Module 3


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Module 3

  2. 2. Planning Ahead <ul><li>What is organizing as a management function? </li></ul><ul><li>What are the major types of organization structures? </li></ul><ul><li>What are the new developments in organization structures? </li></ul><ul><li>What organizing trends are changing the workplace? </li></ul>
  3. 3. Organizing <ul><li>The deployment of organizational resources to achieve strategic goals. </li></ul><ul><li>The deployment of resources is reflected in the division of labor. </li></ul><ul><li>Formal lines of authority and mechanisms for coordinating diverse organization tasks. </li></ul>
  4. 4. What is organizing as a management function? <ul><li>Organizing and organization structure </li></ul><ul><ul><li>Organizing </li></ul></ul><ul><ul><ul><li>The process of arranging people and other resources to work together to accomplish a goal. </li></ul></ul></ul><ul><ul><li>Organization structure </li></ul></ul><ul><ul><ul><li>The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups. </li></ul></ul></ul>
  5. 5. Figure : Organizing viewed in relationship with the other management functions.
  6. 6. What is organizing as a management function? <ul><li>Organizing Process: consists of </li></ul><ul><ul><ul><li>a. Function of identifying, defining and grouping of work/activities or tasks, establishing authority relationships among people and assigning tasks to people. </li></ul></ul></ul><ul><ul><ul><li>b. Defining authority, responsibility, delegation and accountability </li></ul></ul></ul><ul><ul><ul><li>c. Allocating resources of an organization to achieve the specific orgn’l goals efficiently and effectively. </li></ul></ul></ul>
  7. 7. What is organizing as a management function? <ul><li>Organising Process: steps: </li></ul><ul><ul><ul><li>Consideration of orgl objectives </li></ul></ul></ul><ul><ul><ul><li>Grouping of activities into depatments </li></ul></ul></ul><ul><ul><ul><li>Deciding which department will be key departments (key result areas) </li></ul></ul></ul><ul><ul><ul><li>Determining levels at which various decisions are to be made. </li></ul></ul></ul><ul><ul><ul><li>Determining the span of management </li></ul></ul></ul><ul><ul><ul><li>Setting up a coordination mechanism </li></ul></ul></ul>
  8. 8. Organsiation Structure: Formal And Informal <ul><li>Formal structures  </li></ul><ul><ul><li>The structure of the organization in its official state. </li></ul></ul><ul><ul><li>The intentional structure of roles in a formally organized enterprise. </li></ul></ul><ul><ul><li>An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. </li></ul></ul><ul><ul><li>An organization chart identifies the following aspects of formal structure: </li></ul></ul><ul><ul><ul><li>The division of work. </li></ul></ul></ul><ul><ul><ul><li>Supervisory relationships. </li></ul></ul></ul><ul><ul><ul><li>Communication channels. </li></ul></ul></ul><ul><ul><ul><li>Major subunits. </li></ul></ul></ul><ul><ul><ul><li>Levels of management. </li></ul></ul></ul>
  9. 9. <ul><li>Informal structures  </li></ul><ul><ul><li>A “shadow” organization made up of the unofficial, but often critical, working relationships between organization members. </li></ul></ul><ul><ul><li>A network of interpersonal relationships that arise when people associate with one another. </li></ul></ul><ul><ul><li>Potential advantages of informal structures: </li></ul></ul><ul><ul><ul><li>Helping people accomplish their work. </li></ul></ul></ul><ul><ul><ul><li>Overcoming limits of formal structure. </li></ul></ul></ul><ul><ul><ul><li>Gaining access to interpersonal networks. </li></ul></ul></ul><ul><ul><ul><li>Informal learning. </li></ul></ul></ul>
  10. 10. <ul><li>Informal structures (cont.)  </li></ul><ul><ul><li>Potential disadvantages of informal structures: </li></ul></ul><ul><ul><ul><li>May work against best interests of entire organization. </li></ul></ul></ul><ul><ul><ul><li>Susceptibility to rumor. </li></ul></ul></ul><ul><ul><ul><li>May carry inaccurate information. </li></ul></ul></ul><ul><ul><ul><li>May breed resistance to change. </li></ul></ul></ul><ul><ul><ul><li>Diversion of work efforts from important objectives. </li></ul></ul></ul>
  11. 11. Four Points About the Organization Chart Visual representation Set of formal tasks Formal reporting relationships Framework for vertical control
  12. 12. Organizational Structure and Span of Control Relatively narrow span of control Relatively wide span of control
  13. 13. Span of Management <ul><li>The number of employees reporting to a supervisor. </li></ul><ul><li>Traditional view, seven or so per manager. </li></ul><ul><li>Many organizations today, 30 or more per manager. </li></ul><ul><li>Generally if supervisors must be closely involved with employees span should be small. </li></ul>
  14. 14. Large Spans of Control: Factors:- <ul><li>Work is stable or routine. </li></ul><ul><li>Similar task is performed by everyone. </li></ul><ul><li>A single location. </li></ul><ul><li>Employees are highly trained. </li></ul><ul><li>Rules and procedures are available. </li></ul><ul><li>Support systems and personnel are available for supervisor. </li></ul><ul><li>Little time is required in nonsupervisory activities. </li></ul><ul><li>Personal preferences and styles of management favor a large span. </li></ul>
  15. 15. Tall versus Flat Structure <ul><li>Span of control used in an organization determines whether the structure is tall or flat. </li></ul><ul><li>Tall structure has a narrow span and more hierarchical levels. </li></ul><ul><li>Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels. </li></ul><ul><li>The trend has been toward wider spans of control. </li></ul>
  16. 16. Tall verses Flat Structure
  17. 17. Basic Forms of Organizational Structure Divisional Organization International Organization Functional Organization Matrix Organization
  18. 18. What are the major types of organization structures? <ul><li>Functional structures </li></ul><ul><ul><li>People with similar skills and performing similar tasks are grouped together into formal work units. </li></ul></ul><ul><ul><li>Members work in their functional areas of expertise. </li></ul></ul><ul><ul><li>Are not limited to businesses. </li></ul></ul><ul><ul><li>Work well for small organizations producing few products or services. </li></ul></ul>
  19. 19. <ul><li>Potential advantages of functional structures: </li></ul><ul><ul><li>Economies of scale. </li></ul></ul><ul><ul><li>Task assignments consistent with expertise and training. </li></ul></ul><ul><ul><li>High-quality technical problem solving, </li></ul></ul><ul><ul><li>In-depth training and skill development. </li></ul></ul><ul><ul><li>Clear career paths within functions. </li></ul></ul>
  20. 20. Figure 2 Functional structures in a business, branch bank, and community hospital.
  21. 21. <ul><li>Potential disadvantages of functional structures: </li></ul><ul><ul><li>Difficulties in pinpointing responsibilities. </li></ul></ul><ul><ul><li>Functional chimneys problem. </li></ul></ul><ul><ul><li>Sense of cooperation and common purpose break down. </li></ul></ul><ul><ul><li>Narrow view of performance objectives. </li></ul></ul><ul><ul><li>Excessive upward referral of decisions. </li></ul></ul>
  22. 22. <ul><li>Divisional structures </li></ul><ul><ul><li>Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region. </li></ul></ul><ul><ul><li>Common in complex organizations. </li></ul></ul><ul><ul><li>Avoid problems associated with functional structures. </li></ul></ul>
  23. 23. Figure 3 Divisional structures based on product, geography, customer, and process.
  24. 24. <ul><li>Potential advantages of divisional structures: </li></ul><ul><ul><li>More flexibility in responding to environmental changes. </li></ul></ul><ul><ul><li>Improved coordination. </li></ul></ul><ul><ul><li>Clear points of responsibility. </li></ul></ul><ul><ul><li>Expertise focused on specific customers, products, and regions. </li></ul></ul><ul><ul><li>Greater ease in restructuring. </li></ul></ul>
  25. 25. <ul><li>Potential disadvantages of divisional structures: </li></ul><ul><ul><li>Duplication of resources and efforts across divisions. </li></ul></ul><ul><ul><li>Competition and poor coordination across divisions. </li></ul></ul><ul><ul><li>Emphasis on divisional goals at expense of organizational goals. </li></ul></ul>
  26. 26. <ul><li>Types of divisional structures and how they group job and activities: </li></ul><ul><ul><li>Product structures focus on a single product or service. </li></ul></ul><ul><ul><li>Geographical structures focus on the same location or geographical region. </li></ul></ul><ul><ul><li>Customer structures focus on the same customers or clients. </li></ul></ul><ul><ul><li>Process structures focus on the same processes. </li></ul></ul>
  27. 27. <ul><li>Matrix structure </li></ul><ul><ul><li>Combines functional and divisional structures to gain advantages and minimize disadvantages of each. </li></ul></ul><ul><ul><li>Used in: </li></ul></ul><ul><ul><ul><li>Manufacturing </li></ul></ul></ul><ul><ul><ul><li>Service industries </li></ul></ul></ul><ul><ul><ul><li>Professional fields </li></ul></ul></ul><ul><ul><ul><li>Non-profit sector </li></ul></ul></ul><ul><ul><ul><li>Multi-national corporations </li></ul></ul></ul>
  28. 28. Fig 4 Matrix structure in a small multi-project business firm.
  29. 29. <ul><li>Potential advantages of matrix structures: </li></ul><ul><ul><li>Better cooperation across functions. </li></ul></ul><ul><ul><li>Improved decision making. </li></ul></ul><ul><ul><li>Increased flexibility in restructuring. </li></ul></ul><ul><ul><li>Better customer service. </li></ul></ul><ul><ul><li>Better performance accountability. </li></ul></ul><ul><ul><li>Improved strategic management. </li></ul></ul>
  30. 30. <ul><li>Potential disadvantages of matrix structures: </li></ul><ul><ul><li>Two-boss system is susceptible to power struggles. </li></ul></ul><ul><ul><li>Two-boss system can create task confusion and conflict in work priorities. </li></ul></ul><ul><ul><li>Team meetings are time consuming. </li></ul></ul>
  31. 31. What are the new developments in organization structures? <ul><li>Guidelines for horizontal structures: </li></ul><ul><ul><li>Focus the organization around processes, not functions. </li></ul></ul><ul><ul><li>Put people in charge of core processes. </li></ul></ul><ul><ul><li>Decrease hierarchy and increase the use of teams. </li></ul></ul><ul><ul><li>Empower people to make decisions critical to performance. </li></ul></ul><ul><ul><li>Utilize information technology. </li></ul></ul><ul><ul><li>Emphasize multiskilling and multiple competencies. </li></ul></ul><ul><ul><li>Teach people how to work in partnership with others. </li></ul></ul><ul><ul><li>Build a culture of openness, collaboration, and performance commitment. </li></ul></ul>
  32. 32. What are the new developments in organization structures? <ul><li>Team structures </li></ul><ul><ul><li>Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. </li></ul></ul><ul><ul><li>Often use cross-functional teams. </li></ul></ul>
  33. 33. Fig 5 How a team structure uses cross-functional teams for improved lateral relations.
  34. 34. <ul><li>Potential advantages of team structures: </li></ul><ul><ul><li>Eliminates difficulties with communication and decision making. </li></ul></ul><ul><ul><li>Eliminates barriers between operating departments. </li></ul></ul><ul><ul><li>Improved morale. </li></ul></ul><ul><ul><li>Greater sense of involvement and identification. </li></ul></ul><ul><ul><li>Increased enthusiasm for work. </li></ul></ul><ul><ul><li>Improved quality and speed of decision making. </li></ul></ul>
  35. 35. <ul><li>Potential disadvantages of team structures: </li></ul><ul><ul><li>Excessive time spent in meetings. </li></ul></ul><ul><ul><li>Effective use of time depends on quality of interpersonal relations, group dynamics, and team management. </li></ul></ul>
  36. 36. <ul><li>Network structures </li></ul><ul><ul><li>A central core that is linked through networks of relationships with outside contractors and suppliers of essential services. </li></ul></ul><ul><ul><li>Own only core components and use strategic alliances or outsourcing to provide other components. </li></ul></ul>
  37. 37. Figure 10.6 A network structure for a Web-based retail business.
  38. 38. <ul><li>Potential advantages of network structures: </li></ul><ul><ul><li>Firms can operate with fewer full-time employees and less complex internal systems. </li></ul></ul><ul><ul><li>Reduced overhead costs and increased operating efficiency. </li></ul></ul><ul><ul><li>Permits operations across great distances. </li></ul></ul>
  39. 39. <ul><li>Potential disadvantages of network structures: </li></ul><ul><ul><li>Control and coordination problems may arise from network complexity. </li></ul></ul><ul><ul><li>Potential loss of control over outsourced activities. </li></ul></ul><ul><ul><li>Potential lack of loyalty among infrequently used contractors. </li></ul></ul><ul><ul><li>Excessively aggressive outsourcing can be dangerous. </li></ul></ul>
  40. 40. A Matrix Organization MARTHA STEWART Area Specialists Media Group Magazines Books Internet Radio/ Newspaper Network/ Cable TV Merchandising Group Kmart line Catalog line Sears Paint Specialty retailing Cooking Entertainment Weddings Crafts Gardening Home Holidays Children
  41. 41. An International Organization CEO Retail Division A Retail Division B International Division Latin America Europe Asia
  42. 42. The Future of Organizational Structure <ul><li>Boundary-less Organizations </li></ul><ul><li>Team Organizations </li></ul><ul><li>Virtual Organizations </li></ul><ul><li>Learning Organizations </li></ul>
  43. 43. What are the new developments in organization structures? <ul><li>Deadly sins of outsourcing: </li></ul><ul><ul><li>Outsourcing activities that are part of the core. </li></ul></ul><ul><ul><li>Outsourcing to untrustworthy vendors. </li></ul></ul><ul><ul><li>Not having good contracts with the vendor. </li></ul></ul><ul><ul><li>Overlooking impact on existing employees. </li></ul></ul><ul><ul><li>Not maintaining oversight; losing control to vendors. </li></ul></ul><ul><ul><li>Overlooking hidden costs of managing contracts. </li></ul></ul><ul><ul><li>Failing to anticipate need to change vendors, cease outsourcing. </li></ul></ul>
  44. 44. What are the new developments in organization structures? <ul><li>Boundaryless organizations </li></ul><ul><ul><li>Eliminate internal boundaries among subsystems and external boundaries with the external environment. </li></ul></ul><ul><ul><li>A combination of team and network structures, with the addition of “temporariness.” </li></ul></ul><ul><ul><li>Key requirements: </li></ul></ul><ul><ul><ul><li>Absence of hierarchy. </li></ul></ul></ul><ul><ul><ul><li>Empowerment of team members. </li></ul></ul></ul><ul><ul><ul><li>Technology utilization. </li></ul></ul></ul><ul><ul><ul><li>Acceptance of impermanence. </li></ul></ul></ul><ul><li>Boundaryless organizations (cont.) </li></ul><ul><ul><li>Encourage creativity, quality, timeliness, flexibility, and efficiency. </li></ul></ul><ul><ul><li>Knowledge sharing is both a goal and essential component </li></ul></ul>
  45. 45. Figure 10.7 The boundaryless organization eliminates internal and external barriers.
  46. 46. What are the new developments in organization structures? <ul><li>Team Organisation </li></ul><ul><li>Virtual organization. </li></ul><ul><ul><ul><li>A special form of boundaryless organization. </li></ul></ul></ul><ul><ul><ul><li>Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet. </li></ul></ul></ul><ul><li>Learning organization </li></ul>
  47. 47. <ul><li>Informal Groups </li></ul><ul><li>The Grapevine </li></ul><ul><li>Intrapreneuring </li></ul>The Informal Organization A Powerful Dynamic orgn
  48. 48. What organizing trends are changing the workplace? <ul><li>Contemporary organizing trends include: </li></ul><ul><ul><li>Shorter chains of command . </li></ul></ul><ul><ul><li>Less unity of command . </li></ul></ul><ul><ul><li>Wider spans of control . </li></ul></ul><ul><ul><li>More delegation and empowerment . </li></ul></ul><ul><ul><li>Decentralization with centralization . </li></ul></ul><ul><ul><li>Reduced use of staff . </li></ul></ul>
  49. 49. <ul><li>Shorter chains of command </li></ul><ul><ul><li>The line of authority that vertically links all persons with successively higher levels of management. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Organizations are being “streamlined” by cutting unnecessary levels of management. </li></ul></ul></ul><ul><ul><ul><li>Flatter structures are viewed as a competitive advantage. </li></ul></ul></ul>
  50. 50. <ul><li>Less unity of command </li></ul><ul><ul><li>Each person in an organization should report to one and only one supervisor. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Organizations are using more cross-functional teams, task forces, and horizontal structures. </li></ul></ul></ul><ul><ul><ul><li>Organizations are becoming more customer conscious. </li></ul></ul></ul><ul><ul><ul><li>Employees often find themselves working for more than one boss. </li></ul></ul></ul>
  51. 51. <ul><li>Wider spans of control </li></ul><ul><ul><li>The number of persons directly reporting to a manager. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Many organizations are shifting to wider spans of control as levels of management are eliminated. </li></ul></ul></ul><ul><ul><ul><li>Managers have responsibility for a larger number of subordinates who operate with less direct supervision. </li></ul></ul></ul>
  52. 52. Fig-8 Spans of control in “flat” versus “tall” structures.
  53. 53. <ul><li>More delegation and empowerment </li></ul><ul><ul><li>Delegation is the process of entrusting work to others by giving them the right to make decisions and take action. </li></ul></ul><ul><ul><li>The manager assigns responsibility, grants authority to act, and creates accountability. </li></ul></ul><ul><ul><li>Authority should be commensurate with responsibility. </li></ul></ul>
  54. 54. <ul><li>Guidelines for effective delegation: </li></ul><ul><ul><li>Carefully choose the person to whom you delegate. </li></ul></ul><ul><ul><li>Define the responsibility; make the assignment clear. </li></ul></ul><ul><ul><li>Agree on performance objectives and standards. </li></ul></ul><ul><ul><li>Agree on a performance timetable. </li></ul></ul><ul><ul><li>Give authority; allow the other person to act independently. </li></ul></ul><ul><ul><li>Show trust in the other person. </li></ul></ul><ul><ul><li>Provide performance support. </li></ul></ul><ul><ul><li>Give performance feedback </li></ul></ul><ul><ul><li>Recognize and reinforce progress. </li></ul></ul><ul><ul><li>Help when things go wrong. </li></ul></ul><ul><ul><li>Don’t forget your accountability for performance results. </li></ul></ul>
  55. 55. <ul><li>More delegation and empowerment (cont.) </li></ul><ul><ul><li>A common management failure is unwillingness to delegate. </li></ul></ul><ul><ul><li>Delegation leads to empowerment. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Managers are delegating more and finding more ways to empower people at all levels. </li></ul></ul></ul>
  56. 56. <ul><li>Decentralization with centralization </li></ul><ul><ul><li>Centralization is the concentration of authority for making most decisions at the top levels of the organization. </li></ul></ul><ul><ul><li>Decentralization is the dispersion of authority to make decisions throughout all levels of the organization. </li></ul></ul>
  57. 57. <ul><li>Decentralization with centralization (cont.) </li></ul><ul><ul><li>Centralization and decentralization not an “either/or” choice. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations. </li></ul></ul></ul><ul><ul><ul><li>Advances in information technology allow for the retention of centralized control. </li></ul></ul></ul>
  58. 58. <ul><li>Reduced use of staff </li></ul><ul><ul><li>Specialized staff </li></ul></ul><ul><ul><ul><li>People who perform a technical service or provide special problem-solving expertise to other parts of the organization. </li></ul></ul></ul><ul><ul><li>Personal staff </li></ul></ul><ul><ul><ul><li>People working in “assistant-to” positions that provide special support to higher-level managers. </li></ul></ul></ul>
  59. 59. <ul><li>Reduced use of staff (cont.) </li></ul><ul><ul><li>Line and staff managers may disagree over staff authority. </li></ul></ul><ul><ul><ul><li>Advisory Authority. </li></ul></ul></ul><ul><ul><ul><li>Functional authority. </li></ul></ul></ul><ul><ul><li>No one best solution for dividing line-staff responsibilities. </li></ul></ul><ul><ul><li>Organizing trend: </li></ul></ul><ul><ul><ul><li>Organizations are reducing staff size. </li></ul></ul></ul><ul><ul><ul><li>Organizations are seeking increased operating efficiency by employing fewer staff personnel and smaller staff units. </li></ul></ul></ul>