4.Basic Orgn Design
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Organization Organization
The framework Developments in
for dividing, or changes to
assigning, and the structure of
coordinating work an organization
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ey e e s
orSpecialization
ut or ty anResponsibility
Chain Centralization vs.of Command Decentralization
DepartmentalizationSpan of Control
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Jobisbrokendownintoanumberofsteps
H
igh
individuality
Makesefficient
use
of
the
diversity
of
skills
thatworkershaveroducti
Work Specialization HighLowLow
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e
a n
o
ommane xecu veOfficer
ExecutiveVice President
ExecutiveVice President
President
VicePresident
VicePresident
VicePresident
VicePresident
VicePresident
Region1
Region2
Region3
Region4
Region5
DistrictA
DistrictB
DistrictC
DistrictD
DistrictE
DistrictF
DistrictG
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pan
o
on ro
Numberofemployeesthatanmanagercan
Increasedoverthelastseveralyears
Contingencyvariables
impact
number
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u or y
vs.
espons y
Rightsinherentin
mana erial
ositionto
Obligationtoperform
giveordersandexpectthemtobefollowed
withauthority
Relatedto
ones
characteristicsof
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The
Concept
of
Authority
Chief Executive
MarketingHuman
ResourcesProductionAccountingFinance
Research and
Development
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ne
u or y
Levelofauthoritythatentitlesmanagerto
Contributesdirectlytotheachievementof
organ za ona
o ec ves
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The ConceptThe Concept
of Powerof Power
AuthorityLevel
The PowerCore
Accounting
Resources
MarketingResearch and
DevelopmentProduction
unc on
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CoerciveCoercive
ReferentReferent RewardReward
xpertxpert Leg t mateLeg t mate
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TheDegreeofCentralization
HigherLower
en
tDecentralizationDecentralizationtrol
ower
entCo
eeEm
nagem
Emplo
TopM
Hi her
Centralization
Lower
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ve
ays
o
epar men a ze
Functional
Customer
Geographic
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Structure
MECHANISTIC
ORGANIC
oll bor tion
both
relationships
verticalandhorizontal)
A t ble uties
xe
u es Formalcommunication
Information
communicationchannels
Centralizedauthority
Decentralized
uthorize
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trategy
Contin encFactors and
rgan za on Technology
nv ronmen aUncertainty
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ewDe artments
e pansof Control
The Simple
tructure
AuthorityFormalization
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e
ureaucracy
StructureStructure
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ClearAccountabilit
Cross-FunctionalCoordination
The Matrix
tructure
of Specialists
of Command
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a r x
ruc ure
amp e
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The Team-Based
Structure
Hold TeamsEmpowerunm y
of Work
Decisions
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Globalizationofmarketsandcompetitors
Needforrapidinnovation
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Or anizational Desi nBoundarylessTeams
Empowerment
Information SharingOpen
Organizational CultureStrong mutual relationships LEARNING
me y
Accurate
ense o commun y
CaringTrust
ORGANIZATION
LeadershipShared vision
Source:Management, Seventh Canadian Edition, by Stephen P. Robbins, MaryCoulter, and Robin Stuart-Kotze, page 231. Copyright 2003. Reprinted by
permission of Pearson Education Canada Inc.
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CULTURE?
Systemofsharedmeaningwithinanorganizationthatdeterminestoalargeextenthowemployeesbehaveand
act
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Dimensions
of
Organizational
Groupemphasis Conflicttolerance
Peoplefocus
Unitinte ration Means
end
Control Opensystems Risktolerance ocus
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Constrainswhatmanagerscanandcannotdo
Culturehasalinkbetweenvaluesand
managerialbehaviour
what
is
acceptable
andnot
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.
Predictability
Consistency
Internalguidelines
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ARECAP
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ENTERPRISE
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Structure?
S ecificationof
the
obs
to
be
done
withinanorganizationandthewaysin.
allowsthe
organization
to
achieve
its
goals. Atsomeorganizationsthe
structureis
ri id
at
other
it
is
more
flexible.
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..OrganizationalstructurevariesaccordingtoaOrganizationalstructurevariesaccordingtoa
,
,
,
,
.
.
Size,technologySize,technology,and,andchangesinenvironmentalchangesinenvironmentalc rcums ancesc rcums ances a so n uences ruc ure.a so n uences ruc ure.
Although all organizations have the same basic
,contributes to the most efficient operations.
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throughan
OrganizationChartDia ram
de ictin
a
com an s
structure
and
showin
em lo ees
where
theyfitintoitsoperations
TheformalOrganizationchartalsoreflectsthe
ChainofCommand
Reporting
relationships
within
a
company
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TheOrganizationalChart
Contemporary Landscape Services, Inc.
Mark Ferguson
Retail ShopManager
NurserManager Operations
Manager
BuyerOffice
Mana erBuyer Supervisor
Residential
Mana er
Commercial
Mana er
66 -- 3232
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TheBuildin Blocksof
OrganizationalStructure
Thefirststepindevelopingthestructureofany
Specialization
Determining
who
will
do
whatDepartmentalization
Determininghowpeopleperformingcertaintasks
canbest
be
grouped
together
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Inaverysmallorganization,theownermay
performevery
job.
Asthefirmgrows,however,sodoestheneedtospecializejobssothatotherscanperformthem.
am m n177 scovere eac o enworkers
did
all
the
steps
of
making
pins
each
groupcouldmake48,000aday.
Rememberalso
that
or anizations
can
overdo
specialization. Why?
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Departmentalization
ProfitCenter
andprofits
Somecompanyoperationsdonotgenerate
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Departmentalization
CustomerDepartmentalization
likelytobuyagivenproduct
Departmentalization
according
to
specific
products
bein created
ProcessDepartmentalization
usedtocreateagoodorservice
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GeographicDepartmentalization
business
Departmentalization
according
to
groups
functions
or
activities
M lti l F f D t t li ti
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MultipleFormsofDepartmentalization
President
Functional DepartmentalizationFunctional Departmentalization
Marketing
Production
Finance
Geographical DepartmentalizationGeographical Departmentalizationexas an
Manager
regon an
Manager
or a an
Manager
Product DepartmentalizationProduct Departmentalization
66 -- 3838
onsumer
Products
n ustra
Products
onsumer
Products
n ustra
Products
onsumer
Products
n ustra
Products
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Establishin the
DecisionMaking
Hierarchy
Whomakeswhichdecisions?The answer almost never focuses on an
individual or even on a small group. Themore accurate answer usually refers to the
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DevelopingaDecisionMaking
Hierarchy
Assi nTasks: Determine
who
can
make
decisionsandspecifyhowtheyshouldbe
.
Givethe
authority to
make
decisions
and
the
respons y oro ga on oma e em.Authorityandresponsibilitygohandinhand.
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havebeenmade. Thisinvolves
Delegation
Assignmentofatask,responsibility,orauthorityby
a
manager
to
a
subordinateAccountabilit
Liabilityofsubordinatesforaccomplishingtasks
assi nedb
mana ers
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Manymanagers
actually
have
trouble
delegatingtaskstoothers.
wherethe
owner
manager
started
out
.
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have
trouble
delegating
effectively?
Theyfeelthatemployeescanneverdoanythingas
wellas
they
can.
Theyfearthatsomethingwillgowrongifsomeone.
The lacktimeforlon ran e lannin becausethe areboggeddownindaytodayoperations.
Theysensetheywillbeinthedarkaboutindustrytrendsandcompetitiveproductsbecauseofthetime
.
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to
delegate
effectively?
Admitthattheycannevergobacktorunning
prosperwiththehelpoftheiremployees.
Theymustlearntoletgo.
Four reasons some managers in big
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Fourreasonssomemanagersinbig
companies
dont
delegate
as
much
oraswellastheyshould:
Theyfearthatsubordinatesdontreallyknowhowto
The fearthatasubordinatemi htshowthe
managerup
in
front
of
others
by
doing
a
superb
job
Theydesiretokeepasmuchcontrolaspossibleover
howthingsaredone
Theysimplylacktheabilitytoeffectivelydelegatetoot ers
Howcanmanagersinbigcompanies
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g g p
Allmanagersshouldrecognizethattheycantdo.
thattheycanassumemoreresponsibilityinthefuture.
Managers
should
recognize
that
if
a
subordinate
performswellitalsoreflectsfavorablyonthemanager.
Amanagerwhosimplydoesntknowhowtodelegates ou
see
spec a ze
tra n ng
n
ow
to
v e
up
an
assigntaskstoothers.
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DistributeAuthorit : Determinewhetherthe
organization
is
to
be
centralized
ordecentralized.
CentralizedOrganizationOrganizationinwhichmostdecisionmakingauthorityisheldbyupperlevelmanagementecen ra ze rgan za onOrganizationinwhichagreatdealofdecisionmakingauthorityisdelegatedtolevelsofmanagementatpointsbelowthetop Thisisthecurrenttrend.
pano ontroNumberofpeoplesupervisedbyonemanager
FlatOrganizationalStructure Vertical
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g
.
Characteristicofdecentralizedcompanieswithrelativelyfew
Chief Partner
Partners
Associates
Relatively wide span of control55 -- 4848
Tall United States ArmyUnited States Army
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Structure
eneraenera
Characteristicofcentralized
MajorsMajors
layersofmanagementandrelativelynarrowspansof
Captains &Captains &
LieutenantsLieutenantscontrol
WarrantWarrantOfficersOfficers
SergeantsSergeants
e at ve y narrow span o
control.
CorporalsCorporalsAt lower levels, where
tasks are similar and
PrivatesPrivates55 -- 4949
simpler, span of control
widens.
Line and Staff OrganizationLine and Staff OrganizationLine do theLine do the
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LineandStaffOrganizationLineandStaffOrganizationLinedotheLinedothe
Clark Equipment Corp.mainline
functions/Staff
assist
mainline
functions/Staff
assist
ResourcesDepartment
EngineeringDepartment
StafStaf
ManagersManagers
Earthmovers Division
Division
DivisionManagersManagers
MaterialsDistribution
66 -- 5050
Handling
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HorizontalOrganizationalsobecomingmorepopular.
Authorit
ranted
to
committees
or
work
teamsinvolvedinafirmsdailyoperations
Basic Forms of
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BasicFormsof
OrganizationalStructure
Organizationscanstructurethemselvesinalmostan
infinitenumber
of
ways
based
on
the
specialization,
departmentalization,ordecisionmakinghierarchies.
Thefourbasicformsoforganizationalstructurethatreflect
the
general
trends
followed
by
most
firms
are:
FunctionalFunctional
DivisionalDivisional
MatrixMatrix
InternationalInternational
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Formofbusinessorganizationinwhichauthority
s eterm ne yt ere at ons ps etweengroupfunctionsandactivities
Com an Structured Around Basic Business Functions
Marketing Operations Finance
epar men epar men epar men
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Organizationalstructure
in
which
corporate
v u u u
underthelargercorporateumbrella
Food Service Infant Foods Condiments
Star-Kist Tuna Frozen-Foods Misc. ProductsDivision Division Division Division
producing and marketing its own productsproducing and marketing its own products
Matrix Organization
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MatrixOrganization
Organizationalstructureinwhichteamsareformedan eammem ersrepor o woormoremanagers
A matrix is a highly flexible form that is
readily adaptable to changing circumstances.
Matrix structures rely heavily on committeeand team authorit .
Some companies use the matrix organization
project. The end of the project usually means
Martha StewartMatrix Organization at
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g
Area
S ecialists
Media Group Merchandising Group
Magazin
Boo
ks
Interne
Rad
io/
Newspa
Netw
or
CableT
K-martLi
Sears
Pa
Cata
lo
Lin
e
Specialt
Reta
ilins
er
/ neint
/
Cooking
Entertainment
Weddings
Crafts
Gardening
Home
Holida s
66 -- 5656Children
InternationalOrganization
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g
Approachestoorganizationalstructuredeveloped, ,
andsellinglobalmarkets
CEO
Division A
Division B
Division
LatinEuro e Asia
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21st Century
BoundarylessOrganizations minimizeoreliminate
traditional
boundaries
and
structures.
TeamOrganizationshaving littleornounderlyingfunctionalhierarchyandrelyalmostexclusivelyonprojecttypeteams.
VirtualOr anizations havelittleornoformalstructure.Theytypicallyhaveonlyahandfulofpermanentemployees,averysmallstaff,anda
mo es
a m n s ra ve
ac y.
VirtualOrganization
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Contracted Contracted
in Asia
Services
Accounting
HumanCore
Or anization
Finance Operations
Management
ContractedDistribution &
ContractedSales &
66 -- 5959
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thatcanbeseenandrepresentedinchartform.
e
n orma
organ za on w nw c
peop e
dotheirjobsindifferentwaysandinteractwitho erpeop e nways a ono o ow orma
linesof
communication.
The informal or anization is sometimes ust aspowerful, if not more powerful, than the formal
structure.
FormalversusInformal
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Organizational
Systems
Groupsofpeoplewhodecidetointeractamong
t emse ves
rapev ne
Informalcommunicationnetworkthatrunsthrough
anorganization
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RestructuringanOrganization
Restructuring referstotheprocessbywhich
mana erschan etaskandauthorit
relationships
to
improve
organizational
effectiveness.
One
t e
of
restructurin
that
has
become commoninrecentyearsisdownsizing.
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Downsizing istheprocessbywhichmanagers
andlayoffmanagersandworkerstoreduce
withrestructuringanddownsizingarethe
useo
empowere
wor ers,
se
manage
teams,andcontingentworkers.
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Empowerment istheprocessofgiving
authoritytomakeimportantdecisions.
Selfmanaged
teams are
work
groups
that
cons s o peop ew oare o n yrespons e
forensuringthattheteamaccomplishes
itsgoals
and
who
lead
themselves.
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Contingentworkers areemployedfor
whoreceivenoindirectbenefitssuchas
ea nsuranceorpens ons.
TheNetworkBasedForm
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Advantages Disadvantages
Enableshighlyflexibleandadaptiveresponses
Difficulty managing lateral
relationships across
Createsabestofthebestfirmtofocusresourcesoncustomerandmarketneeds
autonomous organ zat ons
Difficulty motivating
Eachorganization
can
leverageadistinctive
mem ers o re nqu s
autonomy to join network
competency
Permitsrapidglobalbenefits can be problematic
Canproducesynergisticproprietary knowledge and
technology
Cummings & Worley, 8e (c)2005 Thomson/South-Western14-66
TheDownsizin Process
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Clarifytheorganizationsstrategy
Assessdownsizin
o tions
and
make
relevant
choices
Implementthechanges
Followthrough
with
growth
plans
Cummings & Worley, 8e (c)2005 Thomson/South-Western14-67
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. . integrationoftwoorganisatoins
.
revenues.
.
structuredescribe
above
. shouldbeleanerandmoreflexible.
Cummings & Worley, 8e (c)2005 Thomson/South-Western14-68
TheReengineeringProcess
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Pre aretheor anization
Specifytheorganizationsstrategyandobjectives
Identifyandanalyzecorebusinessprocesses
Define erformanceob ectives
Design
new
processes Restructuretheor anizationaroundthenewbusiness
processes.
Cummings & Worley, 8e (c)2005 Thomson/South-Western14-69
Characteristicsof
Reengineered Organizations
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ReengineeredOrganizations
Workunitschangefromfunctionaldepartmentstoprocess
teams Jobschangefromsimpletaskstomultidimensionalwork
eop e sro esc ange romcon ro e oempowere
Thefocus
of
performance
measures
and
compensation
shifts
.
Organizationstructureschangefromhierarchicaltoflat
Managerschangefromsupervisorstocoaches;executiveschangefromscorekeeperstoleaders
Cummings & Worley, 8e (c)2005 Thomson/South-Western14-70
Thank You
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ThankYou