2 Structuring an Organization Comprises: Division of LaborTeam TasksAssigning Responsibility/ AuthorityAccountabilityAllocating ResourcesEstablishing ProceduresSee Learning Goal 1: Explain the organizational theories of Fayol and Weber.See Text Page: 207
3 Fayol’s Principles of Organization Unity of CommandHierarchy of AuthorityDivision of LaborSubordination of Individual Interest to the General InterestAuthorityDegree of CentralizationClear Communication ChannelsOrderEquityEsprit de CorpsAlso available on a Transparency AcetateSee Learning Goal 1: Explain the organizational theories of Fayol and Weber.See Text Pages:Fayol’s Principles of OrganizationThis slide presents Fayol’s principles of organization.Unity of command and Hierarchy of authority suggest that each employee reports to one and only one boss and they should know who they should report to respectively.Management courses through out the world teach these principles and organizations are designed accordingly.When these principles become rules, policies, and regulations, they create inflexibility which gets organizations away from a quick response to situations. An example of this inflexibility or a slower response time can be seen in FEMA’s response to Hurricane Katrina’s situation.
4 Weber’s Organizational Principles Job DescriptionsWritten RulesProcedures, Regulations, PoliciesStaffing/Promotions Based on QualificationsAlso available on a Transparency AcetateSee Learning Goal 1: Explain the organizational theories of Fayol and Weber.See Text Pages: 209Weber’s Organizational PrinciplesThis slide presents Weber’s organization principles.Weber’s principles were similar to Fayol’s.Additionally, he emphasized job descriptions, written rules, consistent policies, regulations, and procedures, and staffing and promotions based on qualifications.Weber was in favor of bureaucracy and believed that these principles were necessary for large organizations’ effective functioning. However, in today’s corporate world, these rules and bureaucracy do not necessarily work. Organizations need to respond to customers and other environmental factors quickly which calls for a creative, flexible, and quick decision making process contrary to a bureaucratic process.
5 Centralization (No Delegation) DisadvantagesLess Responsiveness to CustomersLess EmpowermentInterorganizational ConflictLower Morale Away from HeadquartersAdvantagesGreater Top-Management ControlMore EfficiencySimpler Distribution SystemStronger Brand/Corporate ImageAlso available on a Transparency AcetateSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages:Centralization (No Delegation)This slide identifies the advantages and disadvantages associated with centralization of management decisions.Centralization can be defined as a philosophy of an organization and management that focuses on retaining control of authority with higher level managers.One of the disadvantages of this type of management style is slower decisions because of layers of management. Ask the students: What specific problems you see with this type of management? (Slower decision-making means the company is less responsive to both internal an external customers needs.)Share with the students a simple rule to follow when dealing with centralized authority: Decisions regarding overall company policy and establishment of goals and strategies should be made at the top.
6 Decentralization (Delegate Authority) AdvantagesBetter Adaptation to Customer WantsMore Empowerment of WorkersFaster Decision MakingHigher MoraleDisadvantagesLess EfficiencyComplex Distribution SystemLess Top-Management ControlWeakened Corporate ImageAlso available on a Transparency AcetateSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages:Decentralization (Delegate Authority)This acetate gives the student an alternate look at decision-making other than centralization in a company.Decentralization is a philosophy of an organization and management that focuses on delegating authority throughout the organization to middle and lower managers.The most significant advantage to this form of management style is the empowerment of the employees. Statistics indicate when delegation is practiced in a company; absenteeism, injuries, loyalty and production improve.Share with the students a simple rule to follow when dealing with decentralized authority: The closer an issue is that directly affects the customer, the more decentralized the decision-making should be. A customer service manager must have the authority to make a decision that will satisfy a customer immediately, not wait until the home office makes a decision.
7 Organizational Structures Tall OrganizationsMany Layers of ManagementHigh Cost of ManagementNarrow Span of ControlFlat OrganizationsCurrent TrendCreation of TeamsBroad Span of ControlSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages:
8 How to Make Jobs Fit Your Company (Part 1 of 2) Each manager must ask:What resources do I control to accomplish my tasks?What measures will be used to evaluate my performance?Who do I need to interact with and influence to achieve my goals?How much support can I expect when I reach out to others for help?Also available on a Transparency AcetateSee Learning Goal 2: Explain the various issues involved in structuring organizations.How to make jobs fit your company? (Part 1 of 2)This slide presents the four questions that every manager ask of themselves in order to design jobs for maximum performance.Professor Robert Simon of Harvard Business School presents these questions and offers four basic spans of a job: control, accountability, influence, and support (next slide).(Source: HBS Working Knowledge, October 31,2005)Source: HBS Working Knowledge, October 31,2005
9 How to Make Jobs Fit Your Company (Part 2 of 2) Four Basic Spans of a Job:The Span of ControlThe Span of AccountabilityThe Span of InfluenceThe Span of SupportAlso available on a Transparency AcetateSee Learning Goal 2: Explain the various issues involved in structuring organizations.How to make jobs fit your company? (Part 2 of 2)This slide is a follow up to the previous slide on how to make jobs fit your company (Part 1 of 2).Prof. Simon discusses four spans of a job:Control: This defines the range of resources for which managers can make decisions and are held accountable.Accountability: Defines the goals a manager is expected to achieve. If a manager wants compliance from employees, s/he should set a narrow span of accountability, where as to encourage creative thinking and outside-the-box type of solutions, a broad span should be set.Influence: This refers to how wide a net an individual needs to collect data, new information, and attempt to influence the work of others.Support: This refers to the amount of help an individual can expect from others. A wider span is critical when customer loyalty is vital to strategy implementation.(Source: HBS Working Knowledge, October 31,2005)Source: HBS Working Knowledge, October 31,2005
10 Span of Control - Narrow AdvantagesMore Control by Top ManagementMore Chances for AdvancementGreater SpecializationCloser SupervisionDisadvantagesLess EmpowermentHigher CostsDelayed Decision MakingLess Responsiveness to CustomersSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages: 214
11 Advantages Disadvantages Span of Control - Broad Reduced Costs More Responsiveness to CustomersFaster Decision MakingMore EmpowermentDisadvantagesFewer Chances for AdvancementOverworked ManagersLoss of ControlLess Management ExpertiseSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages: 214
12 Departmentalization by Function DisadvantagesLack of CommunicationEmployees Identify with DepartmentSlow Response to External DemandsNarrow SpecialistsGroupthinkAdvantagesSkill DevelopmentEconomies of ScaleGood CoordinationSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages:
13 Departmentalization By Product By Function By Customer Group By Geographic LocationBy ProcessSee Learning Goal 2: Explain the various issues involved in structuring organizations.See Text Pages: 216
14 Line Organizations Advantages Disadvantages Inflexible Clear Authority & ResponsibilityEasy to UnderstandOne Supervisor Per EmployeeDisadvantagesInflexibleFew Specialists for AdviceLong Line of CommunicationDifficult to Handle Complex DecisionsSee Learning Goal 3: Describe and differentiate the various organizational models.See Text Pages: 217
15 Line/Staff Organizations Line PersonnelFormal AuthorityMake Policy DecisionsStaff PersonnelAdvise Line PersonnelAssist Line PersonnelSee Learning Goal 3: Describe and differentiate the various organizational models.See Text Pages: 217
16 Matrix Organizations Advantages Disadvantages Flexibility Cooperation & TeamworkCreativityMore Efficient Use of ResourcesDisadvantagesCostly/ComplexConfusion in LoyaltyRequires Good Interpersonal Skills & CooperationNot PermanentSee Learning Goal 3: Describe and differentiate the various organizational models.See Text Pages:
17 Important Conditions for Small Teams Clear PurposeClear GoalsCorrect SkillsMutual AccountabilityShift Roles When AppropriateAlso available on a Transparency AcetateSee Learning Goal 3: Describe and differentiate the various organizational models.Important For Small TeamsThis slide presents five important conditions for garnering the maximum benefits of small teams, according to Jon Katzenbach, co-author of The Wisdom of Teams.Ask the students: Which of these five conditions you believe would be most important in your team experience? Why? (The most critical factor of these five conditions, according to Katzenbach, is a clear performance purpose for the team.)Source: CIO Dec 2003
18 Real Time Transparency Virtual Corporations Networking See Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.See Text Pages: 221
19 A Virtual Corporation Core Firm Production Firm Accounting Firm Distribution FirmCoreFirmAlso available on a Transparency AcetateSee Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.See Text Pages: 222A Virtual CorporationThis acetate illustrates the concept of a virtual corporation as an organizational model that could propel American businesses into the next century.The theory behind the virtual corporation can be understood by picturing a company stripped to its core competencies. All other business functions will be accomplished by:Forming joint venturesForming temporary alliances with other virtual companies with different areas of expertiseHiring consulting servicesOutsourcing or subcontracting of servicesShare with the students some other interesting concepts of a virtual corporation:On-demand knowledge workers who operate independently.Skill-selling professionals such as engineers, accountants, human resource experts who manage your projects from their homes through worldwide telecommunications.Team-building will change as companies hire individuals with expertise in various areas to solve business problems. As a solution is identified, the team will cease to exist.Legal FirmAdvertising AgencyDesign Firm
20 Benefits and Concerns of Healthcare Outsourcing Lower Employee MoraleLiabilityShould Patients be InformedConfidentiality & SecurityBenefitsProvides Enough Staff to Operate the FacilityCost SavingsSee Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.Benefits and Concerns of Healthcare OutsourcingThis slide identifies the benefits and concerns of healthcare outsourcing.Have the students identify the possible countries to outsource healthcare. (India is used by many hospitals and healthcare organizations due to availability of knowledge workers.)Ask students: Why do you think these countries represent a threat to U.S. jobs? (Lower wages will result in lower costs)Ask the students about another country: What could be outsourced to South Africa? Why? (South Africa is considered a good choice for customer service centers for French, English, and German speaking customers. Work force is trained to speak several different languages while wages are low. As a global company dealing with consumer inquiries, the central location of a call center may reduce cost significantly.)Source: Healthcare Financial Management, 2005
21 Which Jobs Will Be Outsourced Next? Also available on a Transparency AcetateSee Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.Which Jobs Will Be Outsourced Next?This slide supports the previous discussion of outsourcing by identifying the most common functional areas U.S. companies plan on hiring outside organizations. The results are from the TEC International’s survey of 1,091 CEOs.As mentioned in previous discussion, the number-one reason why companies outsource is to reduce cost. This slide shows Manufacturing, Information Technology and Customer support/sales as the largest planned outsourced Business Categories.Ask the students: Why do you think these categories are outsourced more often? (Manufacturing can be done a lot cheaper in a country with lower wages, IT and customer support, represent functional areas that provide basic or routine types of job performance; unlike sales and marketing, where specific strategies are closely aligned to meet specific customer needs. In general, the farther removed from the customer your function is, the more likely that function may be performed outside the company.)Source: USA Today
22 Adapting to Change Restructuring for Empowerment Focusing on the CustomerCreating a Change-Oriented Organizational CultureThe Informal OrganizationSee Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.See Text Pages:
23 Layers of Authority-Traditional Top Managers- Decision MakersMiddle Managers- Develops Rules & ProceduresSee Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.See Text Pages: 224Workers and Supervisors
24 Inverted Organization Structure Empowered front-line workersSupport PersonnelAlso available on a Transparency AcetateSee Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.See Text Pages: 224Inverted Organization StructureThis slide presents the inverted organization structure an alternate to the traditional management layers.The critical idea behind the inverted organization structure is that the managers’ job is to support and facilitate the job of the frontline people, not boss them around.Ask the students – What type of organization structure would they prefer to work under: traditional or inverted? Why?Top Mgmt.
25 Examples of Informal Group Norms Do your job but don’t produce more than the rest of the group.Don’t tell off-color jokes or use profane language among group members.Listen to the boss and use his/her expertise but don’t trust him/her.Everyone is to be clean/organized at the workstation.Also available on a Transparency AcetateSee Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.Examples of Informal Group NormsGroup norms are an interesting topic to discuss in teaching organizational structure. This slide illustrates some of the informal group norms.Ask students: Have you ever felt pressure to conform to such informal norms? If you gave in to group pressure not to produce more than the rest of the group, did you feel good about yourself? (Focus on the self-gratification feeling of a job well-done and the corresponding compensation.)Discuss the importance of informal groups in an organization that become somewhat formal themselves.
26 More Examples of Informal Group Norms 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!Also available on a Transparency AcetateSee Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.More Examples of Informal Group Norms1. This slide is a continuation of PPT 8-25.2. Ask the students to review both acetates to identify which Informal Group Norms should be followed.Drinking is done off-the-job. Never at work.Do not tell off-color jokes or use profane language among group membersEveryone is to be clean/organized at the workstationRespect/help your fellow members on the job