, the individual is the central starting point, and the team
structure has been designed to strengthen the individual. This culture exists
only for the persons involved, and these usually have strong opinions about
their working methods. It is often difficult for the company to manage the
employees in this culture. Here the team seek personal and social recogni-
tion for their 'unique' talents and skills, as well as economic rewards that
demonstrate to the rest of the world how successful they are.
To be continued on next page
3. The Network Culture
This is predominantly a small-team culture (or a network of smaller compa-
nies), which aims to carry out projects. The main objective is to get the job
done and these cultures tend to have great influence over their activities.
This culture is usually flexible and adapts easily to the circumstances. Here
the team seek certainty and job security based on the number of successful
projects they complete.
4. The Rule Culture
This culture is very bureaucratic and based on procedures, rules, work
descriptions and authority. The individual's position in the company is a key
point in this culture, and therefore emphasis is on predictability, uniformity
and consistency. This culture has a tendency to be inflexible and often
resists change. Here the team seek minimal changes and risks, in relation to
their positions and status quo.
Source: Psychologists: The four cultures, can you recognise them?
Trompenaars and Hampden-Turner's culture types
Based on the Managerial Grid, where the dimensions are the manag-
er's orientation towards the task and manager orientation towards
employees, Trompenaars and Hampden-Turner compare this using a
mixture of management style and organisational structure in which
they arrive at a dimension of high equality between manager and
employee. This means that there is a close link between manager and
employee when it comes to decisions and cooperation; also see the
right side of Figure 5.6 on decision-making and situational leader-
ship. In the other dimension the manager is perceived as a leader in
a hierarchical system, where horizontal decision-making is prevalent,
i.e., leaning to the left side of Figure 5.6.
A typology is created by making a comparison that determines the
four different culture types:
Incubator
Guided missile
Family
Eiffel Tower.
Incubator is characterised by the fact that the manager is oriented to
the person, rather than tasks, and the manager works alongside the
employee. Here the culture is of participants having a bond with the
company and its values. There is a high degree of self-realisation,
and participants work independently. Rules and hierarchy are not
welcome here.
142

Incubator fosters innovative employees, who creatively do their best.

They are constructive, self-developing and resourceful.

Guided missile is characterised by the manager being task oriented,

rather than people oriented, but the manager still operates on equal
terms with employees. Since tasks are the manager's ~ocal. point, .it
means that the employees' focus also goes In that direction. This
means that there are few social relations between participants, and
there is an impersonal environment.
The organisation's goals are paramount, and participants aim for
goal achievement and assessment based on their performance. Pro-
fessional competence is the participants' characteristic and pri~~,
and they are autonomous without the need of a manager. Partici-
pants often work on projects, but with holistic tasks.
Culture adaptation
A number of analytical elements have now been reviewed, which help
to create the culture of a company. Since the purpose of analysis is
that the company can harmonise its culture in relation to the outside
world and in relation to the internal situation, there will be a need for
continuous adaptation.

The family is characterised by the manager being the influential party,
but they show great interest in their en:ployees, more ~h~n they do
for the tasks. There is a close relationship between participants, but
it is not necessarily visible to their surroundings. The manager is 'the
father/mother', who looks after the family's wellbeing, but who also
takes most of the decisions.
!f the company's environment is very dynamic, then an ongoing ad-
Just~ent of the corporate culture is a necessity for the company's
survival. The surroundings and the internal situation also affect the
culture and the speed of its adaptation.

Participants accept the manager's power and yielding t.his powe:,

such as favouring certain individuals and they feel a close link to their
workplace, often having worked there for a long time.

Eiffel Tower is characterised by bureaucracy with a solid management

structure in which tasks are essential, and management take the de-
cisions. Participants can be easily replaced, causing a spillover effect
on motivation.

Focus is on goals and projects, and it may be difficult for participants

to 'rise through the ranks' without the right qualifications. The per- External
ception of the organisation is not very positive, motivational fac~ors adjustment
~~~J'_""'j~J"'h_/'~/. ~;~::j.'_r""'~"'j'''j''''"'''''~''
are almost nonexistent, and tasks are usually rule bound and routine. Strategies, goals,
activiticsandroutlnes
~~~=. - - ---_ ~~~

Fundamental values
The four culture types are often used throughout the whole com- Perceplion5,thoughts,~eling5,
expecratlonsofthecompany
Internal
pany, but in many cases, several types of culture are represented in =~~- ~=~-~ ..
=~~---"-..~~~=~. ~--
adjustment

the same company. If we take an example like Microsoft, the culture

will be substantially different between the company's system devel-
opment department and the finance ~epartmen.t. There may also Figure 7.5 illustrates how the chapter began with an analysis of in-
be large differences in culture, depending on national cultures. For ternal and external factors. These are the cause of the symbolism
instance , the difference between the Indian and Danish branch of characterising artefacts, values and unconscious values, which are
Microsoft can be great. expressions of what the corporate culture consists of

When assessing the symbols of the company and comparing
against the goals it has for its corporate culture, you get the
portunity to define what course of action is required to achieve
desired culture. Here you are forced into putting words to
actions that must take place to change the culture. In the figure, it
called the functionalist perspective.
The result is specific changes, both externally and internally. An ex-
ternal adjustment may be a new logo, a move to a more fashionable
address, new standards for how to treat customers, etc. Internal ad-
justments could include a new organisational structure, training
employees in a particular direction or change of dress code.
Ethics in a business context
Ethical issues related to the company is a broad topic, but can
kept within the boundaries contained in the stakeholder model.
In that way, there are three main areas:
- managers and employees in the company,
close environment in terms of customers, suppliers, competitors,
partners and owners,
remote environment, the surrounding community, national and
international.
Chapters 3-6 have already dealt with the topic of ethical charac-
ter, which is concerned with how employees, as individuals and in
groups, exposed to various forms of management are treated and
treat each other. Here standards and morals are often the cause of
this.
Ethics, what is it?
EXAMPLE:
According to Anne Skare Nielsen, Institute for Futures Studies:
"Business ethics and social responsibility are concepts that give every sign
of not just being a trend, but an integrated feature of tomorrow's successful
company, whether you want to call it moral obligation, human rights, su-
stainable development, charity, sacrifice, community orientation, corporate
social responsibility, corporate governance, total quality management or
something else. All the concepts arise from ethical consideration, but what
are ethics anyway? Is it nothing more than a rhetorical slogan invented by
some ancient Greeks, that you can throw into a debate to strengthen your
own position?"
!' iii 145
Ethics is about what is good, or rather, what is considered good.
Ethics is the theoretical and philosophical reflections on proper be-
haviour and thus principles of how a society believes we should act
within the framework of what can be done in the present or future,
usually with strong influences from the past. Unlike morals, ethics
are, in practice, abstract and theoretical. Ethics have a strong subjec-
tive element as well and it is therefore impossible to give a specific or
definitive definition. To do this is to take out a patent on good, an act,
which historically has never proven to lead to anything good (Nielsen,
2001).
Today, companies work extensively with ethics and morality in rela-
tion to all their stakeholders, and in practice, it has meant that com-
panies have an interest in having a strategy in this area. In this con-
text, the concept of Corporate Social Responsibility (CSR) emerged.
Today CSR covers all three areas of the stakeholder model.
Corporate Social Responsibility (CSR)
Often the result of a company's CSR work is documented in the form
of a 'Code of Conduct'.
EXAMPLE:
A part of the complete supplier guideline
Summary of our Code of Conduct
Preface
We work on a basis of mutual trust on goods that are delivered to us. Ever
sinceJYSK was founded, we have given top priority to cooperation and trust
between our agents, our suppliers and ourselves, and we believe this forms
the basis of healthy, profitable cooperation.
Cooperation includes clear responsibilities and agreements. That's why
we ask you to acknowledge the agreements made, with the various condi-
tions and principles we put forward for our mutual benefit, just as we
consent to meet our part of the agreement.
We expect our partners to act in our mutual best interest to ensure that
this code of conduct results in positive actions, not just words.
Source: www.jys/c.dlc
One of the best-known and most accepted models ofCSR is Carroll's
Four Part Model of Corporate Social Responsibility, developed by Archie
Carroll. He sees CSR as a concept that can be divided into four com-
mon aspects: Economic, legal, ethical and philanthropic responsibil-
 ;",i
147

ities. Social responsibility is only fully achieved once all components

of the pyramid are fulfilled. responsibility, if they wish to have the opportunity to win recognition
and be respected by stakeholders and society.
Figure 7.6: Corporate Social Responsibility
Contents of CSR
When a company starts the process of introducing CS~, there ~re
many areas to be considered. www.CS~-kompass~t.dkls a '_"Iebslte
sponsored by the Ministry of Economic and B.uslness. Affairs, the
Philanthropic Confederation of Danish Industries and the Danish Institute for Hu-
responsibility man Rights, which outlines a variety of areas to take into account, as
::i< (desired x\: well as methods for testing the company's current CSR and recom-
mendations in connection with the introduction of it.

Figure 7.7 shows the numerous issues to be considered when intro-

ducing CSR.

Figure 7.7: CSR issues

Economic I..&gal Ethical Philanthropic
responsibility ..~ respons~~ility . ~ __. responsibility . _ responsibility ~_
: Life Cyc@: v'/[1~tf!dT1di:/"'" ':Xir-pol-'uti6H . Dining facilities
Assessment h~2ycling and drinking water

Source: Crane & Matten (2007)

It is a re~uirement that there is an economic basis in a company, be-

cause this component is fundamental in being able to operate social
responsibility in practice. Furthermore, society expects the company
to respect the law within the framework in which it operates. Ethi-
cal accountability means that it acts fairly towards its stakeholders,
even where t~ere is no legislation in that area. The company is ex-
peered to be liable beyond the legal and economic expectations that
society places on them. Philanthropic accountability relates to the
company's own expectations for them self as a commercial entity
(Crane & Matten, 2007).

The ~thical dimension is an essential factor of the CSR concept. Ac-

cording :0 Carroll, business ethics are the last type of responsibility
that society expects the company to comply with. The CSR concept
Source: www.csrkompasset.dk

means that. the company must act in its stakeholders' interest , re-
The table is divided into four areas as shown in Figure 7.6, but the
spect universal human rights, and contribute to what is best for so-
location of each CSR is debatable, because legislation is very differ-
ciety, in order to be accepted as an ethical and socially responsible
ent depending on where in the world you are. Therefore, the areas
company. Companies are hereby ordered to demonstrate ethical
can be moved around.
 '49

companies must abide by. The second area contains the considera-
tions on business ethics that the company must deal with (Crane &
Matten, 2007). In the 'gray area', it is up to companies and their
industry to define ethics if they wish to exercise ethical responsibility.

Ethical decisions
As shown, the conditions for em I . Companies make ethical decisions to ensure that they will have an
stakeholders' company p oyees In the Company and its
can vary greatly Th . h image as an ethical company in relation to their stakeholders and
must make a CSR policy hI· at IS wythe company the outside world in general,. There are also some companies that
' so t e sta<eho/d .
t h e company's CSR contains. ers are In no doubt what will further enhance this image by making ethical and environmental
accounting and reporting.
CSR decisions
Those who are th d .. When is a decision required that must address ethics?
. e eClslon-makers for CSR· h
caslonally find themselves in h. I . In t e Company will oc- Ethical decisions are decisions concerning what is right and what
h
ethics and legislation.
an et rca dilern
as to be described. One of the dilem . rna
h
v:
en CSR policy
mas ISthe relationship between
is wrong. Through an identification process, it can be determined
where exactly situations of an ethical character arise, and whether
there is an ethical issue at all.
Figure 7.8: The relationship between ethics and legislation
Although, based on the company's viewpoint, there does not seem
to be a moral issue, this is perhaps not the case for all parties. By
looking at the following two considerations, it is possible to identify
whether there is an ethical issue to be dealt with:
The decision seems as ifit will have a relatively big effect on others
One or more persons see the decision as ethically appropriate.

If the answer is yes to just one of these, it must be assumed that there
is an ethical issue.

When the ethical issue is uncovered, a decision-making process must

Legislation
be implemented to find the best solution. Figure 7.9 shows a possible
decision-making process.

Figure 7.9: The ethical decision-making process

Source: Crane & Matton (2007)

Legislation is by definition th .. I
deoes not cover many ofth minima accept bl b h .
I. a e e aVlour. Law
e mora Issues b th . h·
company. Business ethics beg· h 'I o. Wit In and outside the
ethics only come into In w. er~ egistation ends. Therefore
.. corporate thinking fi . , When it is recognised there is an ethical issue, a moral evaluation
non, Figure 7.8 consists oft or areas with no legisla-
. woareas:Oneofl . I . is made, after which it can be decided what is morally appropriate
o fb USlness ethics. The I . I . egis ation and the other
. egis atlve area cover th . to do in the situation. When the first three stages are completed,
national and international I . I. . s e entire complex of a moral action can then happen. The model distinguishes between
egis atron, I.e., all laws and rules that all
knowing what is right, and then actually doing it. An example of this is
150
j; I
151

a salesperson choosing to lie to a customer in order to achieve their

sales target, though they know their behaviour is immoral. I d the bank should reward the entire team when business goes well.
On ntsht::hole, we feel it is better for banks to fOdculsndmlv~lrdeu:~
~~i~~n;~~erm
The factors influencing the decision-making process are mainly di- . h h the short-term an ,
and collective, rat er t an on ut Chairman of the
vided into two categories: Individual factors and situational factors. es , writes Michael Budolfsen, Dep y
lead to t h e 'biIg sa I'"
Danish Financial Services Union in a press release,
The individual factors are the traits that characterise the individuals
involved, which are innate factors, such as gender and age, and later
onset conditions, such as personality and education. The situational Customers
' first ,.'
h D . h Financial Services U'ruori,
n most advisers choose the
According to t e arus , flict between the services and
factors are the circumstances that determine whether the individual ' 'd h they experience a con
customer s Sl e w en II d h which are actually best for the
takes an ethical decision. In a business context, this includes job, products the bank wishes to se an t ose,
roles and organisational culture.
customer, b have a high level of professio-
"We now have evidence that our mem ers h b dvice." says
nalism and that they take pride In giVing e c ustomer t e est a Vice,
' , ,. th
To reach an ethical solution to a given issue, it is therefore a require- Michael Budolfsen,
ment that all stages in Figure 7.9 are complied with. For instance, it
is no good that a company with a desire for ethical decision-making
stops after the second stage, and thus did not act out of a moral . connection. WIith the issue shown in Fig-
Ethical codes often arise In in which the
judgement, as was the case with the salesperson. Similarly, the deci- h ' a area' illustrates the gray zone, In w
sion-makers' individual traits and the situation they find themselves ure 7.8, where. t : gr y Id rather make these codes themselves
in, are important for determining whether the company will design company and Its Industry wou d ti hter Ie islation often be-
an ethically acceptable action plan for ethical issues. (self-regulation), instead of further an . g d d;e industry have a
ing made. You could say that companies an
proactive CSR strategy.
Ethical codes
Id th t commit organisations, in-
Today, most commercial companies have a set of ethical codes. Of- Ethical codes are voluntary p e ges a ific guidelines values and
. rs to anum ber 0f speci I ,
ten these codes are used by the company to make external parties, dustries or manage , I' t the companies' employees
proper ethical conduct In re anon 0
including (potential) customers, suppliers and other stakeholders
(Crane & Matten, 2007).
aware of the ethical standards prevailing within the individual com-
pany. Often companies publish these standards on their website in
Ethical codes can be divided into four types:
order to arouse stakeholder sympathy.

Organisational/business ethical code~ t h.a: state w h a t is considered to be

Bank advisors in an ethical dilemma proper ethical behaviour in the individual company.
22. Sept. 2008 10:49Jobliv, DR

, in of various types according

Are bank advisers the banks' salespeople or customer advisors? It is a Occupational ethical codes .a,re ~ group g Ie there are significant
dilemma that at least every fourth bank advisor finds them self in at least iob function or qualification. For examp , . I
once a year. t~ J . h hi I codes/principles for craftsmanshlp~ aw,
~~~~~~~e:nl~ :c~n~tmli~:. New groupings r.eg~larly occur within oc-
Stop bonuses.
.
cupatlons th a t have their own 'Code of Ethics.
There are several factors that influence whether a bank adviser is in a di-
lemma, but most obvious is the fact that sales incentives - including bonus
schemes - affect the frequency. This is demonstrated in a study made by the
Industrial ethical codes are ethical codes developed by different indus-
Danish Financial Services Union among its members. tries.
"It is unacceptable that our members end up in this dilemma. Therefore, we
recommend that banks should stop personal sales target bonuses. 'cal cod ected to the subgroups of com-
Program or group ethical co es ar~ con~ d where cultural elements
panies. This could be branc es a roa ,
To be continued on next page come into play (Crane & Matten, 2007).
 EXAMPLE
The American Marketing Association (AMA) is a trade association who
publish guideli~es for general standards within the marketing industry in
the U.S.A. On ItS.website, the association has published a set of principles
about the conditions a company's code of ethics should include in relation
to its marketing. The main elements of the guidelines are as follows: 'Do no
harm, be fair, ensure transparency, be a good custodian, demonstrate ac-
countability and tell the truth'. If the association's members do not respect
these gUidelines, their membership is revoked. Innovation

After reading this chapter, you will be able to:

Define the concept of innovation
Describe the different levels of innovation, such as individual, cor-
porate and community level
Explain the 'Innovation Council's' 12 Principles of Innovation
Governance
Work specifically with the creative process of idea development
phases and idea assessment
Discussion Questions:
Work with Doblin's types of innovation
Why is there so much focus on corporate culture?
Structure work to find new innovative areas using Drucker's Seven
Identify symbols for the following companies:
Sources of Innovation
Hummel, Volvo, jysk A/S and Karnstrup A/S.
Analyse and evaluate a company's innovation capability
What is the relationship between national culture and corporate Provide suggestions for which factors should be changed to make
culture? Which culture is strongest? ,
a company more efficient
-- Why can a strong corporate culture be both positive and negative Distinguish between the factors that inhibit and promote a cul-
for a company?
ture of innovation.
Why is it important to assess the culture of the company?
Wha~ c~n. culture types be used for? And can they be used? The capacity for innovation is a major factor in providing new ~r~d-
Why ISIt Important for a company to consider ethical and moral ucts and facilities services. One often thinks that development IS In-
issues?
novative; is it a very new innovative feature, something that has never
How would you start a project to introduce CSR?
happened or been seen before.
What is meant by ethical and moral accountability?
What is self-regulation?
If it was such, innovation would be a lengthy process, and how
What is meant by an ethical decision?
should companies continually create something unprecedented? In-
What are ethical codes?
novation can of course well be something completely new, but the
opportunity to do something innovati~e may also lie i~ combining
ideas, products and facilities services In a new and different way.
This is the kind of innovation that most often takes place.
 j::. f·'!
155

What is innovation?
"[I]nnovation; development of a new idea and its
realisation in practice. Examples could be a new product's
introduction on the market, introduction of new technical
solutions, routines and practices in both private and public
The 'Oh Abe' concerts in Denmark have had a recession. At one time the
organisations, new forms of interaction or incorporation
were very ~opular and CD's and merchandise were produced for the ~on- y
~ert~, but It rained for a couple of seasons, and the audience stayed away. of new customs and rules of conduct in society. The core
i,i t t e same time, there was not much innovation with the concerts. of innovation is that the new idea will have an actual use.
II The target g~oup was young children and their parents. There is reat fo- The Austrian-American economist Joseph A. Schumpeter
ii ~~s on childr~n s everyday entertainment in children's television br~adcasts. introduced the concept of innovation in a recent economic
~ ere are vanous celebnty dolls like Bamse etc The ci . I
Ii h' hat i .. ' . e circus ISa so some- theory 'in 1912. According to Schumpeter, innovation is a
I t I~g t at ISvery exciting for this target audience, just as a visit to one of the
II,' various amusement parks acr th . . constant inventive element, but consequently, a destructive
Ab' Id . oss e country IS also eXCiting. Eventually 'Oh
~r e cou only offer music and a little festival atmosphere. element in relation to the existing economic order; old
The Muscular Dystrophy Foundation, who arranged the 'Oh Abe' c companies die and new ones are born; competitive
cer.ts, had hto d~sco.ntinue them and find a new direction to take. In co~:~o- behaviour and social life changes."
ration Wit DR s Big Band, the innovative process began Source: Den Store Danske Encyklopcedi (The Great Danish Encyclopaedia)
t ~R:s Big Band and the Muscular Dystrophy Foundati;n would really try
o e Innovative - combining different elements into one whole entity.
This definition of innovation shows that there is more to innovation
Elements: than just being creative. An innovative person or organisation must
- TV stars be able to have a new idea and implement it into practical new prod-
Circus ucts, market approaches, collaboration, production processes, etc.
Play area
Music
- Avoid a fiasco due to bad weather. Innovation versus creativity
The Muscular
Many people and organisations are very creative, but the ideas are
. Dystrophy . Foundation
. writes ' "Th e woe
h I'd I ea ISt
. h at we
want to build a non traditional circus performance that moves the bounda- rarely put into practice, they lack the ability to realise the ideas into
hav of what normally takes place in DR's child universe. The audience will actual products and actions. Therefore, the innovative person must
ave the opportunity to meet presenters and characters across otherwise also have skills in project management/planning, attract, and retain
very separate worlds. ~haracters are transformed into circus performers relevant stakeholders.
and together they provide a narrative that sparkles with music game '
fa~tasy and all the good songs. And then the DR Big band hel~s to bis~d the
w. ole perfo~mance together," says Signe Lindkvist, DR's Children's Ent _
Figure 8.1: Innovation's elements
tamrnanr Editor. er
Circus
. Summarum
. bec . I .
ame a uruversa expenence for 3-80 year olds
It ISall packaged In a creative and happy website selling tickets: .

:~5.
D Bandet

Source: www.circussummarum.dk/cms.ashx
M _ MUSKELSVINDFONDEN

Source: Heilbroner (1953)

 i· i· r
Creative destruction
New companies arise, new facilities services and products are in-
troduced to the market, new processes and management practices
are introduced, and continuous innovative elements occur. These
innovative elements naturally lead to some products, facilities serv-
ices, businesses and business processes being replaced. This is what
the economist Schumpeter called creative destruction, i.e., to build
something new means some of the previous routines, structures,
products, etc., is torn down and phased out (Heilbronn, 1953). Here
the evolution from 'Oh Abe' concerts to Circus Summarum is a good
example of creative destruction.
Many manufacturing companies previously had a clear division of
labour between those with white coats - the supervisors - and those
in blue overalls - the professional and unskilled. The supervisors
planned, allocated tasks, controlled the work, and hired and fired.
The organisation of work processes has proven not to be optimal
in many organisations because the supervisor can quickly become
a bottleneck and he may not necessarily have the best knowledge
to plan and solve the tasks. The previous working practices were
exposed to creative destruction and new more flexible working ar-
rangements have emerged, such as autonomous teams, matrix
organisations and others, see Chapter 3 on groups, Chapter 4 on
leadership and Chapter 10 on organisational development.
Different levels of innovation
Innovation theory talks about three levels from which the innova-
tive process has its source and the opportunity to develop. The three
levels consist of input from Individuals, Companies and National
interests.
Individual level
How does an individual get new and different ideas? We as people
tend to stay in familiar thought and behaviour patterns, and act as
we always have done. Be it the way we meet other people, or the way
we respond when some problem arises that we cannot immediately
solve. How we behave under pressure, or how we respond when deal-
ing with something new and unknown, etc.
It lies deep in human nature to be on the safe side. When we as peo-
ple must find some new ideas or try something new, it requires a
great deal of effort from individuals to dare to embark on the new
and untried. If we want to be more innovative, we must be willing to
'57
leave our 'comfort zone' and step onto uncertain ground, challeng-
ing our surroundings and ourselves.
Our brain has two halves; the left side is where we think logically and
analytically and the right side is where our emotions and fantasies
are stimulated. What often happens is that we get an idea in the
right side of the brain, but very quickly, our logical, analytical left
side says, the idea will not work, it is no good, it is too uncertain, or
we have never tried that before, etc.
Later when w~ work more with idea development, one of the key
areas of the creative process is to separate the impulses of the brain's
two halves.
Company level
"You can't survive on the success of yesterday," wrote Tom Peters in
his book The reinventing work series SOList books (1999). Tom Peters be-
lieves that when companies stop innovation and development, they
begin to phase themselves out. If companies become so complacent
and secure in their position that they lose their innovative abilities,
then they will ultimately lose a foothold in the market and disappear
because of the aforementioned creative destruction.
Product lifecycle for most products becomes shorter and shorter
Competitors are quick to copy the company's products and serv-
Ices
New technologies and new market opportunities arise
Information is distributed globally online
Many customers are not as loyal as before
Globalisation in general.
All these factors mean that companies/organisations must continu-
ally focus on planning, developing and introducing new services and
products on the market.
In many companies, the logical and analytical approach to problem
solutions provides status. When a new and different idea comes
along, there are many who quickly come up with reasons why it can-
not be done. The opinions of these idea killers can vary, but the ef-
fect is often that work on the new idea will stop.
Below are some examples of idea killers. You can certainly make the
list much longer.
 159

Examples of idea killers:

We have always done it this way, so why change it now? Set a goal of creating growth relative to the organisation's stakeholders
In our company/branch, it is different. and strategies
It may work in theory, but not in practice. Set a goal for how much of the company's turnover will come from new
It is too expensive. products and new concepts, and make it a common criterion of success
We will never get the other staff onboard. Create a link between the overall strategy, vision and innovation in the
We have tried and it does not work. company
The unions will never agree to it. Map the company's innovation resources and innovation efforts, gauge
Let us think a little more about the idea. results year by year, compare with others and account for development,
-- You do not really understand the problem. both internally and externally
Etc. Formulate an innovation strategy, discuss it regularly at board meetings
and communicate it to all employees
- Visibly demonstrate to all employees that innovation and creativity are
~: cou~se, companies must not accept all ideas as good ideas, but important and valued
It ISa big problem if almost all new initiatives are discarded because Create a culture where there is room for experimentation
of a corpor~te culture that is resistant to change. Consequently, the Make sure everyone knows the company's innovation model and that
company will slowly, but surely perish in the free market. the processes and structures of how innovation takes place are clearly
communicated to all
National level Create an innovative culture among all employees
The Danish government has realised that what can ensure Denmark's Make innovation part of the reward system in the company, including
~osition is that we have some companies who are focusing on innova- rewarding creative ideas, good business models and innovations' suc-
tion, together with some institutions who support these companies. cess in the market
Cultivate innovative collaboration
- Work systematically with idea generation .
.Danish companies cannot compete on wages, but can be successful
I~ the marke.t because of an innovative approach to design, produc-
Source: www.innovationsraadet.dk
tion, marketing, collaborations, etc.

C?ne of the .efforts made by the government is to set up the Innova-

The content of the 12 principles are looked at in more detail under
tion Coun~iI, to ma.k~ suggestions about how overall policy can be
innovation enabling factors in Figure 8.7.
translated Into specific actions and projects.

Table 8.1 Innovation Council's 12 Principles of Innovation Governance

Innovation Council is a network of innovators from the main sectors

of society, who work to identify Danish opportunities in the global know-
ledge co~munity. Since 2008, the Innovation Council has been working
hard to lift quality reform from the political to the innovative sphere, the-
reby helping to translate visions into reality.
The Innovation Council wants its efforts to contribute to Denmark
developing into one of the wor/d's most innovative societies. Innovative
adaptable organisations, competitiveness, talent attraction and develo~-
ment, together With world-class education and research are central to the
Innovation Council's work."
The Innovation Council has developed 12 principles for good innovative
behaviour at company level.
The creative process
When working systematically with idea generation, it is necessary for
the work to be structured. Some ideas appear out of the blue, but
To be continued on next page most often it is hard work. Anyone can contribute and all are crea-
,60

tive. However, some put limitations on themselves and therefore do
not come forward with their new and unusual ideas. To overcome
these barriers it is necessary to work with some sort of idea develop-
ment template.
To promote the wealth of ideas you can use differen~ meth~ds. One
of the best known methods is brainstorming, where In the light of a
specific problem, as many ideas and suggestions are made as pos-
sible.

As mentioned earlier, our brain is made up of two halves. The left
side manages and controls our logical and rational behaviour, while
the right side provides impetus and drives our creative behaviour and
emotions.
Another tool are word chains, where a person from the group work-
ing on the problem, says a random word and the ne~t person in the
group also says a word. This is repeated about 20 times, so that a
word chain of20 random words is created.

In our society and culture there is a lot of focus on and prestige in Subsequently, one word at a time from the word chai.n is int~rlinked
using the brain's left side, i.e., appearing logical, rational and control- with the problem. This entails the group abandoning their usual
led. Various boards and committees have killed offmany a good idea, thought patterns, and new angles and ideas arise.
springing from the right side, early, because immediately the rational
left side of the brain questions the idea: What are the costs? Has a
cost benefit analysis been made? What about the legal issues? Etc.

When working on developing an idea, it is very important to distin-

guish when you are creative and idea generating, and when you are
logical, rational and idea assessing.

The creative/divergent phase

In this phase the goal is to get as many ideas as possible within the
focus area you have. The goal is quantity, based on the reasoning
that from 500 ideas, there is perhaps only one you can use and work
with. This phase is called the divergent phase, meaning you spread
your ideas out.

There are many methods that can be used in connection with getting
ideas.

In the divergent phase, you must put your inhibitions and restrictions
to one side: All ideas are good ideas. Create an environment where
everyone dares to present the ideas they have. In the divergent phase,
you must only use the right side of the brain, i.e., when you get an
idea, do not sit and think: Is this idea good enough? Is it too silly? Is
it realistic? Etc. All ideas are good ideas.

That is the way the wild, crazy idea sometimes provides inspiration
for new angles and ways of working, so the idea that initially seems
completely unrealistic, can provide ideas and idea impulses to work-
able solutions.

The divergent phase is also sometimes called the green zone, inspired
by organic, sprouting, new life. To be continued on next page
 Eventually some of the ideas might be interlinked in one overall
idea.

Another method often used as an extension of the above method is

the Idea Assessment method.
The group provide selection criteria to gauge ideas. It may be eco-
nomic requirements, such as the project can cost up to.X number
A third way to get new ideas is by picture association.
of dollars, the project should be completed by a certain date, ~r
the project should be resolved without external consultancy. If It
A photo is shown to the entire group and each group member writes
is a training project, the requirements could include; we wtl.1use
down the ideas and associations they have, based on the photo, that
the learned theory in practice or will we extend our professional
are related to the group's problem.
network.
Then ideas are assessed in the light of the established selection
15 to 20 pictures are shown, selected to provide many different im-
criteria. Each idea is assessed individually, to see if they live up to
pulses. Each picture is displayed for about one minute. Initially, it is
the requirements set.
not a question of group work; each group member must indepen-
Then a form is created, where ideas are judged in relation to the
dently write down the assosiations they have. Subsequently, when
requirements and assessed in terms of how well requirements are
all the images have been shown, each group member presents their
met.
ideas and the other group members give praise and build upon them.
+ idea fully meets the requirement
Remember no idea killers.
(+) idea meets the requirement to an acceptable standard
? it is doubtful whether the idea meets the requirement
Many examples of various tools that can be used in this creative
idea did not meet the requirement
phase can be found in literature and on the Internet. The goal of
them all is to stimulate the brain's right side, to release creative pow-
Figure 8 2' Idea requirement form
er. In addition to literature, you can also get input and participate
Idea 1 Idea 2 Idea 3
innovatively through the Internet, for example, 'VidenDanmark for
aile (Knowledgable Denmark for all)'.21 Requirement 1
Requirement 2
The analytical/convergent phase Requirement 3
After being very idea generating and 'aloft', it is time to use the left Etc.
side of your brain and come back down to earth again. There may Subtotal
be several hundred ideas and keywords to ideas. Now it is the stage Total +,(+), ?,-
where you need to think realistically and logical in view of resources,
market knowledge, tactical and strategic considerations, etc.
By using this method, a more objective selection is gained.
Forthis analytical/convergent phase, various methods could be used.
The creative process can be illustrated using the diagram In Figure
The first method is to organise all of the ideas found.
8.3.
All ideas are spread out on a large table.
Five to seven relevant headings are devised, under which the ideas
are categorised.
Similar or overlapping ideas are discarded.
Each individual idea is examined. If the entire group assess that
an idea is not relevant in relation to the problem, it is discarded.

21. Source: www.videndanmark.dk/index.php?id=l

 Figure 8.3: The creative process

4 Core processes By purchasing la.rgeql.l<lrt~it:i:s3ahd

relatively few product Variations, Jysl~
can buy at competitive prices.
Idea 5 Product perfor- The new mobile phones integrate
Issue develop- Idea Ideas that can be mance several products into one phone:
assessment taken furth er camera/video, GPS, walkman,
calendar, pedometer, etc.
6 Delivery system When you book a flight with Ryanair
they will offer customers a range of
additional services ranging from food
Creative phase _ on the plane to hotel and car rental at
Separation - Logical/analytical phase the destination.
7 Service When purchasing a new car, you
automatically receive a customer club
membership, where customers are
invited to interesting events, break-
down cover and car swap across
Europe 24/7.
Delivery 8 Distribution Hjemls have managed to reach
channels consumers' doorsteps and thereby
Types of innovation solved the problem of ice cream that
melts in the back of the car.
Jay Doblin is a professor at the Illinois Institute of Technology and he 9 Brand When the electricity company NESA
works with ten types of innovation. offers Natural Power, also called
green electricity, NESA try to offer
As mentioned in the introduction to this chapter, innovation is much more than just power. Customers a~so
buy a clear conscience and NESA will
more than just inventing a new and ground breaking product. Doblin
appear as an environmentally respon-
has compiled the ten types of innovation, where he shows the differ- sible company to the customer.
ent areas where companies can try to create innovation.
10 By purchasing a Build-A~Bear teddy
bear, children create their own teddy
Figure 8.4: Ten types of innovation
bear and through it get a greater
Main areas Innovation sense of ownership and a better
Examples
experience.

Dell introduced the customer having Source: Doblin (www.doblin.com)

to pay for the computer before it is
sent from the assembly plant.
It is important to look at the whole of your company to see where
2 Networks and Just-eat.dk work closely with
alliances Coca-Cola, so that Coca-Cola market
new and better solutions can be made.
the just-eat.dk concept for the
restaurants.
3 Smart
The electronic health record, EHR, is
processes
an example in health care, where the
goal through a common IT platform
is to improve information flow, so
that all relevant parties have easy
access to updated information on
each patient.
166
!.'

Sources of innovation groups, etc. Rather than seeing it as a defeat,' failure can turn into
learning from which new opportunities arise. A classic example ~f
"The most successful innovations are the result of a deliberate and
the unexpected is the yellow Post-it®, which was invented by acci-
targeted search for changes and problems in society" (Drucker
2007). ' dent. The company had developed some glue that did not stick as it
should, where, after some thought, someone came up with the idea
of using it for the now so familiar yellow labels.
The American management professor Peter F. Drucker (1909-2005),
has worked most of his life with and researching how organisations
Source 2. Incongruities
c.an be.come .more innovative, and the sources to be used in conjunc-
Incongruities occur if there are some undesirable habits and routines
non with deliberate and structured work with innovation.
in the company or industry. An example might be if there is some dis-
cipline boundaries at work, so that only some groups may per~orm
The sources in Figure 8.5 are areas Drucker believes companies
certain work functions. Another example: In the past lorry drivers
should monitor in a systematic and structured way to capture new
spent many driver hours sailing with various shippi.ng con:pani.es.
signals internally and externally. These new trends and signals must
Nowadays, lorries do a lot of transportation by leaving their trader
then undergo a creative process in order to become innovative op-
on the quay, and another lorry drives it onboard. When the ferry
portunities for the organisation.
reaches the other side, a second lorry is waiting and continues trans-
portation.
Drucker's Seven Sources of Innovation

Source 1. The unexpected Source 3. Process needs

The focus here is on internal processes. Can the work be done in a
T~e unexpected can be either unexpected success or unexpected
more efficient way? This is where the Lean22 way of thinking arose.
failure. It may be, for example, that an organisational change does
Through an analysis of current workflow, new and more rational
not become a success in spite of various studies, interviews, focus
methods are found to avoid a waste of time, materials, money, etc.
One example is the construction of Enterprise Resource Planning sy~-
Figure 8. S: Sources of change that lead to innovation
tems (ERP systems), where the company's entire information flow IS
gathered on and managed from a single server.

Source 4. Industry and market structures

If there are some large mergers in the industry, this could be a threat
or an opportunity. There may also be some political action, which
could be an innovation opportunity, or new rules and laws.
The traditional newspaper industry is at a crossroads: It is expen-
sive to produce and distribute the printed newspaper; com~etition
from free newspapers is very high, consumers get much of their news
from the Internet, which usually is free. The newspaper houses that
know how to adapt to this new market situation are those who will
survive.

Source 5. Demographic changes

Companies must constantly keep themselves updated with re~ar? to
population composition, education level, income level, urbanisation,
etc.

Source: Drucker (2007) 22. Lean is to streamline the organisation, thereby securing the greatest possible value creation with the
fewest possible resources.
,68

i !.: ,69
The German chain SCHLECKER has made it their business to Spot
small and medium-sized cities, where the local grocery shop closes. Some believe that instead companies should work to m~ke. a creative
SCHLECKER move into these towns with shops selling non-food and innovative environment available to employees. This IS done by
products. They now have over 14,000 shops and are starting to enter looking at the seven sources of change, but also:
the Danish market. Employees
Organisational culture
Source 6. Changes in public perception National standards and values.
How consumers perceive things. This perception is not necessarily
based on real facts, but often on emotions. It may well be that the Figure 8.6: The innovative workplace
number of domestic burglaries is falling, but people feel insecure, so
the sale of burglar alarms increases.
It is the innovative company's mission to notice these new trends
and tendencies. Is it possible, for example, to find new business op-
portunities based on the increased focus on CO emissions and sus-
2
tainability, or the general focus on health, etc.

Source 7. New technology and scientific findings

Drucker calls this source 'Superstar'. The source of new knowledge of-
ten has a long development process, perhaps where initially the basic
research started at the country's universities and eventually become
a commercial idea.

This new knowledge is often based on several new technologies. GPS

technology coupled with mobile systems has led to many new ap-
plications in areas such as Track & Trace, where it is now possible to
track a package sent by Post Danmark, or your expensive motorcycle
or anything of value.

Source: Own design with inspiration from Buchanan & Huczynski (2007)

One should look at employees as kinds of inventors, who mu.st not go

it alone and are only left to their own initiative in terms of Idea g~n-
eration. It may generate small or larger ideas, but given the breeding
ground, they can be decisive for the company's future.
The innovative company
Until now, we have clarified what is meant by the term innovation, By giving free rein to staff skills and their ~ersonal charisma and thus
how one is capable of generating ideas, and where we need to find encouraging innovative thinking, they wd! react as Innovators. Inno-
sources of innovation. Now the question arises: How can the com- vators are theoretically part of a marketing model (Kotler, 2003),
pany who want to be innovative, organise this? which looks at when customers accept and begin to use a product.
Innovators are usually the first to use new products; th~ir personal-
In Chapter 11, we will work with change management to understand ity encourages them to try new ways of enjoying the excitement and
how changes are managed, and what to take into account internally risks of experimentation.
and externally in that process. However, many researchers question
whether controlled changes are a proper way to react in relation to To create space for individual expression, it means there mu.st be a
an unpredictable and turbulent world. corporate culture in place that can accept and encourage the innova-
tive process. In order to promote the innovative culture the company
 must work with attitudes among employees, and management must
Trust and openness There is a high degree of trust
be able to accept and appreciate the culture. raised without fear of reprisal or
Dynamic and There are new things all the time and often new ways
The more the company is under pressure from market competition, initiative thinking and solving tasks occur. Full speed ahead.
the greater the degree of willingness will be present for an innovative Playful and humour People experience a relaxed atmosphere with jokes
corporate culture. humour. Spontaneity is in focus.
You will hear many voices in debates that express dif-
National culture also has an impact on companies' desire to open up ferent ideas and views.
for an innovative corporate culture. For example, Michael Porter believes Conflict Peoplebehave lrian adult manner with greatpsychol()gi~:
that British companies are too slow to incorporate innovation into l11anagemeht,\\i 'i.·' cal insight. Conflict management is directed at ideasan4i'
the organisation, which should be the reason for the efficiency dif- riotagainst persons;
ference between British companies, who have relatively poor results, Taking Quick decisions are taken that are implemented here
and for example, American, German and French. and now. Prefer to experiment rather than make a
analysis.
It provides the opportunity to discuss and test new ideas,
although it is not part of the planned work. Changes
must be exploited.

Source: Own design with inspiration from Buchanan & Huczynski (2007)

Innovation, as we have reviewed for companies, has had a slow start,

but it seems that the ball is now rolling and gradually picking up
speed. Large, well-established companies have a little more difficulty
with it than smaller companies do. The reason is perhaps that the big
companies are more established and mechanistic in their structure
and mode of operation.
Figure 8.8: Innovation containment factors

The following tables explain the factors that will help increase and _~~?~~ni~_t~oiL __"~~~_~~~_~~~~~~i_<>._~_,"_____ ,~_~, ~_ .._
reduce the creative, innovative environment. Both the enabling and
Challenges ~eopl~arealienatedand radiate, indifference. The job is'
without challenges and apathy prevails.
containment factors in the table are partly concerned with employee
People are passive, rule-bound and eager to linger in their
attitudes and opinions, and partly about the company's openness to well-established and limited job situation.
take initiatives up and process them.
Proposals will be quickly dismissed with idea killer ar-
guments. The usual response is about fault finding and
Figure 8.7: Innovation enabling factors obstacles.
Trust and openness Very bad environment of trust. People are suspicious of
eachother.afraid of maki ng mistakes and afraid of get,:,
ting their ideasstolen.
Dynamic and " Slow pace without surprises. No new projects or plans
People are'ieeking contact, give and receive information
initiative for change. Everything is as usual.
without hindrance. They discuss problems and tasks,
make decisions and take initiative. Playful and humour Heavy and serious atmosphere, rigid and sombre. Jokes
are not acceptable.
People listen to each other. Ideas and proposals will be
received in a positive and constructive manner by both Debate People follow the recognised and authoritarian
managers and colleagues. without questioning them.
 '73

Conflict
Personal and emotional tensions are
management
Coalitions are made setting traps for others. There
gossip and a risk of slander. A bit of a warlike
environment.
Taking risks
Caution and hesitation is prominent in relation to
initiatives. People work on the "safe side", "sleep on
and let a committee work with ideas before decidi
Idea time
All of the working time is planned and specified in
The workload means that there is not room for
thiriking in daily lif~.

Source: Own design with inspiration from Buchanan & Huczynski (2007)

As shown in Figures 8.7 and 8.8, it is important for company ma

agement to create a workplace that promotes the culture needed a
desired by the company. The tables can thus be used as both an
analytical tool and an assessment tool.

Discussion Questions:. .. an ?
What is meant by innovation capability of a comp y. I.
What organisational issues are invol~ed when it comes to wor<mg
towar ds the company being innovative?
.. ">
. eant b Ythe term 'creative destruction. .
Whal t.IS mh Tiom Peters talks about different levels ofinnova~lo~.
Exp am w y . . . h th indi-
Characterise the individual level and combine It Wit e
As an analysis tool, we can look at how the employees act, and thus
vidual factors in Chapter 4.
assess to what extent containment or enabling innovation character-
istics are prevalent. What are idea killers? .
H w do ou avoid idea killer behaviour? ..
W~y is t~ere a big difference between the desires for mnovation
It is then up to the decision-makers to change the culture of the com-
d ding upon national cultures? .
pany. This can be done from tools previously discussed in the book
epen. I'
Descnbe the corre anon e b tween the .12 Principles of Innovation
about teams, individuals, motivation, leadership and corporate cul-
Governance and the innovation enablmg factors.
ture, because it is all of the themes that lay the foundation for the .. ?
company's ability to be innovative. What is meant by creativity. . ?
What can we use innovation types for In a company.. tant
Discuss which of Drucker sources of change are most Impor
How the company will come to function and look in the future de-
to a company.
pends on these assessments and the changes that the company must
undergo. We give some suggestions to what changes can be made in
the book's third part on strategy implementation.
 Part 3
Strategy Implementation

Aims and depth: The reader must be able to identify different ways
to change the organisation and identify various reasons for the ne-
cessity of organisational development.
 Organisation Strategy

After reading this chapter, you will be able to:

Implement a strategic analysis of a company with focus on or-
ganisational strategy
Distinguish between positioning-based strategies (outside in) and
resource-based strategies (inside out)
Analyse a company's strategy from a positioning perspective with
Michael Porter's generic strategies and Miles & Snow's strategic
analysis
Analyse a company's strategy from a resource-based perspective.

Lodam
For over 40 years, Lodam Electronics A/5 in Senderborg has designed,
produced and implemented customised, electronic regulators for climate
control systems for a wide range of customers worldwide. In 2007, Lodam
became a member of the Bitzer Group, one of the world's largest manufac-
turers of refrigeration techniques.
Lodam has a clear goal to be innovative. In 2007, they came 3cd in the Da-
nish Innovation Cup and they have the goal of a permanent position in the
top ten. As a workplace, their vision is to be among the ten best workplaces
in Denmark, based on the 'Great place to work' assessment.
Knowledge sharing and openness are two of the tools, among other
things, that have secured the company moving from 12th to 3cd place in the
Innovation Cup, and it is also partly due to Lodam introducing weekly meet-
ings, where employees brief each other of their projects.

To be continued on next page

 II 179

"The meetings allow knowledge sh ' The starting point for the outside-in perspective is that the company
you are invited to share your kn =
la~ng be perfectly legitimate because
your knowledge while prev nti ow th ge with others, The goal is to share must adapt to the market, It is therefore key market trends, which
, e Ing ot ers from h ' k define where the company should position itself. Management's abil-
position of power" said CEO 1(' , uSing t etr nowledge as a
, ' Fistlan Strand The co h I
meeting on Wednesdays wh I ' mpany 0 ds a weekly ity to understand the market and position the company optimally is
, ,ere emp oyees and '
current projects, trips meet' d management can discuss crucial in achieving a competitive advantage, The basis for this way
like a small thing it h~s IngdSan much more, Although it may sound
, create more ope d of thinking about strategy are the surroundings and the market being
leagues are doing, nness an awareness of what col-
relatively transparent, It is therefore possible to implement a quali-
"We have seen that the meetin shave ' ,
fied external environment analysis and identify the optimal position
advice, which can otherwise begd'ff' Imade It easier to ask colleagues for - the strategic 'fit'. If the company has taken the right position, it will
h ' I ICUt In a development d
were t h ere ISa certain pride" 1(" epartment be able to achieve a competitive advantage by aligning its resources
, says Fist/an Strand,
with market requirements (Hamel and Prahalad, 1994).
Source: www.!odamcomand"/'
, nnovatlon on presc 'pti "i E. h
n IOn, r versbladet, 30 July 2007.
On the contrary, the inside-out strategy assumes that the market is
volatile and unpredictable. The company consists of resources, and
What is strategy?
some companies have more valuable resources than others have and
There are many different d f , , are better at utilising them. These companies will therefore be able
, e InltlOns of strategy All d f , ,
tarn both an intention ' , h ,e uunons Con-
, I,e" a WIS for the fut d ' , to create more customer value than their competitors will. Valuable
a greater or lesser extent ofth d ure, an recognItIon, to resources are therefore a barrier for new competitors, as they ensure
,
strategy IS about: ,e nee to adapt to I I hi
mar<et, ntIs way,
a 'better' product for the customer and thereby creating preferences.
Involving employees Strategy here concerns companies identifying a competitive advan-
Creating a common direction tage zone based on their unique core competencies.
To ensure that direction and b' ,
cepted by all, 0 1ectlves are understood and ac-
In 2010, Google launched its first mobile phone - the Google Gl - in
collaboration with mobile manufacturer HTC, and Google supplied
Attitudes towards how t d I the Android software, The mobile is a direct competitor to Apple's
changed over the last 50 :ear:v(~(~p and work with strategy has iPhone, launched in 2007, and launched at a time when the market
was on fundamental analysis of the ;~sen, 2~09), In 1950-60, focus for mobile phones was the worst year since 2001. In 2009, the whole
such as SWOT's integrari f' mpany s external environment
Ion 0 Internal and e ternal f ' market saw a decline of more than 15 per cent and if the global
outset, In the 1970s th M' x erna I actors from the
, , ere Was Intzberg's pi ' hi economy does not improve, forecasts predict a further decline of as
In the 1980s positioning an I' d annlng lerarchies, and much as 25 percent. There are simply too few first-time customers in
P orter as one, of the I f"
a YSISan focus on I ith Mi
mar<ets WIt MIchael
" <ey 'gures, Srnce the 1990 h proportion to the number of current customers, who choose to wait
d ifferenr strategic perspect' 'I' s, We ave seen many
ives, Inc udlng the I' , with purchasing a new phone.
cu Iture and value-based strate ies n earn,lng organIsation,
such as ecosystems and re g b' etwork strategIes, organisations
source- ased strategies, In spite of this negative situation, Google chose to introduce the G1
in December 2009. An analysis focusing on the market and industry
From all these perspectives and theori " would have concluded that Google should wait until the economy
trends: Positioning analysis ( ,~orr,es, we wIll hIghlight two key
recovers. When Google decided to introduce the phone anyway, it
perspective (inside-out) W' h?utsl ~-~n), and the resource-based
must have be based on an analysis that concluded Google's internal
known author is withou~ d It bin ~~s~tlonlng perspective, the best
competencies in communication and operating systems, combined
Chain, Competitive Analysi;~n~ G~c ~el Porter ,(Five Forces, Value
with the image they have on the market built up through their In-
ries such as Blue Ocean a d h B nerrc StrategIes), but also theo-
n t e oston model " from this ternet search engine, gives them a unique competence demanded
perspective, ,orrglnate
by customers. An inside-out analysis, rather than an outside-in may
better explain Google's strategy.
180

How a company chooses to implement its strategic process depen~s Figure 9.1: The strategic process
on the specific situation, needs and ambitions. Most of ~ur strate.glc
tools come from the positioning school, but companies In unpredict-

able, dynamic and complex environments can ~ave. a maJor adva~-

tage by including more resource-based perspectives In their strategic

process (see e.g., Klausen, 2009).

The strategic process

Independent of strategic perspective, it is necessary to analyse the
market and your own competencies as a basis for defining a strategy.
The analysis aims to create awareness of what drives the develop-
ment of the market, creating the opportunity to influence develop-
ment and to 'benchmark' 23 against your own and others' results. The
strategic analysis will always be a snapshot - a situation description
based on a history and experience and a desired future. However, the
market continuously evolves and therefore the decision on strategy
has to be taken in light of limited rationality (see Chapter 5), and
with a high degree of uncertainty (see Chapter 2). The theories and
models used are therefore a structured way to interpret the situa- Source: Daft (2007)
tion, but do not in itself provide the answer to the company's future
success.
Situation analysis
The aim of this strategic analysis is to take an educated guess at
The first step in being able to optimise the company's design is to un-
how the organisation should be designed. Based on the company's
derstand the external environment that influences the organisation.
overall strategy, it is therefore necessary to define the external and
See th e analysis in Chapter 2, that deals pri mari Iywith id entifyi ng what
internal analysis in relation to factors that are central to the way
~xternal environment elements are crucial to the level of uncertainty
of structuring and coordinating the organisation. In contrast to ~n
In the organisation's decisions. The analysis could be based on a PEST
analysis, for example, seen through marketing eyes, the result will
analysis or an analysis of the industry, based on the Five Forces.
focus on composition and structure and less on market development
and negotiation power.
The level of uncertainty is defined by a combination of the number
of sectors and the degree of instability within them - a combination
The strategic process starts with a situation analysis: An assessment of
of simple/complex and stable/dynamic, as described in Chapter 2.
the company's external environment and i~terna! resources and c~-
At the same time, considerations about the amount of resources has
pabilities. It is complied as a SWOT analysis, which forms t~e b~sls
to be taken into account - is the external environment rich or poor in
for management's formulation of the mission, vision, goals and direction/
resources that are relevant to the organisation?
strategy. Then the organisation's design is adapted in relation .to struc-
ture, coordination, technology, culture/values, and staff/skills. If the
An analysis of the company's external environment can be consoli-
design is 'true' in relation to the challenges it faces, the org.anisation
dated as an OT analysis, either where the key elements of the study
will experience efficiency where resources are utilised to achieve goals
are classed as opportunities in the external environment (0) or as
and improve competitiveness.
potential threats (T). Since the aim is to design the organisation
based on this analysis, the weight ofOT analysis will lay in the factors
that place special demands on the organisation, for example, flexible
23. Benchmarking is a method of comparing your performance or processes against the best in the field.
structure, rapid and global coordination of resources, allocation of
This can be in relation to other companies within your own industry or among other industries.
responsibilities, decision-making skills, etc.

The other half of the situation analysis is about the company's inter-
nal situation. The goal of the analysis here is to ascertain what re-
sources exist within the organisation, i.e., an assessment of strengths
and weaknesses.
The analysis can be a value chain analysis, an analysis of the com-
pany's resource profile or a rating of the company's market orienta-
tion (Hollesen, 2003).
Crucial for the analysis is to identify the person or core competencies
that are essential for the company's ability to serve customers. These
may be based on primary activities, such as modern and efficient
production equipment, a creative and innovative marketing depart-
ment, or they may be more indirect, such as skilful leadership with vi-
sion and ideas, and an innovative culture with very high learning. The
results of the analysis are summarised in a SW analysis, where the
determining factors in the company are assessed as either strengths,
i.e., something you can invest in to achieve the goal, or weaknesses,
i.e., something that can take resources from other activities, thereby
making achievement of goals difficult. It is important to assess all
types of resources: Financial, technological, human, physical, organ-
isational and image-based (Hollesen, 2003). All six resource types
may be of importance in the overall assessment of the company's
competitive strength - and thereby strategy.
! : i r, '/
strategy
The conclusions of the external and internal analysis is evaluated by
management in the organisation and used to form the basis of the
company: Vision, mission and values. Here it is crucial that manage-
ment recognises that although the purpose of the analysis is to look
ahead, it is of course a snapshot of the situation right now, and it
is therefore essential that they have skills, creativity and experience
to interpret the situation correctly. The basis must be formulated at
several levels within the company:
The Strategic level deals with vision, mission, values and policies, and
is long-term planning (5-10 years). Here top management and the
board of directors have responsibility.
The tactical level is dealt with by functional managers, for example
sales or marketing managers, who plan resources, such as budgets
for each part of the organisation based on the formulated strategy.
The operational level translates tactics to specific plans, such as staff-
ing, purchasing management, etc. Operational planning concen-
trates on a period up to one year ahead, and is dealt with on a prac-
tical level in the company.
The three levels represent the goal hierarchy in a company. It is cru-
cial for the company's strategies and plans to work that there is con-
sistency between the way the company is managed at the top and
bottom. In order to be able to meet the overall vision, it is necessary
to meet the targets from below. The optimal purchase size and fre-
quency affect the purchasing department's ability to stay within its
budget, which in turn affects the company's ability to meet its cost-
saving strategy that makes it possible to sell the products cheaper
than competitors can.
Vision and Mission are business direction and justification In the
market. For example, Nordisk Films write on their website:
 9.2: Porter's generic strategies

NORDISl( FILM
j Low costs
Cost leader
e.g. Ryanair e.g. Starbucks
Focused cost leader e.g. Focused differentiation
Vision fA/L;' frn·;_._.,,, C"A-? "PC"
.... .,L" IJ:&:, l.sererstandens Brandforsikring e.g. Asics
Egmont's vision is to be the m t .
.
b USlness os attractIve m di
partners and con e la group for employees
sumers '
At Nordisk Film, we have inter ·ret .
tractive provider of entertainme~ fO~~i~:'S as the ~esire to be the most at-
We are a company with far-reachin . ~, televIsIon, games and music. In a differentiation strategy, the company seeks to compete by offer-
while at the same time b . g hlstoncal roots and a strong culture ing customers a better product or a higher value. This can be done
elng a COmpanywh b '
are always at the forefront. 0 em races the future, and We via special characteristics, such as easy user interfaces for IT equip-
Only with satisfied and diverse e I ment or design, such as iPod, extra good service like courtesy cars
Nordisk Film exist. mp oyees, who work as a team, can
for repairs or advertising. The aim of differentiation strategy is to win
It may well be that through th .
filmmaking machine in Scandina:~ge~ Nordlsk Film is the most productive customers who have special requirements, such as status or prestige.
mechanical ambitions. ia, ut as a workplace, we have never had A wide range of products and brands, such as Diesel clothes, Ap-
We are proud of our polar bear s b ple computers and Toyota cars, adopt this strategy. Organisations
to be polar bears. ym 01 and everyone one of us are proud that use a differentiate strategy are very focused on building and
maintaining specific skills that allow them to be better than the com-
Mission
petition on the decisive factors. Therefore, Apple's organisation will
Egmont's mission is to create and tell stori .
through living images and music. e stones. At Nordlsk Film, we do this focus on maintaining skills of innovation, which has been crucial In
For.over a hundred years, Nordisk Film h . the development of the iPod.
ment Industry in Scandinavia 0 . as been a leader In the entertain-
talents in film, television g . ur gdoal IS.to continue to attract the best
II h ' ames an music In th Cost-leader strategy seeks to increase market share through selling the
te t e best, the strangest the rnosr i . at way we can continue to
W I·· ,ost Important d h . products a little cheaper than the competition or try to be so good at
e Ive to gIve creativity plenty of elb an t e wackIest stories.
proud of it. owroom and we allow ourselves to be production that there is a greater profit margin. Cost-leaders focus
So our promise to the wid· W . heavily on efficiency and control over their resources. The strategy
Vision, mission and valor . e bnng stories to life. can be seen in low cost airlines, such as Ryan Air or from car manu-
ues are used to formulate the overall strategy.
facturers like Suzuki. H&M also have a cost-leader strategy.
Source: www.nordiskfilm.dk
Porter's third and fourth strategies; focused differentiation and focused
If We st~rt from a positioning perspective h. cost-leader, focus around a particular market or customer group. The
the basis for formulating th . ' w ich for most companies is company tries to gain a competitive advantage within this group by
. elr strategy we .
generic strategies but h .' can use Michael Porter's either a cost-leader strategy or a differentiation strategy. An example
M·II es & Snow's archetypes.
,ere We will also I d
rntro uce an alternative: of a focused cost-leader is the LB Group, who offers cheaper insur-
ance to those employed in education-related jobs. ASICS running
Porter's generic strategies shoes are an example of focused differentiation.
Porte' .
r s generic strategies work with t .
advantages: Low cost and u-: wo potential competitive Porter's theory concludes that it is vital for the company's competi-
assessment of audience . u.nNlqueprod~ct. This combined with an tive position to consciously choose one of the FOUR strategies. This
size. arrow aim d def
people with special requests ~ e at a eflned group of choice will set the basis for the market position and guide organisa-
di or requirements· b d .
many ifferenr segments Th b. ,or roa, aiming at tional design".
. . e com inati .
IoWing matrix: Ion IS expressed in the fol-
24. However) there is much debate among theorists about the findings of Porter's strategies. Companies
like Google and eBay have had great success with hybrid strategies that combine elements from the
cost-leader strategy and differentiation strategy. Organisation design is reviewed in Chapter 10.
186 if

Miles & Snow's archetypes

The resource-based perspective
Another method to analyse strategies is with Miles & Snow's arche-
Strategic analysis can also take a more resource-based perspective,
types (Daft, 2007). Miles &Snow also have a positioning focus, based
such as the learning organisation. The resource-based perspective
on the organisation's 'fit' with its external environment, but they ex-
is relevant if the market is highly fragmented, competition is fierce,
press it in four strategies: Prospector, Defender, Analyser and Reactor.
and adaptation to the market will force management to focus only
Figure 9.3: Miles & Snow's archetypes on problem solving, without the time and resources for long-term
Prospector assessment of the company's future. Therefore, in these cases it is
Relatively broad product/market.
Focus on the market. not appropriate to focus on strategic fit, as both Porter and Miles/
Seeking new opportunities, and testing them Snow's analysis do.
const~I1t1Y.. .....•..........•..............•.....•.......
'.......••.•..•........•
Inter~~Ifocuson flexibility and dynamism. In the resource-based analysis, the focus is on SW, in other words,
Differentiation is central in the marketing strategy. on the internal analysis. The goal of a resource-based analysis, for
Defender
Narrow·.pt?d.uct/market. example, as a base to build a learning organisation, is to identify the
Example:
Strategies with an emphasis on stability and retention. resources the company has to be used for creating a competitive ad-
Egmont (publisher of
Onlychange if the pressure gets too great;
cheap magazines such Internal focus on cost efficiency.
vantage. Resources, as mentioned earlier, can be financial, techno-
as Her & NU)
The price the most important marketingfactor. logical, human, physical, organisational or image-based. Therefore,
Collector's Book Club the analysis focuses on the organisation's processes and values, such
Focus on the safe side. as a particular culture, experience, vision or leadership, to exploit in
Canbe .~~enas.acombination ..of Prospector and creating a competitive advantage.
Defe7det~ canbe divided .into a basis part, which
accounts for the bulk of revenues and a smaller trial- A strategic analysis, based on resource perspective might look like this:
and-errorpart, which deals with development.
Describe the special strengths that characterise the company.
Focus On cost effective differentiation.
Reactor Possibly look in the company's annual report to find the com-
~;6~\~~~s~xternalchanges without assessing the costs pany's own perception of this.
Example: Xerox and
Kodak struggle hard to No strategicfocusand no clear Attempt to identify key resources available to the company. As-
get out of a very reac- sess all resource types, but focus on the core types for this par-
Often \<\Ii.Hingt()trychanges.
tive strategy in which
VViHin?~~ss a~d interest are present. ticular company.
th~yfailedto follow
deveiopmenbiin tech-
Try to identify the resources that give the company (sustained)
nology and customer com petitive advantage, based on an analysis of whether they are
requirements valuable, rare, hard to copy/imitate, could be exploited by the company's
current organisation.
Source: Own design with inspiration from Daft (2007)

Structurally, the study may be organised as a value chain analysis,

but with focus on resources and knowledge. The result of this analy-
Miles & Snow's archetypes are highly recognised as strategic tools
sis is more internally focused than the position-based analysis, but
and they have been tested in hospitals, banks, schools, and produc-
is extremely useful in relation to the objective of adapting the or-
tion and insurance companies. At all these places an understanding
ganisation's design, see Figure 9.1. The conclusion allows for greater
and agreement was found for the archetypes characteristics, and at
work on improvements within the horizontal connections, values
the same time great recognition among the company's management,
and processes and are therefore more often useful in the design of
compared to how strategies are experienced in the market. It will
organic and flexible organisations. The effectiveness of the organic
thus be easier and more useful to group competitors in a particular
organisation is based on learning, development and readiness to
sector from the Miles & Snow's theory. It gives the possibility to com-
change and therefore requires an analysis to identify these points.
bine an overall strategic focus with a competition/growth strategy.

A small TV antenna business that has expanded
to become a digital frontrunner
By Ulla Gunge Hansen, Business Magazine (Erhversbladet), Thursday 7 May 2009.
Since 1957, the family business of Kjaerulff 1 A/S has supplied state-of-the-
art electronic solutions for radio and television. Today, the founder's son
can look forward to digital television broadcasting taking over Danish TV.
One can easily get nostalgic on hearing the successful story of l<jaerulff 1.
Over nearly six decades, the company has grown from a small one-man
TV antenna business in Odense, to being a global company involved in the
forefront of development and supply of solutions for digital television, IP
platforms, fibre and satellite.
Back in 1957, 17-year-old Flemming l<jaerulff stood in his own little
blacksmith shop in the basement, bending antennas into shape, which he
then rode out with on his bicycle and set them up for Mr and Mrs Denmark.
Sold ground coffee
At that time, television was just for the privileged few, and only about
100,000 television sets existed in Denmark - the vast majority on Sealand.
He also ground a little coffee in the basement, which he sold. He expan-
ded the business, so he both set antennas up and offered a domestic ap-
pliance service, says his son Karsten l<jaerulff, who today is the owner and
director of his father's company.
However, the domestic appliances service side was sold off within a few
years and antennas became the core business area. Denmark's Radio was
the onlyTV channel and it was originally transmitted from Copenhagen,
but from 1955, it was also transmitted from the 219-metre high transmitter
mast in Sender Hejrup.
In 1960, regional radio was also transmitted from here, and there was
suddenly an enormous demand for antennas. Flemming l<jaerulfftoured
around the island ofFunen with his homemade antennas for the radio and
television hungry population.
Several German television channels were available and the Danes wanted
to see them. Using his ingenuity, Flemming l<jaerulff developed one of the
first cable TV systems, and in 1969, German television transmissions came
into Danish living rooms as a result.
Meanwhile, Karsten l<jaerulff comes into the world, and when he was
about ten years old, he worked daily as his father's errand boy in the busi-
ness. After a while, he too went off and set antennas up, and when he was
17, he apprenticed as an electrician. Soon afterwards, he was ready to take
over his father's life's work.
To be continued on next page
189
"When I was 21 and had qualified, my father had back problems and the
shop was not looked after. So after a short time I considered opening my
own business," says Karsten l<jaerulff.
However, the idea did not go down well with his father.
"Some days we would not speak to each other. Then he came and asked
me if I would take over the business. I had not expected that," says Karsten
l<jaerulff.
It had otherwise always been on the cards that this was exactly what
should happen. The mid 1980s were bad times, and the business was not
going, as Karsten l<jaerulffwould have liked. Nevertheless, on 1 October
1986, 21-year-old Karsten l<jaerulfftook over at the helm.
Illegal satellite dishes
He was much younger than the other six employees, some of whom had
been there from the company's early years and may therefore have found it
difficult to adjust to the errand boy now being the boss.
"But I made some adjustments and reshuffles, and I let some people go."
After that, the company's growth went from strength-to-strength. In the
first year, Karsten l<jaerulffwas able to achieve a turnover of 5.5 million
DKK, which was the same as the previous year. In 1987, turnover had incre-
ased to 7.5 million DKK.
What really sparked growth was satellite TV.
"Even though the government tried to make satellite television illegal, it
was this that really set the business in motion. Back then the state owned
what is today, TDC, and it was their intention that everybody should have
hybrid net. This was totally, totally wrong. Imagine if you had to live with
this kind of controlled communication. It was a monopoly."
Despite the strict rules, Karsten l<jaerulffbegan selling satellite dishes.
"I set the first one up in 1985. Back then, it was illegal. After I had sold the
first ten or fifteen, people were so afraid that we put plastic over them and
logs all around, so you could not see it was a satellite dish."
Satellite dishes are now legal, and with TV2 in 1989, satellite and cable
television became a big part of the business, whereas before Danes would
have had new antennas.
"There was a queue several hundred metres long in front of the little
shop, because people wanted to see TV2's opening broadcast," said Kar-
sten l<jaerulff.
Letting the shop go
In 1989, he went to Korea, Hong Kong and Taipei to find suppliers of satel-
lite television equipment, satellite dishes and receiver boxes. The contacts
created during this trip, sowed the seeds of the commercial company that
l<jaerulffl is today. The retail and installation division was sold offin 2000.
"I could see how fast development was going, and I had more interest in
developing a commercial company than driving out and setting up anten-
nas."
In the early 1990s, l<jaerulff 1 began exporting to Germany, and Sweden
and Norway soon followed. Today the company has sales offices in Sweden,
Norway, Finland, Germany and Poland. Customers are found virtually all
over Europe, some even outside.
To be continued on next page
'90

Expensive supplier error

The company has experienced tremendous growth over many years and
today it has about 90 employees.
However, I<jaerulff 1 suffered a major loss last year, partly because a
contractor had fitted defective components in a large number of receiver
boxes that the company had to call back and replace at their own
At the same time, the company had invested in developing new products,
and a lot of money was spent on extending the company's premises.
Yet Karsten Kjaerulff was optimistic about the coming year.
Partly because the company is the sole importer of the German Loewe flat
Designing organisations
screen TV's and media centres, but largely because from 1 November
Danes will have digital television broadcasts. I<jaerulff 1 are ready to sell
digital receiver boxes, and where the old antennas are located on rooftops
today, there shall instead be other solutions for which the company is able
to deliver and have experience of from Sweden and Finland, where the
television signal is already digitised. At the same time, several new products
are under way.
"It went tremendously well for us in 2006-2007, when we began a lot of After reading this chapter, you will be able to:
product development. What we are now focusing on is getting the produ- Identify and assess key factors that influence an organisation's
cts finished. In addition, we are optimistic of developments in both H 0 TV
and fibre solutions. We are still feeling the effects of the financial crisis, but design .. .
from next year we must make money, and I am sure we will," said Karsten Analyse how different strategies affect organls.atlonal desl.gn
I<jaerulff. Define organisational effectiveness and provide suggestions on
how organisational design can affect efficiency.
Make an analysis of Kjaerulff 1 A/S's strategic development from the
company's establishment to the present day from (a) a positioning-ba-
sed analysis (Porter or MileS/Snow) and (2) a resource-based analysis.
In 2007, the public sector in Denmark underwent a major reform. Five large
What analysis do you think provides the best picture of the company?
Explain. regional authorities, primarily to operate Danish hospitals, replaced all :he
county authorities. To handle employment, the public employ~ent service
merged with the county authorities in new local counc"-base~ Job cen-
tres and in the education sector, the reform meant that public secondary
Discussion Questions schools and sixth form colleges converted to autonomous institutions for
which the State has executive responsibility.
Describe the differences In positioning perspective and the re-
Generally seen, the structure form was an excellent opportunity to rethink
source-based perspective.
the regional/local forms of organisation to become more fu:ure-onented
What are the pros and cons of using positioning perspective for and able to handle demands and innovation, and market Orientation that
the analysis and formulation of organisational strategies? this form of structure presented.
Define the six different resource types that can exist in a com-
Some of the questions that senior management had to ask concerning the
pany. Give examples oftypes of companies that depend on strong
redesign of regional authorities were:
(a) human resources, (b) image-based resources, (c) technologi- - How should large public organisations look in a high-tech society?
cal resources.
How to ensure coordination with the new organisations?
Explain the differences between Porter's generic strategies and Is hierarchy still the best framework for resolving projects?
Miles & Snow's archetypes. Will a matrix organisation or project organisations ensure effective
What factors are important to include in a decision on which problem solving?
strategic analysis approach is most relevant for the analysis of a What management concepts do we want to utilise?
company? How do we organise ourselves for future gray areas and ensure coordi-
nation for members of the public?

To be continued on next page


Within the overall framework, the task is to determine the principles for the
division of labour, delegation, management and coordination, dividing the
organisation into units, ensuring clarity and balance between technical and
economic focus. The basic organisational principles are selected based on
some well-chosen 'drivers' - perspectives or values that are central in the
management of public organisations: Innovation, professional sustainabi-
lity, leadership, management, marketing and communications.
Source: DEN STORE DANSKE and Digmann et at (2006)
When management sets objectives for an organisation and uses
these objectives to formulate a generic and competitive strategy, it
will influence the organisation's design.
Organisational design is a complex task, involving decisions about
the structure, culture, coordination mechanisms, recruitment, moti-
vation and technology. Meanwhile, the environment and challenges,
and thus targets, are a dynamic entity that requires constant adjust-
ments. The result is that organisational design is not a design in the
sense of a specific structure, but a process where different elements
are constantly modified and adjusted, so at any given time they give
the organisation the best resource base, e.g., money, people and
products in relation to the organisation's goal.
When assessing a company's design, it may be appropriate to struc-
ture the elements that affect the design in some areas:
193
Figure 10.1: Relationship between strategy, design and effectiveness
Strategic analysis
See chap. 9
Source: Daft (2001)
As previously mentioned, organisational design is not an isolated
element, but part of the process to make the organisation efficient
and able to achieve its objective. First, analyse the situation and for-
mulate a strategy, as described in Chapter 9. Next, design the organi-
sation. The quality of the analytical and strategic work is judged by
the organisation's efficiency.
Organisational design
The strategy the company chooses has implications for the organi-
sational structure. For an organisation that chooses a price-focused
strategy, everything will have equal focus on keeping costs down in
all parts of the organisation. The strategy creates the corporate cul-
ture: The company's basis and behaviour.
In order to design the organisation so that it matches the chosen
strategy, it is necessary to look at five elements: structure, coordination/
dependencies, technologJj personnel and motivation and finally organisational
culture.
Structure
Organisational structure was analysed in Chapter 2, and here we dis-
tinguished between mechanistic and organic structures.
The mechanistic or vertical structure can be described as stable, hi-
erarchical, clear areas of responsibilities, centralised power, and
commands, higher position gives prestige, loyalty and obedience.
Mechanistic structures are often best in organisations with a very
stable external environment, and where the company has chosen
a price-focused strategy: Cost-leader with Porter or defender with
Miles & Snow.
194
The organic or horizontal structure can be characterised with task
dependent division of labour/projects, mutual adaptation, gen-
eral responsibility, decentralisation, advisory roles and interaction,
prestige via personal knowledge and experience, commitment and
contribution to growth. Organic structures often work with compa-
nies in very dynamic and complex external environments, where the
company has chosen to differentiate them self: Differentiation with
Porter, and prospector with Miles & Snow.
The analyser strategy requires a combination of the two structures:
The base part with a focus on stability and performance requires
control and efficiency, and thus often a more mechanistic structure.
While the development orientation part, trial and error component, is
in need of more learning and flexibility, as in the organic structure.
Coordination Mechanisms and dependencies
Structure and coordination are closely related. As described in Chap-
ter 2, the degree of formalisation, and thus the proportion of coor-
dination, which is handled via formal rules and systems, is greater,
depending on how mechanistic the organisation is. We can say that
the more complex and unstable the external environment, the less
you can coordinate using formal systems: The requirements for the
systems will change all the time.
Figure 10.2: Use of coordination principles in relation to stability and complexity
Increasing stability
Standardisation of work processes
Direct supervision
Increasing
Source: Own design with inspiration from Mintzberg (1979)
195
Direct supervision is a manager controlling employees' behaviour and
steering them in the correct direction. Standardisation of work processes
is the use of routines and formalised systems as a method to ensure
consistency within the organisation. Standardisation of output focuses
on uniformity in the finished product as a way to ensure consistency.
Coordination through standardised skills uses employees' skills as a key
element, and finally, mutual adaptation is a coordination method in
which employees adapt themselves in line with each other. Direct super-
vision is the most vertical approach, and mutual adjustment is the most
horizontal connection (see organisational structure in Chapter 2).
The relationship between the method of coordination, company
structure and environment type can be deepen by broadening the
figure from Chapter 2:
Figure 10.3: Relationship between external environmental trends, structural
trends and coordination mechanisms
Stable Dynamic
Decentra-
Complex lising
} trends
Centralising
Simple
trends
}
~~
Mechanistic trends Organic trends
Generally, the degree of standardisation increases, the more stable
and cost-focused, the company is. Standardisation happens through
standardisation of processes, for example, assembly line work and
routines, standardisation of outputs, such as Coca-Cola, where re-
gardless of their country and time, it tastes the same, or standardisa-
tion of skills, e.g., training of doctors, which ensures the same treat-
ment for all patients. The more complex and dynamic the external
environment becomes, the more organic, the firm's structure should
complexity
be and the more flexible the coordinating mechanisms will be, i.e., a
higher degree of mutual adaptation. Direct supervision is a special
kind of coordination that works best in relatively small, centralised
units. In small organisations, the manager is the main coordination
 197

factor. He keeps an eye on what happens in the market, he

Motivation and reward systems
and delegates tasks to employees, who then perform them and
The difference in strategy also has implications for the motivation
port to him. Mechanism can be found, for example, in small
and reward systems in the organisation. The theory about motiva-
companies where the boss has a great overview and contact
tion and reward is described in Chapter 4, so here we will just touch
customers. He then assigns tasks to the workmen and apprentices.
on some key features.
Dependency in the organisation25 can be utilised to expand the
In companies with cost-focus strategies, i.e., cost-leader ~r def~nder
of coordination. Both pooled and sequential dependence can be
strategies, the priority is efficiency. This is often realise~ with a
solved by formal coordination - both the rules and routines , or
highly centralised, authoritarian leadership with close scrutiny. Here
coordinating positions like group leaders, etc. Reciprocal depend-
employees perform standardised jobs under close human or tech-
ence is a factor that complicates coordination and thereby places
nological monitoring. There is no special delegation, an~ en:ployees
greater demands on alignment and cooperation - the same way as
are not expected to initiate change. Therefore, the motivation and
the dynamic and complex external environment in Figure 10.2.
reward systems must be found in the maintenance factors, such as
Technology and design good colleagues or pay. The employee is expected to perform .the
described job based on fixed standards and is rewarded for achiev-
Joan Woodward (Daft, 2007), concluded in her study that there is
ing the goal - nothing else.
a correlation between the technology used in the company, and the
structural characteristics one can detect.
In companies with unique products, i.e., differentiation or prospector
strategies, there is a greater need for learning and d~velopment ~m~ng
Her study was based on the three different manufacturing technolo-
employees. The organisation will focus on a con.tlnuous quality Im-
gies: Single-piece) mass production and process production.
provement through better products, better. s.ervl~e, better c~mmu-
nication, etc., to keep ahead of the competition In customer s eyes.
Single-piece production was characterised by a flat organisation with
Power will be more decentralised with a flat hierarchy. Employees are
many small, more or less autonomous groups. In single-piece pro-
rewarded for creativity, risk taking and innovation. The motivation
ductions, she found a prevalence of organic structures with low de-
grees of formalisation. here will be the challenge and content of the job, called motivation
factors by Herzberg, more than wages.
Mass-producing companies had a tendency for a high level of hierarchy
Organisational culture
and many rules. It was often centralised companies with a clear
The choice of strategy also sets the agenda of the fundamental values
separation between management and the workers. These companies
of the organisation and thereby the overall culture. Culture can fit in
dominated the mechanistic tendencies.
relation to the four areas in Figure 10.3.
Process production" had, as with single-piece production, trends that
Figure 10.4: The relationship between structure) coordination and culture
were more organic. Here the employee's role was primarily surveil-
lance, and they would only intervene if something went wrong.

One can thus conclude that technology requires or creates standard-

ised jobs. A single-piece production provides just the opportunity for
individual adaptation of the product and hence requires an organi-
sational form in which positions and roles can be adapted according
to the task. In contrast to this, mass production is in itself a stand-
ardisation of output, which belongs to the mechanistic structure.

25. Dependencies are described in Chapter 2.

26. See an example of process production in the case study on Cheminova, Part 4.
198
I'" , 199

Relationships in Figure 10.4 should not be taken as the final :lnCH,''''''

Resource-based efficiency is assessed as the organisation's ability to ac-
because there are numerous exceptions. Hierarchical
cess and check relevant resources to perform the tasks. Examples of
can exist in people-focused cultures and departments within an
measurement criterion can be:
ganic structure with very control-focused values. However, there is
Organisation's bargaining power
tendency for hierarchical structures, with focus on the task via
Management's ability to interpret market t:ends. .
agement and culture, to have a high degree offormalisation.
The ability to optimally exploit both tangible and. intangible. re-
sources in daily business, such as whether there IS unexploited
Organisational effectiveness potential in employees or machines .... .
Organisation's responsiveness and flexibility In relation to the ex-
The consequence of organisational design will be a more or less
ternal environment.
fective organisation. The organisation's structure, coordination
culture as an overall design should be able to:
Resource-ba~ed efficiency is often an appropriate assessment of the
Solve the organisation's main tasks
effectiveness for organisations who cannot judge output, such as
Accommodate the employee's human needs
voluntary or social organisations like the Danish Red Cross Youth or
Be reliable
the National Association for Children's Adult Friends.
React quickly to changes in the external environment.
Process-based efficiency assesses the organisation's internal systems
Any structural choices will be a compromise between the concerns
and processes: Does the organisation run like a well-oiled machine?
and interests of the organisation. As we saw in Chapter 2, there is a
Examples of assessment criteria can be: ..
great difference between when an organic, flexible and willingness Strong organisational culture and a good working environment
to change-oriented organisation is optimal and when the company
Operational reliability
needs the stable, optimising efficiency focus, that mechanistic struc-
tures allow. Team spirit, loyalty and cooperation
Trust and communication between employees and management
Resolution competence close to critical sources of information
If management has assessed the external environment correctly, has Well-functioning horizontal and vertical communication
taken account of relevant threats and opportunities, have the cor-
Reward systems - for employees and especially for m~na?ement,
rect understanding of the company's competitive strengths, and have
who reinforce the appropriate behaviour in the organisation
used this knowledge to formulate an appropriate strategy, which is Interaction within the organisation.
then transformed into an appropriate organisational design, the or-
ganisation should be effective.
Process-based efficiency is very limited in its assessment, because
it does not include either input or output. It is relevant as a partial
Effectiveness can be assessed on three fronts:
assessment of efficiency, but allows only for an assessment of the
workplace. One can say that process-based efficiency is a means to
Figure 10.5: Organisational effectiveness
success more than the target.

Objective-based efficiency focuses on the organisation's ability to

Output: achieve its operational objectives. Examples ofthese goals could be:
Products or
services
Profitability
Growth
Market share
Social responsibility
Resource-based Employee satisfaction
Process-based Objective-based
efficiency efficiency efficiency
Product quality and service level
Source: Daft (2007) Research and development
Diversification
200
Financial stability
Managerial development.
Objective-based efficiency is used in most companies, because out-
put is relatively easy to assess and quantify. The problem with an
objective-based assessment is that the company's goals often involve
different areas that are in conflict with each other. It can be, for
instance, difficult to be both in expansion and have high financial
stability. In this way, it is necessary for the company to prioritise its
goals before assessing effectiveness. An example of a priority target
assessment can be found on the Balanced Scorecard (Daft 2007),
where economy, learning, customers and processes in a goal hierar-
chy are prioritised.
CASE STUDY:
Kirk & Holm is a small design and advertising agency with strong skills in
visual and strategic communications. The company has five employees:
The three owners, graphic designer Jesper Holm, graphic designer Kristina
Kirk and CEO Birte Bruun, and two graphic artists.jacob Jensen and Lars
Thomsen. Age wise they range from the mid 20's (the two graphic design-
ers) to mid 40's (Jesper Holm).
Owners of Kirk & Holm
To be continued on next page
201
The company's mission is:
Kirk & Holm will create strategic-based visual design with a profit-genera-
ting effect and value for our customers.
They have many different types of customers, from various industries.
They include an art book for Johnny Madsen, IDEmobler (overall design
strategy for their own IDdesign brand), an exhibition design for the Univer-
sity of Aarhus, design of the website and magazines for Surf & Ski, graphic
design of a recruitment campaign for Maersk Oil and Gas, and Caroline
Wozniacki (packaging design for her personal care products).
Workflow at Kirk & Holm operates as follows: When they get a major
project, all employees sit around a table and brainstorm for two to three
hours. All ideas are put on the table, and it is often here they find the
project's central theme. The project is then divided up among the graphic
designers, Tasks are resolved using the Adobe tools InDesign, Illustrator
and Photoshop, and supplemented with traditional graphic craftsmanship.
Often a project will lead to the development of20 to 30 different visual
proposals, but only one is selected as the best, is developed and presented
to the customer.
Jacob Jensen and Lars Thomsen at work
Kirk & Holm is run with plenty of spirit and enthusiasm. Jesper Holm and
Kristina Kirk started the company 13 years ago and they are an important
part of the corporate culture. The mood at the company is marked by
commitment, informality and humour. There is focused expertise within
the company: Employees are selected for their professional competence.
Birte Bruun has a Master of Science in Business, Language and Culture and
is a former marketing director. Jesper Holm and Kristina Kirk are qualified
graphic designers and specialists of print media and logos; all three have
additional competences in text writing, and Jesper Holm is the author of se-
veral books, while Jacob Jensen and Lars Thomsen are specialists in among
other things, web design. As a team, Kirk & Holm therefore has both depth
and breadth in their knowledge and can tackle projects and styles ranging
from the classic and minimalist, to the hip and colourful.
To be continued on next page
202
Assess Kirk & Holm's strategy using Miles & Snow's four archetypes
from Chapter 9: Prospector, Defender, Analyser and Reactor. What
of coordination do you think is dominant in Kirk & Holm? Are there
several types of coordination in play simultaneously?
- Assess Kirk & Holm's corporate culture. Which archetype do you think
fits the company best?
- Assess mutual employee dependency. Are they pooled, sequential or
reciprocal? Explain.
- Give suggestions on how Kirk & Holm can assess their effectiveness
using Figure 10.5.
Source: Www.kirk-holm.dlc
Signs of design problems
The easiest way to recognise problems in design is to look at
above-mentioned efficiency types. If management assesses that
one or more areas the organisation is lower than desired such
it has a lower .market share and growth than is desired, less profit,
poor work environment or a weak negotiating position in connection
,:ith suppl.iers in the market, i.e., low bargaining power, it may be a
sign of an Inadvertent organisational design.
An incorrect design often has the following symptoms:
Oecision-m.aki~g is ~ooslow or too bad. The hierarchy may be too steep,
decentralisation ISpoor, or information can be stuck in different
parts of the organisation. The horizontal or vertical channels of
communication do not function optimally.
The organisation does not respond to changes in the external environment.
Coordination between departments is bad, the customer's needs
are unknown or new technologies only get as far as the develop-
ment department. There is no clear division of responsibility in
relation to market surveillance.
Employee productivity and efficiency decreases and they do not achieve
their goals. The organisation is unable to set clear objectives for
employees or structure is out of shape in regards to the balance
between market complexity and the need for clarity in the place-
ment of responsibility and authority.
- Conflicts. Organisations should allow conflicts as a means of de-
velopment and change, but excessive levels of conflict or destruc-
tive conflicts is often a sign of an incorrect organisational struc-
ture, with unclear objectives and lack of horizontal coordination.
1,.\'· 203
If one or more symptoms exist in the organisation, it is probably
a sign that the organisational design is n~t opt!mal. The ~ompany
should go through the design process again, as Illustrated In Flg~re
10.1, with the aim of adjusting the design factors. For companies
in highly turbulent environments, this can be a continuous. process,
but even companies who had a relatively stable external environment
before; can experience an increasing need for change and transfor-
mation. This need is the starting point for the next chapter.
Discussion Questions:
Give examples, respectively, of external and internal factors that
may affect the company's organisational design. ...
Give examples of the five different methods of coordlnatlo~ In
Figure 10.2. How does the method of coordination affect motiva-
tion in an organisation?
According to Figure 10.3, organisations in complex markets have
a trend towards decentralisation. Explain why. Can there be cases
where companies need to centralise decision-making powers, al-
though the market is complex? Give eX,amples. .
- Is it possible to change a department s depende~cles? .Can you,
for instance, change from reciprocal to sequential? Give exam-
ples. What are the respective advantages and disadvantages of
reciprocal dependence? .. .
Give examples of products produced by Single-piece production,
mass production and process production. .
Give suggestions on how the following companies ~a~ gauge .thelr
organisational effectiveness: A library, a small painting busln~ss
with two painters and an apprentice, a metalwork c~mpany With
55 employees, a beautician who has started a business, and a
charity. You need to include elements in terms of resources, proc-
ess-based and objective-based efficiency.
Read the Kirk & Holm case study, and give suggestions on how
Kirk & Holm should motivate and reward their graphical employ-
ees. Base your answer on your analysis of culture and values.
Ii
 Change Management

After reading this chapter, you will be able to:

Understand the factors that influence change management
- Analyse the influence the proposed changes will have on the or-
ganisation and its surroundings
Assess and address resistance to change projects
Clarify the organisational change processes' affect on the work-
ing environment
Develop an impact analysis for change projects
Use different models for managing change in organisations.

Rg8'S NEW STRATEGY

R~
R98 is Copenhagen's waste disposal company. The company is fund owned
and has a concession with Copenhagen and Frederiksberg City Councils, to
be the sole provider of waste disposal services until the year 2011.
"R98 was about to make a new strategy, and work begun in collaboration
with Ramboll Management. The goal was to fulfil the agreements with the
Copenhagen councils for many years. Inspired by Ramboll Management it
was soon clear however, that the focus had to be different," says director of
R98, Seren Eriksen.
"The concession is unpopular. It is under intense pressure from the
public, politicians and journalists. In all likelihood it will be withdrawn early
at some stage, and we want to prepare ourselves actively for that situation,"
says the director. Therefore, on the one hand the plan was to take the initia-
tive to discuss the agreement, and on the other hand, be prepared for free
competition.

To be continued on next page

 207

206

Therefore, there is a need for management and employees to work

openly together in order to bring about changes in the company.
Internal and external analysis
R98's strategy process was based on an int r I
consultants from Ramb II M e na and external analysis by
nal stakeholders and po~tica~~:g~me~t. ~.hi~e interviews with R98's exter- When does a requirement for change occur and
bility a dialogue with' C(lng Ig Ig ted the concession's vulnera-
, senior management defined a number of focus areas thereby a need for managing changes arises?
The involvement of employees A need for change or pressure, can in principle arise from two places,
"Employees have been very highly rioritised i .
support, the strategy will be im p ib! . n the process. Without their namely internally and externally. External situations, such as changes
POSSI e to Implement" I' h di
. 0 f serni
tor. Specifically , there were a series seminars with.' exp arns
f t e tree- in the industry, new regulatory intervention, market trend, the need to
yees. There was also great ernphasi . f
asis on In .
ormlng all athe
group 35 emplo-
other0 employees. be innovative and much more besides, see Chapter 2. Internal condi-
tions include a need for greater efficiency, cost savings, outsourcing,
Clear focus areas and introduction of new technologies, new forms of management,
R98, together with Ramboll Management has defined .
avours setting out th II a series of ende- business expansion or the opposite.
e overa strategy The di I'"
incredibly specific and acti . d rrector exp ains, We were
on oriente We know I
requirements We are n . our market and our These situations come from something direct and specific, but in
. ow very acute on the thing th h d
so we are ready in four years with . h s at we ave eveloped,
, or Wit out the concession." addition the company must also have its attention on development-
oriented employees and managers - enthusiasts, who are passionate
to help things work, and that the company develops dynamically.
"One of the fundamental errors committed in Elsewhere managers observe stress reactions by seeing absenteeism,
change Ian? transformation projects is that manage~a;~ stress, conflicts and a poor working environment, and here there is
not hma cef, It clear wh a t Impact
will . the project or the changes also a need for change in the company.
ave or employees and managers (at other levels and
:~Ia~~ ~~:~~t ~e changes involve an~ what affects there These changes can be general for the whole company, department
f, t e changes or the project. What will this
specific and/or employee group or individuals.
mtehan or en:dployees and perhaps in the second round for
oand ers outs:
I'? e Ithe organisation,
.. '
for instance, customers
supp iers t appears that often one is not suffici I
aware of this, and this lack of attention can subse ruentlv
prove to be very expensive", q y

Says Steen Hildebrandt,

continues: Professor at ASS ' Aar h us U'nlverslty,
. and he

"You do not realise that h . What is managing changes?

planning level and c. ange projects have a mental

~~:~,:gr ;7 d
a practice and very
the individual employee.
.
/y::t;~:~;~~~~:~
g II arge y concerns rational views and assessments
. Definition: Managing changes is the process that helps to recognise
changing needs and can put the changes into practice in an optimum
way for the organisation. (Hildebrandt, 6 November 2003)
h en a research . and' many experrences suggest that ou'
th
Ita.ve mad: a ~aJor basic mistake. It is in fact the oppo~te' It means that there are many different elements involved in change
th 1S emotiona .and personal subjective views and concern~ management. This includes virtually all the topics covered in this
a t are esse.ntlal or very important in the implementation book, as well as issues that are also outside ofthe book's framework.
of many projects and changes." (Hildebrandt 31 0 t b
2003). ' coer
To illustrate the complexity of managing changes, the topics on the
subject are outlined in Figure 11.1:
 20g
208

Figure 11.1: Issues that may be included in managing changes projects At the same time, management must know the external factors that
will affect change and how change affects the other way round. They
must manage and assess the economy of the change project, but also
the economy as a result of the changes for the company in terms of
income (financial). They must be able to take the right decisions and
assess risks with the project. The method of managing for changes
must be considered and planned (project management, leadership),
because it is obviously very complex.

Managing changes is said to be an ongoing process, where minor

changes are, occasionally made, but the form we primarily try to
clarify is more project-oriented change management. This means the
management of long-term changes that are one-off in character and
complex.

In both types of changes the subjects in Figure 11.1 should be con-

sidered, but weighted differently. Long-term changes take place on
at least two levels of the company, on a strategic level, where visions
and strategies are devised and determined (objective and goals), and
on a cultural level, where strategies result in changes that must be
devised and organised, while looking after the daily operation of the
company.

Examples of long-term changes:

Implementation of new IT systems or other new systems
Outsourcing of production divisions to another country
In orde~ to succeed in making changes, it requires that mana ers Moving of departments or changing the organisational structure
resp.onslble for change take the elements in Figure 11.1 into con~id- of the company
eratron, because a specific change in one place of th " - Launching a subsidiary in a new market
t . II' . e organisation
~u ornatrca y Implies that many of the elements in the f Launch of e-commerce
Into play. Igure come
Downsizing of the company in the form of redundancies, rede-
ployment and the discontinuance of activities
Management must look at: Process of managing changes.
A combination of employ ees Wit
. h t h eng. h t skills
. IS.. In place (HR)
Some of " the employee
I h b
s ave to e moved, promoted or retrained . A model is needed to provide structure and an overview of the proc-
(organrsanona development). ess making the changes. One such model is shown in Figure 11.2,
- Whether to work in teams, and if so, to what extent Process of managing changes .
-- Wh
. lie th er t he c hange will alter corporate .
culture totally or par-
tra y.
Whether ~m~loyees will lose motivation or be more motivated
How motivation can be increased? .
How employees are to be informed and at what times?
H~wh emdployees ~re involved, so they become motiva;ed to work
Wit an not against change?
210

211

Figure 11.2: The Process of managing changes

. h I se circumstances should be inves-
the change can be realised, ~ e. co h se is created to consider what
tigated. This means. an ana YSlsII~h: directly and indirectly involved
effect this change will have on a .
departments, employees, customers, suppliers, etc.

The elements alecf'C t e d by the change can easily be made transparent

by using Leavitt's Diamond Model:

Chart 11.3: Leavitt's Diamond Model

The model should be compared with Figure 11.1, since the elements
listed are part of the three phases in Figure 11.2.
Source: Loosely based on Smith, Norton & Ellis (1992)

The model is constructed in three phases: Analysis consists of defining

the framework for the project and reflections on how to implement
The model consists of four elements that will be affected by changes
change, and what the consequences are. The results of the analysis
phase are a project description and a plan for the process. The or- in the company.
der of activities in the change process is planned in detail. After the
d b changing their behaviour, they may
change process is conducted in relation to a project plan, the outcome Employees must learn to a apt y h to be convinced and accept
have further training and they may ave
of the change is evaluated. The purpose and objectives that were set
from the onset are assessed. This will provide the company with a the benefits of change.
picture of whether anything has been gained from the change, whilst
. affected by change. Some departments
being made aware of other predictable secondary effects, as well as Structure of the company IS . Th r lationship and processes
those that are unpredictable. Results of the evaluation can be used are c Iose, d down and new ones arise. . he e
to improve new change projects in the future. between the various departments will c ange.

Analysis phase . .. 10 ees and functions are changed. The

Work tasks of individual emp y d This produces an
The situation for the model in Figure 11.2 is that the initiator of usual processes are remove d a nd new ones. starteI . I
.. ng and changes
increased nee d t:lor trairu In wor < tas <so
change is typically the management, but it can also come from
employees who experience a need for change or transformation.
. t rocesses and tasks has to be adapted
Here the purpose and goals for change are also given, but before Technology for ph~~lng ou p Id be here that change happens, for
to the new conditions. It cou
 213
212 C) F: C.:

instance, by purchasing new manufacturing equipment or a new IT Once a change is underway in the company, it will generate insecu-
system. rity throughout the organisation, especially in the areas of company
where employees think it will have the greatest influence. This means
The hold of the four areas, and .. that there is a need to quickly step in with activities, so confidence
tell thmodel takes
I Its primary intent is to
. e peop e - managers and employees - that you cannot chan e among staff does not disappear. One tool for this is the Change Cir-
Just one of the areas without a change in all the oth ers. g cle.

EXAMPLE: Change Circle

Employees want to express themselves and react with frustration
A company introduces a new ERP system (changes in technolo .
means that employees (changes for empl) . gy), which when confidence is not there due to the changes and/or expectations
know the oyees are now gOing to get to
of change. The reaction can look like this:
that the r;~:n:s;~; ~~~:~;::~se;~;~airreecourds.efs ad~cordingly.This means
di mo I re ,some new wh I
ot h ers Isappear (task changes) ERP t h ' ue "Now this is enough! I'll soon have to take sick leave, because I can't
finance de artment' . sys em c anges, for example, the
bear not knowing anything about what to do or whom I should do it
(structure ~hange). ;h:o:;:~:~~~:~:~~: ::~:~~n:hsationdshal! takelpla~e
e pro uction-p annmg with. I think I'll ask if I can be made redundant. I must have a meeting
with my boss. He must do something!"

Management must be aware of this sort of reaction. Organisational

What
db' changes will
. hap pen .IS up to management to identify and ad- change takes place on several levels.
tasks. ecause It IShere that change management has one of its main
(s. The strategic level determines whether there is a risk that managers
find that departments must close or come under a different section.
By Elsewhere in the organisation, where modifications translate into
h analysis
f using Leavitt's model ' th ere .IS now an overview. of h
t e our elements are involved in relation to change N .. .ow changes according to Leavitt's model, change will influence the daily
to consider whether the change will mean an h . ~w It IStime work. Here problems arise, such as being able to achieve the tasks,
" Y c ange In corporate
cu I.ture. It ISessential to ensure that change doe: during the change. Here it may be possible, to some extent, to put
h II bei . oes not d estroy or .rrn-
some work on temporarily standby, but this is a burden for employ-
~~II;utree;~ - ;.rng m the company that is expressed in the corporate
. ere ore, managers must analyse how the chan e affects ees. It could mean uncertainty, a decision vacuum and frustration,
or could be used to strengthen corporate culture. See Chapter 7. ' and it must be taken into account during the planning phase.

How are these reactions handled?

The Change Circle is a model that creates an understanding of com-
mon human reactions to change. By using it, employees can better
understand what is happening during the change.

Since change often creates friction between the parties involved, it is

important to understand colleagues' situation. The model is based
on a common understanding to feel responsibility for the situation
and for each other's well being. This avoids colleagues feeling like
victims of the situation.
214 Ii !,
215

Figure 11.4: Change Circle

in the above description is that employees often feel like victims, and
they will also often act like victims. Therefore, they will try to find
someone who can help them or alternatively someone they can place
the responsibility for the situation.

It is here that conflicts and resistance emerge, and you often see
absenteeism rise. It is important that you see these reactions as tem-
porary stress symptoms. The reactions can be severe and can mean
loss of good employees through redundancies or they leave of their
own accord.

The last part of the process is less problematic. Here the parties in-
volved look ahead and can see the possibilities in the new situation
(5). Depending on how big the change is and the employee's, own
handling of it (6), you can come unscathed through the circle and
now continue beyond the timeline until the new changes take place,
which in turn will send you around the circle again.

How can managers cope with the situations in the various phases of the change
circle?
Source: Hawk of the Yellow Wind (2006)
The best thing would be to avoid having to go through these phases,
but that is often not so easy in practice. Therefore, managers choose
the best possible change and communication strategy, which should
:~e figur~ should be seen as a timeline that illustrates what happens be able to nip most frustrations in the bud. More on that under the
en a c ange occurs. When the change begins, where the lines in-
point of communication strategy.
tersect, and you must take a trip around the circle b f,
~eed Wit~your usual work. This trip will be easierto :c~:~~~~~~:~~7~ In the first phase, the manager must deal with the person affected by
th~~:~t~ yo~ c~ose colleagues know the reactions, and you all know the change and take care of them. This is done by providing proper
I goo c ange management, they will disappear again.
information, create space and provide opportunities of various
kinds, ensure that there is common understanding among staff or
~i~s~~ecahc~~;~~:aactionds.~ccur whilst moving around in the circle. The manager colleagues, and ensure that they have someone they can
con rtion (1) where th t f ffai .
Example: "It can't be . h '. , e s. ate 0 a airs IS denied. talk with. Be attentive and sympathetic.
I rig t that It s always In our department the
ma <e changes. It must be a mistake." (2) Or "I can' b I' h y
In the second phase, the situation is worked on by activating the people
managemen~ will m~ve the development dep~rtment :br:~e;el t ~t
involved, getting them to deal with the situation and to do something
have to se~ If ther~ IS qu~lified staff there, before I believe i~" w"~
~~~:~:fthls, :deactlodn (3) IStypi~a"y that you push the situatio~
nge aSI e an pretend It IS not there.
!~ about it, etc. Here, the team or network can, with others who are
also facing change, help to increase understanding and acceptance
of change. Get them to recognise the reactions, such as frustration
and sick leave, for what it is: An expression of uncertainty.
~a:etn t~~:ucg:a~~~~:~it~ut~e denial, begins to take shape, people
perha . if i .'. as anger, frustration, and sorrow or In the third phase the reactions come: Here is where both management
ps JOY, I It IS a positive change. You get used to the ch
and employees should show understanding of why their colleagues
hereafter acceptance of the change C II ange, and
. soon 10 ows Now the react as they do. All are going through their own change process and
IS resurrected from before the ch . moment
ok the reaction is not due to a lack of cooperation.
and see the possibilities (4) in thea~;~ s~;u:~:~ sWtahrtatt~10h ah~ad
. IS appenlng
216

E.m~loyees can now begin to look ahead, and they no longer feel like employees work more against than for the organisation's goals, an~
victims of the event and in need of help, but as performers in their to a high degree, it is others who must adapt, rather th~n t.he orga.nl-
own situation. They will begin to look ahead and work actively in sation itself and there are many changes in the organisation, which
relation to the new situation. helps to create a breeding ground for discontent and resistance.

Douglas McGregor's theory of management's view of human nature

towards their employees, influences the change strategy used.

Theory Y: Here the starting point is that employe~s .are autonomous,

like their work, chose their own work tasks, are WI"lng to ch~n.ge and
eager, a senseof responsibility and generally contribute pOSitively to
the organisation.

Change strategies Theory X: Here the employees are people who need to be set to work,
As sh~wn~ it is very different how to tackle change in a company. are lazy and require supervision. They only come to work to earn
OrganlsatlO~al s.tructures, changes in the environment, management money and have no desire to contribute other than the tasks they are
styles, organisational culture and development are topics that affect given to do.
change strategy. This means that strategy can be and often is dif-
ferent depending on where in the company the planned change will A comparison of the four views produces the following four change
take place. It may vary from department to department. There will strategies. See Figure 11.5.
typically be a difference in strategy with changes in, for instance, the
sales department compared to the production department, simply Figure 11.5: Change strategy
because there are different issues involved, and the people subjected
to change, are very different.

This means the strategy for planning a change, also requires looking
at various departments and personnel groups.

To choose a change strategy involves Figure 11.5, which has its point
of origin in th: t:vo extremes, na.me~y that the company or a given
department ":'Ithln the ~~mpany, IS.either in a state of harmony or a
state of conflict. In addition, there IS also the view of human nature
which lies behind management's view of employees. Here there is the
XYTheory, see Chapter 5.

Harmony perception is to say that the organisation (company or de-

pa~tment) have common values: They work towards the same goal,
,,:,hlch may be beyond the organisation's goals, they have well-de-
fln~d room to manoeuvre and function, and perceive themselves as
an Integrated unit within the organisation. Common values are often
th.at one must cooperate, have rights and obligations, and freedom Representive strategy is where the organisation is in harmo~y, ~nd
with responsibility. where management has a Y-view of their employees. Th.e situation
here is that employees with great serenity can have confidence t~at
Corflict perception is to say the organisation is often in conflict with a representative for them will look after their interests in. conne~tlon
ItS surroundings. There is disagreement about virtually everything, with the changes that must happen. So a representative IS appointed
218
to the change project. There is a moderate to low level of conflict and
thus a very small risk of internal problems associated with change.
Expert strategy also appears in a harmonious organisation, but man-
agement's perception of employees is an X-view. This means that the
changes made, will not rock the employees' situation. They will just
accept that change happens and carryon. Here the strategy is that
the experts, for example, internal or external consultants, assess the
exte~t of change for the various personnel groups and organises
and Instructs employees in the new tasks. Here there is a low level
of conflict and a very small risk of internal problems associated with
change.
The socio-technlcal strategy is similar to the expert strategy and it is ac-
tually .als~ an expert strategy, but it differs in that the analysis and
organisation of tasks takes place in two forums: A technical and
social. The basis is that there are already some conflicts within the
organisation, which may be due to professional divisions with dif-
ferent, clear boundaries or similar. The technical, such as IT experts,
take c.are of the changed tasks due to technology and organise tech-
n~loglcal change. The social, such as sociologists or HR department,
will then look at the changes to made in terms of the job, structure
and personnel, see Leavitt's model, Figure 11.3. The two forums of
experts co~rdinate ~nd come with a collective solution for change.
Here there IS a relatively low level of conflict and low risk of internal
problems associated with change, because the change in situation is
addressed as a whole.
Participation strategy is characterised by a Yview, where there are con-
flicts within the organisation. This means that there are employees
~h~ are acti~e, have a~titudes, goals and ambitions, but might have
d.lfflc~l~y seeing what IS best for the company. The strategy is, in its
simplicity, that all employees participate in the change process. This
can .be very difficult in large organisations, because it may be a costly
affair for the company. There is a high conflict level and therefore a
great risk that it will be a bad solution, so you can often count on
internal problems in connection with change.
The risks mentioned in connection with change strategies are im-
portant to analyse as much as possible to avoid any inconveniences.
This is addressed in the next section.
219
Risk analysis .
A risk analysis aims to ensure that the change process IS prepared
to encounter possible problems. However, first we must analyse the
risks involved, and how they may arise.
The analysis can be based on a 'Before/During/After' analysis,
in other words, what risks are there in the analysis phase, process
phase and the result phase, see Figure 11.2.
During the analysis phase, where the change projec~ is dete.rmined~ it
is a matter of choosing the right method for analysis, that IS, ~on~ld-
eration of corporate culture, thinking about who in the organlsa~lon
will be involved (Leavitt), choosing the right change strate?y, p:oJect
composition and management. These issue~ are ~~out risks '" the
selection and consideration of methods, but In addition, there IS also
the content of change, where there may be risks. An example of a
method to analyse these factors is as follows:
This can be based on what can go wrong or fail:
Where?
When?
How?
Who?
Afterwards discover the reason why the risk factor occurs.
The reasons here may be:
Technical
System related
External environment related
220
221

- Political The process

Human This phase in the change management process is the practical phase.
Other. This is the phase where the change is finally made, and where com-
munication to the organisation's employees is very important. In
After this risk assessment, we will know the consequences and risks some cases, communication can already have partly taken place in
associated with change. the analysis phase, but there may be certain dangers with this, see
the sections on change circles, on resistance to change and change
Finally, plans are made for initiatives to be undertaken should the strategies.
problems occur. This is done in the form of an action plan.
If you do not communicate adequately, there will quickly be rumours
Example of a risk analysis: circulating and thus misunderstandings that will harm the process
and outcome of change.
Example of the introduction of the company's new ERP system.
When changes must be communicated to employees, it is to create
Figure 11.6: Risk analysis
an understanding of:
Why is it necessary to make the change?
What is the purpose of the project?
What will it mean for the organisation in the future?
What are employees' future roles and opportunities?
What results will be achieved?
What are the success criteria for the project?

This means the employees know the premise to change and many of
the previously described inconveniences can be avoided.

Diaioq"

In addition to informing employees, form a dialogue to ensure that

reactions to the process of change are heard, understood and used
in the project. At the same time, any changes to the plan must be
communicated, so there are no misunderstandings in the middle of
the process.

Project composition
EXAMPLE:
The process of change is a lengthy, large and complex task that is
LEGO warn of mass redundancies
best implemented as a project. The project begins with putting a
When LEGO decided to stop all production in Switzerland, they sent out a
project team together, who are supervised by a steering committee. press release. This is an indirect method to inform employees. However, in
Who participates in the project and the steering committee, depends conjunction with this they informed all employees throughout the Group
on the outcome of the analysis presented in Figure 11.2. via meetings and intranet, so everyone was properly informed and able to
ask questions to their immediate managers and senior management on the
The project implications for their own job.
What happened was that the 239 employees at its plant in Willisau,
Also called the change project. Here the project is broken down into would eventually lose their jobs in early 2006.
a series of smaller tasks, and time wise, driven by the project group
manager. This means there is always control of what has to be set in
motion, when and in what order. 27. Also see change communication in the appendix of this chapter.
222
223

organisation is widespread, then changes will never begin. This may

At the same time th h
showed h h' e c ange was prepared, so that from LEGO's side it be due to:
w at t ey would do and COUld ei
jobs would be moved t E E give an explanation, namely that the There are no visible crises.
. 0 astern urope.
The explanation was Switzerland's high costs whi h . A closed business culture.
tant factor in th d .. ' IC was a very rmpor-
e ectsion to move production to Eastern Euro e Avoid confrontation.
At th: same time LEGO pointed out that the round of redun:a~cies An organisational structure with sub-optimisation.
would, In all likelihood, not stop there and that th I Functional goals rather than holistic goals. (Visible crises here are
nical production benefits and cost sa:ings with th ere were a so some tech-
I ddi h
e c anges a means.)
n a rtion, LEGO brought attention to other chan es that we
Whayconcerning
, d.istribution, etc. Therefore, there wa~ no hidde::gu:d;r . Authorisation offinancialloss.
t err cornrnurucatron. a In Unattainable goals for earnings and sales.
At the same time, they also announced that the fin . I - The removal offunction performance targets.
on the right track and that some of aneta accounts were
positive develop~ent. the changes were made to reinforce this Show employees the company's poor performance relative to

BY doi competitors.
olng t hiIS, they ensured a greater understanding of the situation.
Get external consultants to open management's eyes to alterna-
tives.

Kotter's model can be used t d ib .

flexibili . h 0 escn e project management and Step 2. Build the guiding team
. ~ I Ity In t e process. The model overlaps the three hases show A strong team must be put together, who can process information,
In FI~ure 1~.2, but takes a .slightly different perspectiv:' and as suc~ keep powerful people informed and participate in key decisions. The
can e use as an alternative change management model. guiding team should consist of the most important line managers
with expertise and different perspectives. Team members must be
Kotter's change management model trustworthy, have a good reputation in the organisation and be ex-
This model is based on the need that the . perienced managers, who can bring leadership into the process of
h . d company IS constantly
c anglng ue to external and internal conditions Th . h change. The team seeks to establish a common goal, cooperation
hase mod I th .. . . ere IS a t ree-
P e at In ItS Simplicity is as follows: and trust, preferably with the help of team building.

Figure 11.7: Kotter's three phases Step 3. Developing a vision and a strategy
It takes time and resources to create a common and realistic vision
and strategy. The vision for the change process defines the course
of change; it motivates employees in the right direction and helps to
coordinate their actions. The vision provides a picture of where you
want to go with the change, and in addition, it sets realistic goals, is
focused, flexible and easy to communicate.
There are some activities in connection with these ph d h
. d i . ases an t ey
ar e perceive In eight steps. '
Step 4. Communicating the change vision
Employees in the organisation must know the change vision, and this
Unfreezing only happens ifit is communicated to them. It is important here that
The idea is that when the nee~ for change arises, the situation is communication is simple with non-technical terms or knowledge is
analysed in the here and now, In order to ask questions about the not taken for granted. You can use metaphors, analogies and exam-
current situation. ples, and communicate in many different forums. Debates within
and across different employee groups is also a way to publicise the
~tep 1. Increase urgency28. Here it tries to focus on potential crises VISion.
o ensure that change begins to take place. If self-satisfaction in the

28. Also see change communication in the appendix of this chapter.

224 225

Changes of the old processes are removed and new ones are integrated in the
After the message of change is circulated within the organisation, remain Ing processes.
and there is now awareness and acceptance, a change is now made.
Here the organisation is working to implement change and new Step 8. Anchoring new work methods in the culture
needs arise. Changes should ideally match corporate culture, or it now has some
new elements to implement change. Corporate culture is, refer to
Step 5. Strengthen staff skills Chapter 7, a series of standards of conduct and common values for
Employees help greatly with the work of change, so they must be a group of people. Norms of behaviour are common practices in a
equipped for the new tasks. This is done by developing their skills group, and the standards maintained by the group. Common values
and changing working conditions. Various barriers may hinder the are harder to change than norms of behaviour, because they are less
process, for example: visible and deep rooted in culture. Therefore, you should be aware to
The structural barriers within the organisation anchor changes in the culture and common values.
Lack of skills
- Information and personnel systems that can be contrary to the One should thus be aware of:
vrsron That changes in norms and common values come last and not
Managers who are unwilling to change and therefore obstruct in first in the change process
different ways. Change is only reflected in the culture when it has shown results
It may be necessary to replace key personnel, who maintain the
Step 6. Generate short-term gains old values and criteria
Success with the process of change is dependent on creating rela- Promotion may be considered when the new values must be an-
tively short-term, visible and unequivocal results. Depending on chored.
the complexity of the project, it is necessary to have continual and
tangible results associated with the change project. This signals to
employees that the initiative is worthwhile, and gives the project a Outcome
feeling of success. In the change management model in Figure 11.2, we now come to
the point where the organisation will act as a learning organisation
Step 7. Consolidation of results and producing more change and thus reflect over the change made. This is done by looking at the
The momentum of change may be lost and thereby progress is lost. whole process and then evaluating the results.
A major reason for this might be corporate culture and the mutual
dependence created with the change process. According to Leavitt, Here a process evaluation is applied, where change management can
changes in one place affect other parts of the organisation. This get feedback on the work and methods, and whatever else happened
complicates the change initiatives, because you cannot only change during the change project. The result of this evaluation can then be
the components, you have to change the entire organisation at the used in subsequent change projects.
same time, and that requires a high level of patience and coopera-
tion. Leavitt's claim also means that several change projects are un- A frequent result of change is that new change needs arise. Herein
der way simultaneously. For this to succeed, top management needs lays change that was not in the planning of the change project. It
to concentrate on overall leadership, while responsibility for projects may be that targets set for the project have been so amply satisfied
is delegated further down the organisation, which will allow as many that it has led to these new change needs arising, just as the opposite
people as possible to be engaged in projects. may also be the case.

Integration Discussion Questions

The process of change is now almost complete, and that means that Explain why change management involves so many disciplines.
the employees' everyday life has to be re-established, but there are See Figure 11.2.
changes to tasks and the working day. The changes must be inte- Can you say that specific change strategies are the most optimal
grated into the processes in order for the company to operate. Some for a company?
226

-- What is it ~hat makes communication an important factor in a

change project>
Co~sider how to measure the outcome of a completed chan
project, ge
W~at topics. associated with a completed change project should
be Included In the process evaluation?
What are the benefits of using Kotter's change management
model? How do you ensure the change circle can be used in the
company? Appendix
How do ensure that the company's customers do not receive a
reduced level of service during and after a change process?

Example of change communication's content

Leif Pjetursson has drawn up 11 general questions that may be rel-
evant to get the answers to if you want to create an effective change
communication with your employees.

The manager will not always be able to find answers to all questions
right away. For middle managers in local government, the problem is
that sometimes as part of a political system, they do not always have
enough time to think about the issues.

Table 1: Change communication

VVhat\NecanbePToud of with the
Whatarewe good at?· •.•
··.•.
What.hopesahcl clr~amswouldwe .liketOrealise?\g/J/
\Aihatis.our proJeg ~hd•.
for.what main. purpos~- ~h6ft
and.l.ongtenn?i.i. ii .i
.•••• >. .
\Aihat societal goaJs ~repossible with. ourvision?
What ideal intentionsare possible with our vision?
 229

4. Tell about the Which 4-6 specific, delimited, fixed-term goals accom- 11. Identify the main Which 3-6 key
goals of the change modate change? message Howwould we
What promises do these goals hold? For instance, the How would we test whether the messages work?
promise of a better and more secure future, the promise Finally:
to meet specific needs and wants? What do we still need to clarify?
5. Tell about the What tangible rewards do we expect that change will When could we expect to have a response?
benefit of change give employees? Source: Pjetursson (2005)
What specific motivators accommodate change?
What good val ues have we that are still useable?
VVhat neW valuesdo we need for change?
H0\'i.c.f(.(th~sei~alues reflect the recipients' and
companY'~ Values?
7. Show the values Howwill we as leaders show that we believe in the
and show passion vision arid project?
How will weshow what values we believe in?
Whatpicture do we want to be painted by us?
8. Create consistency How ~a.hchange fit together with the good that we have
previ()~slyd.one, with what we need tod()?
~.?W~.~~ ..~.h~2?~ ..b~.conn.ectedtothe.indivi~.~.~I·units
a.n•d previous.\'i0rk?< \ i i . ((......... \ .
I-lO\'i~aW~hahg.be linked.to. individual~rh~I()yees?
y
.\iV9.a.t..•.....
employee?"':
d..••...........
o.•..
·•·e
.••.
.·••..
.s.•
•··.·..·.c
•.. \..•....•..
·•h.... . ..
a...........•
n...••.•.
getyRic.all l11eanfor.t •h·•e...•..
i...:;.•..•
.·.•..•.
n·d
. .....•..•.
i•V....
I·•d
•• ...........•.
u al
•....••..•.•.

How i~.~ho.ng~ a.ssociated with prior and the current

changEl process?

~:~:~il~u?esishould characterise our copnlunication

:h;~.9;~~ •.~.B~8e:~~~~~ :eee:n~:~~utl~.g~serve.~hen

\I\Ih.;nJ;8ra.·rg?typic.~llyn.()tll1eani.ngrul~().el11ployees?
What can We leamfromthis? ".

wei7t~;~f~·~~~~~t~i~atefhentherei~w@~t~~ffiething
How will w~communicate with each team a:~d
employeEl about what change means to them?
Whatva.ll.Ies should characterise our c()mml.ltli<:CI.tionof
changei'

:h;~Y;~t~t~8e:~~~~~ !eee:n~:~~u~~ obSerje 0 hen

Wheni~Fr~ng? typically not meaningfult()el11ployees?

What can we learn from this?
.HoB 8Wwk{$8·~LJflicate ~henth.~re.isiIl6t k()rri~th ing

B~:t~iflt~~:~~fu8Mc~te\VitKeacht~W~·;i·WJ·e~Plo~
yee abo~tl,\lhat change means to them? .
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 Part 4
Case studies

Case 1: Team building at Cheminova

Case 2: Vision and value base for Aarhus City Council

Case 3: Innovation in the medical device industry: Almeco CM Lab

Case4: The organisational structure of Dana Lim

 U i) i 1 237

Case 1: Team building at Cheminova=

Cheminova AjS produces chemical agents to control unwanted in-
sects, plants and fungi. The company is located at Harboore Tange
on Ronland, and employs 1,800 people, of which about 800 work at
the factory in Denmark. Offices and staff in 25 countries represent
the company internationally, including U.S.A., Mexico, India, China
and Australia. Cheminova exports 99% of production to more than
100 countries worldwide. The majority of its sales are to North and
South America and Europe.

Aerial photo of Chemin ova

Cheminova's Danish plant is located on the 1.3 km2 peninsula of

Renland - between Harboore and Thyboron. The factory area is 0.6
krn", of which 115,000 m2 are buildings. In addition to the produc-
tion installations, there are also extensive laboratory and develop-
ment facilities, warehouses, bottling plants, administrative and dis-
tribution functions. As well as the manufacturing plant in Denmark,
Cheminova also has a production facility in India.

There are approximately 350 employees at the production plant at

Reuland - around 300 hourly paid workers and 50 salaried employ-
ees. Among the blue-collar workers, around a third are unskilled, a

29. The case was developed in collaboration with Sonny Finn jergenscn, Vice President and Plant
Manager and Seren BlaabjergJepsen, Plant Manager, Cheminova A/S.
 239

third are skilled process operators and a third are other skilled work- The staffing of the plants is often changed or adjusted, so about
ers (blacksmiths, carpenters, electricians, etc.). There are produc- 30% of all appointments at Cheminova are internal redeployment of
tion worker.s at the major chemical production plant as well as sup- employees from one facility to another. There is no deliberate evalu-
ply and environmental facilities (e.g., cleaning plant). ation of the employee's personality (personal profile) relative to the
type of facility (team) they are moved to. The logbook is used as a
~ach facility is organised into a number of 'steered groups', depend- tool to assess professional competence/suitability for the job.
Ing on how many shifts are at the facility. At a five-shift facility with
an annual operating time of around 330 days, there are five teams, In 2007, a new production facility, Triazol, was ready to use. The
which in turn staff one site. The facility runs 24 hours a day, and the plant is the second multi-planr'? at Cheminova and will produce two
teams have the responsibility themselves to organise the work opti- different types of antifungal. The plant's staff was selected from em-
mally. Therefore, the supervisor's role is primarily coordination. The ployees who applied to work at Triazol - knowing that the manage-
supervisor, however, still has the overall environmental and safety ment of the facility wanted a team-based structure as a basis for
responsibilities.
work.

Usually a new employee starts in a team in the role of an 'appren- Plant Manager Soren B. Jepsen led the staffing and training of new
tice'. They are equipped with a logbook in which to note down tasks production workers (operators and overseeing supervisors). He had
and challenges. As time passes, they are given more complex jobs experience in team structures from a previous facility, Pyrethroid,
and greater responsibility. Time wise it is partly dependent of the where a team structure had been tried, but which had experienced
employee's own interest and competence, i.e., how quick they are a degree of relapse to the 'old' way of working, where the supervi-
to learn. The logbook contains milestones (targets) that after three sor planned and decided, and employees implemented. The plant's
~nd six months must be reached. If they fail, there will be a manage- operation required many resources, and the result was that employ-
rral assessment of whether their employment will continue. Overall, ees' first priority was operations, and therefore the working form
the logbook is a key tool in assessing the employee's knowledge and returned to what was familiar.
development.
A more radical team structure was wanted at the new facility.
Therefore, two separate out of house training sessions were organ-
ised - one for operators and one for supervisors. At both sessions,
Triazol plant the exercise was to discuss and process the content of the work, a
typical working day, and what tasks you might expect, and who was
responsible for what. A number of responsibilities were established
for operators.
The challenge was to create a facility where the objectives set are
achieved
To produce different kinds of fungicides, of the right quality and
quantity - at the right time
To reduce production costs through continuous improvements in
everyday life
- To create a dynamic and challenging workplace, where it is fun
to be.

Meanwhile, the work's organisation is a greater challenge, because

15 operators divided into five teams of three persons and only one

30. A multi-plant is a facility, which is able to produce several types of products. A 'normal' plant is built
to produce only one type of product in a continuous process.
 team on duty at a time staff the facility. There is no way to com-
municate between the teams, apart from the ten-minute overlap,
when one team goes home, and another arrives. This places heavy
demands on documentation and responsibility - for both the op-
erators and the supervisors. Another challenge is that at Cheminova
many of the production workers have trouble reading and writing,
making it more difficult to use written communication for instruc-
tion and coordination between teams.
To create an understanding of each other's roles and to strengthen
cooperation and communication, the training sessions ended with
a two-day course, where the operators and supervisors all partici-
pated. They discussed how the team and supervisors should work
together, responsibilities, communication style and rules of coopera-
tion. All staff underwent a personality test based on ideas of The
Whole Brain (Hermann, 1996). Here, staff were analysed with focus
on their personal preferences: The rational, the experimental, the
emotional or the practical.
Hermann's Whole Brain
The goal was to put the team in a position to recognise and identify
their weaknesses. A team where employees, for example, all scored
low on the future factor, would be more aware they should ensure a
progressive and development-oriented focus in their work. A team
that is weak on the emotional, can be very productive, but with a
bad working atmosphere.
The training course was a great success. Both operators and supervi-
sors were dedicated in their work on structure and focused on team
structure. In February 2008, the plant went into production.
After a short period of operation, problems began to arise. The
cause was not cooperation, but the plant's function and operation.
For more than a year, the plant was tested and adapted to enable
it to function optimally, and during this period, commitment and
focus on the new team structure unfortunately disappeared rapidly.
The mental energy to develop and create the new way of working
was no longer present. All efforts went into solving operational and
practical problems.
However, in July 2009, it seemed as though the plant was running
again. All tests and samples looked positive, and the mental energy
was back among the staff. To return to the team structure it called
for an out of the house retraining session, which would focus on how
to get the team structure up and running again.
Questions:
Analyse the team structure at the Triazol plant uSing relevant
theories.
Assess what form of leadership that type of team structure re-
quires. Are there any special conditions that you believe are con-
ducive or inhibitory to establish a team structure for the produc-
tion team?
A challenge in the team structure is to create a reward system
that accounts for the team, as well as the individual. Give sugges-
tions on how Cheminova could structure a reward system to fit
the team structure. You should be aware that due to agreements
and trade unions, you cannot give different wages for the same
job (i.e., a professionally qualified operator gets the same hourly
rate regardless of commitment, initiative, etc. A skilled process
operator, however, receives a lot more than an unskilled opera-
tor/skilled with another qualification).
Give suggestions for activities that you think should be part of the
retraining session for operators at the Triazol plant.
 243

Case 2. Aarhus City Council The council has developed a vision that reflects the council's goals.

ARHUS A vision for Aarhus

KOMMUNE Aarhus is large enough to be interesting and small enough to feel at home.

Aarhus is a lively and attractive city with many educational and research
institutions, and a strong and dynamic economy.

Aarhus City Council is Denmark's second largest council, with ap-

proximately 307,000 inhabitants. Its main task is to service the citi-
zens and businesses in the city. This means ensuring that the services
are there that a city generally needs, and to allocate resources the
city receives through taxes and state aid.
The council is politically controlled and the elected council members
help to allocate resources and plan the future of the city. Due to the
size of Aarhus City Council, it is managed by divisions called civic
departments. Councillors make up the council's policy board, con-
sisting of the mayor and five council members, who each head a civic
department. The council's overall organisation chart looks like this:
Aarhus City Council's organisation chart
The town and its immediate setting provide numerous impressions and ex-
periences from the vibrant and interesting town centre, to the surrounding
communities and beautiful scenery offorests and beaches.
Aarhus is a modern, vibrant urban community with active societies and a
rich recreational and cultural life, but also a city where you can see and feel
the history.
Our groundwork is to develop the city in an era of rapid technological
development, greater cultural diversity and new opportunities for collabo-
ration across traditional boundaries - both locally and internationally. In
the development of the city, we must ensure a broad sense of balance and
sustainability, so that Aarhus remains an excellent city to stay and live in.
Aarhus' vision:
Aarhus - an excellent city for everyone
- The city with room for you to show what you can do.
Everyone should be able to take responsibility for their own lives and
utilise their abilities.
- We should jointly help those who need it.
- There must be room for difference and diversity. Integration must be
our strength.

Aarhus - a city in motion

- The city with a strong and innovative business, cultural, and educational
life.
New ideas must be cultivated and tested using unconventional forms of
cooperation.
- We must lead the way in the development and use of new technology.
- We must orient ourselves internationally and assert ourselves among the
best.

Source: www.aarhuskommen.dk

Source: www.aarhuskommune.dk
In addition for having responsibility in relation to the City Council,
The various committees are the political link between the council councillors and civic department heads are also responsible for en-
and the civic departments. The committees only have advisory func- suring that the council is a good work place. The council makes a big
tions. The mayor and councillors share the top management of local effort to retain and develop employees.
government and are all full-time politicians.
Based on the overall vision, the City Council has internally tried to
create common values for the council.
244 245

Questions:
New vision for Aarhus and common values for Aarhus City Council Based on the above case and references in relevant parts of Aarhus
On 9 October 2003, the council adopted a new vision for Aarhus and com-
City Council's website, please:
mon values for Aarhus City Council.
The vision is comprehensive, long-term and development-oriented and
Based on Hertz's motivation theory, analyse how the council
covers the whole of Aarhus. It will serve as an indicator for development motivates its executives and other employees, and the extent to
and represents the upper levels of Aarhus City Council's goal hierarchy. which maintenance factors provide fertile ground for satisfied
The purpose of preparing these base values is to create common values employees. It is recommended to read these specific topics on the
across many local authority areas and focus on what characterises staff website: Job satisfaction, personnel policy, development policy
contact with the public, businesses and other internal and external part-
and respect.
ners. Unlike the vision, the base values are not concerned with the whole of
Aarhus, but only Aarhus City Council as an organisation. Analyse the council's form of leadership.
The City Council have affirmed the following values. Assess which implementation model of motivation is used.
Analyse Aarhus City Council's corporate culture.
Aarhus City Council's values
In Aarhus City Council, we have a vision for the city and the council's
activities, just as we have developed a wide range of goals for the council's
different areas of work. The vision and goals are indicators for the develop-
ment of Aarhus.
We have also put into words the values that we prioritise highest at Aar-
hus City Council. The values are broad and express what we want to stand
for, and be known for, in our contact with the public, businesses and other
internal and external partners.
These are words and thoughts, that we all know, and in our daily work,
we do our best to live up to them. In this way, the values represent a philo-
sophy for all employees of Aarhus City Council.

The Council's values are:

Credibility - you must have confidence in us
We stand by what we do, and you can count on what we say. We place great
emphasis on quality and accountability, and think generally and in context.
We meet the public and each other with openness.

Respect - everyone should receive fair and decent treatment

We put the public in the centre with a focus on both rights and duties. We
have a special responsibility to ensure broadness and accommodate diver-
sity. We respect other people's right to their own life values, opinions and
experiences.

Commitment - individual efforts make a difference and we must do it even better

We commit ourselves professionally and personally, and we strive to make
a difference. We are focused, result-oriented, and constantly trying to do it
even better. We are flexible and willing to change and appreciate new ideas
and initiatives.

Source: www.aarhuskommune.dk
 247

Case 3. Almeco CM Lab31 The industry is subject to tight regulatory controls. A product must
have approval before being put on the market and for companies
working globally, this can be a very complicated process. Licensing
and regulatory rules are not standardised worldwide.

Another complex factor in the industry is to pinpoint the target

group. Today the target group is both physicians and hospitals, but
The medical device industry is one of the leading industries in the also nurses who assist the doctors, users who treat themselves, and
Danish business community and contributes greatly to the Danish hospital management that must keep within a budget, which has an
economy. Globalisation of the industry places great demands on influence on the equipment purchased.
companies' ability to differentiate. In this respect, the key has been
the ability of innovation. Over a period of 4-5 years, the industry has An analysis of the medical device industry from 2005 concluded that
experienced global growth rates of approximately 7%. The United in order to succeed, it requires:
States dominates the world market, with a market share of approxi-
mately 40%, Europe (30%) and Japan (11%). The 10 largest manu- Access to research and knowledge centres: Close contact with re-
facturers in the world market account for 34% and all have been in search institutes and universities, not just within traditional medical
the market for many years. This makes it difficult for newcomers to research, but also in other areas that cover needs, relationship build-
find a foothold. ing, socio-cultural trends, consumer psychology, etc. This is an area
where Danish companies are lagging behind their competitors in the
In Denmark, some big international companies, such as Novo Nord- U.S.A.
isk, Coloplast, William Demant Holding (hearing aids) and Radiom-
eter, dominate the industry. The 10 largest Danish manufacturers ac- Focus on skills development. The medical device industry has great
count for approximately 80% of the Danish turnover. In addition, the difficulty in recruiting graduates with strong skills in non-medical
industry consists of numerous small and medium-sized manufactur- areas. These include staff with expertise in user-driven innovation,
ers, distributors and subcontractors. Many of these, approximately building relationships with suppliers or analysis of customer needs.
75% are 'spin-offs' from universities and hospitals. Geographically, There is less of a problem with technological capabilities. The fact
the companies are located in three geographic clusters around Co- that Danish medical device companies have more difficulty in com-
penhagen, Aarhus and Aalborg. In Denmark, the industry has expe- mercialising their products than competitors in, for instance, Ger-
rienced increases in turnover, and export growth rates are well above many and England, illustrates the problem.
average for Danish industry.
Focus on networking. Medical device companies need like-minded
The medical device industry is relatively young and diverse. The in- networks. Projects and tasks across the length and breadth of the
dustry provides equipment for medical treatment and includes prod- industry and cooperation with related partners in innovation, an-
ucts as diverse as MRI/CT scanners, dialysis machines and blood thropology, design, etc., are crucial for the development of relevant
pressure meters to catheters, insulin syringes, heart valves, contact skills.
lenses and ostomy bags. Competition in the area is often dependent
on an advanced production method, such as advanced welding of Much of the challenge for small and medium size companies in the
plastic products for urine bags or tubes, and there are significant Danish medical device industry, is to build volume and a market posi-
economies of scale in production. Most products have relatively low tion, where from within their niche, they become part of a strong and
profit margins. Medicine is not a part of the industry, because they competitive network. The ability to innovate is crucial and design of
are based on pharmacology and chemistry, where medical equip- organisational structures and management style that supports this,
ment is based on engineering, digital technology and material tech- is a key part of the company's development.
nology.
One of the newest companies in the medical device industry in Den-
31. Sources: Ugeavisen Esbjerg, (4 February 2010), and Riis (2005) mark is Almeco CM Lab. Max and Else-Marie Terpager established

the company in January 2010. They had sold their dental business
and wanted to start something new. Almeco CM Lab set up 1,000
m2 of production facilities - provisionally with eight men, in three
shifts at the port of Esbjerg. However, the company plans to grow,
and it is expected to create more jobs within the first year.
Almeco CM Lab produces and has a patent on a three-section tube
for freezing and storage of biological materials such as cells, cell
components, DNA and proteins. What is special about Almeco's
tubes is that a portion of the tube may be broken off and used for
testing - i.e., there is only the need for one tube, whereas before it re-
quired more. The tube can be used for stem cell storage and provides
a more uniform, safe and easy storage of the material. Tubes and the
contents are frozen in nitrogen to minus 195 degrees. In addition,
Almeco produces various support materials like labels, dispensers,
etc.
There are only five producers of similar products globally. Customers
are bio banks, hospitals, and laboratories, but potential buyers are
private clinics for freezing stem cells. So far, Almeco has made agree-
ments with distributors in 37 countries and has production in China
and India. In 2010, the order book was for 15 million tubes.
Projects:
Based on information on the global and Danish medical industry,
make an external environment analysis for Almeco CM Lab. Your
analysis will focus on the factors that determine the organisation
of the company.
Assess Almeco's strategy. Which strategy do you think the com-
pany should follow? What impact will the success criteria have on
Almeco?
Give suggestions on how you feel Almeco should design their
organisation. Your answer must include structure, coordination,
production technology, HRM/motivation as culture.
How, do you think Almeco should measure their effectiveness _
resource-based, process-based or goal-based?
- What demands does the design place on Almeco's leadership?
What management style and role, do you mean, Max and Else
Terpager should utilise to promote innovation in the company?
249
Case 4. Dana lim
DANA LIM
Denmark's largest manufacturer of adhesives and
sealants
Dana Lim AjS is one of Denmark's oldest and most traditional glue
manufacturers, who for over 75 years have supplied the Danish mar-
ket with adhesives and sealants. Being Denmark's largest producer of
adhesives, sealants and fillers, Dana Lim always has focus on prod-
uct quality, safety and the environment.
Today, they produce more than 400 different types of adhesives and
sealants at their plant in 1<0ge. Every day in the development labora-
tory, technicians and engineers are trying to push the limits of glue:s
capability, so there is constantly coming new, better and more envi-
ronmentally friendly products on the market.
Dana Lim AjS is 100% Danish owned by the I<ai Hansen Foundation.
Each year the Foundation awards the Dana Lim Prize for scientific
research that promotes Danish business and society.
Despite its strong Danish roots, today Dana Lim is a bus.ines: th~t
goes far beyond the country's borders. There are su~sldl.anes In
Lithuania and Sweden, and the company has representation In many
other European countries.
Dana Lim's strength is a product range of high quality, together with
fast and direct customer contact.
Technical service is open to all, private as well as professional, and
industrial customers.
Dana Lim's products are available from leading retailers across the
country.
250 1': ./ 1i 251

History - short and sweet

Industrial - quality, advice and development
Here are various adhesives developed for different industries.
1928: Kai Hansen starts Dana Lim.
1929: Dansk Limfabrik (Danish Glue Factory) established on Ncrregade.
Furniture Packaging & Labelling
1948: The factory moved to Kobenhavnsve].
1952: Kai Hansen dies suddenly. Doors & Windows Technical Adhesives
1955: Kai Hansen's Foundation takes over Dansk Limfabrik. Floors Other Industries
1973: Danish Limfabrik become a public limited company.
Graphic Production Direct To Datasheets
1988: Danish Limfabrik AlS changes its name to Dana Lim AlS.
1998: Acquisition of The Carlske Factories.
2000: Establishment of Dana lim as UAB in Lithuania. Assembly
2001: Acquisition of Mfa AlS. The following types of products are found in DIY centres.
2004: Acquisition ofEmo Farg AB.
2006: Establishment of Dana Lim AB in Sweden.
Wood Adhesives Sealants - Proff
2008: Establishment of Dana Lim Beijing in China.
Construction & Contact Adhesives Assembly Foam
Floor Adhesives Sealant Tapes
Wallpaper Adhesives Sealant Accessories
Fillers Putty & Wood Filler
Products Sealants Special Products
Fugemasse - Proff NBS Pistols

Office & Hobby - for both children and adults

Whether it's children's rooms, hobby rooms or the office, Dana Lim has the
products you need.
Sales organisation
Their all-round office and hobby products, range from the well-known yel- Three sales divisions handle sales of Dana Lim's products In Den-
low Universallim glue stick to extremely strong epoxy.
marie Retail, construction and industry.
Dana Lim makes a great effort to market the safest products, most of which
have both the A mark and CE marie. The company's subsidiaries represent them in Sweden and Lithuania.
There are 18 different types of products. The export department in cooperation with local representatives
carries out exports to other markets.
Office & Hobby: Multi Glue 323
Office & Hobby Textile Adhesive 327 Sales organisation is shown in Figure p.
Universal Adhesive 300 Araldite Rapid
All-Round Adhesive 304 Araldite 90 Seconds
Gluestick 310 Araldite Extra
Adhesive Strip 312 Araldite Fusion
Paper Glue 314 Araldite Putty
School Glue 315 Super Glue 351
Adhesive Lacquer 319 Super Glue Gel 359
Hobby Adhesive 320
252

Sales organisation at Dana Lim A/S

Index
1 Sales Manager 1 Sales Manager 1 Sales Manager 1 Export Director
1 I(ey Account Manager - Seal and 1 Sales Consultant China: 2 Sales Reps.
5 Sales Consultants 1 Sales Manager - Central & Finland: 1 Sales Consultant
- North Sealand & - Jutland & Funen North Jutland Latvia: 1 Sales Consultant
Greater Copenhagen 1 Sales Consultant Lithuania - Subsidiary:
- South & Central - Funen, Central & 1 Sales Consultant
360-degree assessment 119 Change management 108, Creative/divergent phase 160
Seal and South Jutland Norway: 1 Export Manager
A.P. Moller-Maersk 132 205 Create effective teams 48
- Central Jutland 1 Floor Consultant + 3 Distributor
Funen & South Jutland - Jutland & Funen companies Aarhus Business Academy Change management Cross functional groups 46
- NorthJutiand Poland: 1 Sales Consultant 122 process 221 CSR 147
Sweden - Subsidiary: Adams 81 Change needs 225 Culture 31
1 Sales Manager Adizes 56, 105 Change reactions 214 Dealing with uncertainty 28
4 Sales Reps. Adizes' leadership roles 56 Change strategies 221 Decisions 108
Hungary: 1 Importer Administrative principles 13 Change vision 223 Decision-making process 109
Administrator 58,59 Circus Summarum 156 Decentralised organisations
Administrator role 106 Classical school 11 29
Adjustments externally and Close environment 144 Definition of innovation 155
internally 144 Code of Conduct 145 Democratic manager 96
Almeco CM Lab 246 Common values 133,225 Demographics 166
Project: Alternative options 109 Communication 67,72, Development of teams/
Give an assessment of the sales department's organisational divi- American Marketing 227 teambuilding 60
Association 152 Competencies 169 Dependency 38, 196
sions.
Analyst 28 Com petitors 157 Dialog 221
Prepare two other proposals for possible divisions and describe Analysis 205 Complex and dynamic exter- Different levels ofinnova-
the advantages and disadvantages of these. Analytical/convergent phase nal environment 195 tion 156
162 Com pleter Finisher 58 Differentiation strategy 185
It is recommended to use Dana Lim's website: www.danalim.dk Application of organisational Conflict perception 216 Division of labour 156
groups 46 Conflict types 51 Domain 24
Appreciative Inquiry 74 Conflicts in the team 54 Drucker's 7 sources of
Artefacts 133 Conscientiousness 70 innovation 166
Attitudes 74 Contents ofCSR 147 Dustbin model 112
Authoritarian manager 97 Context 49 E-commerce 209
Authority 95 Coordination mechanisms Effective teams 43, 48
Autonomous groups 35 and dependencies 194 Eiffel Tower 141
Autonomous teams 52 Coordinator 58 Emotional stability 70
Balanced Scorecard 200 Core competencies 182 Employee competencies 82
Base values 244 Corporate culture 133, 143 Entrepreneur role 105
Behaviour 60 Corporate social responsi- ERP 167
Belbin's team roles 56 bility 146 Ethical codes 151
Blake & Mouton 99 Cost leader strategy 185 Ethical decision-making
Burns & Stalker 32 Creative destruction 156 process 149
Business ethics 144 Creative innovative environ- Ethics 15,145
Carroll 145 ment 170 Ethics in a business context
Change Circle 221 Creative process 159, 164 148
254 255

Expectancy theory 82 Informal norms 55 Mintzberg's leader roles 104 Porter & Lawler 80, 83 Ro Ie types 48 Team management 108
Experience-based 112 Inner need 76 Mission 201 Porter's generic strategies Sales management 108 Team structure 43
Expert strategy 218 Innovation 34, 155 Modern manager 90 184 Schein's culture model 133 Teambuilding 62
External environment 21 Innovation capability 153 Modern organisational Positioning analysis 178 Secondary groups 45 Teamwork 63
External incentives 76 Innovation governance 153 design 14 Positive reinforcement 72 Seven sources of change Technology 164
Feedback 82 Innovation versus creativity Moral judgement 150 Power distance 136 169 The Big-five model of
Formal groups 45 155 Motivation 80 Power structure 138 Shaper 57 personal ity 70
Formalising 31 Innovative company 168 Motivation factors 78, 197 Primary groups 45 Single piece production 196 The four primary culture
Frederic Taylor 12 Innovative work place 169 Mutual adjustment 195 Process-based efficiency 199 Signs of design problems types 140
Functional groups 46 Input/output ratio 81 Mutual dependencies 38 Process needs 167 202 The Power Culture 140
Functional structured Inside-out 178 Myers-Briggs Type Indicators Producer role 59, 106 Situation analysis 180 The unexpected 166
organisation 33 Inspirational motivation 92 (MBTI). 69 Product divisional structure Situational leadership 100 Training and development
Functionalist perspective Instructional management National and regional cul- 34 Social responsibility 129, tactics 117,119
144 style 103 ture relationship 136 Production method 31, 246 145 Transformational leader 91
Garuda model 93 Integrator role 106 National level 158 Production process 155 Socio-technical strategy 218 Trornpenaars og Hampden-
Goal hierarchy 183 Inverted Needs Pyramid 78 Negative reinforcement 72 Project groups 45,47 Span of control 29 Turner's culture 141
Group types 44 Job design 48 Network of innovators 158 Prospector 186, 197 Stable 21, 25 Two Factor theory 78
Groups 43 Job development 85 Network structures 37 Punishment 71,72 Stakeholder model 144 Types of innovation 164
Groupshift 55 Job fit-analysis 76 New knowledge 168 Rational decision-making Standardised skills 195 Uncertainty level 181
Guided missile 142 Job rotation 85 Norms 54,75 process 109 Standardisation of work Value base 235
Guiding team 223 Job significance 86 Objective-based efficiency Reciprocal 38, 196 processes 195 Value chain analysis 30
Hackman & Oldham's job Knowledge sharing 34 199 Reference groups 45 Standardisation of outputs Values 75
design model 83 Kotter 91, 222 Objective theory 80 Recruitment 23, 118 195 Victor Vroom 83
Harmony perception 216 l.aissez-faire manager 98 Occupation conditional Remote environment 144 Strategic 'fit' 187 View of human nature 95,
Hawthorne studies 14 Leader roles 104 ethical codes 151 Resistance to change 212 Strategic level 183 98
Hersey & Blanchard 102 Leadership 89,90 Openness 70 Resource-based perspec- Strategic process 180 Vision 183
Herzberg 79 Leadersh ip characteristics Optimal composition of ad tive 178 Strengths and weaknesses Wealth of ideas 161
Hierarchy 29 95 hoc-teams 56 Resource-based efficiency 57,62 Word chain 161
Hofstede's cultural Leadership form 111 Organic organisations 33 199 Structural redesign 85 X-view perception 97, 218
dimensions 117 Learning organisations 17 Organisational culture 14, Resource Investigator 58 Structure 21 ff. XYtheory 95
Horizontal division of labour Leavitt's Diamond Model 17 Resource types 182 Tactical level 183 Y-view perception 97,218
29 211 Organisational design 14 Rewards 95,139 Tannenbaum & Schmidt
Horizontal communication Lewin 96 Organisational fit analysis Role conflict 48 101
and coordination 35 Lewin's leadership forms 76
H R activities 117 111 Organisational justice 80
HR management (HRM) Logical and rational Organisational strategies
116 behaviour 160 190
HR results 117 Maintenance factors 79 Organisational structure
H R strategy 117 Management development 28,193
Human Resources (HR) 115 121 OT analysis 181
Idea assessment method Management style 79,96 Outcome 225
163 Managerial Grid 99 Outside-in 177
Idea generator 170 Maslow's Pyramid of Needs Participating management
Idea killer 157 79 style 103
Idealised influence 92 Mass produced 196 Perception 166
Incongruent 167 Matrix organisation 36 Performance-based rewards
Incubator 141 McClelland's theory 79 117
Individuals in groups 47 McGregor 95 Permanent team 60
Individual level 156 Mechanistic or organic Personnel policy 121
Individualism 136 structures 32 Personnel quota 30
Industrial ethical codes 151 Mechanistic organisation Personality 56
Industrial revolution 11 33 Personality test 60
Industry and market Michael Porter 177 Picture association 162
structure 167 Miles & Snow's archetypes Plant 58
Informal groups 45 186 Pooled 196
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