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Transcript of Chap 008 Chap 008 Chap 008
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StructuringOrganizations
for Today’s
Challenges
Chapter 08
McGraw-Hill/Irwin Copyright © 2013 by The M cGraw-Hill Companies, Inc. Al l rights reserved.
1. Outline the basic principles of organization
management.
2. Compare the organizational theories of Fayol andWeber.
3. Evaluate the choices managers make in structuring
organizations.
4. Contrast the various organizational models.
5. Identify the benefits of inter-firm cooperation andcoordination.
6. Explain how organizational culture can helpbusinesses adapt to change.
LEARNING GOALSChapter Eight
8-2
Profile
• Started as a summer intern andmoved up through Xerox.
• The only female African-American CEO among
Fortune’s Top 150 Companies.
• Serves on many boards andhas been placed on councils by
President Obama and Vice-President Biden.
URSULA BURNSXerox
8-3
This sport’s equipment company studied the CDindustry and learned to use ultraviolet inks toprint graphics on skis. It went to the cable
television industry to learn how to braid layersof fiberglass and carbon, and adapted thatknowledge to make its products.
Name that company!
NAME that COMPANYChapter Eight
8-4
Everyone’sReorganizing
• Many companies are reorganizing, especiallythose in decline. Including:
- Auto makers
- Homebuilders
- Banks
• Adjusting to changing markets is normal incapitalist economies.
• Companies must go back to basic
organizational principles and firm up the
foundation.
REORGANIZATION is for
EVERYONELG1
8-5
Building anOrganization fromthe Bottom Up
• Create a division of labor
• Set up teams or departments
• Allocate resources
• Assign tasks
• Establish procedures
• Adjust to new realities
STRUCTURING an ORGANIZATIONLG1
8-6
http://www.xerox.com/http://www.xerox.com/http://www.xerox.com/
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You own a lawn-mowing business and are aware of
the hazards in the job. But you’ve seen othercompanies save money by eliminating safety
equipment. You’d also like to make more money.
SAFETY vs. PROFIT (Making Ethical Decisions)
• What do you do?
• Save money with lesssafety precautions?
• What are the
consequences?
8-7
The ChangingOrganization
• Often change in organizations is due to evolvingbusiness environments:
- More global competition
- Declining economy
- Faster technological change
- Pressure to protect the environment
• Customer expectations have also changed --
Consumers today want high-quality productswith fast, friendly service and all at low cost.
THE CHANGING ORGANIZATION
LG2
8-8
Source: NewsWeek, July 26, 2010 and Fast Company, March 2010.
HOW MUCH CHANGESin a DECADE? LG2
The ChangingOrganization
What? 2000 2010
Amount of cell phone use 34% 89%
Number of active blogs 12,000 141,000,000
Amount of reality shows 4 320
Daily emails sent 12 billion 247 billion
Number of hours spent online per week 2.7 18
Number of daily newspapers 1,480 1,302
Number of daily letters mailed 207 billion 175 billion
Amount of books published 282,242 1,052,803
iTunes downloads 0 10 billionPercentage of obese Americans 26% 34%
8-9
The Developmentof OrganizationDesign
• Mass production of goods led to complexities inorganizing businesses.
PRODUCTION CHANGEDORGANZIATION DESIGN
• Economies of Scale --Companies can reducetheir production costs by purchasing raw materialsin bulk.
•
The average cost ofgoods decreases asproduction levels rise.
LG2
8-10
Fayol ’s Principlesof Organization
• Unity of command
• Hierarchy of authority
• Division of labor
• Subordination of individualinterests to the generalinterest
• Authority
FAYOL
S PRINCIPLES
• Degree ofcentralization
• Clear communicationchannels
• Order
• Equity
• Esprit de corps
LG2
8-11
• Organizations in whichemployees have no
more than one boss;lines of authority are
clear.
ORGANIZATIONS BASED on
FAYOL
S PRINCIPLES
• Rigid organizations that
often don’t respond tocustomers quickly.
LG2
Fayol ’s Principlesof Organization
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Max Weber andOrganizationalTheory
• Employees just need to do what
they’re told.
• In addition to Fayol’s principles,Weber emphasized:
- Job descriptions
- Written rules, decisionguidelines and detailed records
- Consistent procedures,regulations and policies
- Staffing and promotion basedon qualifications
WEBER
S PRINCIPLESLG2
8-13
TurningPrinciples intoOrganizationDesign
• When following Fayol and Weber, managerscontrol workers.
• Hierarchy -- A system in which one person isat the top of an organization and there is aranked or sequential ordering from the topdown.
• Chain of Command -- The line of authoritythat moves from the top of the hierarchy to thelowest level.
HIERARCHIES and COMMANDLG2
8-14
TYPICAL ORGANIZATION CHARTLG2
TurningPrinciples intoOrganizationDesign
8-15
• Bureaucracy -- An organization with many layers ofmanagers who set rules and regulations and overseeall decisions.
• It can take weeks or months to have informationpassed down to lower-level employees.
• Bureaucracies can annoy customers.
BUREAUCRATIC ORGANIZATIONSLG2
TurningPrinciples intoOrganizationDesign
8-16
Progress Assessment
• What do the terms division of labor and jobspecialization mean?
• What are the principles of management outlined
by Fayol?
• What did Weber add to the principles of Fayol?
PROGRESS ASSESSMENT
8-17
ChoosingCentralizedorDecentralized
Authority
• Centralized Authority -- When decision-making isconcentrated at the top level of management.
CENTRALIZATION orDECENTRALIZATION?
• Decentralized
Authority -- Whendecision-making isdelegated to lower-levelmanagers and employeesmore familiar with localconditions thanheadquarters is.
LG3
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Choosing the AppropriateSpan of Control
• Span of Control -- The optimal number ofsubordinates a manager supervises or should
supervise.
• When work is standardized, broad spans ofcontrol are possible.
• Appropriate span narrows at higher levels of the
organization.
• The trend today is to reduce middle managersand hire better low-level employees.
SPAN of CONTROLLG3
8-19
Choosing Tallversus Flat
OrganizationStructures
• Structures determine the way the companyresponds to employee and customer needs.
• Tall Organization Structures -- An organizationalstructure in which the organization chart would be tall
because of the various levels of management.
• Flat Organization Structures -- An organizationalstructure that has few layers of management and abroad span of control.
ORGANIZATIONAL STRUCTURESLG3
8-20
FLAT ORGANIZATIONALSTRUCTURELG3
Choosing Tallversus Flat
OrganizationStructures
8-21
Weighing the Advantages andDisadvantages ofDepartmentalization
• Departmentalization -- Divides organizations intoseparate units.
• Workers are grouped by skills and expertise tospecialize their skills.
DEPARTMENTALIZATIONLG3
8-22
1) Employees develop skills and progress within adepartment as they master skills.
2) The company can achieve economies of scale.
3) Employees can coordinate work within the
function and top management can easily directactivities.
ADVANTAGES of
DEPARTMENTALIZATIONLG3
Weighing the Advantages andDisadvantages ofDepartmentalization
8-23
1) Departments may not communicate well.2) Employees may identify with their department’s
goals rather than the organization’s.
3) The company’s response to external changes maybe slow.
4) People may not be trained to take differentmanagerial responsibilities, instead they become
specialists.
5) Department members may engage in groupthink and
may need outside input.
DISADVANTAGES of
DEPARTMENTALIZATIONLG3
Weighing the Advantages andDisadvantages ofDepartmentalization
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Looking at Alternate Ways toDepartmentalize WAYS to DEPARTMENTALIZE
LG3
8-25
WAYS to DEPARTMENTALIZE
LG3
Looking at Alternate Ways toDepartmentalize
8-26
Progress Assessment
• Why are organizations becoming flatter?
• What are some reasons for having a narrow spanof control in an organization?
• What are the advantages and disadvantages of
departmentalization?
• What are the various ways a firm candepartmentalize?
PROGRESS ASSESSMENT
8-27
OrganizationModels
1. Line Organizations
2. Line-and-StaffOrganizations
3. Matrix-StyleOrganizations
4. Cross-Functional Self-Managed Teams
FOUR WAYS to STRUCTURE anORGANIZATIONLG4
8-28
LineOrganizations
•
Line Organization -- Has direct two-way lines ofresponsibility, authority and communication runningfrom the top to the bottom. Everyone reports to onesupervisor.
• There are no specialists, legal, accounting,
human resources or information technologydepartments.
• Line managers issue orders, enforce disciplineand adjust the organization to changes.
LINE ORGANIZATIONSLG4
8-29
Line-and-StaffOrganizations
•
Line Personnel -- Workers responsible for directlyachieving organizational goals, and include production, distribution and marketing employees.
• Line personnel have authority to make policydecisions.
LINE PERSONNELLG4
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• Staff Personnel -- Employees who advise and assistline personnel in meeting their goals, and include
market ing research ,(wrong!!!) legal advising, IT andhuman resource employees.
STAFF PERSONNELLG4
Line-and-StaffOrganizations
8-31
SAMPLE LINE-and-STAFFORGANIZATIONLG4
Line-and-StaffOrganizations
8-32
Matrix-StyleOrganizations
• Matrix Organization -- Specialists from different parts of the organization work together temporarily onspecific projects, but still remain part of a line-and-staffstructure.
MATRIX ORGANIZATIONS
• Emphasis is onproduct development,
creativity, specialprojects,
communication andteamwork.
LG4
8-33
SAMPLE MATRIXORGANIZATIONLG4
Matrix-StyleOrganizations
8-34
• Managers have flexibility in assigning people toprojects.
• Interorganizational cooperation and teamwork is
encouraged.
• Creative solutions to product developmentproblems are produced.
• Efficient use of organizational resources.
ADVANTAGES of the
MATRIX STYLELG4
Matrix-StyleOrganizations
8-35
• It’s costly and complex.
• Employees may be confused about where theirloyalty belongs.
• Good interpersonal skills and cooperativeemployees are a must.
DISADVANTAGES of theMATRIX STYLELG4
Matrix-StyleOrganizations
• It’s a temporary
solution to a possible
long-term problem.
• Teams are not
permanent.
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Cross-FunctionalSelf-ManagedTeams
• Cross-Functional Self-Managed Teams --
Groups of employees from different departments whowork together on a long-term basis.
• A way to fix the problem of matrix-style teams isto establish long-term teams.
• Empower teams to work closely with suppliers,
customers and others to figure out how to createbetter products.
CROSS-FUNCTIONALSELF-MANAGED TEAMSLG4
8-37
Going BeyondOrganizationalBoundaries
• Cross-functional teams work best when the voice
of the customer is heard.
• Teams that include customers, suppliers and
distributors go beyond organizational boundaries.
• Government coordinators may assist in sharingmarket information beyond national boundaries.
GOING BEYONDORGANIZATIONAL BOUNDARIES
LG4
8-38
Source: CIO Magazine, www.cio.com.
• Clear purpose
• Clear goals
• Correct skills
• Mutual accountability
• Shift roles whenappropriate
BUILDING SUCCESSFUL TEAMS Important Conditions for Small TeamsLG4
Going BeyondOrganizationalBoundaries
8-39
Progress Assessment
• What’s the difference between line and staffpersonnel?
• What management principle does a matrix-styleorganization challenge?
• What’s the main difference between a matrix-
style organization’s structure and the use of
cross-functional teams?
PROGRESS ASSESSMENT
8-40
Transparencyand VirtualOrganizations
• Networking -- Usingcommunications technologyto link organizations andallow them to work together.
• Most companies are nolonger self-sufficient;
they’re part of a globalbusiness network.
REAL-TIME BUSINESSLG5
Photo Courtesy of: MarcWathieu
• Real Time -- The present moment or actual time inwhich something takes place.
8-41
• Transparency -- When a company is so open toother companies that electronic information is sharedas if the companies were one.
• Virtual Corporation -- A temporary networkedorganization made up of replaceable firms that joinand leave as needed.
TRANSPARENCY and VIRTUAL
CORPORATIONSLG5
Transparencyand VirtualOrganizations
8-42
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A VIRTUAL CORPORATIONLG5
Transparencyand VirtualOrganizations
8-43
• Douglas Pick launched DAP World from his
apartment, but couldn’t produce all that was
needed.
WHEN YOUR WORKERSWORK for SOMEONE ELSE
(Spotlight on Small Business)
• Started working with NewHorizons to help produce
and ship his earplugs.
• Now he sells millions ofearplugs to major outlets
like Walgreens and RiteAid.
8-44
Benchmarkingand CoreCompetencies
• Benchmarking -- Compares an organization’s practices, processes and products against theworld ’s best.
• Core Competencies -- The functions anorganization can do as well as or better than anyother organization in the world.
•
K2 Skis researched other companies’ practicesin order to create the best possible skis and
snowboards.
BENCHMARKING andCORE COMPETENCIESLG5
8-45
Source: Healthcare Financial Management.
Benefits Concerns
• Provides enough staffto operate the facility
• Lower employeemorale
• Cost savings • Liability
• Should patients beinformed
• Confidentiality and
security
BENEFITS and CONCERNS ofHEALTHCARE OUTSOURCINGLG5
Benchmarkingand CoreCompetencies
8-46
Source: USA Today.
WHICH JOBS will be
OUTSOURCED NEXT?LG5
Benchmarkingand CoreCompetencies
8-47
Adapting toChange
•Change isn
’t easy.
Employees like to do
things the way theyalways have.
• Get rid of old, inefficient
facilities and equipment.
• Use the Internet to getto know your customers
and sell directly to them.
ADAPTING toMARKET CHANGES
LG5
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KEEP in TOUCHAmazon and its Customer Database
Amazon uses information stored in databases toreach out to customers. The company emails
customers letting them know about music, DVDsor books they might like based on pastpurchases.
• Have you ever received an email like this from Amazon or anothercompany?
• What benefits would a database of personal information, like pastpurchases, provide Amazon?
• Do you think these databases are helpful for both companies andconsumers or are they an invasion of privacy?
LG5
Adapting toChange
8-49
• People will become so used to having social
media at their fingertips, it’ll no longer be news.
• There will be new gadgets; some will beimprovements, others will be revolutionary.
• This can lead to more people working from home
and more companies interacting directly with theircustomer base.
WHEN TWITTER and FACEBOOKare OLD SCHOOL
(Social Media in Business)
8-50
RestructuringforEmpowerment
• Restructuring -- Redesigning an organization so itcan more effectively and efficiently serve itscustomers.
• Inverted Organization -- An organization that hascontact people at the top and the CEO at the bottomof the organizational chart.
•
The manager’s job is to assist and supportfrontline workers, not boss them.
RESTRUCTURINGLG5
8-51
TRADITIONAL and INVERTEDORGANIZATIONSLG5
RestructuringforEmpowerment
8-52
Creating aChange-OrientedOrganizationalCulture
• Organizational or CorporateCulture -- The widely sharedvalues within an organization thatfoster unity and cooperation toachieve common goals.
• Some of the best organizationalcultures emphasize service.
• Culture is shown in stories,traditions and myths.
ORGANIZATIONAL CULTURELG6
8-53
Managing theInformalOrganization
• Formal Organization -- Details lines ofresponsibility, authority and position.
• The formal system is often slow and
bureaucratic, but it helps guide the lines ofauthority.
• No organization can be effective without formaland informal organization.
FORMAL ORGANIZATIONLG6
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• Informal Organization -- The system of
relationships that develop spontaneously asemployees meet and form relationships.
INFORMAL ORGANIZATION
• Informal organizationhelps foster
camaraderie andteamwork amongemployees.
LG6
Managing theInformalOrganization
8-55
• The informal system is
too unstructured andemotional on its own.
• Informal organizationmay also be powerful
in resistingmanagement
directives.
LIMITATIONS of INFORMAL
ORGANIZATIONSLG6
Managing theInformalOrganization
8-56
Source: CIO Magazine.
• Do your job but don’t produce more than therest of your group.
• Don’t tell off-color jokes or use profanity.
• Everyone is to be clean and organized at the
workstation.
• Respect and help your fellow group members.
• Drinking is done off the job – NEVER at work.
GROUP NORMS Examples of Informal Group Norms
LG6
Managing theInformalOrganization
8-57
Progress Assessment
• What’s an inverted organization?
• Why do organizations outsource functions?
• What’s organizational culture?
PROGRESS ASSESSMENT
8-58
http://www.cio.com/http://www.cio.com/http://www.cio.com/