Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1 Name || DSouza Pritam Henry 571017160 Halo

o Technologies, Thane, Mumbai 1976 Master of Business Administration - HR Fourth Semester Change Management 1 23rd March 2012

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q1. What are the requirements for making organizational change. Ans. Cummings and Worley (Organization Development and Change, 1995) describe a comprehensive, five-phase, general process for managing change, including: 1) motivating change, 2) creating vision, 3) developing political support, 4) managing the transition and 5) sustaining momentum. That process seems suitable for organizing and describing general guidelines about managing change. Whatever model you choose to use when guiding organizational change, that model should include the priorities and areas of emphasis described in the following five phases of change. The collaborative consulting model described integrates highlights from all of the five phases. Motivating Change This phase includes creating a readiness for change in your client organization and developing approaches to overcome resistance to change. General guidelines for managing this phase include enlightening members of the organization about the need for change, expressing the current status of the organization and where it needs to be in the future, and developing realistic approaches about how change might be accomplished. Next, organization leaders need to recognize that people in the organization are likely to resist making major changes for a variety of reasons, including fear of the unknown, inadequacy to deal with the change and whether the change will result in an adverse effect on their jobs. People need to feel that their concerns are being heard. Leaders must widely communicate the need for the change and how the change can be accomplished successfully. Leaders must listen to the employees people need to feel that the approach to change will include their strong input and ongoing involvement. Creating Vision Leaders in the organization must articulate a clear vision that describes what the change effort is striving to accomplish. Ideally, people in the organization have strong input to the creation of the vision and how it can be achieved. The vision should clearly depict how the achievement of the vision will improve the organization. It is critically important that people believe that the vision is relevant and realistic. Research indicates that cynicism is increasing in organizations in regard to change efforts. People do not want to hear the need for the latest silver bullet that will completely turn the organization around and make things better for everyone all the time. They want to feel respected enough by leaders to be involved and to work toward a vision that is realistic, yet promising in the long run. Often the vision is described in terms of overall outcomes (or changes) to be achieved by all or parts of the organization, including associated goals and objectives to achieve the outcomes. Sometimes, an overall purpose, or mission, is associated with the effort to achieve the vision, as well. Developing Political Support This phase of change management is often overlooked, yet it is the phase that often stops successful change from occurring. Politics in organizations is about power. Power is important among members of the organization when striving for the resources and influence necessary to successfully carry out their jobs. Power is also important when striving to maintain jobs and job security. Power usually comes from credibility, whether from strong expertise or integrity. Power also comes from the authority of ones position in the organization. Some people have a strong negative reaction when talking about power because power often is associated with negative applications, for example, manipulation, abuse or harassment. However, Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 2

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Adapted from Field Guide to Consulting and Organizational Development power, like conflict, exists in all human interactions and is not always bad. It is how power and conflict are used and managed that determine how power and conflict should be perceived. Matters of power and politics are critically important to recognize and manage during organizational change activities. Change often means shifts in power across management levels, functions and groups. To be successful, the change effort must recruit the support of all key power players, for example, senior management, subject matter experts and others who are recognized as having strong expertise and integrity. A strong mechanism for ensuring alignment of power with the change effort is to develop a network of power-players who interact and count on each other to support and guide the change effort. Means to manage power can include ensuring that all power-players are involved in recognizing the need for change, developing the vision and methods to achieve the vision, and organization-wide communication about the status of change. Any recommendations or concerns expressed by those in power must be promptly recognized and worked through. Managing Transition This phase occurs when the organization works to make the actual transition from the current state to the future state. In consultations, this phase usually is called implementation of the action plans. The plans can include a wide variety of interventions, or activities designed to make a change in the organization, for example, creating and/or modifying major structures and processes in the organization. These changes might require ongoing coaching, training and enforcement of new policies and procedures. In addition, means of effective change management must continue, including strong, clear, ongoing communication about the need for the change, status of the change, and solicitation of organization members continuing input to the change effort. Ideally, the various actions are integrated into one overall Change Management Plan that includes specific objectives, or milestones, that must be accomplished by various deadlines, along with responsibilities for achieving each objective. Rarely are these plans implemented exactly as planned. Thus, as important as developing the plan, is making the many ongoing adjustments to the plan with key members of the organization, while keeping other members up-to-date about the changes and the reasons for them. Sustaining Momentum Often, the most difficult phase in managing change is this phase when leaders work to sustain the momentum of the implementation and adjustment of plans. Change efforts can encounter a wide variety of obstacles, for example, strong resistance from members of the organization, sudden departure of a key leader in the organization, or a dramatic reduction in sales. Strong, visible, ongoing support from top leadership is critically important to show overall credibility and accountabilities in the change effort. Those participating in the change effort often require ongoing support, often in the form of provision of resources, along with training and coaching. The role of support cannot be minimized despite its importance during organizational change, the role of support is often forgotten. At this point in a consulting project, it may be wise for you to ensure you have ongoing support (often from other consultants) that can provide you ongoing objectivity, affirmation, provision of resources and other forms of support. Employee performance management systems play a critical role in this phase of organizational change, including in setting goals, sharing feedback about accomplishment of goals, rewarding behaviors that successfully achieve goals and accomplish change, and addressing performance issues. =======================X=======================X========================= Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 3

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q2. Describe the role of leaders in managing change. Ans. The leaders play an important role in the change management. The leaders at different levels in the organisation will have different roles to play. The leaders work towards achieving the goals in the organisation. Whenever the leaders are planning to manage change, it is necessary to follow few principles. They are: Different people react in different way for the changes: The opinion of different people varies in a different way. Some people like to follow the old system and they want things to be as it is, so they like to be at the stability end of the spectrum. Some other people encourage for the new upcoming change, so they like to be at the change end. Many problems come when the people find that their opinions do not match with the situations. In such a condition the individuals will be dissatisfied, experience stress, and dislike individuals at the other end. Stability..Change The above drawing shows the spectrum of change. The opinion of the people varies from person to person. There are some people who like to follow the old system and they will be at the stability side of the spectrum. There are some other people who will be encouraging the change process so that the people will place themselves at the change side of the spectrum. Everyone has fundamental needs that have to be met: The need vary depending on the people. There is some degree for each of the needs. The change programme has to meet the control, inclusion and openness needs of the individuals otherwise there is chance for negative reactions ranging from the resistance to the opposition. Will Schutz, a famous psychologist have identified three fundamental needs in people's reaction to change. They are: o The need for control. o The need for inclusion. o The need for openness. Change often involves a loss, and people go through the "loss curve": The loss of curve explains the feelings of the individuals as the time proceeds in the change process.

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

The loss curve depends on the extent of loss in the chain management programme. If someone is promoted to higher position then the loss in the lower position is not a big issue, since something better has replaced the old one. But if someone is made with a purpose of getting a new job then the losses will have a harmful effect. The common factors that can be found in all loss curves are: At the initial position, there can be no sinking of the change. For example, there are some people in the organisation who will be very confident that the changes will not occur at all. In such a situation, it is very difficult to start with the new process. Whenever there is a loss then the individual hits a deep low. The depth will be more if the loss is sudden or unexpected. Adjusting to the new situations takes a longer time. Expectations need to be managed realistically: Some of the enforced changes do not meet the expectations of the employees that time certainly they will be unhappy and the expectations have to be set at the realistic level. For example: Suppose that we are a contractor for any project and we expect to be paid in 14 days but the contract says 30 days then we need to discuss and make sure that we get what we are expecting. If this not happening then we must make sure that the expectations are managed by both contractor and buyer. Fears have to be dealt with: It is the tendency of human beings to go out of the window, whenever there are some significant changes. Some people fear the worst since their minds will not be very conscious to know the things better. There are many fears which an employee faces during a changing phase. Some of them are like: Loosing the job. Inability to survive in changed setup Not getting a new job. Future problems arising due to loss of job. The fears have to be addressed by leaders in an understanding way by making them understand that the redundant people can get the better job. Main roles of a leader in change According to Senge, Leadership occur at different locations in an organisation. Some leaders have the traditional hierarchical leadership they are more formal. Some local leaders have to transfer the vision into an action. Network leaders have the job of connecting different parts of an organisation that are involved in the change. Bate has given the list of roles of leaders according to his idea of five dimensions of cultural leadership. The five dimensions are: The aesthetic culture deals with the ideas about the change. This is the sensate, ideational and idealistic culture. This is the species culture. The political culture deals with the meaning of change and involves putting ideas into the words. This gives the ownership to that political idea of the community. The ethical culture deals with the standards in the change and involves the guiding of learning process. This involves some ethics that have to be followed in the organisation. Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 5

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

The action culture involves the translations from cultural meanings into the cultural practices. This involves the practices that are followed around in the environment. The formative culture deals with the structures those are in change. This involves the architecture of culture. This involves the structures around the change. The role model leader provides the confidence to manage the change process and demonstrates some of the characters which play an important role in the change process. They are: Wider context: The leader has the ability to deal the changes in wider way since it is not only limited to the organisation strategy but it is spread to the team, division and the organisation. Empathy: The leader has the ability to see others and understand and acknowledge others for managing the change process. Communication or being straight: The leader communicates directly to the people about the present and future changes and keeps the people well informed. Leader communicates both the good and the bad news with the people. Leader will be honest in terms of the change and the consequences of the change on the individual as well as the team. Counselling: The leader counsels the individuals who are undergoing change and respects the individuals change by understanding their emotions. Challenging: The leader identifies the unacceptable attitudes and behaviours and suggests for the acceptable attitudes and behaviours and maintains the comfort among the individuals and groups. Involving: The leader encourages the individual and team to involve fully in the change process and make sure that the change is successful. Reframing: The leader has the ability to see the situation from different perspectives and encourages others to do in the same way. This helps to create solutions in order to put the situations in a coherent framework. Enable learning: The leader enables the people to learn new skills, gain knowledge and the behaviours. Reviewing: The leader ensure that the certain reviews are done on regular basis for the proper management process. Recognitions set a positive environment so it is necessary to give positive feedback for the individuals as well as the group when they achieve their objectives. =======================X=======================X=========================

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q3. What are the challenges that managers face in implementing successful change? Ans: There are many challenges that have to be addressed for implementing the change. It is human tendency to resist the changes since the change require learning new skills when we are very much comfortable with the old rules. There are many challenges that have to be faced by the organisation that have to be implemented by the organisation. They are: There is more competition from other countries in the market of today. In this situation we have to look with our organisation whether the organisation is able to cope with the market after implementing the change. There will be some socio, economic problems like the resource allocations and the impact of the resource allocation like depletion of resources on the environment. There are some changes may effect the life style of the people. There may be extra effort that is needed in the case of change process. There is a need to learn about the learning of new skills in the case of implementation of change that has to be carried out. There are many theories that explain why the people resist the change even when there is a necessity for the change. The resistance to change is the major challenge that is faced in all the organisations of todays world, Resistance to change can be averted via some factors. They are: Commitment: From the top level authorities in the organisation to the low level authorities, each employee has to commit for the plan. This begins at the top so that it shows the good leadership. A change mandate: it is necessary to tell the employee in a very convincing way that the change is necessary and it is not a choice. Input: Any employee who is going to undergo the change must be given an opportunity to raise their queries in the respected way. Accountability: Every individual those who are involved in the change process are responsible for implementing their own individual change activity. If they do not meet that responsibility then they may have to face some consequences. Rewards and celebrations: The successful implementation in the organisation should be well acknowledged. The organisation as a whole should honour the successful implementation. Evaluation: The Examination of the implementation is carried at the regular intervals for the success of the organisation. Whenever a change takes place in an organisation, the personal compact, that is, the relationship between the employers and employees gets affected. The personal compacts are of three types. They are:

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

The formal compact: This involves the formal basic tasks and performance requirements as defined by the documents of the company like job descriptions, employment contracts and performance agreements. The psychological compact: This involves the trust between the employee and the employer. This is needed for the better achievement of the individual as well as the company's objectives. The social compact: This involves the employee's opinion about the culture of an organisation and the success of that organisation. Change usually destabilises the relationship between the employee and the employer, since they will not be comfortable with these changes. These will cause the resistance to change. It is not simply the new idea that causes the resistance to change. As soon as the change is announced in the organisation, many employees will adapt some tactics to protect themselves. The position of the employees in the organisation will be: Argumentative: There are some employees who aggressively challenge against the change which is necessary. This is the time waster and it opposes the critical objectives that have to be met. The employee must agree that every idea is worth of consideration. We need to ask some suggestions from the employees those who challenge the change. Avoidance: Some managers and the members of the leadership team will simply avoid the change without refusing the change process. This is done by showing some kind of avoidance like not attending the meetings, denying the resources, or withholding the feedback. Leading the change is difficult in this as it requires the time and money for the change process management. Distraction: Many employees in the organisation show this type of attitude by showing some diversions during the change process that definitely reduce the effort. A distracted individual shows this by not involving physically as well as mentally in the change process. Once the resistances are identified, then we can use several strategies that are used to overcome the resistance to changes. All the employees must be given the same respect, since every individual will have their own opinion for the change. It is advisable to seek the agreement in all the stages of change process. When there are many on the board in the organisation then it is good to ask and address the few holdouts which are helpful to drive the goal. Finally the resistance is overcome by making sure that the change is communicated in the proper way that is in the multi dimensional format. Adult learning theory supports the need to propagate the messages that are seen, heard and felt.

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q4. Change management plays an important role in any organisation, as the task of managing change is not an easy one. Justify. Ans. The management of change from manager or project teams perspective is called Organisational change management. Here, the focus is on broad change management practices and skills that can help the organisation to understand, accept, and support the needed business change. The main focus is on change management plans, communication plans and training programs. The parties involved in this are project team members, human resources, and key business leaders that sponsor the change. For organisational change management, you have to build knowledge and abilities in the following areas: o Change management teams structure and roles. o Change implementation barriers. o Change management planning and strategies. o Employee resistance management. o Organisational change management methodologies. o Executive sponsorship building. o Communication plans, training, and educational programs creation. o Incentive and recognition programs. Organisational change management covers all the activities aimed at helping an organisation to successfully accept and adopt new technologies and new ways to serve its customers. Effective change management helps in transformation of strategy, processes, technology, and people to enhance performance and ensures continuous improvement in a constantly changing environment. A comprehensive and structured approach to organisational change management is important for the success of any project that can bring significant change. Significant organisational change occurs only when organisation changes its overall strategy for success, adds or removes a major section or practice, and/or wants to change the nature by which it operates. It also occurs when an organisation evolves through various life cycles. To understand organisational change and begin guiding successful change efforts, the change agent should have a broad understanding of the context of the change effort. This includes understanding the basic systems and structures in organisations, including their typical terms and roles. This requirement includes understanding of leadership and management of the organisations, as well. In the past few decades, number of tools has been explored to help change agents to effectively explore, understand and communicate, and guide the organisations. Tools from systems theory and systems thinking are a major breakthrough. Even if the change agent is not an expert in systems theory and thinking, a basic understanding can develop a new way of working. Types There are many types of organisational changes: Organisation-wide versus subsystem change: Usually, organisations undertake organisation-wide change to evolve into a different level in their life cycle. Examples for organisation-wide changes are major restructuring, collaboration, cultural change. Examples of subsystem change include addition or removal of a product or service, reorganisation of certain department, or implementation of a new process to deliver products or services. Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 9

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Transformational versus incremental change: Transformational change is also referred to as quantum change. Examples of transformational change include changing an organisations structure and culture from the traditional top-down, hierarchical structure to a large amount of self-directing teams, Business Process Re-engineering. Examples of incremental change include continuous improvement as a quality management process or implementation of new computer system to increase efficiencies. Sometimes, organisations experience incremental change, but its leaders fail to recognise that change. Remedial versus developmental change: Change can be used as a remedy to the current situation. Examples for remedial changes are to improve the poor performance of a product or the entire organisation, reduce burnout in the workplace, and help the organisation to become more proactive and less reactive, or address large budget deficits. Change can be developmental i.e., it can be applied to a successful situation and make it more successful. Examples for developmental change are, expand the amount of customers served, or duplicate successful products or services. Unplanned versus planned change: Unplanned change occurs because of a major, sudden surprise to the organisation, which forces its members to respond in a highly reactive and disorganised fashion. Planned change occurs when leaders in the organisation recognise the need for a major change and proactively organise a plan to accomplish the change. Note that the planned change often does not occur in a highly organised fashion. Instead, it occurs in a chaotic and disorderly fashion than expected by participants. =======================X=======================X=========================

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q5. How do change managers recognize resistance of employees to change? Ans. It is important to be able to spot the resistance to change when it occurs rather than get surprised when the change mysteriously fails. Identifying the same will help you to respond appropriately to it. This is one of the biggest challenges faced by the change managers. If you can catch the resistance early, it will then give you a chance to respond to it before it takes hold, hence, effectively nipping it in the bud. Let us first look into some of the early signs of resistance. These can be in the form of: Gossip When a change is announced, the tom-toms will start beating loudly and the grapevine will bear fruits of much and varied opinion. Keep your ear to the ground so as to know what is being said around the coffee points. Listen particularly for declarations of intent and attempts to organise resistance. Grumbling and complaints are natural ways of airing discomfort, so you should not try to squash it as this will anyway lead you to failure. The biggest danger happens when it is allowed to ferment in an information vacuum. Respond to the gossip by opening it up, show that you are listening to the concerns and that are taking them seriously. Providing lots of valid information will help to fill the vacuum. Testing Just as a high school class tests a teacher's ability to maintain discipline, so will some brave souls test out what would happen when they resist the change. An example, the resisters may not turn up to a meeting or may openly challenge a decision. How you deal with such early resistance has a significant effect on what happens next. For example, you can shout at them and hurt their sentiments, or you can take an adult position, describe what they have done and assertively question their motives. Resistance to change can occur in two ways, namely: Individual action Individuals, may resist, however, this is generally limited to the extent of their personal power. For those with a lower power, this may include passive refusals and covert action. For those with more power, the resistance may include open challenge and criticism. An individual action must be handled individually. It should be started with those who possess a greater power and then the message gets automatically conveyed to those below. An example of dealing with an individual who is resisting change: Disciplining a senior executive can send a strong signal to the other resistors. Collective action People generally do not bother of organising unless and until they have serious issues with the change. This gives rise to what is known as organised resistance. Organised resistance is usually a sign of a serious problem. When these people find a common voice in the organised resistance, then their words and actions could create a significant threat to the change, even though they might be individually less powerful. Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 11

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Care should be taken while managing the collectives. It should be done by negotiating with their leaders rather than dealing with a myriad of smaller fires. You may be needed to make some concessions, but you can see to it that at least at the end of the negotiation you should be able to rescue some key elements of the change. You can also use the 'divide and conquer' approach, by striking deals with the individual key players; although this must be done carefully as it can cause a serious backlash. An example of a collective action against resistance to change: Trade Union. Resistance need not always be out in the open, in most cases it often starts out in a more underhand, covert way. Thus, we can conclude that resistance to change is basically expressed in two ways. These include: Covert resistance Covert resistance is the deliberate form of resistance to change, but done in a manner such that it allows the perpetrators to seem as though they are not resisting. Covert resistance should be handled by showing that you know what is happening and investigations should be so designed so as to identify the people responsible. When the resistance is covert in nature, you may also be required to resort to covert methods to identify the source and hence take appropriate action. An example of covert resistance being expressed can be through the sabotage of various kinds. Overt resistance Overt resistance does not try to hide, as it is the result of either of someone comfortable with their power, or someone for whom covert acts are against their values, or someone who may be desperate. Deal with the overt resistance by first seeking to respond openly and authentically. If they are blindly resisting, then you will be left with no alternative but to defend, for example by isolating and disciplining the culprits. Although overt active resistance is potentially damaging, it is at least visible and there is the option of using formal disciplinary actions. An example of overt resistance being expressed can be in the form of an open argument such as refusal or attack. Another aspect of the overt resistance is that it does not necessarily need to take positive action as in some cases it can be passive. Overt resistance can be expressed through two types of actions. They are: Passive resistance Passive resistance occurs when people do not take any specific action. Their main tool will be to refuse to collaborate with the change. They may agree and then do nothing to fulfil their commitments. This could become very difficult to address, as the resisters would have particularly not done anything wrong. One way to address this is by getting the public commitment to an action, and by following it up publicly if required. This will ensure that they complete the action. This process should be repeated until they are either bought in or they give in. For example, during meetings, they may sit quietly and appear to agree with the change. Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 12

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Active resistances Active resistance occurs when people take specific and deliberate action to resist the change. It may be made overt, with public statements and acts of resistance, or it may be made covert, such as organising others to create an underground resistance movement. Thus, we have seen the different ways of recognising resistance.

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Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

Q6. What are the three dimensions of organisational structure? Ans. According to Robins, organisational structure has three dimensions.

Dimensions of Organisational Structure

Formalisation

Centralisation

Complexity

a) Formalisation Formalisation refers to the degree to which the activities, policies, measures, instructions are carried out and how they are defined, mentioned, and standardised in an organisation. The degree of formalisation is higher when compared with the degree of division of labour, the degree of departmentalisation, the degree of span of control, and the level of delegation of authority. Some of the benefits of formalisation are as follows: Formalisation cuts-down the irregularity in the organisation as the activities are standardised. Formalisation increases coordination as the activities are distinct and specified which ultimately leads to an effective coordination between the managers and the employees. Formalisation reduces the operation cost of the organisation. Formalisation reduces conflicts and uncertainties as most of the activities are standardised. Though formalisation is beneficial, it is not away from criticisms. Some of its criticisms are as follows: As most of the activities are standardised, there is no scope for creativity and flexibility. It is difficult to change the rules that are followed in the organisation. If any new rules are formed and implemented, employees struggle a lot to cope up with it. Though formalisation has certain limitations, it is used in many organisations as it effects in smooth and effective running of organisations. Also, it builds good relationship and efficiency within the organisation. b) Centralisation Centralisation refers to the degree to which decision-making is given importance in the organisation. Centralisation is one among the fourteen principles stated by [2]Henry Fayol. His principle says Diminishing the role of subordinates in decision-making is centralisation and decentralisation is the opposite of centralisation. In centralisation, control and decision-making are made by the top level of management but they have less power. It is impractical to have absolute centralisation as it would deprive subordinates based on power, authority and duties. The concept of centralisation plays a major role in the survival of small organisations as they face competition in the market. Importance is given to decentralisation only when there is larger organisation as decision making has to be placed in the centre of the operating level. It is because of the complexity of industries in terms of size, interdependence of work flow, complex tasks and physical barriers within and among Winter Drive November 2011 Sikkim Manipal University Submitted By: Pritam DSouza Registration No. : 571017160 14

Master of Business Administration-MBA Semester 4 Assignment - MU0018 Change Management - Set 1

groups. Decentralisation pushes down the authority and power of decision-making to the lower levels in the organisation. However, it is a systematic effort to hand over power and authority to the lowest levels. The concept of decentralisation can also be related to fundamental principles of democratic management as every individual gets justified admiration for their worth. c) Complexity Complexity is referred to the differences among jobs and divisions. Complexity highlights the degree of differentiation that exits inside the organisation. Complex organisational structure comes into force because of variety of jobs and divisions within the organisation. As it is very complex, the management of it becomes very difficult and boring. Complexity of the organisation also refers to the degree of management, communication and control within the organisation. Based on complexity of activities within the organisation, there are three types of differences. If the differentiation is higher, higher will be the complexity. Differentiation Based on Complexity

Horizontal Differentiation

Vertical Differentiation

Spatial Differentiation

Horizontal differentiation: It refers to the total number of dissimilar units at the same level in the organisation. Examples: Specialisation, departmentalisation. Vertical differentiation: It refers to total number of levels in the organisation. It reflects the depth of hierarchy in the organisation. The hierarchal increase will improve the complexity in the organisation. By this coordination and communication becomes difficult as they are he important factors of working. Spatial differentiation: It refers to a degree to which location of units and the personnels are distributed. This increases the complexity of organisations in multiple locations as coordination and interaction becomes difficult in the organisation. All these dimensions contribute a lot to efficiency, centralisation, specialisation, centralised authority of functional departments, and monitors span of control. Therefore, all these dimensions are vital and integral part of the organisation to run successfully and economically.

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