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Chap 4 MGT 162
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Chap 4 MGT 162

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  • 1. Topic 5 Designing the Contemporary Organization
  • 2. Organizing Defined The process of determining the tasks to be done, who will do them, and how those tasks will be managed and coordinated.
  • 3. The Process of Organizing Organizational Mission Developing the foundation - Determining tasks and defining jobs - Defining work relationships Developing organizational design - Grouping organizational members - Developing an integrating system - Determining the locus of decision making Goals and Objectives Control and Feedback
  • 4. Steps in organizing • 1.Detailing of work.-Describing all the work that must be done. • 2.Division of work-Dividing the total workload. • 3.Aggregation of work-departmentalization. • 4.Coordination of work-integration and standardization • 5.Review of performance-assess managerial and organizational performance. 4 Division of work The process of dividing jobs into smaller components so that a worker performs only a small part of the total jobs. Advantage 1.Increase productivity 2.Allows people to learn skills and become expert at their job functions.
  • 5. Organizational Design Defined The way in which the activities of an organization are arranged and coordinated so that its mission can be fulfilled and its goals achieved.
  • 6. Components of Organizational Design Overall organizational design is defined by three primary components: Organizational StructureOrganizational Structure Integrating MechanismsIntegrating Mechanisms Locus of Decision MakingLocus of Decision Making
  • 7. Organizational Structure • Organizational Structure – Defines the primary reporting relationships that exist within an organization. – The chain of command and hierarchy of responsibility, authority, and accountability are established through organizational structure. – Common forms of organizational structure: • Functional structure, division structure, matrix structure, and network structure.
  • 8. Functional Structure • Functional Structure – Members of the organization are grouped according to the particular function that they perform within the organization. – Appropriate when an organization’s greatest source of complexity comes from the diverse tasks that must be performed rather than from its products, geographic markets, or consumer groups.
  • 9. Functional Structure • Advantages – Facilitates specialization. – Cohesive work groups. – Improved operational efficiency. • Disadvantages – Focus on departmental vs. organizational issues. – Difficult to develop generalists needed for top- level management. – Only top-level management held accountable for profitability.
  • 10. Functional Structure PGP, Inc. CEOCEO MarketingMarketing FinanceFinanceSalesSalesProductionProduction Human Resources Human Resources
  • 11. Divisional Structure • Divisional Structure – Members of the organization are grouped on the basis of common products, geographic markets, or customers served. • Types of Divisional Structures – Product divisional • Most appropriate for organizations with relatively diverse product lines that require specialized efforts to achieve high product quality.
  • 12. Divisional Structure • Types of Divisional Structures – Geographic divisional • Most appropriate for organizations with limited product lines that either have wide geographic coverage or desire to grow through geographic expansion. – Customer divisional • Most appropriate for organizations that have separate customer groups with very specific and distinct needs.
  • 13. Divisional Structure • Advantages – Enhanced coordination. – Better assessment of manager performance and responsibility. – Development of generalist managers. • Disadvantages – Managers may lack expertise to operate in wide geographic areas. – Duplication of resources. Product Divisional
  • 14. Divisional Structure • Advantages – Allows for focus on specific new markets. – Good structure for growth along geographic lines. – Adaptable to local needs. • Disadvantages – Duplication of product or product/technology efforts. – Coordination and integration are difficult. Geographic Divisional
  • 15. Matrix Structure • Matrix Structure – A structure in which the tasks of the organization are grouped along two organizational dimensions simultaneously. – Examples include product/function, product/geographic region, etc.
  • 16. Matrix Structure • Advantages – Can achieve simultaneous objectives. – Managers focus on two organizational dimensions, resulting in more specific job skills. • Disadvantages – Complex, leading to difficulties in implementation. – Behavioral difficulties from “two bosses.” – Time consuming from a planning/coordination perspective.
  • 17. Network Structure • Network Structure – A contemporary organizational structure that is founded on a set of alliances with other organizations that serve a wide variety of functions. • Types of Network Structures – Internal network • A network structure that relies on internally developed units to provide services to a core organizational unit.
  • 18. Network Structure • Types of Network Structures – Stable network • A network structure that utilizes external alliances selectively as a mechanism for gaining strategic flexibility. – Dynamic network • A network structure that makes extensive use of outsourcing through alliances with outside organizations.
  • 19. Network Structure • Advantages – Maximizes the effectiveness of the core unit. – Do more with less resources. – Flexibility. • Disadvantages – Fragmentation makes it difficult to develop control systems. – Success is dependent on ability to locate sources. – Difficult to develop employee loyalty.
  • 20. Network Structure BrokersBrokers SuppliersSuppliers DesignersDesigners DistributorsDistributors ProducersProducers
  • 21. Managing Complexity Through Integration • Interdependence – The degree to which work groups are interrelated. • Three primary levels of work group integration: – Pooled interdependence. – Sequential interdependence. – Reciprocal interdependence.
  • 22. Pooled Interdependence Occurs when organizational units have a common resource but no interrelationship with one another Head- quarters B C D A F E
  • 23. Sequential Interdependence Occurs when organizational units must coordinate the flow of information, resources, and tasks from one unit to another A B C
  • 24. Reciprocal Interdependence Occurs when information, resources, and tasks must be passed back and forth between work groups A C E F D B
  • 25. Organizational Relationships • The working relationships that exist within an organization affect how its activities are accomplished and coordinated. • These Relationships are Defined By: – Chain of command – Span of control – Line and staff responsibilities – Delegation
  • 26. Chain of Command and Unity of Command • Chain of Command – The line of authority and responsibility that flows throughout the organization. • Unity of Command – A principle that each employee in the organization is accountable to one, and only one, supervisor.
  • 27. Span of management • Also known as span of control • Refers to the number of subordinates who reports directly to a manager. • Broad span of mgt. – means a manager supervises many subordinates ( 10 or more). • Narrow span of mgt.- means a manager supervises only a few workers (less than 10) • Span of Control – The number of employees reporting to a particular manager. • In theory, when tasks are very complex, span of control should be relatively narrow. • In contrast, where jobs are highly standardized and routine (low complexity), a manager will not need to spend as much time supporting individual subordinates, and the span of control may be larger 27
  • 28. Span of Control Narrow Span of Control Manager Wide Span of Control Manager
  • 29. Advantages of broad/wide span of management Advantage 1.Superiors are forced to delegate 2.Clear policies must be made 3.Subordinates must be carefully selected Disadvantages 1.Burdening of managers 2.Danger of superior’s loss of control 29
  • 30. Advantages of narrow span of management Advantage 1.Close supervision 2.Close control 3.Rapid com between subordinates and superiors Disadvantages 1.High costs 2.Excessive distance between the lowest and top levels 30 The importance of span of management • 1.Affect effective utilization of managers e.g Too broad span means a manager is burdening himself with too much workload • Too narrow span means a manager is underutilizedstructure.
  • 31. Situational determinants of span of management. • 1.Similarity of work-e.g Broad span is appropriate for identical tasks. • 2.Geographical contiguity e.g broad span is appropriate for activities located in the same area of work • 3.Complexity of work e.g Broad span is appropriate for simple and repetitive tasks • 4.Direction and control required by subordinates • 5.Time spent coordinating and planning. 31
  • 32. Influence, power and authority • Influence-Actions or examples that cause a change in behavior or attitude of another person. E.g a hard working manager may influence his subordinates to increase their productivity • Power - The ability to exert influence.French and Raven have identified five sources of power : • 1.Reward power : Ability to reward another person. E.g bonus, promotion • 2.Coercive power :Ability to punish or take disciplinary action • 3.Expert power : Based on a person’s possession of special knowledge or expertise • 4.Legitimate power-power vested in the constitution which acknowledges a person’s right or lawfulness to exert influence • 5.Referent power-based on the credibility, attractiveness and trustworthiness of a person that makes subordinates want to imitate the leader’s behavior • Authority- A form of legitimate power. There are two views of formal authority • 1.The classical view • 2.The acceptance view 32
  • 33. The classical view • Supposes that authority originates at some very high level of society and then is passed down from level to level. The acceptance view • Finds the basis of authority in the influencee (subordinates) and not the influencer (manager) Subordinates acceptance is vital to ensure that instructions/ commands could be implemented successfully. 33
  • 34. Line and Staff Responsibilities • Line Personnel – Those organizational members that are directly involved in delivering the products and services of the organization. • Staff Personnel – Those organizational members that are not directly involved in delivering the products and services to the organization, but provide support for line personnel.
  • 35. Line and staff authority • Line authority – refers to managers and other employees who are directly involve in the attainment of the organization goals.e.g production managers, operating workers and marketing manager. 35
  • 36. Staff authority • Include all employees who provide service and advice to the line authority.e.g counselor, personal assistant and typist. • Three types of staff authority: • 1.Personal staff e.g personal assistant • 2.Specialized staff-e.g legal advisor, Vice president ( finance) • 3.Functional staff e.g The Audit dept.-staff authority which has the right to control line activities 36
  • 37. Delegation • The assignment to another person of formal authority and accountability for carrying out specific activities.However not all authority and accountability can be delegated.e.g tasks in which subordinates do not have the required qualifications and skills The extent of delegation depends on such factors as : • The organizational culture • The nature of the tasks • Subordinates capabilities • Delegation – The process of transforming the responsibility for a specific activity or task to another member of the organization and empowering that individual to accomplish the task effectively. – Scalar principle • A clear line of authority must run throughout the organization 37
  • 38. Advantages of delegation • Unburdening of top managers • Improve decision making • Better employees training • Faster decision making 38
  • 39. Barriers to effective delegation 1.Managers reluctance to delegate e.g Lack of confidence on their subordinate capabilities 2.Subordinates reluctance to accept delegation e.g do dot want the additional burden 39
  • 40. Delegation • Reasons for Failing to Delegate – The “time crunch.” – Lack of confidence in the abilities of subordinates. – Managers try to avoid the potential pitfalls of dual accountability. – Managers may be insecure about their own value to the organization.
  • 41. Delegation • The Process of Delegation -Decide which task to delegate – Assigning responsibility • Responsibility refers to the employee’s obligation to complete the activities that he or she has been assigned. – Granting authority • Authority is the formal right of an employee to marshal resources and make decisions necessary to fulfill work responsibility. – Establishing accountability • Where there is accountability for performance, employees understand that they must justify their decisions and actions with regard to the tasks for which they have assumed responsibility. – Monitor
  • 42. Classical guidelines to achieve effective delegation 1.Assign Responsibilities, authority and accountability 2.The scalar principle – a clear chain of command. 3.The unity of command principle – employees report to only one leader. 42
  • 43. Delegation: Learning to Delegate Effectively • Principle 1: – Match the employee to the task. • Principle 2: – Be organized and communicate clearly. • Principle 3: – Transfer authority and accountability with the task. • Principle 4: – Choose the level of delegation carefully.
  • 44. Principles of delegation 1.Match the employee to the task –The selected employee should possess the skills and capabilities. 2.Be organized and communicate clearly – state clearly what is to be done, specific deadlines and special skills required. 3.Transfer Authority and accountability – provide resource and power 4.Choose the level of delegation carefully. 44
  • 45. Steps in delegation 1.Decide which tasks can be delegated 2.Decide who should get the assignment. 3.Delegate the assignment 4.Establish a feedback system. 45