Understanding business 10th chapter 8 structuring organizations for todays challenges

• Bureaucracy -- An organization with many layers of managers who set rules and regulations and oversee all decisions.. Choosing Tall versus Flat Organization Structures Structures det

Structuring Organizations

for Today’s Challenges

Chapter 08

1 Outline the basic principles of organizational

management.

2 Compare the organizational/management theories of

Fayol and Weber.

3 Evaluate the choices managers make in structuring

moved up through Xerox

African-American CEO among Fortune’s Top 150 Companies

has been placed on councils by President Obama and Vice-

President Biden

URSULA BURNS

Xerox

This sport’s equipment company studied the CD

industry and learned to use ultraviolet inks to print graphics on skis It went to the cable

television industry to learn how to braid layers

of fiberglass and carbon, and adapted that knowledge to make its products

Name that company!

NAME that COMPANY

Chapter Eight

Everyone’s

Reorganizing

those in decline Including:

- Auto makers - Homebuilders - Banks

capitalist economies

- More global competition

- Faster technological change

- Pressure to protect the environment

principles and firm up the foundation, and

REORGANIZATION is for

EVERYONE

LG1

Building an

Organization from

the Bottom Up

You own a lawn-mowing business and are aware of the hazards in the job But you’ve seen other

companies save money by eliminating safety

equipment You’d also like to make more money

SAFETY vs PROFIT

(Making Ethical Decisions)

safety precautions?

consequences?

• Economies of Scale

Companies can reduce their production costs by purchasing raw materials

in bulk.

goods decreases as

LG2

• Order

• Equity

• Esprit de corps

LG2

Video: http://www.youtube.com/watch?v=sJrlOfDi2rU

Organizations in which employees have no more than one boss; lines of authority are clear

ORGANIZATIONS BASED on

FAYOL’S PRINCIPLES

Rigid organizations that often do not respond to customers quickly

LG2

Fayol’s Principles

of Management

- Division of labor and work specialization

- Staffing and promotion based on qualification

MAX WEBER’S PRINCIPLES

LG2

• Bureaucracy An organization with many layers of

managers who set rules and regulations and oversee all decisions.

passed down to lower-level employees

authority that moves from the top of the

hierarchy to the lowest level.

• Hierarchy A system in which one person is

at the top of an organization and there is a

ranked or sequential ordering from the top

down.

HIERARCHIES and COMMAND

LG2

• Centralized Authority When decision-making is

concentrated at the top level of management.

CENTRALIZATION or DECENTRALIZATION?

• Decentralized

Authority When

decision-making is

delegated to lower-level

managers and employees

more familiar with local

conditions than

headquarters is.

LG3

Choosing the

Appropriate

Span of Control

• Span of Control The optimal number of

subordinates a manager supervises or should supervise.

control are possible

organization

and hire better low-level employees

SPAN of CONTROL

LG3

Choosing Tall

versus Flat

Organization

Structures

Structures determine the

way the company

responds to employee and

customer needs.

Tall Organization

Structures An

organizational structure in

which the organization

chart would be tall

because of the various

levels of management.

ORGANIZATIONAL STRUCTURES

CHARTS

LG3

Flat Organization Structures An organizational

structure that has few layers of management and a

broad span of control

specialize their skills.

DEPARTMENTALIZATION

LG3

1) Employees develop skills and progress within a

department as they master skills

2) The company can achieve economies of scale

3) Employees can coordinate work within the

function and top management can easily direct activities

1) Departments may not communicate well.

2) Employees may identify with their department’s

goals rather than the organization’s.

3) The company’s response to external changes may

be slow.

4) People may not be trained to take different

managerial responsibilities, instead they become specialists.

5) Department members may engage in groupthink and

may need outside input.

Looking at

Alternate Ways to

Departmentalize WAYS to DEPARTMENTALIZE

LG3

Progress

Assessment

LG4

Line

Organizations

• Line Organization Has direct two-way lines of

responsibility, authority and communication running from the top to the bottom Everyone reports to one supervisor.

human resources or information technology departments

and adjust the organization to changes

LINE ORGANIZATIONS

LG4

Line-and-Staff

Organizations

• Line Personnel Workers responsible for directly

achieving organizational goals, and include production, distribution and marketing employees.

decisions

LINE PERSONNEL

LG4

• Staff Personnel Employees who advise and assist line personnel in meeting their goals, and include

marketing research, legal advising, IT and human resource employees.

STAFF PERSONNEL

LG4

Line-and-Staff

Organizations

Matrix-Style

Organizations

• Matrix Organization Specialists from different

parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure.

MATRIX ORGANIZATIONS

product development, creativity, special

projects, communication and teamwork

LG4

SAMPLE MATRIX ORGANIZATION

LG4

Matrix-Style

Organizations

• Managers have flexibility in assigning people to

projects

encouraged

problems are produced

MATRIX STYLE Advantages

LG4

Matrix-Style

Organizations

• It’s costly and complex.

loyalty belongs

employees are a must

MATRIX STYLE Disadvantages

permanent

Cross-Functional

Self-Managed

Teams

• Cross-Functional Self-Managed Teams

Groups of employees from different departments who work together on a long-term basis.

to establish long-term teams

customers and others to figure out how to create better products

CROSS-FUNCTIONAL SELF-MANAGED TEAMS

LG4

Going Beyond

Organizational

Boundaries

of the customer is heard

distributors go beyond organizational boundaries

market information beyond national boundaries

GOING BEYOND ORGANIZATIONAL BOUNDARIES

LG4

BUILDING SUCCESSFUL TEAMS

Important Conditions for Small Teams

LG4

Going Beyond

Organizational

Boundaries

matrix-style organization’s structure and the use of cross-functional teams?

PROGRESS ASSESSMENT

Photo Courtesy of: Marc Wathieu

• Real Time The present moment or actual time in

which something takes place.

• Transparency When a company is so open to

other companies that electronic information is shared

as if the companies were one.

• Virtual Corporation A temporary networked

organization made up of replaceable firms that join and leave as needed.

TRANSPARENCY and VIRTUAL

Benchmarking

and Core

Competencies

• Benchmarking Compares an organization’s

practices, processes and products against the world’s best.

• Core Competencies The functions an

organization can do as well as or better than any other organization in the world.

order to create the best possible skis and snowboards

BENCHMARKING and CORE COMPETENCIES

LG5

KEEP in TOUCH

Amazon and its Customer Database

Amazon uses information stored in databases to

reach out to customers The company emails customers letting them know about music, DVDs

or books they might like based on past purchases

• Have you ever received an email like this from Amazon or another

company?

• What benefits would a database of personal information, like past

purchases, provide Amazon?

• Do you think these databases are helpful for both companies and

LG5

Adapting to

Change

• People will become so used to having social

media at their fingertips, it’ll no longer be news

improvements, others will be revolutionary

and more companies interacting directly with their customer base

WHEN TWITTER and FACEBOOK

are OLD SCHOOL

(Social Media in Business)

Restructuring

for

Empowerment

• Restructuring Redesigning an organization so it

can more effectively and efficiently serve its customers.

• Inverted Organization An organization that has

contact people at the top and the CEO at the bottom

of the organizational chart.

frontline workers, not boss them

RESTRUCTURING

LG5

TRADITIONAL and INVERTED

cultures emphasize service.

traditions and myths

ORGANIZATIONAL CULTURE

LG6

• Informal Organization The system of

relationships that develop spontaneously as employees meet and form relationships.

INFORMAL ORGANIZATION

helps foster camaraderie and teamwork among employees

LG6

Managing the

Informal

Organization

• The informal system is

too unstructured and emotional on its own

may also be powerful

in resisting management directives

• Do your job but don’t produce more than the rest

of your group

workstation

Progress

Assessment

PROGRESS ASSESSMENT