Organisation and Management

This case study deals with the Oticon’s organizational change, a Danish firm specialised in hearing aids. Due to an instable environment, the firm has transformed the organisation of the structure in order to be competitive in an international market and consequently it has changed the work, the hierarchy, the organisational culture and patterns. The case study shows us with the real example of Oticon how that change can affect the organisational behaviour of the employees and how Lars Kolind manage them in order to stimulate their motivation and increase the productivity. According to the results of the turnover and market shares, that change is a success but it also has some limits which may affect the activity of Oticon.

Indeed, the organization has completely changed in term of work because “everyone started in a different workplace” and Oticon has adopted a structure in which the employees are present and involve in the important decisions. This new structure based on “project-organisation” is called “spaghetti-organisation. We can recognize some aspects and characteristics of an organic structure with “the lack of a line of command”. Oticon has therefore abolished the hierarchy from the top and the departmentalisation and the work is based on projects in which the employees involve. All has been done to valorise this involvement and the communication between the employees in and inter-project: “turn down the wall…, employees move desk to desk”. Oticon chose to adopt a kind of matrix structure (Hatch 1997, p.187) in which there are some aspects of mechanistic structure (Hatch 1997, p.76) with “still a number of routine” and bureaucratic tasks (Weber 1947).

The change process was quite long and has totally affected the organizational behaviour of the employees. Lewin states that “the change allows three separate activities: “Unfreezing, change or movement, and refreezing” (Hatch 1997 p.353/354). In Oticon, unfreezing did occur with the “meetings” and negotiation with the employees in order to reduce the resistance because the change was not “without some resistance” of the employees. Unfreezing activity took three years because Oticon took its time to prepare the employees to the transformation in adopting a planned change. Then occurred the change or move stage, introducing a new way of work like the use of a personal computer at work and at home, a new organisational culture “turn down the wall to create a big open plan office”, with a different “style of management” requiring the participation of the employees.

Finally, refreezing occurs when the new patterns “stabilize or become institutionalised” like the implement of a reward system in Oticon with the possibility to obtain “scarces resources” if someone is “successful in the promotion” of projects. “An organisation can be viewed as a culture in its own right, as a set of subcultures, or as an artifact through which an even larger culture expresses itself” (Hatch 1997, p.235). We can say that Oticon has successfully completed its change because the turnover was low and the employees have adopted the new patterns and organisational culture. Before the change, Harrison would have said that Oticon had more a role culture with the job specialisation, functions and now it has more a task culture with the adaptability, team settings. However it keeps a role culture: “still a number of routine administrative tasks” (Mullins L. 1999, p.803/804).

There are two types of project group, those for a short period and those for a long period varying “according to the amount of work being done and the complexity of the tasks”. The purpose consists in confronting ideas and points of view and obtaining the motivation of workers through the involvement. Apparently, it is a success because the turnover was low “no one left the company …” even if “not everyone felt comfortable”. Huczynski and Buchanan give us some characteristics of psychological group helping us to understand the operation of Oticon groups: “minimum membership of 2 people, a shared communication, a shared sense of collective identity, shared goals, a group structure” (Huczynski and Buchanan, 2003 p.277/278).

Mayo found that the productivity of a group is influenced by social factors, “people at work are motivated by more than just pay and condition”, the need for recognition, security and sense of belongings is more important in workers’ productivity than the physical conditions”(Huczynski and B., p.286). In addition, Maslow and the pyramid of needs confirm this idea that if you improve the quality of life and the condition of work of the employees, the productivity will increase because the workers are more pleased to go to work and motivated. Indeed, the money is not the only factor of motivation and Oticon’s manager understood it. Lars Kolind has a modernist vision of the organisation characterised by the subjective epistemological view consisting in believing that “knowledge is relative to the knower and can only be created and understood from the point of view of the individuals who are directly involved”(Hatch 1997, p.48).

Moreover, he is managerialist because as the Classical school he thinks that the workers have to be controlled but he exploits them in a different way, by the involvement of the employees who are motivated and become more productive. He has chosen a “genuine laissez-faire” leadership style (Mullins L. 1999, p.267). He also said: “If people don’t have anything to do, they need to find something – or we don’t need them”. He exercises his power unfairly because he obliged the employees to involve. Consequently the employees are “self-disciplining” and monitor themselves for the benefit of the company (Foucault 1979). The radical Karl Marx would have been totally against that because he would have said that it is an exploitation and “alienation” of the workers because of the unbalanced power between the employees and the manager and between the employees and the project managers (Hatch p.28).

However, even if the formal hierarchy has disappeared Lars Kolind has kept a Classical vision because the power is still at the top. Indeed, he is the most powerful person because he owns ten per cent of the shares and he exercises a strong power. Indeed, “project groups meet with the top management once every three month to present their work and results”. He holds the “bases of the power”: coercive, reward, referent, legitimate and expert power (French and Raven, 1958). Moreover, the project leaders are quite powerful because they are “free to manage” their project group in the way they want. They also choose the members of each group and are responsible of the results of the groups, they have the “legitimate” and “reward” power.

According to the results, Oticon’s organisational change is successful however that system demonstrates some limits like the problem of overview “no one outside the project can really know what’s going on inside the group”. In this new organisation the mechanism of communication are simpler and easier however the communication is not better. In addition, the employees work for more than one project and sometimes “people become intertwined”, it is a big mess thus the name of “spaghetti organisation”.

We saw that the transformation of Oticon is a success but in the same time there are a lot of drawbacks non negligible. We can wonder if Oticon’s manager did the right choice in a long term. Indeed, the environment was instable and the competitors had invested consequently Oticon had to react in order to be competitive. Lars Kolind has chosen to adopt a project organisation very flexible and it is a choice among others. However, we also can wonder what will be the Oticon’s destiny. Will the problems of overview and “intertwined” projects involve bad consequences for its activity?

References

French J. and Raven B., (1958) The bases of social power, in D. Cartwright (ed.) as quoted in Huczynski A. and Buchanan D., (2003) Organizational behaviour, 2nd ed., Prentice Hall, p.807.

Foucault M., (1979) Discipline and Punish as quoted in Huczynski A. and Buchanan D., (2003) Organizational behaviour, 2nd ed., Prentice Hall, p.813/814.

Hatch M.J., (1997) Organizational theory, Oxford University Press.

Huczynski A. and Buchanan D., (2003) Organizational behaviour, 2nd ed., Prentice Hall.

Lewin Kurt, (1951) The Field theory in social science, New York: Harper and Row, as quoted in Hatch M.J., (1997) Organizational theory, Oxford University Press.

Marx K., (1974) Capital, Vol.1, London: Lawrence and Wishart, as quoted in M.J., (1997) Organizational theory, Oxford University Press.

Mullins Laurie J., (1999) Management and organisational behaviour, 5th ed. Financial Times Prentice Hall.

Mayo Elton, (1933) The Human Problems of an Industrial Civilisation, Macmillan, New York as quoted in Huczynski A. and Bucanan D., (2003) Organisational behaviour, 2nd ed., Prentice Hall.

Weber Max, (1947) The theory of social and economic organization, A.H. Henderson and Tallcott Parsons, as quoted in Hatch M.J., (1997) Organizational theory, Oxford University Press.

Bibliography

Huczynski and Buchanan, (2003) Organizational behaviour, 2nd ed. Prentice Hall.

Mullins Laurie J., (1999) Management and organisational behaviour, 5th ed. Financial Times Prentice Hall.

Mary Jo Hatch, (1997) Organizational theory, Oxford University Press.

Pfeffer J., (1978) Organizational Design, AHM Publishing Corporation.

Steven Lukes, (1987) Power, Basil Blackwell.

www.longroad.ac.uk/accreditation/subject_business/bs_as/module_2/motivation/mayo_as.htm