Nickels

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Nickels Cover

• Nickels
• McHugh
• McHugh

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Chapter
8
Adapting Organizations to Todays Markets
8-2
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Management Pyramid
CEO, Comptroller, Vice Pres.
Top
Sales Mgrs Plant Mgrs.
Mid-Level
Supervisors Foremen
Front Line/Supervisory
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Workers in Large Companies in the Last 5 Years
Have Undergone...
500 Employees
Source Gallup for Carlson Marketing Group
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Purpose of an Organizational Chart

• Show the activities of the organization
• Highlight subdivisions of the organization
• Identify different types of work performed

• Provide information about different management
  levels
• Show the lines of authority and the flow of
  organizational communications

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Organizational Design

• Organization
• Division
• Department
• Group
• Individual

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Fayols Principles of Organization

• Unity of Command
• Hierarchy of Authority
• Division of Labor
• Subordination of Individual Interest
• Authority

• Degree of Centralization
• Communication Channels
• Order
• Equity
• Esprit de Corps

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Webers Organizational Principles

• Job Descriptions
• Written Rules
• Procedures, Regulations, Policies
• Staffing/Promotions based on Qualifications

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Fundamentals of Bureaucracy

• Chain of Command
• Rules Regulations
• Set Up by Function
• Communication is Minimal

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Centralization (No Delegation)

• Advantages
• Increased Uniformity
• Less Duplication
• Maximum Control

• Disadvantages
• Lots of Policies Procedures
• Many Layers/Slower

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Decentralization (Delegate Authority)

• Advantages
• Informed Decisions
• Worker Responsibility
• Few Layers/Faster

• Disadvantages
• Loss of Control
• Possible Duplication

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Span of Control

• Capabilities of Subordinates Manager
• Complexity of Job
• Geographically Close
• Functional Similarity
• Need for Coordination
• Planning Demands
• Functional Complexity

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Organizational Structures

• Flat Organizations
• Current Trend
• Creation of Teams

• Tall Organizations
• Many Layers of Management
• High Cost of Management

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Departmentalization by Function

• Advantages
• Skill Development
• Economies of Scale
• Good Coordination

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Departmentalization by Function

• Disadvantages
• Lack of Communication
• Employees Identify with Department
• Slow Response to External Demands
• Narrow Specialists

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Departmentalization

• Customer
• Location
• Process

• Product
• Function

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Line Organizations

• Advantages
• Clear Authority Responsibility
• Easy to Understand
• One Supervisor per Employee

• Disadvantages
• Inflexible
• Few Specialists for Advice
• Long Line of Communication
• Difficult to Handle Complex Decisions

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Layers of Authority

• Top Managers- Decision Makers
• Middle Managers- Developed Rules Procedures
• Workers and Supervisors

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Line/Staff Organizations

• Line Personnel
• Perform Functions
• Contribute Directly to Organizational Goals

• Staff Personnel
• Advise
• Assist Line Personnel

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Matrix Organizations

• Advantages
• Flexibility
• Cooperation Teamwork
• Creativity
• More Efficient Use of Resources

• Disadvantages
• Costly/Complex
• Confusion in Loyalty
• Requires Good Interpersonal Skills Cooperation
• Not Permanent

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Tips for Team Leaders

• Dont be afraid to admit ignorance
• Know when to intervene
• Learn to truly share power
• Worry about what you take on, not what you give
  up
• Get used to learning on the job

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How to Increase Team Productivity

• Teach other members by sharing skills/strengths
• Emphasize concern for teammates
• Ask/invite questions
• Motivate teammates through praise recognition

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Networking

• Networking
• Real Time
• Transparency
• Virtual Corporations

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A Virtual Corporation
Production Firm
Distribution Firm
Accounting Firm
Core Firm
Legal Firm
Advertising Agency
Design Firm
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Reasons to Outsource
Source CIO, 2003 Outsourcing Trends
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Outsourcing
Benefits
Downside

• Time to focus on companys primary function
• Increased level of expertise
• Cost effectiveness
• Decreased overhead
• Risk reduction
• Flexibility
• Technology

• Less personal approach
• Less control by owner in planning, implementing
  carrying out companys future
• Potential for competing for the outsourcing
  firms time

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Top Five Outsourced Business Categories
Source BusinessWeek, July 8, 2002
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Outsourcing Possibilities
Source BusinessWeek, February 3, 2003
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How to ImproveOrganizational Structure

• Break business into smaller units
• Build teamwork
• Impose autonomy
• Create meaningful incentives
• Outsource non-operating activities
• Share business capabilities across units

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The Four Rs ofOrganizational Transformation

• Reframe
• Restructure
• Revitalize
• Renew

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Customer -Focused Design

• Information
• Build teamwork
• cross-functional
• integration
• Self-management autonomy

• Bottom-up relationships
• Outsource
• Global orientation
• Internal vs. external customers

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Inverted Organization Structure
Empowered front-line workers
Support Personnel
Top Mgmt.
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Examples ofInformal Group Norms

• Do your job but dont produce more than the
  rest of the group.
• Dont tell off-color jokes or use profane
  language among group members.
• Listen to the boss and use his/her expertise but
  dont trust him/her.
• Everyone is to be clean/organized at the
  workstation.

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Examples ofInformal Group Norms(contd)

• Never side with managers in a dispute
  involving group members.
• Respect/help your fellow group members on the
  job.
• Criticize the organization only among group
  members- never among strangers.
• Drinking is done off-the-job-
  Never at work!