CHAPTER-07
CREATING A FLEXIBLE
ORGANIZATION
1
Dr. Gehan Shanmuganathan, (DBA)
UNILEVER RESTRUCTURES
USING MOBILE TECHNOLOGY
2
UNILEVER RESTRUCTURES USING MOBILE
TECHNOLOGY

Unilever is an outcome of a merger between a British soap
maker and Dutch margarine company in 1930

Grown global powerhouse selling 400 brands in 150 nations
being the world’s third-largest manufacturer of consumer
goods, with more than $ 75 billion in their annual sales.
Workforce of 174,000

Organized by product, location, and function

Teleconferencing, internet phones service, other services
for mobile workers

This has reduced an office cost of 40% and increased
business efficiency
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LEARNING OBJECTIVES
4
LEARNING OBJECTIVES
1.
Understand what an organization is and identify its
characteristics.
2.
Explain why job specialization is important.
3.
Identify the various bases for departmentalization.
4.
Explain how decentralization follows from
delegation.
5.
Understand how the span of management describes
an organization.
6.
Describe four basic forms of organizational structure
LEARNING OBJECTIVES
(CONT’D)
7.
Describe the effects of corporate culture
8.
Understand how committees and task forces
are used
9.
Explain the functions of the informal
organization and the grapevine in a business
WHAT IS AN ORGANIZATION ?
7
WHAT IS AN ORGANIZATION?

A group of two or more people working together to
achieve a common set of goals

Developing organization charts

Organization chart- positions and relationships

Chain of command- line of authority from top to bottom

Staff (advisory) positions- not directly but as
advisors(broken lines)
MAJOR CONSIDERATION FOR
ORGANIZING A BUSINESS
9
MAJOR CONSIDERATION FOR ORGANIZING
A BUSINESS
1.
Job design- divide the entire organizational work
2.
Departmentalization- manageable unites
3.
Delegation- responsibility and authority
4.
Span of management- number of subordinates to a
manager
5.
Chain of command- designate positions with authority
and support positions
JOB DESIGN
11
JOB DESIGN

Job specialization- separate distinctive tasks

Rationale for specialization- increase of production
(Adam Smith- Wealth of nation)

Alternatives to job specialization

Job rotation- rotate

Job enlargement- horizontally

Job enrichment- vertically
EXPLAIN ROTATION, ENLARGEMENT, AND
ENRICHMENT
13
DEPARTMENTALIZATION
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DEPARTMENTALIZATION

Grouping jobs into manageable units

Common bases for departmentalization

By function

By product

By location

By customer

Combinations
FUNCTIONS
BASED STRUCTURE
GM
marketing
finance
production
Human
resource
executive
representative
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PRODUCT
BASED STRUCTURE
MARKETING
MANAGER
MANAGER
PRODUCT-A
MANAGER
PRODUCT-B
MANAGER
PRODUCT-C
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MARKET OR GEOGRAPHY BASED
STRUCTURE
MARKETING
MANAGER
REGION
MANAGER-1
REGION
MANAGER-2
REGION
MANAGER-3
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STRUCTURE BY CUSTOMER
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MATRIX STRUCTURE
1.Inquisitive
2. Analytical
3. Collective
4. Explorative
5. Innovative
1.Quality
oriented
2. Efficiency
oriented
3. Time
oriented
4. Process
oriented
1. Winning
minded
2. Go-getter
3. Convincing
4. Creative
5. Innovative
6. Challenge
status- quo
1. Analytical
2. Collective
3. Number
oriented
4. Cost and
opportunity
cost oriented
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20
DELEGATION,
DECENTRALIZATION, AND
CENTRALIZATION
21
DELEGATION, DECENTRALIZATION, AND
CENTRALIZATION

Delegation

Assigning part of a manager’s work and power to other
workers

Responsibility- duty to perform a job

Authority- power given to perform a task

Accountability- obligation to accomplish a task
STEPS IN THE DELEGATION PROCESS

The manager assigns responsibility

The subordinating is empowered to do the task

Ultimate accountability remains with the manager
BARRIERS TO DELEGATION

Managers unwillingness

Fear of subordinate doing the work better than
manager

Manager is disorganized so can not delegate

Feeling of the manager to get things done
rather sharing
DECENTRALIZATION OF AUTHORITY

Decentralized organization- spreads authority

Centralized organization- authority centralized at the
upper level

Factors favoring decentralization
External environmental factors (dynamism)

Nature of the decision

Abilities of the lower level managers

Lower level decision making skills

Company tradition
THE SPAN OF MANAGEMENT/CONTROL

Span of control- number of workers reporting directly


Wide or narrow
Organizational height- number of layers, or levels, of
management in a firm

Flat organizations- wider span of management

Tall organizations- narrow span of management
FLATTER AND TALLER ORGANIZATIONS
27
FORMS OF ORGANIZATIONAL
STRUCTURE
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CHAIN OF COMMAND:
LINE AND STAFF MANAGEMENT

Line management position

Line authority- a person makes a decision and gives orders
to subordinates to achieve the organization’s goal

Staff management position

Advisory authority – provides support advises, and
expertise within an organization

Functional authority – the authority of staff managers to
make decisions and issue directives about their areas of
expertise
CHAIN OF COMMAND:
LINE AND STAFF MANAGEMENT
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30
LINE-STAFF CONFLICT
 Reasons

for conflict
Staff managers have formal education and more
ambitious

Line managers perceive staff as a threat
 Minimizing
conflict

Form teams

Clear definition of responsibilities

Hold both accountable for results
FORMS OF ORGANIZATIONAL STRUCTURE

Bureaucratic structure

Characteristics- high specialization, departmentalization
by function, formal delegation, high centralization,
narrow span of management, formal relationships

Advantages- manage large number of employees in fair
manner

Disadvantages- lack of flexibility and lack of individual
identity in the mass

Matrix structure- that combines vertical and horizontal
lines of authority (cross functional teams)
THE MATRIX STRUCTURE (CONT’D)
Disadvantages
Advantages


Flexibility

than one supervisor
Increased productivity


Nurture creativity

Innovative
Employees report to more
Confusion about who is incharge

Takes time to resolve issues
than individuals

Personality clashes

Poor communication

Expensive to maintain
FORMS OF ORGANIZATIONAL STRUCTURE
(CONT’D)

Cluster structure- consists of primarily of teams
with no or very few departments- teams


Strengths- special projects, flexibility, explore new ideas

Weaknesses- job security, stress level high
Network structure (virtual organization)perform mainly admin work while other functions
outsourced

Strengths- flexibility

Weaknesses- high turnover
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CORPORATE CULTURE
35
ADDITIONAL FACTORS THAT INFLUENCE
AN ORGANIZATION

Corporate culture


Indicators of corporate culture
 Power
 People
 Task
 Process
Cultural change is needed when the organizations
need a paradigm change
TYPES OF CORPORATE CULTURES

Networked culture- main function is admin
while other functions outsourced

Mercenary culture- employees high motivation
and commitment to perform

Fragmented culture- employees do not become
friends, but work at the office not for the
office

Communal culture- friendship, commitment,
high focus on performance
7 | 37
ADDITIONAL FACTORS THAT INFLUENCE
AN ORGANIZATION (CONT’D)
Committees-
 Types-
ad hoc and standing
committees
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ADDITIONAL FACTORS THAT INFLUENCE
AN ORGANIZATION (CONT’D)

Coordination techniques- rules and procedures

Informal organization

Informal groups

The grapevine- informal communications network
7 | 39
WRITE FIVE KEY THINGS (AREAS)
THAT YOU CAN CRITICALLY
REMEMBER IN TODAY’S
DISCUSSION
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WHAT WE DISCUSSED TODAY..
41
LEARNING OBJECTIVES
1.
Understand what an organization is and identify its
characteristics.
2.
Explain why job specialization is important.
3.
Identify the various bases for departmentalization.
4.
Explain how decentralization follows from
delegation.
5.
Understand how the span of management describes
an organization.
6.
Describe four basic forms of organizational structure
LEARNING OBJECTIVES
(CONT’D)
7.
Describe the effects of corporate culture
8.
Understand how committees and task forces
are used
9.
Explain the functions of the informal
organization and the grapevine in a business
WEEKLY ASSIGNMENT - 07
44
WEEKLY ASSIGNMENT -07

Discuss with examples the importance of
managing a flexi-organization over highly
structured organizations when managing special
projects. E.g- computer projects, research, and
advertising projects and so on.
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