chap5 organizing bách khoa

 Describe the types of organizational structures managers can design, and explain why they choose one structure over another..  Organizational design  The process by which managers m

Fundamentals oF manaGement

BY: LAI VAN TAI

LAI VAN TAI

Chapter

ORGANIZING

Learning Objectives

After studying the chapter, you should be able to:

 Identify the factors that influence managers’ choice of an

organizational structure.

 Explain how managers group tasks into jobs that are motivating

and satisfying for employees.

 Describe the types of organizational structures managers can

design, and explain why they choose one structure over another.

 Explain why there is a need to both centralize and decentralized

authority.

 Explain why managers must coordinate and integrate between

jobs, functions, and divisions as an organization grows.

Organizational Structure

 Organizational Architecture

 The organizational structure, control systems, culture,

and human resource management systems that together determine how efficiently and effectively

organizational resources are used

Designing Organizational Structure

 Organizing

 The process by which managers establish working

relationships among employees to achieve goals

 Organizational Structure

 Formal system of task and reporting relationships

showing how workers use resources

 Organizational design

 The process by which managers make specific choices

that result in a particular kind of organizational structure

Factors Affecting Organizational Structure

Figure 9.1

Key Elements

of Organization Structure

Departmentalization Span of Control

Work Specialization High Low

 Job is broken down into a number of steps

 Each step is completed by a separate individual

 Makes efficient use of the diversity of skills that

workers have

The Chain of Command

District

A

District B

District C

District D

District E

District F

District G

Region 1

Region 2

Region 3

Region 4

Region 5

Vice President

Vice President

Vice President

Vice President

Vice President

Chief Executive Officer

Executive Vice President Executive

Vice President President

Span of Control

 Number of employees that an manager can

manage effectively

 Increased over the last several years

 Contingency variables impact number

Tall and Flat Organizations

 Tall structures have many levels of authority and

narrow spans of control.

 As hierarchy levels increase, communication gets

difficult creating delays in the time being taken to implement decisions

 Communications can also become garbled as it is

repeated through the firm

 Flat structures have fewer levels and wide spans of

control.

 Structure results in quick communications but can lead

to overworked managers

Flat Organizations

Figure 9.10a

Tall Organizations

Figure 9.10b

Marketing Human

Resources Production

Accounting Finance

Chief Executive Officer

Research and Development

The Concept of Authority

Line Authority

 Level of authority that entitles manager to direct

the work of an employee

 Contributes directly to the achievement of

organizational objectives

Finance Accounting

Marketing

Human Resources

Research and Development Production

The Concept

of Power

Function

Authority Level The Power

Core

Expert Legitimate

Coercive

Power

The Degree of Centralization

MECHANIC VS ORGANIC STRUCTURE

Five Ways to Departmentalize

Grouping Jobs into Functions

 Functional Structure

 An organizational structure composed of all the

departments that an organization requires to produce its goods or services

 Advantages

 Encourages learning from others doing similar jobs.

 Easy for managers to monitor and evaluate workers.

 Disadvantages

 Difficult for departments to communicate with others.

 Preoccupation with own department and losing sight of

organizational goals.

The Functional Structure of Pier 1 Imports

Divisional Structures

 Divisional Structure

 An organizational structure composed of separate

business units within which are the functions that work together to produce a specific product for a specific customer

 Divisions create smaller, manageable parts of a firm.

 Divisions develop a business-level strategy to compete.

 Divisions have marketing, finance, and other functions.

 Functional managers report to divisional managers who then

report to corporate management.

Types of Divisional Structures

 Product Structure

 Customers are served by self-contained divisions that

handle a specific type of product or service

 Allows functional managers to specialize in one product area

 Division managers become experts in their area

 Removes need for direct supervision of division by corporate

managers

 Divisional management improves the use of resources

Product,

Market, and Geographic Structures

Figure 9.4

Viacom’s

Product

Structure

Figure 9.5

Types of Divisional Structures (cont’d)

 Geographic Structure

 Each regional or a country or area with customers with

differing needs is served by a local self-contained division producing products that best meet those needs

 Global geographic structure

 Different divisions serve each world region when managers

find different problems or demands across the globe.

 Generally, occurs when managers are pursuing a

multidomestic strategy

Types of Divisional Structures (cont’d)

 Market (Customer) Structure

 Each kind of customer is served by a self-contained

division

 Global market (customer) structure

 Customers in different regions buy similar products so firms

can locate manufacturing facilities and product distribution networks where they decide is best.

 Firms pursuing a global strategy will use this type of structure.

Global Geographic and Global Product Structures

Figure 9.6

Matrix Design Structure

 Matrix Structure

 An organizational structure that simultaneously groups

people and resources by function and product

 Results in a complex network of superior-subordinate

reporting relationships.

 The structure is very flexible and can respond rapidly to the

need for change.

 Each employee has two bosses (functional manager and

product manager) and possibly cannot satisfy both.

Matrix Structure

Figure 9.7

Organizational Change

Organizational Change

 What forces create the need for organizational

change?

 What kinds of changes do organizations make?

Can organizations stop changing?

 What causes resistance to change? How can it

be overcome?

Questions for Consideration

Change Options

Technology

What are the change options?

Physical setting People Structure

Culture

What Do Organizations Change?

 Culture

 changing the underlying values and goals of the

organization

 Structure

 altering authority relations, coordination mechanisms,

job redesign, or similar structural variables

 Technology

 modifying how work is processed and methods and

equipment used

What Do Organizations Change?

Undergoing Change to Improve Products and Services

 TQM and Continuous Improvement Processes

 Re-engineering Work Processes

 Flexible Manufacturing Systems

Exhibit 14-3 The PDCA Cycle

Plan

Act

Why TQM Fails

 Some firms were not performing TQM, just calling

it that

 Some managers have unrealistic expectations, and

effect results too quickly

 Some programs did not assure employees’ job

security

 Some firms did not provide adequate training

 Some firms did not appreciate the complexity of

changes involved

Elements of Re-engineering

 Identifying an organization’s distinctive

competencies

 Assessing core processes

 Reorganizing horizontally by process

Flexible Manufacturing Systems

 Integration of computer-aided design, engineering,

and manufacturing to produce low-volume

products at mass-production costs

 Change happens by changing computer programs,

not producing new parts

 Pratt and Whitney in Halifax can produce 127 different

engine models, up from 20 models for the flexible mfg system was introduced

 Best used with

 Employees: high tech skills, initiative, self-managing

 Organizations: organic structures, teams

Lewin’s Three-Step Change Model

Refreezing Moving

Unfreezing

Sources of Individual Resistance to Change

Security

Economic factors

Individual Resistance Fear of

the unknown

Selective information processing

Habit

Unfreezing the Status Quo

Time

Driving forces

Restraining forces

Desired state

Status quo

 Arouse dissatisfaction with the current state

 Tell them about deficiencies in organization

 Activate and strengthen top management support

 Need to break down power centres

 Use participation in decision making

 Get people involved

 Build in rewards

 Tie rewards to change/use recognition, status symbols,

praise to get people to go along

 Establish goals

 E.G Make business profitable by end of next year

 Institute smaller, acceptable changes that

reinforce and support change

 E.G Procedures and rules, job descriptions,

reporting relationships

 Develop management structures for change

 E.G Plans, strategies, mechanisms that ensure

change occurs

 Maintain open, two-way communication

 Build success experiences

 Set targets for change, and have everyone work toward targets

 Reward desired behaviour

 GOOD - reward behaviour that reinforces changes

 BAD - reward old system (e.g., people relying on old systems

while computerization is going on)

 Develop structures to institutionalize the change

 Organizational retreats, appropriate computer technology,

performance appraisals that examine change efforts

 Make change work