*Chapter Eight
*
Adapting
Organizations
to Today’s
Markets
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
FAYOL’S PRINCIPLES
*
Fayol’s Principles
of Organization
LG2
• Unity of command
• Hierarchy of authority
• Division of labor
• Subordination of individual
interests to the general
interest
• Authority
*
• Degree of
centralization
• Clear communication
channels
• Order
• Equity
• Esprit de corps
8-2
WEBER’S PRINCIPLES
*
Max Weber and
Organizational
Theory
LG2
• Employees just need to do what
they’re told.
*
• In addition to Fayol’s principles,
Weber emphasized:
- Job descriptions.
- Written rules, decision
guidelines and detailed records.
- Consistent procedures,
regulations and policies.
- Staffing and promotion based
on qualifications.
8-3
*Choosing the
SPAN of CONTROL
Appropriate
Span of Control
LG3
*
• Span of Control -- The optimal number of
subordinates a manager supervises or should
supervise.
• When work is standardized, broad spans of
control are possible.
• Appropriate span narrows at higher levels of the
organization.
• The trend today is to reduce middle managers
and hire better low-level employees.
8-4
*
ORGANIZATIONAL STRUCTURES
Choosing Tall
versus Flat
Organization
Structures
LG3
*
• Structures determine the way the company
responds to employee and customer needs.
• Tall Organization Structures -- An organizational
structure in which the organization chart would be tall
because of the various levels of management.
• Flat Organization Structures -- An organizational
structure that has few layers of management and a
broad span of control.
8-5
*
DEPARTMENTALIZATION
Weighing the
Advantages and
Disadvantages of
Departmentalization
LG3
*
• Departmentalization -- Divides organizations into
separate units.
• Workers are grouped by skills and expertise to
specialize their skills.
8-6
*
LINE ORGANIZATIONS
Line
Organizations
LG4
*
• Line Organization -- Has direct two-way lines of
responsibility, authority and communication running
from the top to the bottom. Everyone reports to one
supervisor.
• There are no specialists, legal, accounting,
human resources or information technology
departments.
• Line managers issue orders, enforce discipline
and adjust the organization to changes.
8-7
*
LINE PERSONNEL
Line-and-Staff
Organizations
LG4
*
• Line Personnel -- Workers responsible for directly
achieving organizational goals, and include
production, distribution and marketing employees.
• Line personnel have authority to make policy
decisions.
8-8
*
STAFF PERSONNEL
Line-and-Staff
Organizations
LG4
• Staff Personnel -- Employees who advise and assist
*
line personnel in meeting their goals, and include
marketing research, legal advising, IT and human
resource employees.
8-9
*
MATRIX ORGANIZATIONS
Matrix-Style
Organizations
LG4
*
• Matrix Organization -- Specialists from different
parts of the organization work together temporarily on
specific projects, but still remain part of a line-and-staff
structure.
• Emphasis is on
product development,
creativity, special
projects,
communication and
teamwork.
8-10
BENCHMARKING and
CORE COMPETENCIES
*Benchmarking
and Core
Competencies
LG5
*
• Benchmarking -- Compares an organization’s
practices, processes and products against the world’s
best.
• Core Competencies -- The functions an
organization can do as well as or better than any
other organization in the world.
• If a company can’t match a competitor, they may
try to outsource.
8-11
ADAPTING to
MARKET CHANGES
*
Adapting to
Change
LG5
*
• Change isn’t easy.
Employees like to do
things the way they
always have.
• Get rid of old, inefficient
facilities and equipment.
• Use the Internet to get
to know your customers
and sell directly to them.
8-12