1. Adapting
Organizations
to Today’s
Markets
CHAPTER 8
MUSOLINO
1-1

2. Structuring an Organization Comprises:
Division of Labor
Team Tasks
Assigning Responsibility/ Authority
Accountability
Allocating Resources
Establishing Procedures
See Learning Goal 1: Explain the organizational theories of Fayol and Weber.
See Text Page: 207

3. Fayol’s Principles of Organization
Unity of Command
Hierarchy of Authority
Division of Labor
Subordination of Individual Interest to the General Interest
Authority
Degree of Centralization
Clear Communication Channels
Order
Equity
Esprit de Corps
Also available on a Transparency Acetate
See Learning Goal 1: Explain the organizational theories of Fayol and Weber.
See Text Pages:
Fayol’s Principles of Organization
This 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 Descriptions
Written Rules
Procedures, Regulations, Policies
Staffing/Promotions Based on Qualifications
Also available on a Transparency Acetate
See Learning Goal 1: Explain the organizational theories of Fayol and Weber.
See Text Pages: 209
Weber’s Organizational Principles
This 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)
Disadvantages
Less Responsiveness to Customers
Less Empowerment
Interorganizational Conflict
Lower Morale Away from Headquarters
Advantages
Greater Top-Management Control
More Efficiency
Simpler Distribution System
Stronger Brand/Corporate Image
Also available on a Transparency Acetate
See 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)
Advantages
Better Adaptation to Customer Wants
More Empowerment of Workers
Faster Decision Making
Higher Morale
Disadvantages
Less Efficiency
Complex Distribution System
Less Top-Management Control
Weakened Corporate Image
Also available on a Transparency Acetate
See 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 Organizations
Many Layers of Management
High Cost of Management
Narrow Span of Control
Flat Organizations
Current Trend
Creation of Teams
Broad Span of Control
See 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 Acetate
See 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 Control
The Span of Accountability
The Span of Influence
The Span of Support
Also available on a Transparency Acetate
See 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
Advantages
More Control by Top Management
More Chances for Advancement
Greater Specialization
Closer Supervision
Disadvantages
Less Empowerment
Higher Costs
Delayed Decision Making
Less Responsiveness to Customers
See 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 Customers
Faster Decision Making
More Empowerment
Disadvantages
Fewer Chances for Advancement
Overworked Managers
Loss of Control
Less Management Expertise
See Learning Goal 2: Explain the various issues involved in structuring organizations.
See Text Pages: 214

12. Departmentalization by Function
Disadvantages
Lack of Communication
Employees Identify with Department
Slow Response to External Demands
Narrow Specialists
Groupthink
Advantages
Skill Development
Economies of Scale
Good Coordination
See 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 Location
By Process
See Learning Goal 2: Explain the various issues involved in structuring organizations.
See Text Pages: 216

14. Line Organizations Advantages Disadvantages Inflexible
Clear Authority & Responsibility
Easy to Understand
One Supervisor Per Employee
Disadvantages
Inflexible
Few Specialists for Advice
Long Line of Communication
Difficult to Handle Complex Decisions
See Learning Goal 3: Describe and differentiate the various organizational models.
See Text Pages: 217

15. Line/Staff Organizations
Line Personnel
Formal Authority
Make Policy Decisions
Staff Personnel
Advise Line Personnel
Assist Line Personnel
See Learning Goal 3: Describe and differentiate the various organizational models.
See Text Pages: 217

16. Matrix Organizations Advantages Disadvantages Flexibility
Cooperation & Teamwork
Creativity
More Efficient Use of Resources
Disadvantages
Costly/Complex
Confusion in Loyalty
Requires Good Interpersonal Skills & Cooperation
Not Permanent
See Learning Goal 3: Describe and differentiate the various organizational models.
See Text Pages:

17. Important Conditions for Small Teams
Clear Purpose
Clear Goals
Correct Skills
Mutual Accountability
Shift Roles When Appropriate
Also available on a Transparency Acetate
See Learning Goal 3: Describe and differentiate the various organizational models.
Important For Small Teams
This 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 Firm
Core
Firm
Also available on a Transparency Acetate
See Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.
See Text Pages: 222
A Virtual Corporation
This 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 ventures
Forming temporary alliances with other virtual companies with different areas of expertise
Hiring consulting services
Outsourcing or subcontracting of services
Share 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 Firm
Advertising Agency
Design Firm

20. Benefits and Concerns of Healthcare Outsourcing
Lower Employee Morale
Liability
Should Patients be Informed
Confidentiality & Security
Benefits
Provides Enough Staff to Operate the Facility
Cost Savings
See Learning Goal 4: Discuss the concepts involved in interfirm cooperation and coordination.
Benefits and Concerns of Healthcare Outsourcing
This 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 Acetate
See 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 Customer
Creating a Change-Oriented Organizational Culture
The Informal Organization
See 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 Makers
Middle Managers- Develops Rules & Procedures
See Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.
See Text Pages: 224
Workers and Supervisors

24. Inverted Organization Structure
Empowered front-line workers
Support Personnel
Also available on a Transparency Acetate
See Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.
See Text Pages: 224
Inverted Organization Structure
This 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 Acetate
See Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.
Examples of Informal Group Norms
Group 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 Acetate
See Learning Goal 5: Explain how restructuring, organizational culture, and informal organization can help businesses adapt to change.
More Examples of Informal Group Norms
1. 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 members
Everyone is to be clean/organized at the workstation
Respect/help your fellow members on the job