Mata kuliah : A0012 – Manajemen Umum
Tahun : 2010

8-2
• After studying Chapter 8, you will know:
– how differentiation and integration influence your organization’s structure
– how authority operates
– the roles of the board of directors and the chief executive officer
– how span of control affects structure and managerial effectiveness
– how to delegate work effectively
– the difference between centralized and decentralized organizations

•
•
•
•
•
Fundamentals of Organizing
The Vertical Structure
The Horizontal Structure
Organizational Integration
Looking Ahead
Bina Nusantara

8-4
• After studying Chapter 8, you will know:
– how to allocate jobs to work units
– how to manage the unique challenges of the matrix organization
– the nature of important integrative mechanisms

8-5
• Organization chart
– depicts the positions in the firm and how they are arranged
– provides a picture of the reporting structure
• Differentiation
– aspect of the organization’s internal environment
•
- assignment of different tasks to different people or groups
•
- process in which different individuals and units perform different tasks
– differentiation is high when there are many subunits and many kinds of specialists who think differently

8-6
• Integration
– degree to which differentiated units work together and coordinate their efforts
• all the specialized tasks in an organization cannot be performed completely independently
•
- procedures that link the various parts of the organization to achieve the organization’s overall mission
– any job activity that links different work units performs an integrative function
– the more a firm is differentiated, the greater the need for integration among the units

President
Finance R&D
Personnel
Chemical
Products
Finance
8-7
Manufacturing Sales
Marketing Personnel
Personnel
Metal
Products
Finance
Manufacturing Sales

8-8
• Authority in organizations
– authority - the legitimate right to make decisions and to tell other people what to do
• resides in
rather than people
– in private business enterprises, owners have ultimate authority
• traditionally authority has been the primary means of running an organization

8-9
• Authority in organizations (cont.)
– board of directors - elected by the stockholders to run the organization
• led by a chair
• performs three functions
– selecting, assessing, rewarding, and perhaps replacing the CEO
– determining the firm’s strategic direction and reviewing financial performance
– assuring ethical, socially responsible, and legal conduct
•
on the board
- the firm’s top managers who sit
– outside directors - are likely run other companies
• successful boards tend to be active, critical participants in determining company strategies

8-10
• Authority in organizations (cont.)
– chief executive officer (CEO) - occupies the top of the organizational pyramid
• authority officially vested in the board of directors is assigned to the CEO
–
• CEO personally responsible to the board and owners top management team - typically comprised of the CEO, president, chief operating officer, chief financial officer, and other key executives
• frequently meet with the CEO to make important decisions

8-11
– hierarchy - the authority levels of the organizational pyramid
• top management - strategic managers in charge of the entire organization
• middle management - in charge of plants or departments
• lowest levels - made up of lower management and workers
– called the operational level of the organization
– trend in U.S. is to reduce the number of hierarchical layers
• Span of control
– the number of subordinates who report directly to a manager
– narrow spans produce tall organizations
– wide spans produce flat organizations

8-12
• Delegation
– assignment of authority and responsibility to a subordinate
– can occur between any two individuals in any type of structure with regard to any task
– responsibility - assignment of a task that an employee is supposed to carry out
• common for people to have more responsibility than authority
– accountability - expectation that employees perform a job, take corrective action when necessary, and report upward on the status and quality of their performance
– managers remain responsible and accountable for their own actions and those of their subordinates

8-13
• Delegation (cont.)
– advantages of delegation
• permits getting work done through others
• manager saves time
• manager frees herself/himself to devote energy to other important, higher-level activities
• provides subordinate with a more important job
• from the organization’s perspective, jobs are done more efficiently and cost-effectively

8-14
• Decentralization
– result of the delegation of responsibility and authority
– centralized organization - high-level executives make most decisions and pass them down to lower levels for implementation
– decentralized organization - lower-level managers make important decisions
• most U.S. executives understand the importance of decentralizing decision making

8-15
• Basic concepts
– departmentalization - subdividing the organization into smaller subunits
•
- have responsibility for the principle activities of the firm
– deal directly with the organization’s primary goods and services
– line managers typically have:
» substantial authority and power
» ultimate responsibility for major operating decisions
» accountability for “bottom-line” results
•
- provide specialized support for line units
– moving toward role focused on strategic support and expert advice

8-16
• Functional organization
– jobs (and departments) are specialized and grouped according to business functions and the skills they require
• e.g., production, marketing, R&D, human resources, and finance
– at the most basic level, functional structure is organized around the company’s value chain
•
- sequence of activities that flow from raw materials to the delivery of a product or service
– common in both large and small organizations
– may be most appropriate in rather simple, stable environments

8-17
• Functional organization (cont.)
– advantages of functional structure include:
• economies of scale can be realized
• effective environmental monitoring
• performance standards are better maintained
• greater opportunity for specialized training and indepth skill development
• technical specialists are relatively free of administrative work
• decision making and lines of communication are simple and clearly understood

8-18
• Functional organization (cont.)
– disadvantages of functional structure
• people may care more about their own function than about company as a whole
• may lose focus on overall product quality and customer satisfaction
• managers do not develop knowledge of the other areas of the business
– become specialists, not generalists
• conflicts arise among functions and communications suffer accordingly
• high differentiation may create barriers to coordination across functions

8-19
Staff departments
President
Information technology services
Procurement
Human resources
Inbound logistics
Operations
Outbound logistics
Line departments
Marketing
And sales
Service

8-20
• Divisional organization
– units grouped around products, customers, or geographic regions
– groups all functions into a single division
• duplicates each function across all of the divisions
– separate divisions may act almost as separate businesses
– work autonomously to achieve the goals of the organization
– several ways to create divisional structure

8-21
• Divisional organization (cont.)
– product divisions - all functions that contribute to a given product are organized under one manager
• advantages
– information needs are managed more easily
– people have full-time commitment to a particular product line
– task responsibilities are clear
– people receive broader training
– flexibility of structure better suits it for unstable environments
• disadvantages
– difficult to coordinate across product lines
– managers may not acquire depth of functional knowledge
– duplication of effort is expensive

8-22
• Divisional organization (cont.)
– customer and geographical divisions
• build divisions around customer or geographical distinctions
• advantages
– can focus on customer needs
– can provide faster and better service
• disadvantage
– duplication of activities across many customer groups and geographic areas is expensive

Chairman
CEO
Northeast regional manager
Midwest regional manager
Southeast regional manager
Southwest regional manager
Pacific regional manager
8-23
General managers for:
New York
Philadelphia
Boston
General managers for:
Cleveland
Chicago
St. Louis
General managers for:
Raleigh
Atlanta
Orlando
General managers for:
Dallas
Houston
Albuquerque
General managers for:
Seattle
San Francisco
Los Angeles

8-24
• Matrix organization
– hybrid form of organization
– dual reporting relationships in which some managers report to two superiors
• one functional and one product
– advantages
• higher degree of flexibility and adaptability
– disadvantages
• violation of the
– reporting to two superiors can create confusion

Chairman
CEO
8-25
Project management
Functional managers
Production Engineering Personnel Accounting
Project
Manager
A
Production group
Two-boss manager
Engineering group
Two-boss manager
Personnel group
Two-boss manager
Accounting group
Two-boss manager
Project
Manager
B
Production group
Two-boss manager
Engineering group
Two-boss manager
Personnel group
Two-boss manager
Accounting group
Two-boss manager

8-26
• Matrix organization (cont.)
– matrix survival skills - depend on position in the matrix
–
• the matrix diamond illustrates needed skills matrix form today - resurgence based on:
– pressures to consolidate costs and be faster to market
– need for coordination across countries in global business
• understanding of the matrix has increased
– matrix is not a structure, but a process
» relationships allow information to flow through the organization
» norms, values, and attitudes shape how people think

8-27
• Coordination by standardization
– standardization - establishing common rules and procedures that apply uniformly to everyone
• constrains actions
–
• integrates various units by regulating what people do formalization - reliance on rules and regulations to promote conformance
• should apply to most (if not all) situations
• most applicable in relatively stable and unchanging circumstances

8-28
• Coordination by plan
– interdependent units are required to meet deadlines and objectives that contribute to a common goal
– does not require a high degree of stability and routinization
• units free to modify their actions as long as they are able to meet deadlines and targets required for working with others
• Coordination by mutual adjustment
– involves feedback and discussion to jointly determine how to approach problems and devise mutually agreeable solutions
– allows for flexible coordination to deal with novel problems
– costly from the standpoint of time