* * Chapter Eight Adapting Organizations to Today’s Markets Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

* * Fayol’s Principles of Organization Unity of command Hierarchy of authority Division of labor Subordination of individual interests to the general interest Authority FAYOL’S PRINCIPLES LG2 Degree of centralization Clear communication channels Order Equity Esprit de corps 8-2

* * Max Weber and Organizational Theory Employees just need to do what they’re told. In addition to Fayol’s principles, Weber emphasized:  Job descriptions.  Written rules, decision guidelines and detailed records.  Consistent procedures, regulations and policies.  Staffing and promotion based on qualifications. WEBER’S PRINCIPLES LG2 8-3

* * Choosing the Appropriate Span of Control Span of Control -- The optimal number of subordinates a manager supervises or should supervise. When work is standardized, broad spans of control are possible. Appropriate span narrows at higher levels of the organization. The trend today is to reduce middle managers and hire better low-level employees. SPAN of CONTROL LG3 8-4

* * Choosing Tall versus Flat Organization Structures Structures determine the way the company responds to employee and customer needs. Tall Organization Structures -- An organizational structure in which the organization chart would be tall because of the various levels of management. Flat Organization Structures -- An organizational structure that has few layers of management and a broad span of control. ORGANIZATIONAL STRUCTURES LG3 8-5

* * Weighing the Advantages and Disadvantages of Departmentalization Departmentalization -- Divides organizations into separate units. Workers are grouped by skills and expertise to specialize their skills. DEPARTMENTALIZATION LG3 8-6

* * Line Organizations Line Organization -- Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor. There are no specialists, legal, accounting, human resources or information technology departments. Line managers issue orders, enforce discipline and adjust the organization to changes. LINE ORGANIZATIONS LG4 8-7

* * Line-and-Staff Organizations Line Personnel -- Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees. Line personnel have authority to make policy decisions. LINE PERSONNEL LG4 8-8

* * Line-and-Staff Organizations Staff Personnel -- Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees. STAFF PERSONNEL LG4 8-9

* * Matrix-Style Organizations Matrix Organization -- Specialists from different parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure. MATRIX ORGANIZATIONS LG4 Emphasis is on product development, creativity, special projects, communication and teamwork. 8-10

* * Benchmarking and Core Competencies Benchmarking -- Compares an organization’s practices, processes and products against the world’s best. Core Competencies -- The functions an organization can do as well as or better than any other organization in the world. If a company can’t match a competitor, they may try to outsource. BENCHMARKING and CORE COMPETENCIES LG5 8-11

* * Adapting to Change Change isn’t easy. Employees like to do things the way they always have. Get rid of old, inefficient facilities and equipment. Use the Internet to get to know your customers and sell directly to them. ADAPTING to MARKET CHANGES LG5 8-12