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Organizing Dr. Jangkung Handoyo Mulyo, M.Ec. Span of control Span of control: the number of subordinates a manager can supervise efficiently and effectively.

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Presentation on theme: "Organizing Dr. Jangkung Handoyo Mulyo, M.Ec. Span of control Span of control: the number of subordinates a manager can supervise efficiently and effectively."— Presentation transcript:

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2 Organizing Dr. Jangkung Handoyo Mulyo, M.Ec.

3 Span of control Span of control: the number of subordinates a manager can supervise efficiently and effectively. It’s another vertical dimension that managers must address when designing an appropriate organization structure. Classical view: although there was no consensus on a specific ideal number, the classicists favor small spans (typically no more than six) in order to maintain close control.

4 Span of control  They argued that as a manager rose in organizational hierarchy, he had to deal with a greater variety of complex and ill-structured problem, so top executive should have smaller span of control than did middle managers, etc.  Why is the span of control concept important? To a large degree, it determines the number of levels and managers an organization has. The wider/larger span of control, the more efficient the organization design.  Wider spans are more efficient in terms of cost. But at some point, wider spans reduce effectiveness.

5 Contrasting spans of control Organization levelAssuming span of 4Assuming span of 8 1 (highest) (lowest)4096 Span of 4Span of 8 Operative: 4096 Managers(level 1-6):1365Managers(level 1-4):585 The wider spans have two fewer levels and approximately 800 fewer managers. If the average manager made $ 35,000 a year, the organization with the wider span would save$ 28 million a year in management salaries alone. Obviously, wider spans are more efficient in terms of cost. But at some point, wider spans reduce effectiveness.

6 Span of control The contemporary view: Even in organizations that haven’t restructured, we know, recognize and understand that the most effective and efficient span of control is increasingly determined by looking at a number of contingency variables. For instance the more training and experience subordinates have, the less direct supervision they will need. Therefore, managers who have well-trained and experienced employees can function quite well with a wider span.

7 Span of control Other contingency variables that will determine the appropriate spans include: similarity of subordinate tasks, the complexity of those tasks, the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization’s management information system, the strength of the organization’s culture, and the preferred style of the manager.

8 Centralization and decentralization One of the factor that characterizes an organization’s structure is the amount of centralization, which is a function of how much decision making authority has been delegated to lower level of management. Centralization-decentralization is a relative, not an absolute concept. The classical view: traditionally organizations were structured in the form of a pyramid with a concentration of authority and power at the top. This explains the historical popularity of relatively centralized decision making.

9 Centralization and decentralization The contemporary view: decision should be made by those people who have the best information to make those decision, regardless of their level in the organization. How important it is for managers to respond quickly and effectively to the environmental change. One aspect of decentralization is the concept of empowerment, that is “ a managerial approach in which employees are given substantial authority and say to make decisions on their own”.

10 Centralization and decentralization Employee has the real ‘power’ in the organization because they’re the ones dealing with day-to-day problems and others situations. Empowering employee implies delegating more authority and operating responsibility to them.

11 Factors Influencing the Amount of Centralization-Decentralization NoMore CentralizationMore Decentralization 1Environment is more stableEnvironment is more complex, uncertain 2Lower-level managers are not as capable or experienced at making decisions Lower-level managers are capable and experienced at making decisions 3Lower-level managers do not want to have a say in decisions Lower-level managers want a voice in decisions 4Decisions are more significantDecisions are relatively minor 5Organization is facing a crisis or the risk of company failure Corporate culture is more open to allowing managers to have a say in what happens 6Company is largeCompany is geographically dispersed 7Effective implementation of company strategies depends on managers retaining more say over what happens Effective implementation of company strategies depends on managers having more involvement and flexibility to make decisions

12 Division of labor  The classical view:  Rather than an entire job being done by one individual, it’s broken down into a number of steeps, each step being completed by a separate individual.  In essence, individual specialize in doing part of an activity rather than the entire activity.  Makes efficient use of the diversity of skills and capabilities that employees have.  Unending source of increased productivity

13 Division of labor  The contemporary view:  Early 1960s  There is a point at which human drawback (or diseconomies) from division of labor exceed the economic advantage. These human diseconomies can bee seen in the form of boredom, job stress, low productivity, poor quality, increased absenteeism, and high turnover.  Productivity could be increased by enlarging, rather than narrowing, the scope of job activity.

14 Departmentalization The process of grouping individuals into separate units or departments to accomplish organizational goals. Departmentalization: functional, product, geographic, customer, casting, etc.

15 Functional Departmentalization Plant Manager Manager Engineering Manager Accounting Manager Manufacturing

16 Customer Departmentalization Director Of Sales Manager Retail Account Manager Wholesale Account Manager Government account

17 Geographic Departmentalization Vice President For Sales Sales Director Western Region Sales Director Southern Region Sales Director Eastern Region

18 Process Departmentalization Plant Superintendent Casting Department Manager Press Department Manager Finishing Department Manager


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