Organizational Development

OVERVIEW

"Organizational design involves making difficult choices about how to control" (textbook, p95), coordinate, and motivate internal and external resources to maximize an organization's capacity to create value. Having a well-developed design and structure is a key ingredient to ensure survival, prosperity, and effectiveness in a dynamic and evolving business environment that continually cultivates new impediments and problems without caution. Pine Mountain State University has found itself in a situation where its organizational design and structure has fallen out of line with its general and specific environments hindering its ability to successfully respond to contingencies that have arisen. The organization has recently undergone a restructuring in order to respond to environmental pressures; however, the reorganization has been ineffective in responding to and initiating action to minimize current threats. The key issues that require immediate resolution include the following:

1. The organization has been ineffective in its management of inputs and operations to maximize the value created

2. The organization has failed in its ability to converge and satisfy the needs of inside and outside stakeholders

3. The state has been severely affected by a recession which has impeded the ability of the organization to receive adequate real dollar funding

4. There has been increased political pressure calling for accountability and financial responsibility

5. The organization must determine the level of differentiation and integration it would like to sustain with its sister university in the urban area

ANALYSIS

Organizational Structure

A successful organization is continuously evaluating and redesigning its structure in order to cope with opportunities and constraints that arise within the environment. Pine Mountain has recently undergone a reorganization that has significantly altered the organizational structure of the university. Relative to the old hierarchy the new multidivisional hierarchy has become much taller due to an increase in new administration positions. The organization has increased both the vertical differentiation (increase distribution of authority) and the horizontal differentiation (increase division of labour).

The result of this increased differentiation has led to the development of a slow decision making process, which can be attributed to the lack of decentralization, and lack of communication between the different levels in the hierarchy. Another problem, due to the increased division of labour, has been the development of a subunit orientation--different faculties must compete with one another to receive an adequate allocation of funding. The third problem that has appeared is the increased bureaucratic costs associated with the increased level of administrative positions, which has choked off resources available to increase the level of faculty and services offered. The reorganized structure was implemented to be more responsive to the environment but rather it has created more constraints that must be addressed.

Value Creation

The fundamental principle of an organization is the notion that a collective grouping of people will result in more value created then individuals working alone. A simplified but ideal value creation system for Pine Mountain is developed in figure 1.0 (Appendix A); however, in reality the focus of the organization is centered on the input stage with less emphasis placed on the conversion and output stages. The lack of a balanced focus on the entire process has resulted in Pine Mountain creating less then maximum potential value.

Pine Mountain has placed the input stage as their primary objective with the focus being centered on money and capital inputs. This conclusion is evident through its continual increase in admission levels and its constant pursuit of funding. The university has increased its tuition from $1,000 to $1,500 which results in an approximate $11 million increase in cash inflow. Also, the organization is continuously attempting to secure funding from state and federal governments, alumni, and corporations and foundations.

Next, moving into the conversion stage it becomes evident that the inputs are not being implemented in the most effective manner to generate an increased level of high quality output. First, students continuously complain that it is difficult to enroll in mandatory classes required for graduation and the level of services, such as parking, are inadequate. Secondly, even though there has been an increase in student enrollment the level of faculty members has remained constant while the administration levels have expanded. Thirdly, the different academic departments offered by the university do not receive a balanced allocation of resources but are forced to compete with one another for a finite amount of funding. All three problems in the conversion stage demonstrate the inefficient allocation of resources which result in reduced value creation in the output stage. Currently, the inefficient conversion of resources results in a longer turnover ratio in producing output, as students take longer to complete their degrees.

Uncertainty

When determining the level of uncertainty that is prevalent in any environment there are three basic lenses used to analyze the situation: complexity, dynamism, and ri

Ш Complexity- Mid-High

* Approximately 22,000 students attending Pine Mountain and on top of this there are faculty and administration, which result in a large sized organization.

* There are many different academic services provided (multidivisional) which lead to increased complexity due to difficulty in administrating control, coordination, and motivation.

* The General and specific environment become interconnected economic forces (general) like a recession affect the government's contributions and ability of students to attend school (specific)

Ш Dynamism- Unstable

* General and specific environments can potentially change rapidly (economy downturn, shift in consumer tastes to tech schools and trade programs, etc.)

Ш Richness- Mid

* There is a lot of potential funding available for the school from many different sources but they must compete for this funding with other schools in the state

* A lot