Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 8-8- 1 Bateman Snell...
-
Upload
dwain-lambert -
Category
Documents
-
view
224 -
download
1
Transcript of Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. 8-8- 1 Bateman Snell...
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
1
Bateman Snell
Management
5thEdition
Competingin theNew Era
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
2
Part ThreeChapter 8 - Organization Structure
Chapter OutlineFundamentals of OrganizingThe Vertical StructureThe Horizontal StructureOrganizational IntegrationLooking Ahead
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
3
Learning ObjectivesLearning Objectives
After studying Chapter 8, you will know: how differentiation and integration influence your
organization’s structure how authority operates the roles of the board of directors and the chief executive
officer how span of control affects structure and managerial
effectiveness how to delegate work effectively the difference between centralized and decentralized
organizations
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
4
Learning Objectives (cont.)Learning Objectives (cont.)
After studying Chapter 8, you will know: how to allocate jobs to work units how to manage the unique challenges of the matrix
organization the nature of important integrative mechanisms
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
5
Fundamentals Of OrganizingFundamentals Of Organizing
Organization chart depicts the positions in the firm and how they are arranged provides a picture of the reporting structure
Differentiation aspect of the organization’s internal environment
division of labor - assignment of different tasks to different people or groups
specialization - process in which different individuals and units perform different tasks
differentiation is high when there are many subunits and many kinds of specialists who think differently
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
6
Fundamentals Of Organizing (cont.)
Fundamentals Of Organizing (cont.)
Integration degree to which differentiated units work together and
coordinate their effortsall the specialized tasks in an organization cannot be performed completely independently
coordination - procedures that link the various parts of the organization to achieve the organization’s overall mission
any job activity that links different work units performs an integrative function
the more a firm is differentiated, the greater the need for integration among the units
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
7
Personnel Finance
Manufacturing Sales
Personnel Finance
Manufacturing Sales
Finance R&D Marketing Personnel
ChemicalProducts
MetalProducts
President
Conventional Organization ChartConventional Organization Chart
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
8
The Vertical StructureThe Vertical Structure
Authority in organizations authority - the legitimate right to make decisions and to tell
other people what to doresides in positions rather than people
in private business enterprises, owners have ultimate authoritytraditionally authority has been the primary means of running an organization
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
9
Authority in organizations (cont.) board of directors - elected by the stockholders to run the
organizationled by a chairperforms three functions
selecting, assessing, rewarding, and perhaps replacing the CEO determining the firm’s strategic direction and reviewing financial
performance assuring ethical, socially responsible, and legal conduct
inside directors - the firm’s top managers who sit on the board outside directors - are likely run other companies
successful boards tend to be active, critical participants in determining company strategies
The Vertical Structure (cont.)The Vertical Structure (cont.)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
10
The Vertical Structure (cont.)The Vertical Structure (cont.)
Authority in organizations (cont.) chief executive officer (CEO) - occupies the top of the
organizational pyramidauthority officially vested in the board of directors is assigned to the CEO
CEO personally responsible to the board and owners top management team - typically comprised of the CEO,
president, chief operating officer, chief financial officer, and other key executives
frequently meet with the CEO to make important decisions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
11
The Vertical Structure (cont.)The Vertical Structure (cont.)Hierarchical levels
hierarchy - the authority levels of the organizational pyramidtop management - strategic managers in charge of the entire organization
middle management - in charge of plants or departmentslowest levels - made up of lower management and workers
called the operational level of the organization
trend in U.S. is to reduce the number of hierarchical layersSpan of control
the number of subordinates who report directly to a manager narrow spans produce tall organizations wide spans produce flat organizations
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
12
Capability andsupportiveness
of manager
Similarity of jobsand performance
measures
Ambiguityof work
OptimalSpan ofControl
Subordinatetraining and
access to information
Subordinatepreference for
autonomy
Factors Affecting The Optimal Span Of Control
Factors Affecting The Optimal Span Of Control
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
13
The Vertical Structure (cont.)The Vertical Structure (cont.)Delegation
assignment of authority and responsibility to a subordinate can occur between any two individuals in any type of structure
with regard to any task responsibility - assignment of a task that an employee is
supposed to carry outcommon for people to have more responsibility than authority
accountability - expectation that employees perform a job, take corrective action when necessary, and report upward on the status and quality of their performance
managers remain responsible and accountable for their own actions and those of their subordinates
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
14
The Vertical Structure (cont.)The Vertical Structure (cont.)
Delegation (cont.) advantages of delegation
permits getting work done through othersmanager saves timemanager frees herself/himself to devote energy to other important, higher-level activities
provides subordinate with a more important jobfrom the organization’s perspective, jobs are done more efficiently and cost-effectively
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
15
Schedule checkpoints forReviewing progress
Follow through by discussingProgress at appropriate intervals
Give the subordinate the authority, time, and resources(people, money,equipment) to perform the assignment
Define the goal succinctly
Select the person for the task
Solicit the subordinate’s viewabout suggested approaches
Steps In Effective DelegationSteps In Effective Delegation
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
16
The Vertical Structure (cont.)The Vertical Structure (cont.)
Decentralization result of the delegation of responsibility and authority centralized organization - high-level executives make most
decisions and pass them down to lower levels for implementation
decentralized organization - lower-level managers make important decisions
most U.S. executives understand the importance of decentralizing decision making
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
17
The Horizontal StructureThe Horizontal Structure
Basic concepts departmentalization - subdividing the organization into
smaller subunitsline departments - have responsibility for the principle activities of the firm
deal directly with the organization’s primary goods and services line managers typically have:
substantial authority and power ultimate responsibility for major operating decisions accountability for “bottom-line” results
staff departments - provide specialized support for line units moving toward role focused on strategic support and expert advice
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
18
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Functional organization jobs (and departments) are specialized and grouped
according to business functions and the skills they requiree.g., production, marketing, R&D, human resources, and finance
at the most basic level, functional structure is organized around the company’s value chain
value chain - sequence of activities that flow from raw materials to the delivery of a product or service
common in both large and small organizations may be most appropriate in rather simple, stable
environments
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
19
Functional organization (cont.) advantages of functional structure include:
economies of scale can be realizedeffective environmental monitoringperformance standards are better maintainedgreater opportunity for specialized training and in-depth skill development
technical specialists are relatively free of administrative workdecision making and lines of communication are simple and clearly understood
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
20
The Horizontal Structure (cont.)The Horizontal Structure (cont.)Functional organization (cont.)
disadvantages of functional structurepeople may care more about their own function than about company as a whole
may lose focus on overall product quality and customer satisfaction
managers do not develop knowledge of the other areas of the business
become specialists, not generalistsconflicts arise among functions and communications suffer accordingly
high differentiation may create barriers to coordination across functions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
21
Support activities
Primary activities
Generic Value Chain And Functional Structure
Generic Value Chain And Functional Structure
Margin
Margin
Service
Firm infrastructure
Human resource management
Technology development
Procurement
Inboundlogistics
Operations MarketingAnd sales
Outboundlogistics
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
22
ProcurementHuman
resources
Informationtechnology
services
Inboundlogistics
OperationsOutboundlogistics
MarketingAnd sales
Service
President
Line departments
Staff departments
Functional StructureFunctional Structure
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
23
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Divisional organization units grouped around products, customers, or geographic
regions groups all functions into a single division
duplicates each function across all of the divisions separate divisions may act almost as separate businesses work autonomously to achieve the goals of the organization several ways to create divisional structure
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
24
Divisional organization (cont.) product divisions - all functions that contribute to a given
product are organized under one manageradvantages
information needs are managed more easily people have full-time commitment to a particular product line task responsibilities are clear people receive broader training flexibility of structure better suits it for unstable environments
disadvantages difficult to coordinate across product lines managers may not acquire depth of functional knowledge duplication of effort is expensive
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
25
Apparel Intimate Brands SupportBusinesses
CEO (Les Wexner)
Victoria’s Secret
Bath & BodyWorks
White BarnCandle Co.
Lane Bryant
New York & Co.
Lerner New York
Express
Limited Stores
Structure
Express
Limited Stores
Design Services
Real Estate
Store Planning
DistributionServices
Brand &Creative Services
TechnologyServices
limitedthe
Product Divisions At The limitedProduct Divisions At The limited
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
26
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Divisional organization (cont.) customer and geographical divisions
build divisions around customer or geographical distinctionsadvantages
can focus on customer needs can provide faster and better service
disadvantage duplication of activities across many customer groups and
geographic areas is expensive
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
27
Generalmanagers for:
New YorkPhiladelphia
Boston
Generalmanagers for:
ClevelandChicagoSt. Louis
Generalmanagers for:
RaleighAtlantaOrlando
Generalmanagers for:
SeattleSan FranciscoLos Angeles
Generalmanagers for:
DallasHouston
Albuquerque
Northeastregionalmanager
Midwestregionalmanager
Southeastregionalmanager
Pacificregionalmanager
ChairmanCEO
Southwestregionalmanager
Geographical OrganizationGeographical Organization
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
28
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Matrix organization hybrid form of organization dual reporting relationships in which some managers report
to two superiorsone functional and one product
advantageshigher degree of flexibility and adaptability
disadvantagesviolation of the unity of command principle
reporting to two superiors can create confusion
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
29
Productiongroup
Two-bossmanager
Engineeringgroup
Two-bossmanager
Personnelgroup
Two-bossmanager
Accountinggroup
Two-bossmanager
Matrix Organizational StructureMatrix Organizational Structure
Productiongroup
Two-bossmanager
Engineeringgroup
Two-bossmanager
Personnelgroup
Two-bossmanager
Accountinggroup
Two-bossmanager
Accounting
ProjectManager
A
ProjectManager
B
Projectmanagement
Production
ChairmanCEO
Engineering PersonnelFunctionalmanagers
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
30
The Horizontal Structure (cont.)The Horizontal Structure (cont.)
Matrix organization (cont.) matrix survival skills - depend on position in the matrix
the matrix diamond illustrates needed skills matrix form today - resurgence based on:
pressures to consolidate costs and be faster to market need for coordination across countries in global business
understanding of the matrix has increased matrix is not a structure, but a process
relationships allow information to flow through the organization
norms, values, and attitudes shape how people think
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
31
Top ExecutiveNeeds to balance powerand emphasis betweenfunctions and divisions
“2-Boss” Manager/EmployeeMust learn how to respond to twoSuperiors and prioritize multiple
demands
Functional ManagerMust collaborate andmanage conflicts with
product/division manager
Product ManagerMust collaborate andmanage conflicts with
functional manager
The Matrix DiamondThe Matrix Diamond
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
32
Organizational IntegrationOrganizational Integration
Coordination by standardization standardization - establishing common rules and procedures
that apply uniformly to everyoneconstrains actionsintegrates various units by regulating what people do
formalization - reliance on rules and regulations to promote conformance
should apply to most (if not all) situationsmost applicable in relatively stable and unchanging circumstances
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
8 -
33
Organization Integration (cont.)Organization Integration (cont.)
Coordination by plan interdependent units are required to meet deadlines and
objectives that contribute to a common goal does not require a high degree of stability and routinization
units free to modify their actions as long as they are able to meet deadlines and targets required for working with others
Coordination by mutual adjustment involves feedback and discussion to jointly determine how to
approach problems and devise mutually agreeable solutions allows for flexible coordination to deal with novel problems costly from the standpoint of time