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Mosley7e ch04 Mosley7e ch04 Presentation Transcript

  • Part 2 Planning and Organizing Chapter 4 Fundamentals of Organizing Mosley • Pietri PowerPoint Presentation by Charlie Cook The University of West Alabama © 2008 Thomson/South-Western All rights reserved.
  • Learning Objectives Learning Objectives After reading and studying this chapter, you should be able to: 1. Understand the stages of organization growth. 2. Identify the advantages and disadvantages of the functional, product, and matrix departmentalization approaches. 3. Explain the principles of unity of command and span of control. 4. Describe the difference between line and staff. 5. Understand how to avoid excessive conflict between line and staff. 6. Explain the three types of authority found in © 2008 Thomson/Southorganizations. Western. All rights reserved. 4–2
  • Learning Objectives (cont’d) Learning Objectives (cont’d) After reading and studying this chapter, you should be able to: 7. Distinguish between centralization and decentralization. 8. Discuss the benefits and costs of downsizing. 9. Understand the relationship between management philosophy, strategy, and newer forms of organization. © 2008 Thomson/SouthWestern. All rights reserved. 4–3
  • The Importance of Organization • Failing to properly organize can lead to:  Excessive violation of the unity of command principle.  Failure to develop additional departments or work groups when needed.  Unclear and improper assignment of duties and responsibilities to new employees.  Ineffective use of organizational units and inadequate development of human resources because of improper decentralization of authority.  Conflicts between departments and between line supervisors and staff personnel. © 2008 Thomson/SouthWestern. All rights reserved. 4–4
  • Stages in the Growth of an Organization • Stage 1: The One-Person Organization  One person alone performs all of the basic activities common to organizations. • Stage 2: The Organization with Assistants Added  Several persons perform different activities within the organization.  Roles and responsibilities are becoming defined.  The span of control is widening, increasing the challenge of managing the organization. © 2008 Thomson/SouthWestern. All rights reserved. 4–5
  • EXHIBIT 4.1 John Moody’s One-Person Organization © 2008 Thomson/SouthWestern. All rights reserved. 4–6
  • EXHIBIT 4.2 John Moody Hires Assistants © 2008 Thomson/SouthWestern. All rights reserved. 4–7
  • Stages in the Growth of an Organization • Stage 3: The Line Organization  Each person in the organization has clearly defined responsibilities and reports to an immediate supervisor designated to manage specific activities.  Lines of responsibility and authority are clearly defined.  Authority is centralized, allowing for quick response to opportunities and problems. © 2008 Thomson/SouthWestern. All rights reserved. 4–8
  • EXHIBIT 4.3 John Moody’s Organization after Two Years © 2008 Thomson/SouthWestern. All rights reserved. 4–9
  • EXHIBIT 4.4 The Span of Control in John Moody’s Line Organization © 2008 Thomson/SouthWestern. All rights reserved. 4–10
  • Stages in the Growth of an Organization • Stage 4: The Line-and-Staff Organization  The firm evolves to an organization structure in which staff positions are added to serve the basic line departments and help them accomplish the organization objectives more effectively. © 2008 Thomson/SouthWestern. All rights reserved. 4–11
  • EXHIBIT 4.5 John Moody’s Line Organization after Ten Years © 2008 Thomson/SouthWestern. All rights reserved. 4–12
  • EXHIBIT 4.6 John Moody’s Line-and-Staff Organization © 2008 Thomson/SouthWestern. All rights reserved. 4–13
  • Departmentalization • Departmentalization  The organizational process of determining how activities are to be grouped. • Types of Departmentalization  Function  Product  Service  Process  Territory  Customer  Matrix © 2008 Thomson/SouthWestern. All rights reserved. 4–14
  • Types of Departmentalization • Functional Departmentalization  Grouping together common functions or similar activities to form an organizational unit.  Example: production, sales, and finance. • Advantages of Functional Departmentalization  Maintains power and prestige of the major functions  Creates efficiency through the principles of specialization  Centralizes the organization’s expertise, and permits tighter top-management control of the functions.  Minimizes duplications of personnel and equipment. © 2008 Thomson/SouthWestern. All rights reserved. 4–15
  • EXHIBIT 4.7 Functional Departmentalization at the Top Management Level © 2008 Thomson/SouthWestern. All rights reserved. 4–16
  • Types of Departmentalization (cont’d) • Functional Departmentalization Disadvantages  Total performance responsibility rests only at the top.  Narrow functional focus limits training and experience of lower-lever managers to take over the top position.  Coordination between and among functions becomes complex and more difficult as the organization grows in size and scope (“silo effect”).  Individuals identify with their narrow functional responsibilities, causing subgroup loyalties, identification, and tunnel vision. © 2008 Thomson/SouthWestern. All rights reserved. 4–17
  • Types of Departmentalization (cont’d) • Product Departmentalization  Grouping together all the functions associated with a single product line. • Product Departmentalization Advantages  Attention is increased on specific product lines or services.  Coordination of functions at the division level is improved.  Profit responsibility can be better placed.  Easier to obtain or develop executives who have broad managerial experience in running a total entity. © 2008 Thomson/SouthWestern. All rights reserved. 4–18
  • Types of Departmentalization (cont’d) • Product Departmentalization Disadvantages  Requires more personnel and material resources  May cause unnecessary duplication of resources and  equipment  Top management assumes a greater burden of establishing effective coordination and control.  Top management must use staff support to create and oversee policies that guide and limit the range of actions taken by its divisions. © 2008 Thomson/SouthWestern. All rights reserved. 4–19
  • Types of Departmentalization (cont’d) • Matrix Departmentalization  A hybrid type of departmentalization in which personnel from several specialties are brought together to complete limited-life tasks. • Matrix Departmentalization Advantages  Hierarchy permits open communication and coordination of activities among the relevant functional specialists.  Hierarchical flexibility enables the organization to respond rapidly to the need for change. © 2008 Thomson/SouthWestern. All rights reserved. 4–20
  • EXHIBIT 4.8 Example of Matrix Departmentalization © 2008 Thomson/SouthWestern. All rights reserved. 4–21
  • Types of Departmentalization (cont’d) • Matrix Departmentalization Disadvantages  The lack of clarity and coordination in assigned roles for team members.  Conflicts that may occur between the project team and the home office.  Conflicts in allocating team members’ time due to the assignment of members to more than one project.  Uncertainty about who will decide on the members’ advancement and promotion.  The lack of “roots” for team members assigned repeatedly to multiple temporary assignments. © 2008 Thomson/SouthWestern. All rights reserved. 4–22
  • Unity of Command • Unity of Command Principle  Is the idea that everyone should report to and be accountable to only one boss for performance of a given activity.  Supports supervisors in evaluating performance, passing down orders and information, and helping subordinates to become better employees.  Tells employees who they should look to in the organization for guidance and direction in carrying out their tasks and responsibilities. © 2008 Thomson/SouthWestern. All rights reserved. 4–23
  • Unity of Command • The Importance of Unity of Command  Prevents duplication and conflict when orders are passed down.  Decreases confusion as everyone is accountable to only one person.  Provides a basis for supervisors and subordinates to develop a knowledge of each other’s strengths and weaknesses.  Provides an opportunity for supervisors and employees to develop supportive relationships.  It promotes higher morale. © 2008 Thomson/SouthWestern. All rights reserved. 4–24
  • EXHIBIT 4.9 Violating the Unity of Command Principle © 2008 Thomson/SouthWestern. All rights reserved. 4–25
  • Span of Control • Span of Control Principle  States that there is a limit to the number of people a person can supervise effectively. • Narrower Span of Control at the Top  Top-level managers must solve a variety of different, nonrecurring problems.  Middle managers cannot afford to be tied down by large number of people reporting directly to them.  First-level managers are principally in direct contact with their immediate employees. © 2008 Thomson/SouthWestern. All rights reserved. 4–26
  • Span of Control (cont’d) • Tendency toward Wider Spans of Control  Improved abilities and capacities of both managers and employees  Effectiveness of general supervision over close Supervision  New developments in management have permitted businesses to broaden their span of control and supervise by results, without losing control.  Wider spans of control save the company money. © 2008 Thomson/SouthWestern. All rights reserved. 4–27
  • EXHIBIT 4.10 Narrow, Wide, and Very Wide Spans of Control © 2008 Thomson/SouthWestern. All rights reserved. 4–28
  • EXHIBIT 4.11 Factors Contributing to a Narrow or Wide Span of Control Factors • How physically close are the people performing the work? • How complex is the work? • How much supervision is required? • How much nonsupervisory work is required of the supervisor? • How much organizational assistance is furnished to the supervisor? © 2008 Thomson/SouthWestern. All rights reserved. 4–29
  • Relationships Between Line and Staff • Line Personnel  Carry out the primary activities of a business. • Staff Personnel  Have the expertise to assist line people and aid top management. © 2008 Thomson/SouthWestern. All rights reserved. 4–30
  • EXHIBIT 4.12 Line and Staff Contacts © 2008 Thomson/SouthWestern. All rights reserved. 4–31
  • EXHIBIT 4.13 Some Reasons for Conflict between Line and Staff Personnel • Staff personnel give direct orders to line personnel. • Good human relations are not practiced in dealings between line and staff personnel. • Overlapping authority and responsibility confuse both line and staff personnel. • Line people believe that staff people are not knowledgeable about conditions at the operating level. • Staff people, because of their expertise, attempt to influence line decisions against line managers’ wishes. • Top management misuses staff personnel or fails to use them property. • Each department views the organization from a narrow viewpoint instead of looking at the organization as a whole. © 2008 Thomson/SouthWestern. All rights reserved. 4–32
  • Line and Staff: Authority • Advisory Authority  The authority of most staff departments to serve and advise line departments. • Line Authority  The power to directly command or exact performance from others. • Functional Authority  A staff person’s limited line authority over a given function. © 2008 Thomson/SouthWestern. All rights reserved. 4–33
  • Decentralization versus Centralization • Decentralization  The extent to which authority is delegated from one unit of the organization to another. • Centralization  The extent to which authority is retained by upper management in an organization. © 2008 Thomson/SouthWestern. All rights reserved. 4–34
  • EXHIBIT 4.14 Layers of Management Reflecting a Centralized versus a Decentralized Structure © 2008 Thomson/SouthWestern. All rights reserved. 4–35
  • Factors Affecting Decentralization • Top management philosophy • History of the organization’s growth • Geographic location(s) • Quality of managers • Availability of controls • The economy • Mergers, acquisitions, and joint ventures © 2008 Thomson/SouthWestern. All rights reserved. 4–36
  • Downsizing • Downsizing  The process of eliminating unnecessary levels of management and employees. • Benefits of Downsizing  Immediate cost reductions  Speedier decision making  Improved communication in all directions  Increased responsiveness to customers and faster product delivery  Removal of justification for existence by close supervision and frequently requesting reports © 2008 Thomson/SouthWestern. All rights reserved. 4–37
  • Downsizing (cont’d) • Costs of Downsizing  Loss of internal control as veteran supervisors leave.  Morale problems for remaining employees due to lack of sensitivity in dismissing employees and threatened job security  Increased workloads  Diminished chances of promotion  Social costs of disruptions in dismissed employees lives. © 2008 Thomson/SouthWestern. All rights reserved. 4–38
  • Downsizing (cont’d) • Ways to Get Beyond Downsizing  Focus on the remaining employees  Developing a strategy of support for survivors.  Focus on the future  Create a strategic plan for growth and development for the organization. © 2008 Thomson/SouthWestern. All rights reserved. 4–39
  • Successful Reengineering Is Change • Work units—functional departments to process teams. • Jobs—simple tasks to multidimensional work. • People’s roles—controlled to empowered. • Job preparation—preparation to education. • Compensation focus—activity to results. • Advancement criteria—performance to ability. • Values—protective to productive. • Managers—supervisors to coaches. • Organizational structure—hierarchical to flat. • Executives—scorekeepers to leaders. © 2008 Thomson/SouthWestern. All rights reserved. 4–40
  • EXHIBIT 4.15 Internal Systems Model Causal Variables determine the course of developments within an organization and the results achieved by the organization. (Examples: skills, and behavior) Intervening Variables reflect the internal state and health of the organization. (Examples: loyalties, perceptions of organization members) End-Result Variables are dependent variables that reflect the achievements of the organization. (Examples: productivity, costs, and earnings) © 2008 Thomson/SouthWestern. All rights reserved. 4–41
  • EXHIBIT 4.16 Creative Organizational Structure of IAF © 2008 Thomson/SouthWestern. All rights reserved. 4–42 Source: Graphic from The International Association of Facilitators (IAF) Website 2002—http://iaf-world.org. Reprinted by permission.
  • EXHIBIT 4.16 Creative Organizational Structure of IAF (cont’d) © 2008 Thomson/SouthWestern. All rights reserved. 4–43 Source: Graphic from The International Association of Facilitators (IAF) Website 2002—http://iaf-world.org. Reprinted by permission.
  • EXHIBIT 4.17 Nordstorm’s Inverted Pyramid © 2008 Thomson/SouthWestern. All rights reserved. Source: Based on description found in Robert Spector and Patrick D. McCarthy, The Nordstrom Way: The Inside Story of America’s #1 Customer Service Company (New York: Wiley, 1996). 4–44
  • Important Terms Important Terms • • • • • • • • • advisory authority decentralization departmentalization downsizing functional authority functional departmentalization inverted pyramid line-and-staff organization line authority © 2008 Thomson/SouthWestern. All rights reserved. • • • • • • • • • line organization line personnel matrix departmentalization product departmentalization reengineering span of control principle staff personnel unity of command principle wagon wheel 4–45
  • Skill Builder 4-1 Proposed Change of Organization © 2008 Thomson/SouthWestern. All rights reserved. 4–46