The Impact That Individuals Groups And Structure Have Commerce Essay

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Organisational Behaviour is a field of study that investigates and understands the impact that individuals, groups and structure have on behavioural patterns within an organisation. It focuses on how to improve productivity, reduce absent, with the purpose of using absenteeism and turnover, and increase employee satisfaction. However, Luthans, F., 2005 defines OB as 'the study of the behaviour of people in an organisational setting that involves the understanding, prediction and control of human behaviour'. It does this by taking a system approach. That is, it interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Its purpose is to build better relationships by achieving human objectives, organizational objectives, and social objectives.

Elements of Organisational Behaviour

Oticon base rests on management's philosophy, values, vision and goals. This in turn drives the organizational culture which is composed of the formal organization, informal organization, and the social environment. The culture of Oticon determines the type of leadership, communication, and group dynamics within the organization. Culture also helps workers perceive this as the quality of work life which directs their degree of motivation. The final outcomes are performance, individual satisfaction, and personal growth and development. All these elements combine to build the model or framework in which Oticon operates from. A comprehensive diagnosis of OB requires assessment of behaviour at the individual, group and organisational levels; see figure 1 below.


Organisational Behaviour




Group Level

Team Performance







Individual Level





Individual differences



Oticon Background

Oticon is a Danish organisation that was founded in 1904 by Williams Demant and is a major manufacture of hearing aids. During the 1970s Oticon was considered by many to be the leading manufacturer of hearing aids in the world. They accounted for approximately 25 per cent world market. In the late 2008, the organisation was faced with some tough challenges due to factors such as the changing dynamics in the hearing aids industry and the global financial crisis. In light of this, their market share had declined to approximately 20 percent.

The design of traditional hearing aids commonly known as the 'behind the ear' model which was the cornerstone of the success of Oticon, was rendered almost obsolete as the innovation of a new compact inner ear design of hearing aid became the style of choice in the global market. In light of this Oticon was force to change, with this in mind, this presentation will consider four elements of organisational behaviour as it pertains to the organisation. These are: organization structure, organisational change, leadership style and group's dynamics.

Oticon Organisational Change

Organisational change is the movement of an organization away from its present state and toward some desired future state to increase its efficiency and effectiveness. Interestingly enough, there is a fundamental tension or need to balance two opposing force that influences the way organizations change.

Lars Kolind sensed a need for change when there was a noticeable performance gap- a disparity between existing and desired performance levels. The performance gap occurred within Oticon because current procedures were not up to standard and the financial rise of newer technology being implemented by their competitors was never acknowledged by Oticon. Due to Oticon slow reaction to the changes in market condition and development, the organisation lost a certain majority of their market shares. Lars Kolind, CEO of Oticon had selected a new goal of rapid growth for the organisation which causes the internal actions to change to meet the growth. Through this process, new departments and technologies had been created within Oticon.

In the case of Oticon we can see that change itself can be managed. By observing trend, patterns, and needs, managers' used planned change to help the organization adapt to external problems and opportunities. The overall model for planned change takes the notion of four (4) events that makes up the change sequence 1) Internal and External forces for change existence; 2) Organisation manages monitor these forces and become aware of change; 3) The perceived need triggers the initiation of change and 4) which then makes it possible for the change to be implemented. Each is handled according to organisation and managers' style. The figure 1.1 below shows a model of the change sequence of events.

Figure 1.1

Environmental Forces

Monitor global competition

Customers, competitors and other factors

Need for change Initiate Change Implement Change

Evaluate problems Facilitate search, creativity, Use force field

& opportunities, idea champions, & analysis, tactics for

Defined needed venture teams overcoming

changes in technology, resistance.

Products, structure & culture

Internal Forces

Consider plans, goals, company

Problems & needs

Source: Kathryn M. Bartol & David C. Martin 1999 p354

Oticon Organisational Trajectory

An organisation's strategy trajectory or direction is shaped by its past actions and future objectives and strategies. It provides a guide or framework within which to judge the acceptability, relevance or urgency of issues, concerns and proposed actions. The trajectory process encompasses the determination of and interplay between an organisation's vision, strategies and approach to change.

Mintzbery (1994:25) observes…..few, if any strategies can be purely deliberate, and few can be purely emergent. One suggests no learning, the other no control. All real world strategies need to mix these in some way to attempt to control without stopping the learning'. Therefore organisational trajectory can be seen as a blend or, class between the deliberate and emergent elements of its strategy. For Oticon this blend or clash produces the intended or expected outcomes for the organisation appears to depend partly on the quality of its sense making and partly on the degree of control it can exert, or choose to exert over events. In the case of Oticon, the ability to learn and successfully move on was a very crucial aspect that interplayed between the interpretation of past actions and future intent coupled to the organisations' advantage that makes decision making so complex.

Lars Kolind's trajectory for Oticon focus of choice influenced the aspect of the organisation's trajectory that directed towards a short term period. The case study showed that decision making is a complex and multifaceted process which depended on the type decision that have to be addressed when the organisation dealt with major questions. The case study showed Kolind adopting a less rational and more haphazard approach to decision-making than he would openly acknowledge.

Oticon Trajectory Process

The trajectory process comprises of three elements, namely:

Vision- the CEO of Oticon considered the organisation strategic options to bridge the gap and in so doing refines the vision itself. This process serves partly to ensure that the vision is discussed widely within the organisation and to gain employees; commitment to its objective, thus using the vision as a motivating and guiding force for the organisation. Oticon vision of becoming a service based organisation sprang from the mind of its CEO, Lars Kolind. To construct the disorganized organisation required the involvement of everyone in the organisation. This move was an iterative process of trial, error and most importantly a process of experimentation. Both employees and the CEO knew how they wanted to operate and what was to be achieved. Kolind noted that he actual details had to be worked out and also recognized when things were going wrong and acted to explode the organisation when it was felt that it was becoming too rigid.

Strategy- this is defined as a coherent or consistent stream of actions which an organisation takes or has taken to move towards its vision. Kolind had planned and have consciously acted upon the strategy that has been implemented within Oticon. This strategy was a combination of a mixture of formal and informal plans and actions.

Change- in accordance to the trajectory process, it is necessary to note that, though visions and strategies can be crucial in shaping the life of Oticon, it is only when some facet of the organisation is changed or changes that vision and strategies advance from being mere possibilities to become reality. Visions and strategies shape and direct change while indicating what and where change is needed. This creates the conditions and climate within which change takes place.

Oticon Change Process

Some organisations see change as a norm, a continuous process that forms part of the organisation's day to day activities. Change is also seen as a unique event that seems to involve an element of reinventing the wheel as the organisation struggles to determine how best to deal with it. Oticon appeared to be able to deal with each project as a learning opportunity to pass on. This allowed them to select the most appropriate approach for each situation. In this case, change is seen as an every day event and management is also seen as core capability that needed to be developed thus, making all employees competent.

Many forces for change beset organisation; it is important to recognize that forces act to keep an organisation in a state of equilibrium. Forces opposing change are also forces supporting stability or the status quo. The Lewin- Schein's model looks for the multiple causes of behavior rather than a single cause. Psychologist Kurt Lewin developed the force field analysis, which involved analyzing the two (2) types of forces 1) driving force and 2) restraining forces that influence any proposed change. Use of a force field analysis can be an effective way to both analyze an existing set of conditions and determine the most effective methods to move closer to a desired outcome (see figure 1.2).

Figure 1.2

Source: Kathryn M. Bartol & David C. Martin 1999, p.368 Management 3rd Edition

Oticon Organisational Change Components

Significant changes or innovations usually alterations in one or more of these components: structure, technology, human resources and culture. Since these elements are somewhat interrelated, a change in one may create the need for adjustment in others.

Structural Components - organisational structures are the pattern of interactions and coordination designed by management to link the task of individuals and groups in achieving organisational goals. The structure includes factors as the jobs are defined and clustered into work units and the various mechanisms used to facilitate vertical and horizontal communications. Leavitt divides structural efforts to bring about organisational change into three areas 1. Classical organisational design, 2. Decentralisation and 3. Flow of work.

Technological Components - technology involves the knowledge, tools, equipment and work techniques used by an organisation in delivering its products or services. Fredrick Taylor, through "scientific management" attempted to analyse and refine the interaction between workers and machines to increase efficiency in the work place. Technological changes are often difficult to implement successfully and may prove incompatible with an organisation's structure. Technological changes are also a very important factor in international competition especially in the case of Oticon.

Human Resources/ People Component - change in individuals in the work place is typically aimed at altering the knowledge, skills, perceptions and behaviours needed to perform the job. Changing individuals generally relies on training and development activities, supplemented by performance appraisal and reward systems that reinforce the needed behavior.

Cultural Components - organisational culture is a system of shared values, assumptions, beliefs and norms that unite the organisation's members. Cultural changes are normally based on factors as visions of the organisations' leader or threat to survival.

Oticon Organisational Structure

An organizational structure is an institution with strategies, policies, commonly shared values and a specific set of activities working together toward a single objective. Businesses adopt various organizational models that best match their agendas. There is no one correct type of structure for an organization. The managers in the organization must design a structure that is appropriate.

The purpose of such a structure is to define the guidelines, parameters and the procedural process necessary for a group to accomplish a main objective. For example, the anatomy of an organizational structure is further reduced to the distribution of authority, span-of-control, line vs. staff structures, organizational height and departmentalization.

Oticon underwent very extensive organizational changes which, among other things, introduced an open office plan with mobile workstations, a new paperless information system (Peters, 1992, Poulsen, 1993, Larsen, 1996, 1997, Larsen & Madsen, 1998, Soendergaard & Doejbak, 1998) project-oriented organization structure. These - and other organizational initiatives - have not only leaded to radical renewal of the firm but also fundamentally altered career development processes and employees' career opportunities.

Oticon is a good example of what D. T. Hall (1996) called "The career is dead, long live the career" and the boundary career construct (Arthur & Rousseau, 1966). Key features of traditional career management like earmarking of management potential, formalized development programs, the use of promotions and organizational symbolism were simply not applicable in the "spaghetti organization" with no hierarchical structure, no traditional management positions, no high-flier program and not even an HR function. The nickname "spaghetti organization" reflects the complex, informal and almost anarchistic characteristics of the project organization, as it was initially implemented at Oticon. This is how "spaghetti organization" is defined by a project manager in the company: "The dynamic use of total work force mental capacity across professional borders in no formalized order."

Oticon can also be compare to a boundaryless organisation, which seeks to overcome traditional boundaries between layers of management (vertical), functional areas (horizontal), as well as geographic boundaries. Some claim the boundaryless structure is a combination of team and network structures, with the addition of temporariness. A special form of boundaryless organization is virtual. It works in a network of external alliances, using the Internet. This means while the core of the organization can be small but still the company can operate globally is a market leader in its niche. According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative so successful. Oticon being at risk of losing profits or even going bankrupt due to the major financial downturn moved to flatter structures. Not only are they unable to maintain multiple management levels any more, they are also in need of a more flexible structure to cope with new threats.

Oticon Leadership Style

Before 1988, Oticon operated under an authoritarian leadership style. In this style the complete authority is in one person's hand and no one else can question it. It is also known as totalitarianism or dictatorship. It does forge an atmosphere of discipline in the organization. However, it can at times cause dissatisfaction and a lack of "creative space" for the employees. For such a manager, the employees are just a replaceable resource and not the core of the organization. The manager believes in top-down communication, wherein orders are given by the higher hierarchical level to the lower ones. The concept of "employee satisfaction" does not hold importance for such a manager.

The newly appointed CEO, Lars Kolind exhibited a form of transformational leadership style. Transformational leadership is a leadership approach that is defined as leadership that creates valuable and positive change in the followers. A transformational leader focuses on "transforming" others to help each other, to look out for each other, to be encouraging and harmonious, and to look out for the organization as a whole. In this leadership, the leader enhances the motivation, morale and performance of his follower group. According to James MacGregor Burns (1978), the transformational approach creates significant change in the life of people and organisations. It redesigns perceptions and values, changes expectations and aspirations of employees. Unlike in the transactional approach, it is not based on a "give and take" relationship, but on the leader's personality, traits and ability to make a change through vision and goals. There are also six other forms of leadership style, they are:

Charismatic Leadership Style - the Charismatic Leader gathers followers through dint of personality and charm, rather than any form of external power or authority. They use a wide range of methods to manage their image and, if they are not naturally charismatic, may practice assiduously at developing their skills.

Participative Leadership Style - A Participative Leader, rather than taking autocratic decisions, seeks to involve other people in the process, possibly including subordinates, peers, superiors and other stakeholders. Often, however, as it is within the managers' whim to give or deny control to his or her subordinates, most participative activity is within the immediate team.

Situational Leadership Style - Leaders here work on such factors as external relationships, acquisition of resources, managing demands on the group and managing the structures and culture of the group.

Transactional Leadership Style - The transactional leader works through creating clear structures whereby it is clear what is required of their subordinates, and the rewards that they get for following orders. Punishments are not always mentioned, but they are also well-understood and formal systems of discipline are usually in place. The early stage of Transactional Leadership is in negotiating the contract whereby the subordinate is given a salary and other benefits, and the company gets authority over the subordinate.

The Quiet Leadership Style - The approach of quiet leaders is the antithesis of the classic charismatic leaders in that they base their success not on ego and force of character but on their thoughts and actions. Although they are strongly task-focused, they are neither bullies nor unnecessarily unkind and may persuade people through rational argument and a form of benevolent Transactional Leadership.

Servant Leadership Style - The servant leader serves others, rather than others serving the leader. Serving others thus comes by helping them to achieve and improve. There are two criteria of servant leadership:

The people served grow as individuals, becoming 'healthier, wiser, more autonomous and more likely themselves to become servants' (Greenleaf, 1977).

The extent to which the leadership benefits those who are least advantaged in society (or at least does not disadvantage them).

Oticon Group Dynamics

According to Cartwright, 1951: 382 "...the word 'dynamics'... comes from a Greek word meaning force,... 'group dynamics'' refers to the forces operating in groups. ... it is a study of these forces: what gives rise to them, what conditions modify them, what consequences they have, etc." Group dynamics stresses that group behaviour, rather than that of individuals, should be the main focus of change (Berntein, 1968; Dent and Goldberg, 1999). However, Lewin (1947b) maintained that it is fruitless to concentrate on changing the behaviour of individuals because the individual in isolation is constrained by group pressures to conform.

Another philosopher named Bruce Tuckman (1965) proposed the four-stage model called TuckmanHYPERLINK ""'HYPERLINK ""s Stages for a group. Tuckman's model states that the ideal group decision-making process should occur in four (4) stages:

Forming (pretending to get on or get along with others);

Storming (letting down the politeness barrier and trying to get down to the issues even if tempers flare up );

Norming (getting used to each other and developing trust and productivity);

Performing (working in a group to a common goal on a highly efficient and cooperative basis).

Tuckman later added a fifth stage for the dissolution of a group called adjourning. (Adjourning may also be referred to as mourning, i.e. mourning the adjournment of the group). It should be noted that this model refers to the overall pattern of the group, but of course individuals within a group work in different ways. If distrust persists, a group may never even get to the norming stage.

Various theories of group dynamics exist. The model below combines elements of theories by Jones (1973), Tuckman (1965), and Banet (1976). In this model, each phase of group development is looked at with respect to group members' concerns with task and personal relations (process) functions.


Task Functions

Personal Relations Functions



Testing and Dependence


Organizing to Get Work Done

Intergroup Conflict



Group Cohesion




In Oticon, project teams became the basic organizing unit of the new organization. These teams had from 2 - 3 up while larger development teams may have 10 to 20 participants, and the project leader could choose how to achieve the agreed upon objectives of the project, and who should be a member of the team, as long as he or she met the project specifications. Everyone could in principle become a team leader, provided he or she had the necessary technical and leadership skills.