****** McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh ** Adapting Organizations to Today’s Markets 8 CHAPTER * **

****** 8-2 Structuring an Organization Comprises: AccountabilityAccountability Allocating ResourcesAllocating Resources Establishing ProceduresEstablishing Procedures Division of LaborDivision of Labor Team TasksTeam Tasks Assigning Responsibility/ AuthorityAssigning Responsibility/ Authority

****** 8-3 Fayol’s Principles of Organization Unity of CommandUnity of Command Hierarchy of AuthorityHierarchy of Authority Division of LaborDivision of Labor Subordination of Individual Interest to the General InterestSubordination of Individual Interest to the General Interest AuthorityAuthority Degree of CentralizationDegree of Centralization Clear Communication ChannelsClear Communication Channels OrderOrder EquityEquity Esprit de CorpsEsprit de Corps

****** 8-4 Weber’s Organizational Principles Job DescriptionsJob Descriptions Written RulesWritten Rules Procedures, Regulations, PoliciesProcedures, Regulations, Policies Staffing/Promotions Based on QualificationsStaffing/Promotions Based on Qualifications

****** 8-5 Centralization (No Delegation) Advantages Greater Top- Management ControlGreater Top- Management Control More EfficiencyMore Efficiency Simpler Distribution SystemSimpler Distribution System Stronger Brand/Corporate ImageStronger Brand/Corporate Image Disadvantages Less Responsiveness to CustomersLess Responsiveness to Customers Less EmpowermentLess Empowerment Interorganizational ConflictInterorganizational Conflict Lower Morale Away from HeadquartersLower Morale Away from Headquarters

****** 8-6 Decentralization (Delegate Authority) Advantages Better Adaptation to Customer WantsBetter Adaptation to Customer Wants More Empowerment of WorkersMore Empowerment of Workers Faster Decision MakingFaster Decision Making Higher MoraleHigher Morale Disadvantages Less EfficiencyLess Efficiency Complex Distribution SystemComplex Distribution System Less Top-Management ControlLess Top-Management Control Weakened Corporate ImageWeakened Corporate Image

****** 8-7 Organizational Structures Tall Organizations Many Layers of ManagementMany Layers of Management High Cost of ManagementHigh Cost of Management Narrow Span of ControlNarrow Span of Control Flat Organizations Current TrendCurrent Trend Creation of TeamsCreation of Teams Broad Span of ControlBroad Span of Control

****** 8-8 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 resources do I control to accomplish my tasks? What measures will be used to evaluate my performance?What measures will be used to evaluate my performance? Who do I need to interact with and influence to achieve my goals?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?How much support can I expect when I reach out to others for help? Source: HBS Working Knowledge, October 31,2005

****** 8-9 How to Make Jobs Fit Your Company (Part 2 of 2) Four Basic Spans of a Job: The Span of ControlThe Span of Control The Span of AccountabilityThe Span of Accountability The Span of InfluenceThe Span of Influence The Span of SupportThe Span of Support Source: HBS Working Knowledge, October 31,2005

****** 8-10 Span of Control - Narrow Advantages More Control by Top ManagementMore Control by Top Management More Chances for AdvancementMore Chances for Advancement Greater SpecializationGreater Specialization Closer SupervisionCloser SupervisionDisadvantages Less EmpowermentLess Empowerment Higher CostsHigher Costs Delayed Decision MakingDelayed Decision Making Less Responsiveness to CustomersLess Responsiveness to Customers

****** 8-11 Span of Control - Broad Advantages Reduced CostsReduced Costs More Responsiveness to CustomersMore Responsiveness to Customers Faster Decision MakingFaster Decision Making More EmpowermentMore EmpowermentDisadvantages Fewer Chances for AdvancementFewer Chances for Advancement Overworked ManagersOverworked Managers Loss of ControlLoss of Control Less Management ExpertiseLess Management Expertise

****** 8-12 Advantages Skill DevelopmentSkill Development Economies of ScaleEconomies of Scale Good CoordinationGood Coordination Departmentalization by Function Disadvantages Lack of CommunicationLack of Communication Employees Identify with DepartmentEmployees Identify with Department Slow Response to External DemandsSlow Response to External Demands Narrow SpecialistsNarrow Specialists GroupthinkGroupthink

****** 8-13 Departmentalization By ProductBy Product By FunctionBy Function By Customer GroupBy Customer Group By Geographic LocationBy Geographic Location By ProcessBy Process

****** 8-14 Line Organizations Advantages Clear Authority & ResponsibilityClear Authority & Responsibility Easy to UnderstandEasy to Understand One Supervisor Per EmployeeOne Supervisor Per EmployeeDisadvantages InflexibleInflexible Few Specialists for AdviceFew Specialists for Advice Long Line of CommunicationLong Line of Communication Difficult to Handle Complex DecisionsDifficult to Handle Complex Decisions

****** 8-15 Line/Staff Organizations Line Personnel Formal AuthorityFormal Authority Make Policy DecisionsMake Policy Decisions Staff Personnel Advise Line PersonnelAdvise Line Personnel Assist Line PersonnelAssist Line Personnel

****** 8-16 Matrix Organizations Advantages FlexibilityFlexibility Cooperation & TeamworkCooperation & Teamwork CreativityCreativity More Efficient Use of ResourcesMore Efficient Use of ResourcesDisadvantages Costly/ComplexCostly/Complex Confusion in LoyaltyConfusion in Loyalty Requires Good Interpersonal Skills & CooperationRequires Good Interpersonal Skills & Cooperation Not PermanentNot Permanent

****** 8-17 Important Conditions for Small Teams 1.Clear Purpose 2.Clear Goals 3.Correct Skills 4.Mutual Accountability 5.Shift Roles When Appropriate Source: CIO Dec 2003

****** 8-18 Networking Real TimeReal Time TransparencyTransparency Virtual CorporationsVirtual Corporations

****** 8-19 A Virtual Corporation CoreFirm Accounting Firm Production Firm Distribution Firm Advertising Agency Design Firm Legal Firm

****** 8-20 Benefits and Concerns of Healthcare Outsourcing Benefits Provides Enough Staff to Operate the FacilityProvides Enough Staff to Operate the Facility Cost SavingsCost Savings Concerns Lower Employee MoraleLower Employee Morale LiabilityLiability Should Patients be InformedShould Patients be Informed Confidentiality & SecurityConfidentiality & Security Source: Healthcare Financial Management, 2005

****** 8-21 Which Jobs Will Be Outsourced Next? Source: USA Today

****** 8-22 Adapting to Change Restructuring for EmpowermentRestructuring for Empowerment Focusing on the CustomerFocusing on the Customer Creating a Change-Oriented Organizational CultureCreating a Change-Oriented Organizational Culture The Informal OrganizationThe Informal Organization

****** 8-23 Layers of Authority- Traditional Top Managers- Decision MakersTop Managers- Decision Makers Middle Managers- Develops Rules & Procedures Middle Managers- Develops Rules & Procedures Workers and Supervisors Workers and Supervisors

****** 8-24 Inverted Organization Structure Empowered front- line workers Support Personnel Top Mgmt.

****** 8-25 Examples of Informal Group Norms Do your job but don’t produce more than the rest of the group.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.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.Listen to the boss and use his/her expertise but don’t trust him/her. Everyone is to be clean/organized at the workstation.Everyone is to be clean/organized at the workstation.

****** 8-26 Never side with managers in a dispute involving group members.Never side with managers in a dispute involving group members. Respect/help your fellow group members on the job.Respect/help your fellow group members on the job. Criticize the organization only among group members-- never among strangers.Criticize the organization only among group members-- never among strangers. Drinking is done off-the-job-- Never at work!Drinking is done off-the-job-- Never at work! More Examples of Informal Group Norms