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CH.7 CREATING A FLEXIBLE ORGANIZATION (Departmentalization "The…
CH.7 CREATING A FLEXIBLE ORGANIZATION
What is an Organization?
"A group of two or more people working to achieve a common set of goals."
Developing Organizational Charts
Organization Chart
is a diagram that represents the positions and relationships within an organization.
Chain of Command
is the line of authority that extends from the highest to the lowest levels of the organization.
Staff (advisory)
positions are jobs that are not part of the direct chain of command in the organization.
Major Considerations for Organizing a Business
-Job Design
-Departmentalization
-Delegation
-Span of Management
-Chain of Command
Job Design
Job Specialization:
is the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people.
The Rationale for Specialization
The "job" of most organizations is too large for one person to handle
1.
A worker that learns one specific, highly specialized task, can learn it quickly and perform it efficiently.
2.
A worker repeating the same job does not lose time changing operations
3.
The more specialized the job, the easier it is to design specialized equipment.
4.
The more specialized the job, the easier the job training.
Alternatives to Job Specialization
Risks
-Boredom
-Dissatisfaction
-Higher absence rate
-Low effort
-Sabotage
Alternatives
1.
Job Rotation:
the systematic shifting of employees from one job to another.
-Workers stay interested on their jobs
-Workers develop new skills
-Workers identify new roles where they may want to focus their energies in the future
Job Enlargement
Job Enrichment
Departmentalization
"The process of grouping jobs into manageable units"
By Function:
groups jobs that relate to the same organizational activity.
Used by small and newer firms
Advantage:
Simplified supervision and coordination
Disadvantage:
-Slow decision-making
-Emphasizes department over company
Combinations of Bases
(Multibase Departmentalization)
Most firms use more than one basis of departmentalization to improve efficiency and to avoid overlapping positions.
By Product:
groups activities related to a particular good or service
Used by older and larger firms
Advantage:
-Easier decision-making
-Integration of related activities
Disadvantage:
-Duplication of specialized activities
-Emphasize product over company
By Location:
groups activities according to the defined geographic area in which they are performed.
Decentralized with regional needs
Advantages:
Can respond to unique demands
Disadvantage:
Large administrative staff and control system.
By Customer:
groups activities according to the needs of various customer populations.
Service-based or Market-specific
Advantage:
Can deal efficiently with unique customers
Disadvantage:
Larder-than-usual administrative staff
Delegation, Decentralization, and Centralization
"
Delegation
assigns part of manager's work and power to other workers"
Delegation of Authority
Steps in Delegation
Responsibility:
is the duty to do a job or perform a task.
Authority:
is the power, within the organization, to accomplish an assigned job or task.
Accountability:
is the obligation of the worker to accomplish an assigned job or task.
Barriers to Delegation
-Fear the work will not get done
-Fear the work will be done to well
-Inability to plan and assign work efficiently
Decentralization of Authority
Decentralized organization
is an organization where management consciously attempts to spread authority widely in the lower levels of the organization
Centralized organization
is an organization that systematically works to concentrate authority at the upper levels of the organization.
Factors Favoring Decentralization
-A complex and unpredictable business environment
-Decisions that carry low risk or that are unimportant
-Highly capable lower-level managers with strong decision-making skills
-Past practices of the firm in the decentralizing its structure and decision-making processes
The Span of Management
(Span of Control)
The number of workers who report directly to one manager.
Wide and Narrow Spans of Management
Wide span
exists when a manager has a large number of subordinates.
-High level of competence in managers and workers
-Standard operating procedures
-Few new problems
Narrow span
exists when the manager has only a few subordinates.
-High level of interaction required between manager and workers
-High frequency of new problems
-Physical dispersion of subordinates
-Manager has additional tasks
Organizational Height
is the number of layers, or levels, of management in a firm
Flat organizations
-Have wider spans of management and fewer levels
-Require managers to perform more administrative tasks and to spend more time supervising subordinates
Tall organizations
-Have narrow spans of management and many levels
-Have higher administrative costs (more managers)
-May distort internal communications during passage of the communications through the multiples levels of organization
Forms of Organizational Structure
The Line Structure:
the chain of command goes directly from person to person throughout the organization
Simplicity allows for quick decision making and direct accountability
Most suitable for small organizations with lower volume of activities than medium or large organizations
Line managers:
are managers within a line structure that make decisions and give orders to subordinates to achieve the organization's goals.
The Line-and-Staff Structure:
it utilizes the chain of command from a line structure in combination with the assistance of staff managers.
Line managers
have
line authority
which means they can make decisions and issue directives related to organizational goals.
(A line manager had direct responsibility for achieving the company's goals and is in the direct chain of command)
Staff managers:
support, advice, and expertise withing an organization.
-
Advisory authority
is the expectation that line managers will consult the appropriate staff managers when making decisions.
-
Functional authority
is the authority of staff managers to make decisions and issue directives about their areas of expertise.
(A staff manager supports and advises the line managers)
Reasons for conflict between the two:
-Staff managers often have more formal education
-Staff managers are sometimes younger and more ambitious
-Line managers may perceive staff managers as a threat
-Staff managers may become angry if their recommendations are not adopted
Minimizing conflict between the two:
-Integrate line and staff managers into a team
-Ensure that responsibilities are clearly defined
-Hold both line and staff managers accountable for results
The Matrix Structure:
combines vertical and horizontal lines of authority, usually by superimposing product departmentalization on a functionally departmentalized organization.
-Authority Flows both down and across
(Cross-functional team:
a team of individuals with varying specialties, expertise, and skills that are brought together to achieve a common task.)
-Employees on cross-functional teams report to both the project manager in charge of the team and to their superiors in their home-base functional department
Advantages:
-Added flexibility
-Increased productivity
-Higher morale
-Increases in creativity and innovation
-Personal development of team members
Disadvantages:
-Chain of command conflicts
-May take longer to resolve problems and reach solutions
-Personality clashes
-Poor communication
-undefined individual roles
-Unclear responsibilities
-Difficulty in determining how to reward individual and team performance
The Network Structure (virtual organization):
administration is the primary function, and most other functions are contracted out to other firms
Strength:
Flexibility allows the organization to adjust quickily to changes
Weaknesses:
-Difficulty controlling the quality of work by other organizations
-Low morale and high turnover of hourly workers
-Vulnerability of relying on the outside contractors
Corporate Culture
Inner rites, rituals, heroes, and values of a firm
(Indicators of corporate culture: the physical setting, corporate statement about itself, how the company greets its guests, and how employees spend their time at work)
Types of Cultures
Network Culture
is characterized by a base of trust and friendship among employees, a strong commitment to the organization, and an informal environment.
-Extrovert energized by relationships
-Tolerant of ambiguities and have low needs for structure
-Can stop politics and act to stop "negative" politics
-Consider yourself easygoing, affable, and loyal to others
Mercenary Culture
may have a negative connotation, but it also involves a high degree of passion, energy, sense of purpose, and excitement for one's work.
-Goal-oriented and have an obsessive desire to complete tasks
-Thrive in competitive energy
-Keep "relationships" out of work-develop them
Fragmented Culture
employees do not become friends, and they work "at" the organization, not "for" it. Also, employees have autonomy, flexibility, and equality.
-Are a reflective and self-contained introvert
-Have a high autonomy drive and strong desire to work independently
-Have a strong sense of self
Communal Culture
combines the positive traits of the networked culture and the mercenary culture-those of friendship, commitment,high focus on performance, and high energy.
-You consider yourself passionate
-Strong need to identify with something bigger that yourself
-You enjoy being in teams
-Prepared to make sacrifices for the greater good
When to change?
Culture change is needed when:
-A company's environment changes
-The industry becomes more competitive
-Company performance is mediocre
-The company is growing or becomes a large firm
-Ex: Goldman Sachs, General Mills, Alcoa, Aetna.
Committees and Task Forces
Ad Hoc Committee:
created for a specific short-term purpose.
(Ex. Reviewing employee benefits plan)
Standing Committee:
a relatively permanent committee charged with performing some recurring task
(Ex. Budget review committee)
Task force:
a committee established to investigate a major problem or pending decision
(Ex. Assessing pros and cons of a merger)
Advantages:
-Members bring different knowledge and skills to task
-Tend to make accurate decisions
-Transmit results through the organization more effectively
Disadvantages:
-Deliberations take longer
-Unnecessary compromise may take place
-One person may dominate
The Informal Organization and the Grapevine
"
Informal Organization
is the pattern of behavior and interaction that stems from personal rather than official relationships."
Informal Groups
is created by the members themselves to accomplish goals that may or may not be relevant to an organization.
-Can be powerful forces in organizations exerting positive as well as negative influences
Grapevine
is the informal communications network within an organization.
-Sometimes fasted than the organization's formal communication channels
-May be accurate or distorted; managers should be aware and use appropriately