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Analysis of Organisational Behaviour at Oticon

In this project, my target is to look at the Organisational Behaviour of Oticon.

Oticon, that was founded in 1904 by William Demant, is a Danish firm, and a leader in manufacturing ability to hear aids in European countries and the rest of the world, as well.

However, through the 1980's, a new small American company, which designed a fresh and innovative model of hearing aids, entered aggressively the market, and caused reduced sales for Oticon.

The result of Oticon was immediate, as they decided to reconstruct the whole structure of the business, in order to boost their efficiency and success.

This process lasted for nearly 3 years, and resulted to remarkable changes, which helped Oticon to regain profits, and become again a innovator in their sector.

The journey which Oticon choose to gain back its floor and the initiatives used terms of Organizational Behaviour has been assessed in this task.


Organizational Structure

According to Sheldon: Company is the process of combining the task, which individuals and teams have to execute with the facilities necessary for its execution, that the duties so performed provide the best programs for the efficient, organized, positive and coordinated software of the available attempts.

Koontz and Donnel have described organizational composition as 'the establishment of expert associations with provision for coordination between them, both vertically and horizontally in the enterprise framework'.

Good organizational framework indicates the next:

The framework must lay out formal reporting hierarchy from the lowest degree of worker to the best level of mother board of directors/MD as the situation may be.

Grouping of identical activities in one division so that equipment, machines, processes and experience can be developed at one place under the direction of 1 departmental head.

Coordination of various activities be laid down and coordinating specialist specified.

Individual, group and departmental goals should be laid down with specific time frame. Monitoring of goals is vital.

Standing orders, procedures, procedures, drills, rules and regulations should exit within an organization. They are required to be laid down in details. Duties of the appointment reduce functioning problems.


Mechanistic form

Organic form

Comparative analysis of mechanistic and organic and natural form of organizational structures is given as under:

Centralisation and Decentralisation

Centralisation identifies reservation of expert for decision making at top level of management. Lower levels are accountable for applying the decisions. They can be providers or implementers. In most cases, the authority is not delegated to the lower levels. Subordinates carry out work to perform their assigned task. When there is a stop, hurdle or procedure is halted credited to some reason, then your matter is referred to an appropriate power that gets the power to take appropriate decision to solve the trouble.

Centralization is available where the group structures don't have many layers which is relatively flat. It is found where subordinates aren't trained to take care of higher careers, where there's a lack of trust in subordinates and the intricacy or the magnitude of work that demands centralized control.

Decentralization on the other palm refers to specialist being delegated to various degrees of organization to make appropriate decisions. Centralization and decentralization is not opposite to the other person but two ends of continuum as under

Centralization _________________________________ Decentralization

In decentralized organizations, individuals at lower levels are certified to make decisions pertaining to their jobs that provide them autonomy. Power does not flow with the same rate to each one of the levels of the organization. It's important to understand that each level is having appropriate expert for decision making when need arises and this one doesn't have to hold back for upper level to take decisions for you.

Flat organizational structure is ideal to truly have a decentralized demand and control especially in today's environment where specialty area, information technology, competencies, work clubs, work group culture and systems prevail. It produces sense of responsibility among employees, decreases time, improves production, team sprit, drive and brings 'we' sense among work groupings. Greater decentralization offers employees more impressive range of job satisfaction as they feel that they may have work autonomy. They can respond to a particular situation quickly.

Charlisle suggested the next guidelines to ascertain whether there should be centralization or decentralization.

(a) Objective, goals and aims of the business. Certain organizations that have a democratic electricity sharing set up should be decentralized. Small organizations have a centralized framework.

(b) Size of the organization and complexity of the task. Large organizations with diverse development lines and conglomerates with companies engaged in different fields should be decentralized.

(c) Geographical location of customers: Organizations which cater for customers which are geographically located considerably apart must have decentralized organizational composition.

(d) Competency: If the very best management is highly skilled, experienced and experienced and can take care of more activities at one time, then your centralization is recommended.

(e) Communication: In the event the communication between the management and employees is effective, then the decentralization is preferred. This will permit problem handling and accord a sense of autonomy among workers.

(f) Timeframe: If the work nature is such that the production is dependant on time schedule, then the decentralization is preferred as it includes self guidance.


Management of Change

It is well known simple fact that change is inescapable. Nothing is everlasting except the change but it is the obligation of the management or corporation to manage change properly. Organizations must keep a close watch on the surroundings and incorporate suitable changes if the problem so demands or when the necessity occurs. Change is a continuing phenomenon. It is to be known even generally in most steady organizations change is essential just to keep carefully the level of balance. The major environmental causes, which make the change necessary, are


Market makes and

Socio-economic factors.

Resistance to improve is not desirable. It is counter successful for growth and destructive in character.

According to Barney and Griffin, "the primary reason cited for organizational problems is the inability by managers to properly anticipate or react to makes for change. "


Kurt Lewin proposed "Three Stage Model" of the change process for moving the business from present position to the evolved position. That is as under:

Stage 1: Unfreezing: Creating desire and readiness to improve through

(a) Disconfirmation or insufficient confirmation.

(b) Creation of guilt or nervousness.

(c) Ensure subordinates of internal safety.

Stage 2: Changing through cognitive restructuring: Supporting the client to see things, evaluate things, and feel things in another way based on new point of view obtained through.

(a) Identifying with a fresh role model, coach, etc.

(b) Scanning the surroundings for new relevant information.

Stage 3: Refreezing: Supporting the client to integrate the new viewpoint into

(a) The total personality and self - strategy.

(b) Significant marriage.

1. Unfreezing: Procedure for unfreezing makes individuals ready for change. Lewin is convinced that employees must be educated in advance of impending change and they shouldn't be surprised. Unfreezing requires unfreezing the old behavior or situation.

Edgar Schein required this phenomenal idea propagated by Lewin and improved by specifying subconscious mechanism involved with each level of the model. Unfreezing entails creating desire and readiness to improve by creating a world of disconfirmation of existing mental safeness in the altered pattern of behavior.

This may be accomplished by making announcements, conferences and promoting the theory throughout the business through bulletin, boards, personal associates and group conferences. The unfreezing process quite simply cleans the slate so that fresh behavioural habits, customs, traditions can be imprinted which can then become a new way to do things.

2. Moving: Once unfreezing process is completed, moving takes place. Moving is adding change. Persons experience cognitive restructuring.

The process is carried out by the next three methods as proposed by Kelman:

Compliance: Conformity is achieved by presenting rewards and punishments. It's been established that each accepts change if he's rewarded or punished. This is a behaviour adjustment tool.

Identification: Members are psychologically impressed upon to choose their role model and improve behaviour. In case a leader can become a job model the change is easier.

Internalization: It will involve internal changing of individual's thought functions in order to adjust to a new environment. Members should carry out spirit searching and choose a new behaviour.

3. Refreezing: It is related to integrate the new behaviours in to the person's personality and attitude. It is referred to stabilization. The change behaviour must necessarily fit into the social surroundings. Refreezing takes place when the new behaviour is followed in a normal way of life. New behaviour must replace the old over a long term basis. New behaviours must be re-enforced constantly so that it does not diminish. Change process is not really a onetime process but it is constant hence unfreezing, change and refreezing must also be continuous.


Organizations must plan to put into action change in a organized manner. It must identify the field where the change is necessary whether it is strategic, structural, process - oriented or ethnical change. Changes can also be affected in every the areas concurrently, but it must be managed appropriately so that there surely is no bottleneck effect. Once the dependence on change is recognized and the area in which it is usually to be implemented, the following steps have been suggested by Greiner.

Develop new goals and targets: Aims and goals are produced out of mission statements, objects might need revision due to improve in external or internal forces.

Select an agent for change: It's the responsibility of the management to entrust execution of change to appropriate power. A director may be given this responsibility.

Diagnose the trouble: Medical diagnosis is the first step to use change. If an organization has a big number of worker turnover then your data must be gathered and made available to the consultant so the reasons for turnover can be recognized and appropriate corrective procedures taken. The procedure of recognition of problem is not simple as it appears and requires research.

Select Strategy: It is relatively easy to implement material change as a part of change of a system. What is important is to protect the emotions they need to be made get together to choose methods such that it is simpler to use at a later level.

Develop Plan: If the organization wants to lessen employee turn over, it may prefer to perform comparative review of other organizations in respect of job content, compensation system, worker performance, appraisal system, advertising standards, training & development and the strategy followed by the organization for its growth.

Strategy for execution: Timings of implementation of change is very vital. When the change relates to inner employees, it must be communicated at a proper time so that there is no amount of resistance to planned change.

Implementation of Plan: Once the decision to execute the plan and communication through which the plan is to be implemented is decided, it is the responsibility of the various departments to apply the same. This might need notification, briefing periods or in-house seminars in order to ensure acceptance of all participants of the organizations specially those who are likely to get affected. Employee reactions in attitudes, aspirations, feelings and behaviour must be canalized in positive guidelines due to change.

Evaluation & Reviews: The consequence of the change must be assessed and suitable feed again obtained. If adjustment to training & development causes decrease in staff turnover, the objective of change would deemed to get been achieved. If the results are unlike the expectation, then a new change may be required to analyze cause.

The Change Process in relation to Oticon: Think the Unthinkable

The recruitment in 1988 of a fresh CEO, Lars Kolind, who was simply given full responsibility for applying changes, bought the change that was unthinkable. Following a two-year amount of rationalization and cost-cutting, which achieved savings in sales and administration costs of 20 percent, the recently appointed CEO declared in early on 1990 a broad package of impressive and radical initiatives in organizational composition, job design, information technology, and physical layout of the business. Oticon was rebuilt as a networking company and became the world's technologically leading audio reasonable company; and within five years was flaunted on the Danish stock market.

All these advice were explained in a 10-site memo called "Think the unthinkable, " that was written by the new CEO and distributed to all staff in March 1990. The suggested changes included:

1. Increasing competitiveness through the use of human and technical resources in a more reliable way, hence reducing the overhead costs, which in those days exceeded the genuine development costs;

2. Replacing a hierarchical job composition with a project-based firm where each employee is involved in lots of (often cross-organizational and cross-functional) projects at the same time, and where each project is considered a "business unit" with its own resources, time plan, and success criteria;

3. Abandoning traditional managerial jobs and transferring managerial power to the task groups or the individual employee;

4. Drastically reducing written paper communication by establishing electronic scanning of most incoming email and introducing complete it systems, networks, etc. ;

5. Facilitating physical range of motion by creating an open up space office where each person has a cart or trolley (i. e. , processing cupboard on wheels comprising the computer, the telephone, and a restricted space for data) that may be moved around at work.


Organizational Culture and Climate

Edgar Schein identified culture as "A routine of basic assumptions invented, discovered or developed by given group as it discovers to handle its problems of external adoption and interior integration worked sufficiently to be considered valuable and for that reason, to be trained to new users as the correct way to perceive, think and feel, in relation to those problems. "

Wagner III and Hollenbeck have described organizational culture as "the shared frame of mind and perceptions in an organization that are based on a couple of fundamental norms and worth and help users understand the business. "

Organizational culture is not inborn. It needs to be invented and later developed over a period. It allows employees to perform within the platform of the organization's culture.

Environment takes on a dominant role in expanding the culture therefore will demographic factors. Once the culture is developed, it practically becomes a people's group from an operating viewpoint that promotes risk-taking among managerial cadre and produces novel ideas. It stimulates communication that boosts production and job satisfaction.


According to Bowditch and Buono "Organizational culture is with the type of opinion and anticipations about organizational life, while environment is an indicator of whether those beliefs and targets are being satisfied. "

Employees in the organization keep studying the management viewpoint and various activities they take to deal with organizational factors that are of your routine nature. Included in these are the next:

(a) Selection Procedure for the employees.

(b) Command style and approach to solve problems of the employees.

(c) Wage administration.

(d) Attitude to put into action change and include most advanced technology.

(e) Job explanation.

(f) Organizational framework and frequency to change the same predicated on need.

(g) Performance analysis.

(h) Promotion insurance policy and its execution.

(i) Efforts involved with promoting imagination and inventions.

(j) Option of resources for research and development.

Overt factors can be assessed and fair evaluation can therefore be made about the intentions of the management and attempts they are putting in to build a proper organizational weather. While on the other side covert factors can not be quantified being of subjective characteristics.

Likert has carried out studies on organizational environment by isolating six different variables namely decision making, command style, motivation, goal setting techniques, communication and control. Each variable was then examined on four sizes. Each of the dimensions may then be researched on the five-point level enumerated above. Predicated on the inputs so received on the specific study of a specific variable a proper finish of the prevailing organizational climate can be drawn. Suitable remedial steps then can be initiated to change the climate to desired level.


Many companies have tried to put into practice teamwork unsuccessfully. What were the main element elements that were in charge of the success of teamwork in Oticon?

A lot of companies want to apply teamwork in their procedures, as working into clubs has several advantages such as imagination, innovation, rate, and better efficiency. Moreover, teams with more freedom in their ideas and way of working, seem to be to become more fruitful and creative than others with stricter guidelines.

In the truth of Oticon, there are several key elements which were accountable for the successful implementation of teamwork.

Firstly, the employees were totally up to date about the changes and the new working situation. Furthermore, some of them participated to the procedure of restructuring the company.

Even in the meetings there is the employees' occurrence to be able to be nearer to the new decisions. It is important to be talked about that it was essential for the employees to practice in Personal computer use, so they were encouraged to have a PC home to be able to practice in their leisure time too.

Another facet of this change was that due to Spaghetti organization, all the departments were abolished, and the business's structure was based on the projects. By this, employees were determined, as these were encouraged to come up with new ideas for new jobs, and become leaders of these project teams.

So, the business promoted creativeness and ground breaking ideas among their personnel and gained in output, as the employees noticed satisfied and prepared to add more, because they were active members in the introduction of the business.

The organization of the company became more elastic, that gave freedom to employees' obligations; as they could co-operate and even more, work in the same office buildings, by moving their tables.

Oticon also gave the freedom to project leaders to select on their own the team members, according to their specifications, in a more informal way, the picked team members acquired the to refuse to take part in the project. This means that the individuals, who are in the team, are by their will, so these are more dedicated in the goal, and loafing effects are averted.

Furthermore, it's important to be brought up that team meetings were frequently set up, and the way the conferences were conducted, were arranged by the team itself, in the body of given liberty. So, teams determined where way they may be more profitable, and, be repeated meetings and good communication, the success was inevitable. On the other hand, meetings between mature management, and project groups had occurred only one time every 90 days in order to present their results and take reviews.

A three time preparation period before the conclusion of the new structure was enough time for the theory to mature, and the organization's associates to adapt to the new working conditions.

Finally, the completely autonomous categories were one of the main factors of success, as strong cable connections were built between your team members, which ameliorated the cooperation. Moreover, team members had the opportunity to work in several projects concurrently, which allowed them to switch and promote ideas and information between "connected" jobs. Overall, the not formalized framework urged all employees to add in the development, be getting the right to share with their employers, new ideas and assignments, without the fear of criticism.

Evaluation of the Outcomes, and the Present

Today, over two 10 years following the changes were inaugurated, overall management ideology and practice have generally remained the same, but a number of specific changes have happened. The project firm has been "professionalized" in the sense that fewer people are now assigned as task team market leaders, that job team leading has become a proper career journey, and that a training curriculum in task management has been launched -- thus which makes it more selective and exclusive to become project manager. The role of practical experts has been preserved, but has developed into more traditional business units or personnel functions. The ambition of creating a "paperless group" has proved to be too idealistic, so are there lots of papers to be found in the business -- albeit probably less than in comparable organizations. Lars Kolind, who initiated the radical changes in 1990-1991, retired in 1998 and was replaced by Niels Jacobsen, who was simply with the company from 1988 and "co-managed" the company with Lars Kolind until his retirement life.

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