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Structuring Organizations for Today's Challenges (The Changing…
Structuring Organizations for Today's Challenges
The Changing Organization
Organizing, or structuring, begins with determining what work needs to be done in your company.
Division of labor: Dividing up the tasks.
Economies of scale: When companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase.
Fayol’s Principles of Organization
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
Max Weber and Organizational Theory
Job descriptions
Written rules, decision guidelines, and detailed records
Consistent procedures, regulations, and policies
Staffing and promotion based on qualifications
Hierarchy: System in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person.
Chain of command: The line of authority that moves from the top of a hierarchy to the lowest level.
Organization chart: A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom.
Bureaucracy: An organization with many layers of managers who set rules and regulations and oversee all decisions.
Decisions To Make In Structuring
Organizations
Centralized authority: Decision-making authority is maintained at the top level of management.
Decentralized Authority: Organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions.
Span of control: The optimal number of subordinates a manager supervises or should supervise.
Tall organization structure: Organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management.
Flat organization structure: Organization structure that has a few layers of management and a broad span of control.
Departmentalization: The dividing of organizational functions into separate units.
Advantages
Skills-development
Economies of scale
Work-function coordination
Easy management
Disadvantages
Bad communication
Slow response to change
Slow or no creativity
Narrow specialty
Organizational Models
Line organization: Two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor.
Line personnel: Employees who are part of the chain of command responsible for achieving organizational goals.
Staff personnel: Employees who advise and assist line personnel in meeting their goals.
Matrix organization: Specialists from different parts of the organization work on specific projects but still remain part of a line-and-staff structure.
Cross-functional self-managed teams: Employees from different departments who work together on a long-term basis.
Managing The Interactions Among Firms
Networking: Using communications technology and other means to link organizations and allow them to work together on common objectives.
Real time: The actual time in which something takes place.
Benchmarking: Comparing an organization’s practices, processes, and products against the world’s best.
Adapting To Change
Digital natives: Young people who have grown up using the Internet.
Core competencies: Functions that the organization can do as well as or better than any other organization in the world.
Restructuring: Redesigning an organization so that it can more effectively and efficiently serve its customers.
Organizational culture: Shared values within an organization that provide unity to achieve common goals.
Formal organization: Structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.
Informal organization: Employees meet and form cliques, relationships, and lines of authority outside the formal organization.