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Daft 6th ed Fundamentals of Organizing

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1 Daft 6th ed Fundamentals of Organizing
chp10 Daft 6th ed Fundamentals of Organizing Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. Developed by Cool Pictures & MultiMedia Presentations Copyright © 2002 by South-Western, a division of Thompson Learning. All rights reserved.

2 Organizing The deployment of organizational resources to achieve strategic goals Reflects deployment of resources Shows division of labor Formal lines of authority and mechanisms is developed

3 Organization Structure
Defines how tasks are divided, resources are deployed, and departments are coordinated The set of formal tasks assigned Formal reporting relationships The design of systems to ensure effective coordination of employees across department

4 The Organization Chart
Visual representation Set of formal tasks “The Home Depot is the world's largest home improvement retailer currently operating 1,363 stores. Framework for vertical control Formal reporting relationships

5 Work Specialization Tasks are subdivided into individual jobs
Division of labor concept Employees perform only the tasks relevant to their specialized function Jobs tend to be small, but they can be performed efficiently

6 Chain of Command Unbroken line of authority that links all persons in an organization Shows who reports to whom Associated with two underlying principles Unity of Command Scalar Principle

7 Authority Formal and legitimate right of a manager to make decisions and issue orders Allocate resources to achieve organizationally desired outcomes Authority is distinguished by three characteristics Authority is vested in organizational positions, not people Authority is accepted by subordinates Authority flows down the vertical hierarchy

8 Responsibility The duty to perform the task or activity an employee has been assigned Managers are assigned authority commensurate with responsibility

9 Accountability Mechanism through which authority and responsibility are brought into alignment People are subject to reporting and justifying task outcomes to those above them in the chain of command Can be built into the organization structure

10 Process managers use to transfer authority and responsibility
Delegation 1 Process managers use to transfer authority and responsibility 2 Organization encourage managers to delegate authority to lowest possible level

11 Techniques for Delegation
Give thorough instructions Maintain feedback Evaluate and reward performance Techniques for Delegation Delegate the whole task Ensure that authority equals responsibility Select the right person

12 Line and Staff Positions
Line vs. staff positions Line vs. staff authority Advantages and complexities of using staff positions

13 TYPES OF AUTHORITY President Legal Department Vice-President,
Production Marketing Vice President, Accounting A B C Line authority Staff authority Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 8 8 8

14 Span of Management Number of employees who report to a supervisor
Traditional view, about seven subordinates per manager Many lean organizations today have 30, 40, or even higher subordinates When supervisors must be closely involved with subordinates, the span should be small Supervisors need little involvement with subordinates, it can be large

15 Factors Influencing the Span
Supervisor Preferences and skills Few non-supervisory duties Subordinates Competence and needs Job Work similarity physical proximity Low interaction requirements

16 Tall versus Flat Structure
Span of Control used in an organization determines whether the structure is tall or flat Tall structure has a narrow span and more hierarchical levels Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels The trend has been toward wider spans of control

TM 8-6 SPAN OF MANAGEMENT Org. Level MEMBERS AT EACH LEVEL 1 (highest) 1 1 8 4 2 64 16 3 512 64 4 256 4,096 5 Span of 8 1,024 6 Operatives : 4,096 Managers : 585 4,096 7 Span of 4 Operatives : 4,096 Managers : 1,396 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 6 6 6

18 Centralization vs. Decentralization
The extend to which the power and authority is retained at the top vs. delegated to lower levels. Factors influencing… Size of the organization Geographic dispersion Technological complexity Environmental uncertainty

19 DECENTRALIZATION CENTRALIZATION Decision-making Decision-making small
TM 8-7 DECENTRALIZATION CENTRALIZATION Decision-making Decision-making Restrictive policies, rules, procedures General policies, rules, procedures small centralized simple certain size geographics technology environment large dispersed complex uncertain factors Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 7 7 7

20 Decentralization Tends To …
Make greater use of human resources Reduce burdens of top managers Cause decisions to be made close to the action Permit rapid response to changes

21 Departmentalization The basis on which individuals are grouped into departments
Vertical functional approach. People are grouped together in departments by common skills. Divisional approach. Grouped together based on a common product, program, or geographical region. Horizontal matrix approach. Functional and divisional chains of command. Some employees report to two bosses Team-based approach. Created to accomplish specific tasks Network approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere. Virtual approach. Brings people together temporarily to exploit specific opportunities then disbands

22 Five Approaches to Structural Design

23 Five Approaches to Structural Design Slide 2

24 Functional Structure Advantages
Efficient use of resources Skill specialization development Top management control Excellent coordination Quality technical problem solving

25 Functional Structure Disadvantages
Poor communications Slow response to external changes Decisions concentrated at top Pin pointing responsibility is difficult Limited view of organizational goals by employees

26 Divisional Structure Advantages
Fast response, flexibility in an unstable environment Fosters concern for customers’ needs Excellent coordination across functional departments Emphasis on overall product and divisional goals Development of general management skills

27 Divisional Structure Disadvantages
Duplication of resources across divisions Less technical depth and specialization in divisions Poor coordination across divisions Less top management control Competition for corporate resources

28 Horizontal Matrix Advantages
More efficient use of resources than divisional structure Adaptable to changing environment Development of both general and specialists management skills Expertise available to all divisions Enlarged tasks for employees 32

29 Dual Authority Structure in a Matrix Organization

30 Horizontal Matrix Disadvantages
Dual chain of command High conflict between two sides of matrix Many meetings to coordinate activities Need for human relations training Power domination by one side of matrix 33

31 Team Advantages Same advantages as functional structure
Reduced barriers among departments Quicker response time Better morale Reduced administrative overhead 35

32 Team Disadvantages Dual loyalties and conflict
Time and resources spent on meetings Unplanned decentralization 36

33 Network Approach Advantages
Global competitiveness Work force flexibility Reduced administrative overhead 38

34 Network Approach Disadvantages
No hands-on control Loss of part of the organization severely impacts remainder of organization Employee loyalty weakened 39

35 Virtual Organization Advantages Disadvantages
Can draw on expertise worldwide Highly flexible and responsive Reduced overhead costs Disadvantages Lack of control, weak boundaries Greater demand on managers Communications difficulties

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