* * * Adapting Organizations to Today’s Markets Nickels * McGraw-Hill/Irwin Understanding Business, 8e McHugh * * CHAPTER ** 8 McHugh 1-1 8-1 © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. * * * Structuring an Organization Comprises: • Division of Labor • Accountability • Team Tasks • Allocating Resources • Assigning Responsibility/ Authority • Establishing Procedures 8-2 * * * Fayol’s Principles of Organization • Unity of Command • Hierarchy of Authority • Division of Labor • Subordination of Individual Interest to the General Interest • Authority • Degree of Centralization • Clear Communication Channels • Order • Equity • Esprit de Corps 8-3 * * * Weber’s Organizational Principles • Job Descriptions • Written Rules • Procedures, Regulations, Policies • Staffing/Promotions Based on Qualifications 8-4 * * * Centralization (No Delegation) Advantages • Greater TopManagement Control Disadvantages • More Efficiency • Less Responsiveness to Customers • Simpler Distribution System • Less Empowerment • Stronger Brand/Corporate Image • Interorganizational Conflict • Lower Morale Away from Headquarters 8-5 * * * Decentralization (Delegate Authority) Advantages • Better Adaptation to • Customer Wants • • More Empowerment of Workers • • Faster Decision Making • • Higher Morale Disadvantages Less Efficiency Complex Distribution System Less Top-Management Control Weakened Corporate Image 8-6 * * * Organizational Structures Tall Organizations • Many Layers of Management • High Cost of Management • Narrow Span of Control Flat Organizations • Current Trend • Creation of Teams • Broad Span of Control 8-7 * * * How to Make Jobs Fit Your Company (Part 1 of 2) Each manager must ask: • What resources do I control to accomplish my tasks? • What measures will be used to evaluate my performance? • Who do I need to interact with and influence to achieve my goals? • How much support can I expect when I reach out to others for help? Source: HBS Working Knowledge, October 31,2005 8-8 * * * How to Make Jobs Fit Your Company (Part 2 of 2) Four Basic Spans of a Job: • • • • The Span of Control The Span of Accountability The Span of Influence The Span of Support Source: HBS Working Knowledge, October 31,2005 8-9 * * * Span of Control - Narrow Advantages Disadvantages • More Control by Top Management • Less Empowerment • More Chances for Advancement • Greater Specialization • Closer Supervision • Higher Costs • Delayed Decision Making • Less Responsiveness to Customers 8-10 * * * Span of Control - Broad Advantages • Reduced Costs • More Responsiveness to Customers • Faster Decision Making • More Empowerment Disadvantages • Fewer Chances for Advancement • Overworked Managers • Loss of Control • Less Management Expertise 8-11 * * * Departmentalization by Function Advantages • Skill Development • Economies of Scale • Good Coordination Disadvantages • Lack of Communication • Employees Identify with Department • Slow Response to External Demands • Narrow Specialists • Groupthink 8-12 * * * Departmentalization • By Product • By Function • By Customer Group • By Geographic Location • By Process 8-13 * * * Line Organizations Advantages • Clear Authority & Responsibility • Easy to Understand • One Supervisor Per Employee Disadvantages • Inflexible • Few Specialists for Advice • Long Line of Communication • Difficult to Handle Complex Decisions 8-14 * * * Line/Staff Organizations Line Personnel Staff Personnel • Formal Authority • Advise Line Personnel • Make Policy Decisions • Assist Line Personnel 8-15 * * * Matrix Organizations Advantages Disadvantages • Flexibility • Costly/Complex • Cooperation & Teamwork • Confusion in Loyalty • Creativity • Requires Good Interpersonal Skills & Cooperation • More Efficient Use of Resources • Not Permanent 8-16 * * * Important Conditions for Small Teams 1. 2. 3. 4. 5. Clear Purpose Clear Goals Correct Skills Mutual Accountability Shift Roles When Appropriate Source: CIO Dec 2003 8-17 * * * Networking • Real Time • Transparency • Virtual Corporations 8-18 * * * A Virtual Corporation Accounting Firm Production Firm Distribution Firm Core Firm Legal Firm Design Firm Advertising Agency 8-19 * * * Benefits and Concerns of Healthcare Outsourcing Benefits • Provides Enough Staff to Operate the Facility • Cost Savings Concerns • Lower Employee Morale • Liability • Should Patients be Informed • Confidentiality & Security Source: Healthcare Financial Management, 2005 8-20 * * * Which Jobs Will Be Outsourced Next? Manufacturing Information Technology Customer Support/Sales 0% 2% 4% 6% 8% 10% 12% Source: USA Today 8-21 * * * Adapting to Change • Restructuring for Empowerment • Focusing on the Customer • Creating a Change-Oriented Organizational Culture • The Informal Organization 8-22 * * * Layers of AuthorityTraditional • Top Managers- Decision Makers • Middle Managers- Develops Rules & Procedures • Workers and Supervisors 8-23 * * * Inverted Organization Structure Empowered frontline workers Support Personnel Top Mgmt. 8-24 * * * Examples of Informal Group Norms • Do your job but don’t produce more than the rest of the group. • Don’t tell off-color jokes or use profane language among group members. • Listen to the boss and use his/her expertise but don’t trust him/her. • Everyone is to be clean/organized at the workstation. 8-25 * * * More Examples of Informal Group Norms • Never side with managers in a dispute involving group members. • Respect/help your fellow group members on the job. • Criticize the organization only among group members-- never among strangers. • Drinking is done off-the-job-Never at work! 8-26