Copyright © 2004 Prentice Hall. All rights reserved.6–1 What Is Organizing? Organizing Arranging...
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Transcript of Copyright © 2004 Prentice Hall. All rights reserved.6–1 What Is Organizing? Organizing Arranging...
Copyright © 2004 Prentice Hall. All rights reserved. 6–1
What Is Organizing?
• OrganizingArranging the activities of the enterprise in such a
way that they systematically contribute to the enterprise’s goals. This is a pretty loaded definition
– Remember where the organization falls within the overall management process.
• Planning• Organizing• Leading• Controlling
– Link between planning and organizing• Are the skills sets the same for both processes…
Copyright © 2004 Prentice Hall. All rights reserved. 6–2
Depicting the Organization
• Organization Chart A chart that shows the structure of the organization including:
Strategy Structure– The title of each manager and position
• Legitimacy
– Connecting lines
• Formal networks / communication
– Accountability
• Stipulated, not perceived
– Authority
• Formal right to take action The organizational chart is one of the most popular ways to
“organize” strategic planning.– It is inherently important that the strategy and structure fit
Copyright © 2004 Prentice Hall. All rights reserved. 6–3
Authority and the Chain of Command
• Chain of CommandThe path that a directive and/or answer or request
should take through each level of an organization.– Above and beyond authority– Chain of command ensures the proper communication
and delivery of confidential information
• AuthorityThe right to take action, to make decisions, and to
direct the work of others.– Legitimized through structure and position– Earned through action– Leadership theories
Copyright © 2004 Prentice Hall. All rights reserved. 6–4
Line and Staff Authority
• Line ManagerA manager who is:
(1) in charge of essential activities such as sales
(2) authorized to issue orders to subordinates down the chain of command.
• Staff ManagerA manager without the authority to give orders down
the chain of command (except in his or her own department) Generally can only assist and advise line managers in
specialized areas such as human resources management.
Copyright © 2004 Prentice Hall. All rights reserved. 6–5
Line and Staff Authority
• Functional AuthorityNarrowly limited power to issue orders down the
chain of command in a specific functional area. In respect to other types of authority:
– Functional authority refers to legitimacy and authority based on the perceived expert knowledge the one has on a specific area.
Other areas of authority may come from:– Divisional expertise– Product– Organziational
Copyright © 2004 Prentice Hall. All rights reserved. 6–6
The Informal Organization
Informal OrganizationThe informal contacts, communications, and habitual
ways of doing things that employees develop. More common in today’s environment
3 areas Contacts Communications Habits / Behavior
Remember, both of these organization exist simultaneously. The question is which has more influence and power
Copyright © 2004 Prentice Hall. All rights reserved. 6–7
Departmentalization:• Departmentalization
The process through which an organization’s activities are grouped together and assigned to managers. One of the fundamental approaches to organization
– In essence, grouping people with like professional backgrounds together
– In an effort to bring about increased production and efficiency
– This also allows for better control and managing of employees within the organization
But, since your in my class you know better– What are the down-sides in relation to present day
Copyright © 2004 Prentice Hall. All rights reserved. 6–8
Organizing Departments by Function
• Functional DepartmentalizationA form of organization that groups a company’s
activities around essential functions such as manufacturing, sales, or finance. Again the major benefit is in the control
– Very homogeneous and predictable subgroup– Efficiencies
Drawbacks– Lack of creativity– Lack of adaptability– Higher need for formal coordination throughout the
orgainiztion
Copyright © 2004 Prentice Hall. All rights reserved. 6–9
Self-Contained Divisions/Purposes• Product Departmentalization
Grouping departments around a firm’s products or services, or each family of products or services; also referred to as a “divisional” organization. This is important when the product is the organization
– You can pool functional resources into one division to ensure maximum effectiveness
– Insulated
• Customer DepartmentalizationSelf-contained departments are organized to serve
the needs of specific groups of customers.– Niche markets– Overseas markets
Copyright © 2004 Prentice Hall. All rights reserved. 6–10
Divisional Organizationfor a Pharmaceuticals Company
FIGURE 6–2
Copyright © 2004 Prentice Hall. All rights reserved. 6–11
FIGURE 6–3
Customer Departmentalization,Grayson Steel Company
Copyright © 2004 Prentice Hall. All rights reserved. 6–12
Organizing Departments by Self-Contained Divisions/Purposes (cont’d)
• Marketing-channel DepartmentalizationDepartments focus on particular marketing channels,
such as drugstores or grocery stores.
• Geographic (Territorial) DepartmentalizationSeparate departments are established for each of the
territories in which the enterprise does business.
• In the end: Organization need to decide what structure best suits
external effectiveness and internal efficiency
Copyright © 2004 Prentice Hall. All rights reserved. 6–13
FIGURE 6–4
Marketing Channel Departmentalization
Copyright © 2004 Prentice Hall. All rights reserved. 6–14
FIGURE 6–5
Divisional OrganizationsFacilitate Coordination
Copyright © 2004 Prentice Hall. All rights reserved. 6–15
Checklist 6.1Functional vs. Divisional Organizations
Functional Organization Advantages1. It is simple, obvious, and logical.2. It fosters efficiency.3. It can simplify executive hiring and training.4. It can facilitate the top manager’s control.
Functional Organization Disadvantages1. It increases the workload on the executive to
whom the functional department heads report.2. It may reduce the firm’s sensitivity to and
service to the customer.3. It produces fewer general managers.
Copyright © 2004 Prentice Hall. All rights reserved. 6–16
Checklist 6.1 (cont’d)Functional vs. Divisional Organizations Divisional Organization Advantages
1. The product or service gets the single-minded attention of its own general manager and unit, and its customers may get better, more responsive service.
2. It’s easier to judge performance.3. It develops general managers.4. It reduces the burden for the company’s CEO.
Divisional Organization Disadvantages1. It creates duplication of effort.2. It may diminish top management’s control.3. It requires more managers with general
management abilities.4. It can breed compartmentalization.
Copyright © 2004 Prentice Hall. All rights reserved. 6–17
Creating Matrix Organizations
• Matrix OrganizationAn organization structure in which employees are:
Permanently attached to one department But also simultaneously engaged in ongoing
assignments in which they report to:– Project– Customer– Product– Geographic unit heads.
Obviously, we need a hybrid (all-in-one) approach to address all the other types of structures available Hence the matrix organization
Copyright © 2004 Prentice Hall. All rights reserved. 6–18 FIGURE 6–6
Matrix Organization Departmentalization
Copyright © 2004 Prentice Hall. All rights reserved. 6–19
Matrix Organizations
Advantages• Access to expertise.• Stability of permanent
department assignments for employees.
• Allows for focus on specific projects, products, or customers.
Disadvantages• Confusion of
command.• Power struggles and
conflicts.• Lost time in
coordinating.• Excess overhead for
managing matrix functions.
Copyright © 2004 Prentice Hall. All rights reserved. 6–20
Departmentalization in Practice: A Hybrid
• Why mix the types of departmentalization?Hierarchical considerations
The relationship of top level departments to their subsidiary departments.
Efficiency Product, customer, and territorial departments tend to
result in duplicate sales, manufacturing, and other functional departments.
Common sense Departmentalizing is still more an art than a science.
Copyright © 2004 Prentice Hall. All rights reserved. 6–21
Tall And Flat Organizations, And The Span Of Control
• Span of ControlThe number of subordinates reporting directly to a
supervisor. Wide spans: larger number of direct reports. Narrow spans: fewer number of direct reports.
• Tall vs. Flat OrganizationsTall organizations: more management layers and
more hierarchical controls.Flat organizations: fewer management layer and
decision making closer to the customer.
Copyright © 2004 Prentice Hall. All rights reserved. 6–22
Network-based Organizations
• Organizational NetworkA system of interconnected or cooperating
individuals. How is this different from structure? What is the base premise? Do networks fall in line with structures?
• Informal NetworksCommunication pathways and relationships between
individuals in an organization that Do not necessarily conform to the formal chain of
command and communication networks of an organization.
Copyright © 2004 Prentice Hall. All rights reserved. 6–23
Network-based Organizations (cont’d)
• Formal Organizational NetworkA recognized group of managers or other employees
Assembled by the CEO and the other senior executive team
Drawn from across the company’s functions, business units, geography, and levels.– Why would you need this given structure?
• Electronic Organizational NetworksNetworking through technology-supported devices
such as E-mail Video-conferencing Collaborative computing
Copyright © 2004 Prentice Hall. All rights reserved. 6–24
FIGURE 6–10
How Networks Reshape Organizations
Where is the control and authority?
Where does the organization come from?
Copyright © 2004 Prentice Hall. All rights reserved. 6–25
Network-based Organizations (cont’d)
• Team-Based OrganizationsTeam
A group of people committed to a common purpose, set of performance goals, and approach for which they hold themselves mutually accountable.
• Horizontal CorporationsA structure that is organized around customer-
oriented processes performed by: Multidisciplinary cross-functional teams rather than by
formal functional departments. In this manner, the networks and relationships become
the control mechanisms.
Copyright © 2004 Prentice Hall. All rights reserved. 6–26
FIGURE 6–11
The Horizontal Corporation
Source: Source: John A. Byrne, “The Horizontal Corporation,” Business Week, 20 December 1993, p. 80.
Copyright © 2004 Prentice Hall. All rights reserved. 6–27
Checklist 6.2Building Horizontal Organizations
Make responsibilities overlap. Design individual jobs as broadly as possible, and keep the number of job titles to a minimum.
Base rewards on unit performance to emphasize the importance of working together.
Change the physical layout to promote collective responsibility. Let people see each other’s work.
Redesign work procedures, provide computer terminals, use the e-mail network, and make sure managers are available.
Copyright © 2004 Prentice Hall. All rights reserved. 6–28
FIGURE 6–12
How to Create a Horizontal Corporation
Source: Source: Reprinted from the December 20, 1993, issue of Business Week by special permission. Copyright © 1993 by the McGraw-Hill Companies, Inc.
Copyright © 2004 Prentice Hall. All rights reserved. 6–29
Other Organization Types
• Virtual OrganizationA temporary network of independent companies that
use information technology to share skills, reduce costs, and provide access to one another’s markets.
Its success depends on each of the individual firms’ Responsibility Self-interest to accomplish the network’s purpose.
Virtual organizations are highly dependent on: Technologies Individual work ethics Platform controls