2“Management Talk”“Our company today is leaner, faster, more flexible and more efficient – in short much more competitive. But our journey is far from finished. Building upon our recent success and momentum, we are determined to drive GM to the next level – to sustained success.”Rick Wagoner, General Motors, Chairman and CEO
3Objectives Read an organizational chart List the four types of organizational structures and explain the advantages and disadvantages of each typeName the factors that affect the type of structure an organization adoptsDescribe the roles of the chief executive officer and the board of directors
4Understanding Management General Motors has a long, proud history of being one of the biggest car manufacturers in the world. By the 1980s and 1990s, however, the company was losing profits to newer, more efficient manufacturers. Since then, the company has updated its factories and streamlined its operations in order to reduce costs.
5Management SkillsHow would consolidating six divisions help General Motors improve serviced and cut costs? What are the possible drawbacks of merging the separate divisions?Have you ever been in a situation at home or work where there were too many people in charge of completing a task? What suggestions would you make to simplify the process?
6Sec. 13.1: Understanding how organizational structures work Can you describe a graphic organizer you have used in school or the classroom?What are the benefits of using them?Why is it important for businesses to have organization charts?
7What You’ll Learn How to read an organizational chart The four main types of organizational structuresThe difference between staff and line functionsThe benefits of adopting a matrix or team structure
8Why is this important?“Without an appropriate organizational structure, a business will not succeed”
9What is an Organization Structure? A way to organize employees into some kind of structure to meet goalsMinimizes confusionCoordinates activities by clearly identifying which individuals are responsible for which tasks
10Types of Organizational Structures? Line StructureLine and Staff StructureMatrix StructureTeam StructureOrganizational Chart:A visual representation of a business’s organizational structure
11Line Structure Authority originates at the top and moves downward Common among small companiesLine FunctionsFunctions that contribute directly to company profitsProduction managers, sales reps, and marketing managers
12Line Structure Line Managers Example: Collect and analyze all information needed to carry out their responsibilitiesExample:Production ManagersHire and fire all of the assembly-line workers in their departmentsOrder all supplies for their department
13Line and Staff Structure Mid-sized and large companiesOther employees hired to help line managers perform activities they cannotStaff FunctionsAdvise and support line functionsStaff departments include: legal, human resources, and public relationsHelp line departments do their jobsAuthority is limited to making recommendations to line managers
14Matrix StructureAllows employees from different departments to come together temporarily to work on special project teamsProvides flexibility to respond quickly to a customer need by creating a team of people who devote all of their time to a project then return to their departments or join a new project teamI.E. – Boeing – assigns employees to project teams when it creates to design a new aircraft
16Team StructureBrings together people with different skills in order to meet a particular objectiveBelief is that the company will meet customer needs more effectively than traditional structuresSenior managers need not approve decisions by lower-level managersTeams have the authority to make final decisionsEmployee preferred due to its focus on completing a project rather than a task
17Flat vs. Tall Structures Flat structure: Small number of levels and broad span of management at each levelManager must be able to delegate wellAdvantages:Great Job SatisfactionMore DelegationIncreased communication between levels of managementTall Structure: Has many levels with small spans of managementPower is centralized on the top levels and there is more employee controlGreater controlBetter Performance
18FLAT TALL Span of Management 8:1 (Four Levels) Span of Management 5:1 (Seven Levels)
19Extension Activity!!!Design an organizational chart that illustrates the organizational structure of Fremd High SchoolYou can interview school staff for informationYou can navigate the Fremd website to understand departmental structures and how to structure your organizational chart (Line, Line and Staff, Matrix, and/or Team)Use Microsoft Word or Inspiration to build out your organization chart
20What Makes an Organization Effective? Knowing Your Customers and Responding to Their NeedsTo succeed in the business world, companies must change to keep up with customer needsWhat are some ways that Kodak has done this? (established first simple camera in 1888)
2113. 1: Chapter SummaryCompanies use organizational charts to visually represent their organizational structuresBusinesses generally adopt one of the following four organizational structures: line structure, line and staff structure, matrix structure, or team structure
22Sec. 13.2: Creating an Organizational Chart List leadership roles or committee appointments that you have hadWhat were the positive and negative experiences that you had in these rolesHow might a small company’s growth into a large corporation might change its management structure?
23What You’ll Learn Why is this Important? The different ways in which companies organize their departmentsWhy a company’s structure needs to change as the company growsThe role of the chief executive officerThe role of the board of directorsWhy is this Important?“Managers both help create and work within organizational structures.”
24Factors Affecting Organizational Structure Size of the business and kinds of products or services it producesStructures will differ between:High-teach company employing 50,000 in eight countries (Motorola, Inc.)Small retail business with just a dozen employees (Bob’s Hardware Store)
25“As a company grows, organizational structure must change with it” SIZE“As a company grows, organizational structure must change with it”Organizational Life Cycle StagesStage 1: Growth through creativityStage 2: Growth through directionStage 3: Growth through delegation, coordination, and collaboration
26Stage 1: Growth through creativity Entrepreneurs create products or services for which there is a marketBusiness is small in structureLack formal structures, policies, and objectivesFounder is involved in every aspect of the business and makes all the decisionsCurrent ImportanceAn idea that appeals to consumers
27Stage 2: Growth through direction Company grows in sizeCompany founder is no longer solely responsible for all decision makingProfessional managers hired to plan, organize, and staffManagers create written policies, procedures, and plansRules and systems for hiring, firing, and rewarding employees are implementedSet up:Systems for employees to communicateFinancial controls/Budget constraints for departmentsFormal Rules are on decision-making are formulated
28Stage 3: Growth through delegation, coordination, and collaboration Problems occur which include:Company’s structure can become too rigid and decision making becomes too centralizedLower-level employees feel left out of the decision-making processTop executives find themselves too far removed from the customer to make good decisionsTo combat these problems, stage 3 is implemented which includes:Delegation of duties to lower-level employees in attempt to decentralizeFocuses on:Motivating people at lower levelsAllows senior executives to devote more of their time to long-term management issuesSet up:Systems for employees to communicateFinancial controls/Budget constraints for departmentsFormal Rules are on decision-making are formulated
29The Changing Nature of a Company’s Organizational Structure How have the needs of Apple Computer changed over time?Stage 1:When a company is young, it depends heavily on technical geniuses who had a brilliant idea for a user-friendly desktop computer.They turned this idea into a multimillion dollar company by introducing the Apple II computer in the 1970s1976
30The Changing Nature of a Company’s Organizational Structure Stage 2:As a company grows, it needs managers with excellent managerial skills. To continue to grow, in the 1980s Apple Computer replaced its co-founder, Steven Jobs, with a professional manager. The new CEO, John Sculley, helped introduce the company’s Macintosh Computer1984
31The Changing Nature of a Company’s Organizational Structure Stage 3:Managers learn to delegate authority. In 1996 company founder Steven Jobs returned to Apple as interim CEO in an effort to breathe new life into a company that had fallen on hard times. Apple’s organizational structure allowed it to introduce several important products in the 1990s, including the iMac and now in the 21st Century, the iPod and iPhone.
32Type of Product or Service “The number of levels within an organization increases as the level of technical complexity increases with producing a product or service”
33Organizing a Company into Departments Organizing Departments by Work FunctionsProductionActual creation of company’s goods or servicesMarketingProduct development, pricing, distribution, sales, and advertisingFinanceMaintaining a company’s financial statements and obtaining credit so a company can growHuman ResourcesHiring employees and placing them in appropriate jobs
34Organizing a Company into Departments Each function includes various positionsProductionEngineering, Manufacturing, Quality ControlMarketingAdvertising, Sales, Market ResearchFinanceAccounting and CreditAdvantages:Allows for functional specializationNegative Effects:Conflicts may develop between departments with different goalsProduction department not concerned about advertisingCreate managers whose scope is relatively narrowMarketing manager may know a great deal about marketing, but lack skills in other aspects of the business
35Organizing a Company into Departments Organizing Departments by ProductSingle manager oversees all activities needed to produce and market a productAdvantages:Allows employees to identify with the product rather than with their particular job functionDevelops a sense of common purposeHelps identify which products are profitableAllows for training executive personnel by letting them experience a broad range of functional activitiesNegative Effects:Departments could become overly competitive, to the detriment of the company as a wholeActivities are duplicated for each division [multiple marketing departments for each different product]
36Organizing a Company into Departments Organizing Departments in Other WaysGeographical regionNorth America v AsiaType of CustomerSales to:GovernmentsFor-profit businessesNonprofit organizations
37Understanding the Role of Company Leadership CommitteesAn organized group of people appointed to consider or decide upon certain mattersI.E. – homecoming dance, food drive, blood drive, Grant-A-Wish, etc.Guidelines that managers must set:Clearly define the committee’s functionEstablish authority figures within a committeeSet Clear Goals for members to attain
38Understanding the Role of Company Leadership Chief Executive Officer (CEO)The most important executive in a company (Top Executive)Together with other senior managers, the CEO:Makes decisions about meeting the company’s objectivesSets the company’s objectivesDetermines who fills senior management positionsDevelops the company’s long-term strategiesAttends the company’s annual stockholders’ meeting and answers questions about the company’s activitiesTakes charge of the company in a crisisWorks with the board of directors
39Understanding the Role of Company Leadership Board of DirectorsIn companies owned by stockholders, approves all major management decisionsMeet four to six times a yearThe legal representative of a company’s stockholdersInside Board Members = Work for the companyOutside Board Members = Do not work for the companyExamines all major decisions to ensure it is in best interest of company’s stockholdersMakes it more difficult for corporate managers to act in ways that benefit them personally at the expense of the company’s owners
4013. 2: Chapter SummaryThe type of structure a company adopts depends on many factors including the company’s size and its products or servicesMany companies are organized by work functions. Others are organized by product, region, or customerAn organization may form a committee to decide upon certain mattersSenior management, led by the company’s chief executive officer, initiates or approves all of a company’s major decisionsA board of directors approves all major decisions made by corporate management
41Math SkillsLindholm Technologies, a high-tech company that specializes in computer graphics, has decided to reorganize its corporate structure into a team structure. By organizing into teams, Lindholm expects to be able to eliminate three mid-level managers, each earning $82,000 a year. It also expects to hire two additional entry-level employees, to be paid about $25,000 a year each. If the cost of the reorganization itself is $75,000, how much can the company expect to save after two years?
42Assessing Computer Skills Choose a major U.S. company, such as IBM, Apple, Home Depot, Coca-Cola, General Mills, McDonald’s. Using the Internet, find out how the company you selected is organized and identify the top six managers. Also, if you can, obtain a copy of the company’s organizational chart.