Part 3Managing for Quality and

Competitiveness

© 2015 McGraw-Hill Education.

CHAPTER 6 The Nature of Management

CHAPTER 7 Organization, Teamwork, and Communication

CHAPTER 8 Managing Service and Manufacturing Operations

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Learning Objectives

LO 7-1 Define organizational structure and relate how organizational structures develop.

LO 7-2 Describe how specialization and departmentalization help an organization achieve its goals.

LO 7-3 Determine how organizations assign responsibility for tasks and delegate authority.

LO 7-4 Compare and contrast some common forms of organizational structure.

LO 7-5 Distinguish between groups and teams and identify the types of groups that exist in organizations.

LO 7-6 Describe how communication occurs in organizations.

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Organizational Culture

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o Ensures that organizational members: Share values

Observe common rules

Share problem solving approaches

Organizational Culture (Corporate Culture)

• A firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behavior

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Organizational Structure

o An organization’s structure develops when:

1. Managers assign work tasks to specific individuals or work groups

2. Coordinate the diverse activities required to reach the firm’s objectives

Structure

• The arrangement or relationship of positions within an organization

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The organizational structure at TOMS Shoes consists of two parts

The for-profit component of the company manages overall operations

Its nonprofit component, Friends of TOMS, is responsible for volunteer activities and shoe donations

Organizational Charts

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Organizational Chart

• A visual display of the organizational structure, lines of authority (chain of command), staff relationships, permanent committee arrangements, and lines of communication

The Evolution of a Clothing Store, Phases 1, 2, and 3

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Assigning Tasks

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o Why specialize: Efficiency

Ease of training

Activities too numerous for one person

Specialization

• The division of labor into small, specific tasks and the assignment of employees to do a single task

Learning Organization

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A learning organization is one that opens communication between departments in order to increase the level of learning among employees within the organization

The manager creating and sustaining this kind of organization invests in employees through extensive training and minimal restrictions so that creativity is emphasized

Through the knowledge that is created and captured, employees are encouraged to experiment with the ideas that have the most value for customers Managers encourage a healthy level of risk taking and learning

from mistakes

Failure is valued as a learning experience and success, while celebrated, is seen as a fleeting experience that should not be the focus of the future because there is not much to learn from success

Departmentalization

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Departmentalization

• The grouping of jobs into working units usually called departments, units, groups, or divisions• Functional departmentalization• Product departmentalization• Geographical departmentalization• Customer departmentalization

• Employees become bored• Job dissatisfaction• Poor quality work• Increased injuries• Increased employee turnover

Overspecialization can have negative

consequences

Functional Departmentalization

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Functional Departmentalization

• The grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources

Product Departmentalization

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Product Departmentalization

• The organization of jobs in relation to the products of the firm

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The Campbell Soup Company uses product departmentalization to organize its company

However, the firm also engages in a type of geographic departmentalization for various regions

Geographical Departmentalization

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Geographical Departmentalization

• The grouping of jobs according to geographic location, such as state, region, country, or continent

Customer Departmentalization

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Customer Departmentalization

• The arrangement of jobs around the needs of various types of customers

An Organizational Chart for the City of Corpus Christi

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Delegation of Authority

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As a business grows, so do the number and complexity of decisions that must be made; no one manager can handle them all

Delegation of authority frees a manager to concentrate on larger issues such as planning or dealing with problems and opportunities

Delegation of Authority

• Giving employees not only tasks, but also the power to make commitments, use resources, and take whatever actions are necessary to carry out those tasks

Responsibility and Accountability

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Responsibility

• The obligation, placed on employees through delegation, to perform assigned tasks satisfactorily and be held accountable for the proper execution of work

Accountability

• The principle that employees who accept an assignment and the authority to carry it out are answerable to a superior for the outcome

Degree of Centralization

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Centralized Organizations

• A structure in which authority is concentrated at the top, and very little decision-making authority is delegated to lower levels

• Overcentralization can cause serious problems for a company, in part because it may take longer for the organization as a whole to implement decisions and to respond to changes and problems on a regional scale

Decentralized Organizations

• An organization in which decision-making authority is delegated as far down the chain of command as possible

• Delegating authority to lower levels of managers may increase the organization’s productivity

Span of Management

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A wide span of management exists when a manager directly supervises a very large number of employees

A narrow span of management exists when a manager directly supervises only a few subordinates

Span of Management

• The number of subordinates who report to a particular manager

Organizational Layers

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Complements the concept of span of management

A company with many layers of managers is considered tall; in a tall organization, the span of management is narrow

Organizations with few layers are flat and have wide spans of management

Organizational Layers

• The levels of management in an organization

Forms of Organizational Structures

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• Line structure• Line-and-staff structure• Multidivisional structure• Matrix structure

Forms of Organizational

Structures

Line Structure

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Line Structure

• The simplest organizational structure in which direct lines of authority extend from the top manager to the lowest level of the organization

Line-and-Staff Structure

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Line-and-Staff Structure

• A structure having a traditional line relationship between superiors and subordinates and also specialized managers – called staff managers – who are available to assist line managers

Line-and-Staff Structure

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Multidivisional Structure

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Occurs as organizations grow larger and more diversified

Divisions can be formed on the same bases as departments (customer, product, and/or geography)

Delegation of authority and divisionalized work

Multidivisional Structure

• A structure that organizes departments into larger groups called divisions

Matrix Structure

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Matrix Structure

• A structure that sets up teams from different departments, thereby creating two or more intersecting lines of authority; also called a project-management structure

Matrix Structure

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Groups and Teams

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Group

• Two or more individuals who communicate with one another, share a common identity, and have a common goal

Team

• A small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable

Differences Between Groups and Teams

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Committees and Task Forces

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Typically come from across all departments and levels of an organization

Membership is usually based on expertise rather than organizational position

Occasionally, a task force may be formed from individuals outside a company

Committee

• A permanent, formal group that performs a specific task

Task Force

• A temporary group of employees responsible for bringing about a particular change

Teams

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Project Teams• Groups similar to task forces which normally run their operation

and have total control of a specific work project

Product-Development Teams• A specific type of project team formed to devise, design, and

implement a new product

Quality-Assurance Teams (or Quality Circles) • Small groups of workers brought together from throughout the

organization to solve specific quality, productivity, or service problems

Self-Directed Work Teams (SDWT) • A group of employees responsible for an entire work process or

segment that delivers a product to an internal or external customer

The Flow of Communication in an Organizational Hierarchy

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Formal Communication

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Flow of communication within the formal organizational structure as depicted on organizational charts

Downward Communication

• Refers to the traditional flow of information from upper organizational levels to lower levels

• Typically involves directions, the assignment of tasks and responsibilities, performance feedback, and certain details about the organization’s strategies and goals

Upward Communication

• Flows from lower to higher levels of the organization • Includes information such as progress reports, suggestions

for improvement, inquiries, and grievances

Formal Communication

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Horizontal Communication

• Involves the exchange of information among colleagues and peers on the same organizational level, such as across or within departments

• Information informs, supports, and coordinates activities both within the department and with other departments

Diagonal Communication

• When individuals from different units and organizational levels communicate

• With firms downsizing and increasing the use of work teams, workers are being required to communicate with others in different departments and on different levels to solve problems and coordinate work

Informal Communication

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Managers can utilize informal communications as a sounding device

Can obtain valuable information from the grapevine that could improve decision making

Some organizations use the grapevine to their advantage by floating ideas, soliciting feedback, and reacting accordingly

Grapevine

• An informal channel of communication, separate from management’s formal, official communication channels

Non-Verbal Communication

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Non verbal communication is embedded in most forms of communication and send messages out through hand movements, head nodding, and tone of voice or written word

These indirect forms of communication can be more informative than the direct message being transmitted

It is important to be aware of one’s own non verbal communication style in order to ensure sending the intended message

Improving Communication Effectiveness

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Encourage employees to provide feedback Helps identify strengths and weaknesses

Avoid interruptions

Develop strong and effective communication channels through training

Important for companies to communicate their e-mail policies throughout the organization

Discussion

? Indentify four types of departmentalization and give an example of each type.

? Discuss the different forms of organizational structure. What are the primary advantages and disadvantages of each form?

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