11-Organizational Structures and Processes

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Transcript of 11-Organizational Structures and Processes

Chapter 11Organizational Structures and Processes

2004 by Nelson, a division of Thomson Canada Limited

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What Would You Do?

Exide Technologies is currently organized geographically Share prices are decreasing Debt load is increasing Which organizational structure should Exide have?

2004 by Nelson, a division of Thomson Canada Limited

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Learning Objectives:Designing Organizational StructuresAfter reading these next three sections, youll have a better understanding of the importance of organizational structure because you should be able to: 1. describe the departmentalization approach to organizational structure 2. explain organizational authority 3. discuss the different methods for job design 2004 by Nelson, a division of Thomson Canada Limited

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Departmentalization

Functional Product Customer Geographic Matrix

2004 by Nelson, a division of Thomson Canada Limited

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Functional Departmentalization

Exhibit 11.1 2004 by Nelson, a division of Thomson Canada Limited

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Functional DepartmentalizationAdvantages

Disadvantages

creates highly skilled specialists lowers costs through reduced duplication communication and coordination problems are lessened

cross-department coordination can be difficult may lead to slower decision making produces managers with narrow experiences6

2004 by Nelson, a division of Thomson Canada Limited

Product DepartmentalizationEasy Food Market Cheese Milk Ice cream

2004 by Nelson, a division of Thomson Canada Limited

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Product DepartmentalizationAdvantages

Disadvantages

managers specialize but have broader experience easier to assess work-unit performance decision making is faster

duplication often increases costs difficult to coordinate across departments

2004 by Nelson, a division of Thomson Canada Limited

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Customer DepartmentalizationAmerican Express

Cards

Travel

Financial Services Business Services

Adapted from Exhibit 11.3 2004 by Nelson, a division of Thomson Canada Limited

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Customer DepartmentalizationAdvantages

Disadvantages

focuses on customer needs products and services tailored to specific customers

duplication of resources difficult to achieve coordination across departments decisions that please the company but may hurt the company10

2004 by Nelson, a division of Thomson Canada Limited

Geographic DepartmentalizationCoca-Cola Enterprises Central North America Eastern North America Western North America

Europe

2004 by Nelson, a division of Thomson Canada Limited

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Geographic DepartmentalizationAdvantages

Disadvantages

responsive to demand of different markets reduce costs by locating resources close to customers

duplication of resources difficult to coordinate across departments

2004 by Nelson, a division of Thomson Canada Limited

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Matrix DepartmentalizationA hybrid structure in which two or more forms of departmentalization are used together

most common forms combine product and functional employees report to two bosses increased cross-functional interaction significant interaction between functional and project managers required13

2004 by Nelson, a division of Thomson Canada Limited

Matrix DepartmentalizationAdvantages

Disadvantages

efficiently manage large, complex tasks effectively manage large, complex tasks

requires high levels of coordination increased conflict levels requires high level of management skills

2004 by Nelson, a division of Thomson Canada Limited

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Organizational Authority

Chain of command Line versus staff authority Delegation of authority Degree of centralization

2004 by Nelson, a division of Thomson Canada Limited

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Chain of Command

The vertical line of authority in an organization

clarifies who reports to whom workers report to only one boss violated by matrix structure Number of people reporting to a specific supervisor

Unity of command

Span of control

2004 by Nelson, a division of Thomson Canada Limited

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Line Versus Staff Authority

Line authority-function

the right to command immediate subordinates in the chain of command an activity that contributes directly to creating or selling a companys products the right to advise but not command others 17 an activity that supports line activities

Staff authority-function

2004 by Nelson, a division of Thomson Canada Limited

Delegation of AuthorityThe assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible Three transfers from manager to subordinate

transfer of full responsibility of assignment transfer of authority over required resources transfer of accountability18

2004 by Nelson, a division of Thomson Canada Limited

How to Be a More Effective Delegator1. 2. 3. 4. 5. Trust your staff to do a good job Avoid seeking perfection Give effective instructions Know your true interests Follow up on progress

Adapted from Exhibit 11.7 2004 by Nelson, a division of Thomson Canada Limited

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How to Be a More Effective Delegator6. Praise the efforts of your staff 7. Dont wait until the last minute to delegate 8. Ask questions, expect answers and assist employees 9. Provide sufficient resources 10. Delegate to the lowest possible level20

Adapted from Exhibit 11.7

2004 by Nelson, a division of Thomson Canada Limited

Degree of Centralization

Centralization of authority

most authority is held at the upper levels of the organization significant authority is found in lower levels of the organization Solving problems by applying rules, procedures, and processes21

Decentralization

Standardization

2004 by Nelson, a division of Thomson Canada Limited

Job Design

Job Job Job Job

specialization rotation enlargement enrichment

2004 by Nelson, a division of Thomson Canada Limited

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Job Design

Job specialization

breaking jobs into smaller tasks simple, easy-to-learn, and economical can lead to low job satisfaction, high absenteeism, and turnover periodically moving workers from one job to another23

Job rotation

2004 by Nelson, a division of Thomson Canada Limited

Job Design

Job enlargement

increasing the number of tasks performed by a worker adding more tasks and authority to a workers job

Job enrichment

2004 by Nelson, a division of Thomson Canada Limited

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Learning Objectives: Designing Organizational ProcessesAfter reading these next two sections, you should be able to: 4. explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes) 5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational 25 2004 by Nelson, a division of Thomson Canada Limited

Intraorganizational Processes

Reengineering Empowerment Behavioural informality

2004 by Nelson, a division of Thomson Canada Limited

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Reengineering

Fundamental rethinking of business processes Intended to achieve dramatic improvements in performance Changes the organizations orientation form vertical to horizontal Changes task interdependence27

2004 by Nelson, a division of Thomson Canada Limited

Task Interdependence

The extent to which collective action is required to complete an entire piece of work Three types

pooled sequential reciprocal28

2004 by Nelson, a division of Thomson Canada Limited

Empowerment

Permanently passing decisionmaking authority and responsibility from managers to workers

workers need information and resources to make good decisions workers should be rewarded for taking initiative29

2004 by Nelson, a division of Thomson Canada Limited

Behavioural InformalityBehavioural informality

Behavioural formality

spontaneity casualness interpersonal familiarity

routine and regimen specific rules impersonal detachment

2004 by Nelson, a division of Thomson Canada Limited

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Interorganizational Processes

Modular organizations Virtual organizations Boundaryless organizations

2004 by Nelson, a division of Thomson Canada Limited

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Modular Organization

2004 by Nelson, a division of Thomson Canada Limited

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Virtual Organization

2004 by Nelson, a division of Thomson Canada Limited

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Boundaryless Organization

2004 by Nelson, a division of Thomson Canada Limited

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What Really Happened?

2004 by Nelson, a division of Thomson Canada Limited

Exide Technologies implemented a product structure around global business units Problems associated with product structure caused a return to a geographic structure Exide is still searching for the proper structure

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