Chapter 08           Structuring          Organizations           for Today’s           ChallengesMcGraw-Hill/Irwin       ...
Chapter Eight                   LEARNING GOALS     1. Outline the basic principles of organization        management.     ...
Profile                    URSULA BURNS                             Xerox      • Started as a summer intern and        mov...
Chapter Eight                NAME that COMPANY     This sport’s equipment company studied the CD        industry and learn...
Everyone’sReorganizing   REORGANIZATION is for    LG1             EVERYONE     • Many companies are reorganizing, especial...
Building anOrganization fromthe Bottom Up STRUCTURING an ORGANIZATION     LG1     • Create a division of labor     • Set u...
SAFETY vs. PROFIT               (Making Ethical Decisions)You own a lawn-mowing business and are aware of  the hazards in ...
The ChangingOrganization   THE CHANGING ORGANIZATION    LG2     • Often change in organizations is due to evolving       b...
The ChangingOrganization                  HOW MUCH CHANGES    LG2                          in a DECADE?          Source: N...
The Developmentof Organization   PRODUCTION CHANGEDDesign     LG2                  ORGANZIATION DESIGN     • Mass producti...
Fayol’s Principlesof Organization                     FAYOL’S PRINCIPLES      LG2       • Unity of command              • ...
Fayol’s Principlesof Organization  ORGANIZATIONS BASED on      LG2          FAYOL’S PRINCIPLES      • Organizations in whi...
Max Weber andOrganizationalTheory                  WEBER’S PRINCIPLES     LG2     • Employees just need to do what       t...
TurningPrinciples intoOrganization      HIERARCHIES and COMMANDDesign     LG2     • When following Fayol and Weber, manage...
TurningPrinciples intoOrganizationDesign             TYPICAL ORGANIZATION CHART     LG2                                   ...
TurningPrinciples intoOrganizationDesign              BUREAUCRATIC ORGANIZATIONS     LG2     • Bureaucracy -- An organizat...
ProgressAssessment   PROGRESS ASSESSMENT    • What do the terms division of labor and job      specialization mean?    • W...
ChoosingCentralizedorDecentralized   CENTRALIZATION orAuthority   LG3          DECENTRALIZATION?   • Centralized Authority...
Choosing theAppropriateSpan of Control                  SPAN of CONTROL     LG3     • Span of Control -- The optimal numbe...
Choosing Tallversus FlatOrganizationStructures      ORGANIZATIONAL STRUCTURES    LG3     • Structures determine the way th...
Choosing Tallversus FlatOrganization    FLAT ORGANIZATIONALStructures    LG3              STRUCTURE                       ...
Weighing theAdvantages andDisadvantages ofDepartmentalization                      DEPARTMENTALIZATION      LG3      • Dep...
Weighing theAdvantages andDisadvantages ofDepartmentalization                         ADVANTAGES of      LG3             D...
Weighing theAdvantages andDisadvantages ofDepartmentalization                        DISADVANTAGES of      LG3            ...
Looking atAlternate Ways toDepartmentalize WAYS to DEPARTMENTALIZE     LG3                                          8-25
Looking at                WAYS to DEPARTMENTALIZEAlternate Ways toDepartmentalize     LG3                                 ...
ProgressAssessment   PROGRESS ASSESSMENT    • Why are organizations becoming flatter?    • What are some reasons for havin...
OrganizationModels         FOUR WAYS to STRUCTURE an     LG4             ORGANIZATION     1. Line Organizations     2. Lin...
LineOrganizations   LINE ORGANIZATIONS     LG4     • Line Organization -- Has direct two-way lines of        responsibilit...
Line-and-StaffOrganizations        LINE PERSONNEL     LG4     • Line Personnel -- Workers responsible for         directly...
Line-and-StaffOrganizations                   STAFF PERSONNEL     LG4     • Staff Personnel -- Employees who advise and   ...
Line-and-StaffOrganizations    SAMPLE LINE-and-STAFF     LG4            ORGANIZATION                                      ...
Matrix-StyleOrganizations                MATRIX ORGANIZATIONS     LG4     • Matrix Organization -- Specialists from differ...
Matrix-StyleOrganizations   SAMPLE MATRIX     LG4         ORGANIZATION                                8-34
Matrix-StyleOrganizations   ADVANTAGES of the     LG4          MATRIX STYLE     • Managers have flexibility in assigning p...
Matrix-StyleOrganizations   DISADVANTAGES of the     LG4            MATRIX STYLE     • It’s costly and complex.     • Empl...
Cross-FunctionalSelf-ManagedTeams                    CROSS-FUNCTIONAL     LG4           SELF-MANAGED TEAMS     • Cross-Fun...
Going BeyondOrganizational     GOING BEYONDBoundaries     LG4             ORGANIZATIONAL BOUNDARIES     • Cross-functional...
Going BeyondOrganizationalBoundaries        BUILDING SUCCESSFUL TEAMS     LG4                                   Important ...
ProgressAssessment   PROGRESS ASSESSMENT    • What’s the difference between line and staff      personnel?    • What manag...
Transparencyand VirtualOrganizations                  REAL-TIME BUSINESS     LG5     • Networking -- Using        communic...
Transparencyand VirtualOrganizations                TRANSPARENCY and VIRTUAL     LG5             CORPORATIONS     • Transp...
Transparencyand VirtualOrganizations                A VIRTUAL CORPORATION     LG5                                        8...
WHEN YOUR WORKERS       WORK for SOMEONE ELSE                (Spotlight on Small Business)• Douglas Pick launched DAP Worl...
Benchmarkingand CoreCompetencies               BENCHMARKING and    LG5        CORE COMPETENCIES    • Benchmarking -- Compa...
Benchmarkingand CoreCompetencies                  BENEFITS and CONCERNS of    LG5           HEALTHCARE OUTSOURCING        ...
Benchmarkingand CoreCompetencies                                WHICH JOBS will be    LG5                        OUTSOURCE...
Adapting toChange              ADAPTING to     LG5                  MARKET CHANGES     • Change isn’t easy.       Employee...
Adapting toChange                 KEEP in TOUCH                    Amazon and its Customer Database     LG5     Amazon use...
WHEN TWITTER and FACEBOOK          are OLD SCHOOL                    (Social Media in Business)• People will become so use...
RestructuringforEmpowerment                   RESTRUCTURING    LG5    • Restructuring -- Redesigning an organization so   ...
RestructuringforEmpowerment                TRADITIONAL and INVERTED    LG5              ORGANIZATIONS                     ...
Creating aChange-OrientedOrganizational    ORGANIZATIONAL CULTURECulture     LG6     • Organizational or       Corporate C...
Managing theInformalOrganization               FORMAL ORGANIZATION    LG6    • Formal Organization -- Details lines of    ...
Managing theInformalOrganization               INFORMAL ORGANIZATION    LG6    • Informal Organization -- The system of   ...
Managing theInformal       LIMITATIONS of INFORMALOrganization    LG6                    ORGANIZATIONS    • The informal s...
Managing theInformalOrganization                                    GROUP NORMS                                  Examples ...
ProgressAssessment   PROGRESS ASSESSMENT    • What’s an inverted organization?    • Why do organizations outsource functio...
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Chap008

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  • Company: K2 Skis
  • See Learning Goal 1: Outline the basic principles of organization management. Changing economic times require businesses to alter their approach via reorganization. Using organizational principles is an important aspect to this reorganization.
  • See Learning Goal 1: Outline the basic principles of organization management.
  • See Learning Goal 1: Outline the basic principles of organization management.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber. How Much Changes in a Decade? This slide shows just how much our country has changed since 2000. Clearly the digital revolution is shown here with the amount of blogs, cell usage, emails sent, etc. Ask students: Do you expect these numbers to continue to grow? What may this table look like in 2020? The number of daily newspapers and letters sent has dropped. Ask students: Do you think we will lose more daily newspapers? What about letters? How many still receive letters/cards from grandparents opposed to emails or Facebook posts?
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber. This slide presents Fayol ’s principles of organization. Fayol published General and Industrial Management in 1919. Unity of command and hierarchy of authority suggest that each employee reports to one and only one boss. Management courses throughout the world teach these principles, and organizations are designed accordingly. When these principles become rules, policies, and regulations, they create inflexibility which hampers organizations’ ability to respond quickly to situations. An example of this inflexibility or a slower response time can be seen in FEMA’s response to Hurricane Katrina.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber. Weber, a German sociologist and economist, wrote The Theory of Social and Economic Organizations . Weber ’s principles were similar to Fayol’s. 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 a quick decision making process contrary to a bureaucratic process.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • See Learning Goal 2: Compare the organizational theories of Fayol and Weber.
  • Division of labor is dividing tasks among workers to complete a job. Job specialization is dividing tasks into smaller jobs. Fayol’s principles of management are: -Unity of command -Hierarchy of authority -Division of labor -Subordination of individual interests to the general interest -Authority -Degree of centralization -Clear communication channels -Order -Equity -Esprit de corps 3. Weber added: - Job descriptions -Written rules, decision guidelines and detailed records -Consistent procedures, regulations and policies -Staffing and promotion based on qualifications.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations. Centralization can be defined as an organizational structure 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 do 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. Decentralization is an organizational structure that focuses on delegating authority throughout the organization to middle and lower-level managers. The most significant advantage of 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 employee interacts with the customer, the more decentralized the decision-making should be. For example, 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.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations. Many organizations have moved from tall organizations to flat organizations in an effort to increase nimbleness in the marketplace.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • See Learning Goal 3: Evaluate the choices managers make in structuring organizations.
  • Over the last 25 years businesses have adopted flatter organizations with fewer layers of management and a broader span of control in order to quickly respond to customer demands. A flatter organization gives lower-level employees the authority and responsibility to make decisions directly affecting customers. Span of control refers to the number of subordinates a manager supervises. Generally, the span of control narrows at higher levels of the organization, because work becomes less standardized and managers need more face-to face communication. 3. The advantages of departmentalization include: Departmentalization may reduce costs, since employees should be more efficient; employees can develop skills in depth and progress within a department as they master more skills; the company can achieve economies of scale by centralizing all the resources it needs and locating various experts in that particular area; employees can coordinate work within the function; and top management can easily direct and control various departments ’ activities. The disadvantages of departmentalization include: Communication is inhibited; employee’s may identify with their department’s goals rather than the organization’s; t he company’s response may be slowed by departmentalization; employees tend to be narrow specialists; department members may engage in groupthink and may need input from the outside to become more competitive. 4. An organization can elect to departmentalize in the following ways: customer group, product, functional, geographic, process, and hybrid.
  • See Learning Goal 4: Contrast the various organizational models. Traditional business models, such as line organizations and line-and-staff organizations, are giving way to new structures.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models. The creation of matrix organizations was in response to the inflexibility of other more traditional organizational structures. This structure brings specialists from different parts of the organization to work together temporarily on specific projects.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast the various organizational models.
  • See Learning Goal 4: Contrast 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 do 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.)
  • Line personnel are responsible for directly achieving organizational goals. Line personnel include production workers, distribution people, and marketing personnel. Staff personnel advise and assist line personnel in meeting their goals. The flexibility inherent in the matrix-style organization directly challenge the rigid line and line-and-staff organization structures. The main difference between matrix-style organization and cross-functional teams is that cross-functional teams tend to be long-lived as compared to the temporary and fluid nature of teams in a matrix-style organization.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination. A Virtual Corporation This slide 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.
  • See Learning Goal 6: Explain how organizational culture can help businesses adapt to change.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination.
  • See Learning Goal 5: Identify the benefits of inter-firm 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 which healthcare can be outsourced. (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.)
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination. Which Jobs Will Be Outsourced Next? This slide supports the previous discussion of outsourcing by identifying the most common functional areas for which 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 companies outsource is to reduce cost. This slide shows Manufacturing, Information Technology and Customer Support 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.)
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination. Keep in Touch Information technology has allowed companies like Amazon to better understand customer needs. Use the three questions on this slide to start a discussion with students in class.
  • See Learning Goal 1: Outline the basic principles of organization management.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination.
  • See Learning Goal 5: Identify the benefits of inter-firm cooperation and coordination. 1. The inverted organization structure is an alternative to the traditional management layers. The critical idea behind the inverted organization structure is that the managers ’ job is to support and facilitate the jobs of the frontline people, not boss them around. 2. Ask the students: What type of organization structure would they prefer to work under: traditional or inverted? Why?
  • See Learning Goal 6: Explain how organizational culture can help businesses adapt to change. When you search for a job, make sure the organizational culture is one you can thrive in.
  • See Learning Goal 6: Explain how organizational culture can help businesses adapt to change.
  • See Learning Goal 6: Explain how organizational culture can help businesses adapt to change.
  • See Learning Goal 6: Explain how organizational culture can help businesses adapt to change.
  • See Learning Goal 6: Explain how organizational culture 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 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 (i.e. labor unions).
  • Some service-oriented organizations have elected to turn the traditional organizational structure upside down. An inverted organization has employees who come into contact with customers at the top of the organization and the chief executive officer at the bottom. A manager ’s job is to assist and support frontline people, not tell them what to do. In the past organizations have often tried to do all functions themselves, maintaining departments for each function including: accounting, finance, marketing, and production. If an organization is not able to efficiently perform the function themselves they will outsource the function. Outsourcing is the process of assigning various functions, such as accounting, production, security, maintenance, and legal work, to an outside firm. The goal is to retain the functions that the organization considers its core competencies. Organizational or corporate culture is the widely shared values within an organization that create unity and cooperation. Usually the culture of an organization is passed to employees via stories, traditions, and myths.
  • Chap008

    1. 1. Chapter 08 Structuring Organizations for Today’s ChallengesMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
    2. 2. Chapter Eight LEARNING GOALS 1. Outline the basic principles of organization management. 2. Compare the organizational theories of Fayol and Weber. 3. Evaluate the choices managers make in structuring organizations. 4. Contrast the various organizational models. 5. Identify the benefits of inter-firm cooperation and coordination. 6. Explain how organizational culture can help businesses adapt to change. 8-2
    3. 3. Profile URSULA BURNS Xerox • Started as a summer intern and moved up through Xerox. • The only female African- American CEO among Fortune’s Top 150 Companies. • Serves on many boards and has been placed on councils by President Obama and Vice- President Biden. 8-3
    4. 4. Chapter Eight NAME that COMPANY This sport’s equipment company studied the CD industry and learned to use ultraviolet inks to print graphics on skis. It went to the cable television industry to learn how to braid layers of fiberglass and carbon, and adapted that knowledge to make its products. Name that company! 8-4
    5. 5. Everyone’sReorganizing REORGANIZATION is for LG1 EVERYONE • Many companies are reorganizing, especially those in decline. Including: - Auto makers - Homebuilders - Banks • Adjusting to changing markets is normal in capitalist economies. • Companies must go back to basic organizational principles and firm up the foundation. 8-5
    6. 6. Building anOrganization fromthe Bottom Up STRUCTURING an ORGANIZATION LG1 • Create a division of labor • Set up teams or departments • Allocate resources • Assign tasks • Establish procedures • Adjust to new realities 8-6
    7. 7. SAFETY vs. PROFIT (Making Ethical Decisions)You own a lawn-mowing business and are aware of the hazards in the job. But you’ve seen other companies save money by eliminating safety equipment. You’d also like to make more money.• What do you do?• Save money with less safety precautions?• What are the consequences? 8-7
    8. 8. The ChangingOrganization THE CHANGING ORGANIZATION LG2 • Often change in organizations is due to evolving business environments: - More global competition - Declining economy - Faster technological change - Pressure to protect the environment • Customer expectations have also changed --Consumers today want high-quality products with fast, friendly service and all at low cost. 8-8
    9. 9. The ChangingOrganization HOW MUCH CHANGES LG2 in a DECADE? Source: NewsWeek, July 26, 2010 and Fast Company, March 2010. 8-9
    10. 10. The Developmentof Organization PRODUCTION CHANGEDDesign LG2 ORGANZIATION DESIGN • Mass production of goods led to complexities in organizing businesses. • Economies of Scale -- Companies can reduce their production costs by purchasing raw materials in bulk. • The average cost of goods decreases as production levels rise. 8-10
    11. 11. Fayol’s Principlesof Organization FAYOL’S PRINCIPLES LG2 • Unity of command • Degree of centralization • Hierarchy of authority • Clear communication • Division of labor channels • Subordination of individual • Order interests to the general interest • Equity • Authority • Esprit de corps 8-11
    12. 12. Fayol’s Principlesof Organization ORGANIZATIONS BASED on LG2 FAYOL’S PRINCIPLES • Organizations in which employees have no more than one boss; lines of authority are clear. • Rigid organizations that often don’t respond to customers quickly. 8-12
    13. 13. Max Weber andOrganizationalTheory WEBER’S PRINCIPLES LG2 • 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 8-13
    14. 14. TurningPrinciples intoOrganization HIERARCHIES and COMMANDDesign LG2 • When following Fayol and Weber, managers control workers. • Hierarchy -- A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down. • Chain of Command -- The line of authority that moves from the top of the hierarchy to the lowest level. 8-14
    15. 15. TurningPrinciples intoOrganizationDesign TYPICAL ORGANIZATION CHART LG2 8-15
    16. 16. TurningPrinciples intoOrganizationDesign BUREAUCRATIC ORGANIZATIONS LG2 • Bureaucracy -- An organization with many layers of managers who set rules and regulations and oversee all decisions. • It can take weeks or months to have information passed down to lower-level employees. • Bureaucracies can annoy customers. 8-16
    17. 17. ProgressAssessment PROGRESS ASSESSMENT • What do the terms division of labor and job specialization mean? • What are the principles of management outlined by Fayol? • What did Weber add to the principles of Fayol? 8-17
    18. 18. ChoosingCentralizedorDecentralized CENTRALIZATION orAuthority LG3 DECENTRALIZATION? • Centralized Authority -- When decision-making is concentrated at the top level of management. • Decentralized Authority -- When decision-making is delegated to lower-level managers and employees more familiar with local conditions than headquarters is. 8-18
    19. 19. Choosing theAppropriateSpan of Control SPAN of CONTROL LG3 • 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. 8-19
    20. 20. Choosing Tallversus FlatOrganizationStructures ORGANIZATIONAL STRUCTURES LG3 • 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. 8-20
    21. 21. Choosing Tallversus FlatOrganization FLAT ORGANIZATIONALStructures LG3 STRUCTURE 8-21
    22. 22. Weighing theAdvantages andDisadvantages ofDepartmentalization DEPARTMENTALIZATION LG3 • Departmentalization -- Divides organizations into separate units. • Workers are grouped by skills and expertise to specialize their skills. 8-22
    23. 23. Weighing theAdvantages andDisadvantages ofDepartmentalization ADVANTAGES of LG3 DEPARTMENTALIZATION 1) Employees develop skills and progress within a department as they master skills. 2) The company can achieve economies of scale. 3) Employees can coordinate work within the function and top management can easily direct activities. 8-23
    24. 24. Weighing theAdvantages andDisadvantages ofDepartmentalization DISADVANTAGES of LG3 DEPARTMENTALIZATION 1) Departments may not communicate well. 2) Employees may identify with their department’s goals rather than the organization’s. 3) The company’s response to external changes may be slow. 4) People may not be trained to take different managerial responsibilities, instead they become specialists. 5) Department members may engage in groupthink and may need outside input. 8-24
    25. 25. Looking atAlternate Ways toDepartmentalize WAYS to DEPARTMENTALIZE LG3 8-25
    26. 26. Looking at WAYS to DEPARTMENTALIZEAlternate Ways toDepartmentalize LG3 8-26
    27. 27. ProgressAssessment PROGRESS ASSESSMENT • Why are organizations becoming flatter? • What are some reasons for having a narrow span of control in an organization? • What are the advantages and disadvantages of departmentalization? • What are the various ways a firm can departmentalize? 8-27
    28. 28. OrganizationModels FOUR WAYS to STRUCTURE an LG4 ORGANIZATION 1. Line Organizations 2. Line-and-Staff Organizations 3. Matrix-Style Organizations 4. Cross-Functional Self- Managed Teams 8-28
    29. 29. LineOrganizations LINE ORGANIZATIONS LG4 • 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. 8-29
    30. 30. Line-and-StaffOrganizations LINE PERSONNEL LG4 • Line Personnel -- Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees. • Line personnel have authority to make policy decisions. 8-30
    31. 31. Line-and-StaffOrganizations STAFF PERSONNEL LG4 • Staff Personnel -- Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees. 8-31
    32. 32. Line-and-StaffOrganizations SAMPLE LINE-and-STAFF LG4 ORGANIZATION 8-32
    33. 33. Matrix-StyleOrganizations MATRIX ORGANIZATIONS LG4 • 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. • Emphasis is on product development, creativity, special projects, communication and teamwork. 8-33
    34. 34. Matrix-StyleOrganizations SAMPLE MATRIX LG4 ORGANIZATION 8-34
    35. 35. Matrix-StyleOrganizations ADVANTAGES of the LG4 MATRIX STYLE • Managers have flexibility in assigning people to projects. • Interorganizational cooperation and teamwork is encouraged. • Creative solutions to product development problems are produced. • Efficient use of organizational resources. 8-35
    36. 36. Matrix-StyleOrganizations DISADVANTAGES of the LG4 MATRIX STYLE • It’s costly and complex. • Employees may be confused about where their loyalty belongs. • Good interpersonal skills and cooperative employees are a must. • It’s a temporary solution to a possible long-term problem. • Teams are not permanent. 8-36
    37. 37. Cross-FunctionalSelf-ManagedTeams CROSS-FUNCTIONAL LG4 SELF-MANAGED TEAMS • Cross-Functional Self-Managed Teams -- Groups of employees from different departments who work together on a long-term basis. • A way to fix the problem of matrix-style teams is to establish long-term teams. • Empower teams to work closely with suppliers, customers and others to figure out how to create better products. 8-37
    38. 38. Going BeyondOrganizational GOING BEYONDBoundaries LG4 ORGANIZATIONAL BOUNDARIES • Cross-functional teams work best when the voice of the customer is heard. • Teams that include customers, suppliers and distributors go beyond organizational boundaries. • Government coordinators may assist in sharing market information beyond national boundaries. 8-38
    39. 39. Going BeyondOrganizationalBoundaries BUILDING SUCCESSFUL TEAMS LG4 Important Conditions for Small Teams • Clear purpose • Clear goals • Correct skills • Mutual accountability • Shift roles when appropriate Source: CIO Magazine, www.cio.com. 8-39
    40. 40. ProgressAssessment PROGRESS ASSESSMENT • What’s the difference between line and staff personnel? • What management principle does a matrix-style organization challenge? • What’s the main difference between a matrix- style organization’s structure and the use of cross-functional teams? 8-40
    41. 41. Transparencyand VirtualOrganizations REAL-TIME BUSINESS LG5 • Networking -- Using communications technology to link organizations and allow them to work together. • Most companies are no longer self-sufficient; they’re part of a global Photo Courtesy of: Marc Wathieu business network. • Real Time -- The present moment or actual time in which something takes place. 8-41
    42. 42. Transparencyand VirtualOrganizations TRANSPARENCY and VIRTUAL LG5 CORPORATIONS • Transparency -- When a company is so open to other companies that electronic information is shared as if the companies were one. • Virtual Corporation -- A temporary networked organization made up of replaceable firms that join and leave as needed. 8-42
    43. 43. Transparencyand VirtualOrganizations A VIRTUAL CORPORATION LG5 8-43
    44. 44. WHEN YOUR WORKERS WORK for SOMEONE ELSE (Spotlight on Small Business)• Douglas Pick launched DAP World from his apartment, but couldn’t produce all that was needed.• Started working with New Horizons to help produce and ship his earplugs.• Now he sells millions of earplugs to major outlets like Walgreens and Rite Aid. 8-44
    45. 45. Benchmarkingand CoreCompetencies BENCHMARKING and LG5 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. • K2 Skis researched other companies’ practices in order to create the best possible skis and snowboards. 8-45
    46. 46. Benchmarkingand CoreCompetencies BENEFITS and CONCERNS of LG5 HEALTHCARE OUTSOURCING Benefits Concerns • Provides enough staff • Lower employee to operate the facility morale • Cost savings • Liability • Should patients be informed • Confidentiality and security Source: Healthcare Financial Management. 8-46
    47. 47. Benchmarkingand CoreCompetencies WHICH JOBS will be LG5 OUTSOURCED NEXT? Source: USA Today. 8-47
    48. 48. Adapting toChange ADAPTING to LG5 MARKET CHANGES • 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. 8-48
    49. 49. Adapting toChange KEEP in TOUCH Amazon and its Customer Database LG5 Amazon uses information stored in databases to reach out to customers. The company emails customers letting them know about music, DVDs or books they might like based on past purchases. • Have you ever received an email like this from Amazon or another company? • What benefits would a database of personal information, like past purchases, provide Amazon? • Do you think these databases are helpful for both companies and consumers or are they an invasion of privacy? 8-49
    50. 50. WHEN TWITTER and FACEBOOK are OLD SCHOOL (Social Media in Business)• People will become so used to having social media at their fingertips, it’ll no longer be news.• There will be new gadgets; some will be improvements, others will be revolutionary.• This can lead to more people working from home and more companies interacting directly with their customer base. 8-50
    51. 51. RestructuringforEmpowerment RESTRUCTURING LG5 • Restructuring -- Redesigning an organization so it can more effectively and efficiently serve its customers. • Inverted Organization -- An organization that has contact people at the top and the CEO at the bottom of the organizational chart. • The manager’s job is to assist and support frontline workers, not boss them. 8-51
    52. 52. RestructuringforEmpowerment TRADITIONAL and INVERTED LG5 ORGANIZATIONS 8-52
    53. 53. Creating aChange-OrientedOrganizational ORGANIZATIONAL CULTURECulture LG6 • Organizational or Corporate Culture -- The widely shared values within an organization that foster unity and cooperation to achieve common goals. • Some of the best organizational cultures emphasize service. • Culture is shown in stories, traditions and myths. 8-53
    54. 54. Managing theInformalOrganization FORMAL ORGANIZATION LG6 • Formal Organization -- Details lines of responsibility, authority and position. • The formal system is often slow and bureaucratic, but it helps guide the lines of authority. • No organization can be effective without formal and informal organization. 8-54
    55. 55. Managing theInformalOrganization INFORMAL ORGANIZATION LG6 • Informal Organization -- The system of relationships that develop spontaneously as employees meet and form relationships. • Informal organization helps foster camaraderie and teamwork among employees. 8-55
    56. 56. Managing theInformal LIMITATIONS of INFORMALOrganization LG6 ORGANIZATIONS • The informal system is too unstructured and emotional on its own. • Informal organization may also be powerful in resisting management directives. 8-56
    57. 57. Managing theInformalOrganization GROUP NORMS Examples of Informal Group Norms LG6 • Do your job but don’t produce more than the rest of your group. • Don’t tell off-color jokes or use profanity. • Everyone is to be clean and organized at the workstation. • Respect and help your fellow group members. • Drinking is done off the job – NEVER at work. Source: CIO Magazine. 8-57
    58. 58. ProgressAssessment PROGRESS ASSESSMENT • What’s an inverted organization? • Why do organizations outsource functions? • What’s organizational culture? 8-58

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