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PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 5 Basic Organization.

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Presentation on theme: "PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 5 Basic Organization."— Presentation transcript:

1 PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 5 Basic Organization Designs 5 PART III: Organizing

2 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–2 Learning Outcomes After reading this chapter, I will be able to: 1.Identify and define the six elements of organization structure. 2.Describe the advantages and disadvantages of work specialization. 3.Contrast authority and power. 4.Identify the five different ways by which management can departmentalize. 5.Contrast mechanistic and organic organizations.

3 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–3 Learning Outcomes (cont’d) After reading this chapter, I will be able to: 6.Summarize the effect of strategy, size, technology, and environment on organization structures. 7.Contrast the divisional and functional structures. 8.Explain the strengths of the matrix structure. 9.Describe the boundaryless organization and what elements have contributed to its development. 10.Explain what is meant by the term learning organization. 11.Describe what is meant by the term organization culture.

4 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–4 The Elements of Structure Organization design  A process in which managers develop or change their organization’s structure. Work specialization  A component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job.

5 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–5 Economies and Diseconomies of Work Specialization Exhibit 5.1

6 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–6 Organizational Structure: Control Chain of command  The continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. Unity of Command  The management principle that no person should report to more than one boss. Span of control  The number of subordinates a manager can direct efficiently and effectively.

7 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–7 Chain of Command Exhibit 5.2

8 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–8 Organizational Structure: Control (cont’d) Authority  The rights inherent in a managerial position to give orders and expect them to be obeyed. Power  An individual’s capacity to influence decisions. Responsibility  An obligation to perform assigned activities.

9 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–9 Types of Organizational Authority Line authority  The position authority (given and defined by the organization) that entitles a manager to direct the work of operative employees. Staff authority  Positions that have some authority (e.g., organization policy enforcement) but that are created to support, assist, and advise the holders of line authority.

10 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–10 Line Versus Staff Authority Exhibit 5.3

11 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–11 Authority Versus Power: Authority Exhibit 5.4a

12 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–12 Authority Versus Power: Power Exhibit 5.4b

13 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–13 Types of Power Coercive powerPower based on fear. Reward powerPower based on the ability to distribute something that others value. Legitimate powerPower based on one’s position in the formal hierarchy. Expert powerPower based on one’s expertise, special skill, or knowledge. Referent powerPower based on identification with a person who has desirable resources or personal traits. Exhibit 5.5

14 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–14 Centralization And Decentralization Centralization  A function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made Decentralization  The pushing down of decision-making authority to the lowest levels of an organization

15 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–15 Types of Departmentalization Functional Product Customer Geographic Process Exhibit 5.6

16 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–16 Departmentalization Functional departmentalization  The grouping of activities by functions performed Product departmentalization  The grouping of activities by product produced Customer departmentalization  The grouping of activities by common customers Geographic departmentalization  The grouping of activities by territory Process departmentalization  The grouping of activities by work or customer flow

17 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–17 Contingency Variables Affecting Structure Mechanistic organization  The bureaucracy; a structure that is high in specialization, formalization, and centralization Organic organization  An adhocracy; a structure that is low in specialization, formalization, and centralization Structure follows strategy

18 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–18 Mechanistic versus Organic Organizations Rigid hierarchical relationships Fixed duties Many rules Formalized communication channels Centralized decision authority Taller structures Collaboration (both vertical and horizontal) Adaptable duties Few rules Informal communication Decentralized decision authority Flatter structures Exhibit 5.7

19 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–19 Technology and Structure Unit production  Production in terms of units or small batches Mass production  Production in terms of large batch manufacturing Process production  Production in terms of continuous processing

20 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–20 Organization Design Applications Simple structure  An organization that is low in specialization and formalization but high in centralization Functional structure  An organization in which similar and related occupational specialties are grouped together Divisional structure  An organization made up of self-contained units

21 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–21 Functional Structure Exhibit 5.8

22 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–22 Divisional Structure Exhibit 5.9

23 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–23 Other Organizational Structures Matrix structure  An organization in which specialists from functional departments are assigned to work on one or more projects led by a project manager Team-based structure  An organization that consists entirely of work groups or teams Boundaryless organization  An organization that is not defined or limited by boundaries or categories imposed by traditional structures

24 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–24 Sample Matrix Structure Exhibit 5.10

25 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–25 Virtual Organization

26 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–26 Learning Organization An organization that has developed the capacity to continuously adapt and change because all members take an active role in identifying and resolving work-related issues.  Organization design  Information sharing  Leadership  Organizational culture

27 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–27 Characteristics of a Learning Organization Exhibit 5.11 Source: Based on P. M. Senge, The Fifth Discipline: The Art and Practice of Learning Organizations (New York: Doubleday, 1990); and R. M. Hodgetts, F. Luthans, and S. M. Lee, “New Paradigm Organizations: From Total Quality to Learning to World Class.” Organizational Dynamics (Winter 1994), pp. 4–19.

28 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–28 Organization Culture Organization culture  A system of shared meaning within an organization that determines, to a large degree, how employees act  Shared values are shown in cultural elements:  Stories, rituals, material symbols, and language unique to the organization  Results from the interaction between:  The founders’ biases and assumptions  What the first employees learn subsequently from their own experiences.

29 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–29 10 Characteristics of Organization Culture Member identity Group emphasis People focus Unit integration Control Risk tolerance Reward criteria Conflict tolerance Means-end orientation Open-systems focus Exhibit 5.12

30 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–30 Web Links Visit the Robbins/DeCenzo companion Website  At for this chapter’s Internet resources, including chapter quiz and student PowerPoints.www.prenhall.com/robbins Diversity Perspectives  Log onto to enhance your skill in managing a diverse workforce.www.prenhall.com/onekey

31 Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–31 Video Case Application SAS Institute Insert Video Link Here (Size to this window)


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