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CH 07; BASIC ORGANIZATIONAL DESIGN FOR MARKEING.pptx
- 1. CHAPTER 07 BASIC ORGANISATIONALDESIGN Defining organization structure and design Key characteristics of organizational structure The contingency approach to organization design Application of organization design AT THE END OF THE CHAPTER, STUDENTS SHOULD BE ABLE TO UNDERSTAND;
- 2. Defining organization structureand design Organizational Structure is the formal arrangement of jobs within an organization. CHARACTERISTICS OF ORGANIZATIONAL STRUCTURE Organizational Design involves decisions about six key elements: 1) Work specialization, 2) Departmentalization, 3) Chain of command, 4) Span of control, 5) Centralization and decentralization, and 6) Formalization
- 3. CONT.. ORGANIZING Isan Arranging and structuring work to accomplish the organization’s goals. ORGANIZATIONAL CHART Is the visual representation of an organization’s structure. Purposes of Organizing 1. Divides work to be done into specific jobs and departments. 2. Assigns tasks and responsibilities associated with individual jobs 3. Coordinates diverse organizational tasks 4. Clusters jobs into units 5. Establishes relationships among individuals, groups, and departments 6. Establishes formal lines of authority 7. Allocates and deploys organizational resources
- 4. 1) WORK SPECIALIZATION WORK SPECIALIZATION Is dividing work activities into separate job tasks. WORK SPECIALIZATION is also known as division of labor Work specialization makes efficient use of the diversity of skills that workers have. In most organizations, some tasks require highly developed skills; others can be performed by employees with lower skill levels.
- 5. CONT… SKILLED WORKERSare paid more than unskilled workers, and, because wages tend to reflect the highest level of skill, all workers would be paid at highly skilled rates to do easy tasks—an inefficient use of resources. Work Specialization leads to great increases in productivity. 2. DEPARTMENTALIZATION DEPARTMENTALIZATION Is the basis by which jobs are grouped together. OR, it is How jobs are grouped together.
- 6. CONT… Five commonforms of departmentalization are used, although an organization may develop its own unique classification and they are: I. Functional Departmentization: Jobs are grouped according to functions. II. Geographical Departmentization: Jobs are grouped according to geographic regions III. Product Departmentization: Jobs are grouped according to product line
- 7. CONT.. IV. Process Departmentization:Jobs are grouped on the basis of product or customer flow. V. Customer Departmentization: Jobs are grouped on the basis of specific or unique customers who have common needs. One specific type of team that more organizations are using is a cross-functional team. Cross-functional Team: Is A work team composed of individuals from various functional specialties.
- 8. 3) Chain ofCommand CHAIN OF COMMAND: Is the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom. Managers need to consider it when organizing work because it helps employees with questions such as; Who do I report to? or Who do I go to if I have a problem?
- 9. CONT… To understandthe chain of command, we have to understand three other important concepts, which are; I. Authority, II. Responsibility, and III. Unity of command. AUTHORITY Authority: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. Managers in the chain of command had authority to do their job of coordinating and overseeing the work of others.
- 10. CONT… Authority couldbe delegated downward to lower-level managers, giving them certain rights while also prescribing certain limits within which to operate. It is assumed that the rights and power inherent in one’s formal organizational position are the sole source of influence and that if an order is given, it would be obeyed. Another early management writer, Chester Barnard, proposed another perspective on authority. His view is called the acceptance theory of authority, and it says that authority comes from the willingness of subordinates to accept it. If an employee didn’t accept a manager’s order, there was no authority.
- 11. CONT… Acceptance TheoryOf Authority: Is The view that authority comes from the willingness of subordinates to accept it. Barnard contended that subordinates will accept orders only if the following conditions are satisfied: a) They understand the order. b) They feel the order is consistent with the organization’s purpose. c) The order does not conflict with their personal beliefs. d) They are able to perform the task as directed.
- 12. CONT… The earlymanagement writers also distinguished between two forms of authority; Line Authority & Staff Authority. Line Authority: Is the Authority that entitles a manager to direct the work of an employee. It is the employee–employee authority relationship that extends from the top of the organization to the lowest level. Staff Authority: Is staff authority Positions with some authority that have been created to support, assist, and advise those holding line authority.
- 13. CONT… LINE refersto managers whose organizational function contributes directly to the achievement of organizational objectives. As organizations get larger and more complex, line managers find that they do not have the time, expertise, or resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advise, and generally reduce some of their informational burdens. For instance, a hospital administrator who cannot effectively handle the purchasing of all the supplies the hospital needs creates a purchasing department, which is a staff function
- 14. CONT… RESPONSIBILITY RESPONSIBILITY: Isthe obligation or expectation to perform any assigned duties. When managers use their authority to assign work to employees, those employees take on an obligation to perform those assigned duties. No one should be held responsible or accountable for work tasks over which he or she has no authority to complete those tasks.
- 15. CONT… UNITY OF COMMAND UNITY OF COMMAND: Is the management principle that each person should report to only one manage. Without unity of command, conflicting demands from multiple bosses may create problems. 4) SPAN OF CONTROL SPAN OF CONTROL: Is the number of employees a manager can efficiently and effectively manage.
- 16. CONT… The traditionalview was that managers could not—and should not— directly supervise more than five or six subordinates. All other things being equal, the wider or larger the span, the more efficient an organization is. However, at some point, wider spans may reduce effectiveness if employee performance worsens because managers no longer have the time to lead effectively.
- 17. 5) Centralization andDecentralization CENTRALIZATION: Is the degree to which decision making is concentrated at upper levels of the organization. If top managers make key decisions with little input from below, then the organization is more centralized. DECENTRALIZATION: Is the degree to which lower-level employees provide input or actually make decisions. The more that lower-level employees provide input or actually make decisions, the more decentralization there is. EMPLOYEE EMPOWERMENT: Is giving employees more authority (power) to make decisions.
- 18. 6) FORMALIZATION FORMALIZATIONrefers to how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures. In highly formalized organizations, there are explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes. Employees have little discretion over what’s done, when it’s done, and how it’s done. However, where formalization is low, employees have more discretion in how they do their work.
- 19. THE CONTINGENCY APPROACHTO ORGANIZATION DESIGN An appropriate structure of an Organization depends on four contingency variables; which are; 1) The organization’s strategy, 2) The organization’s size, 3) The organization’s technology, and 4) The organization’s degree of environmental uncertainty.
- 20. 1) The Organization’sStrategy and Structure An organization’s structure should facilitate goal achievement. Because goals are an important part of the organization’s strategies, it’s only logical that strategy and structure are closely linked. Alfred Chandler initially researched this relationship, and “concluded that changes in corporate strategy led to changes in an organization’s structure that support the strategy”. Certain structural designs work best with different organizational strategies.
- 21. CONT… For instance,the flexibility and free-flowing information of the organic structure works well when an organization is pursuing meaningful and unique innovations. The mechanistic organization with its efficiency, stability, and tight controls works best for companies wanting to tightly control costs. ORGANIC ORGANIZATION: Is an organizational design that’s highly adaptive and flexible. MECHANISTIC ORGANIZATION: Is an organizational design that’s rigid and tightly controlled.
- 22. 2) ORGANIZATIONAL SIZEAND STRUCTURE There’s considerable evidence that an organization’s size affects its structure. Large organizations typically considered to be those with more than 2,000 employees tend to have more specialization, departmentalization, centralization, and rules and regulations than do small organizations. However, once an organization grows past a certain size, size has less influence on structure.
- 23. 3) ORGANIZATIONAL TECHNOLOGYAND STRUCTURE Every organization uses some form of technology to convert its inputs into outputs. Typically organizations with a routine technology adapt a mechanistic structure and those with a non-routine technology adapt an organic structure. Joan Woodward divided the firms into three distinct technologies that had increasing levels of complexity and sophistication; I. Unit production: Is the production of items in units or small batches.
- 24. CONT… II. MASS PRODUCTION:Is the production of items in large batches. III. PROCESS PRODUCTION: Is the production of items in continuous processes. In general, the more routine the technology, the more mechanistic the structure can be, and organizations with more non-routine technology are more likely to have organic structures
- 25. 4) THE ORGANIZATION’SDEGREE OF ENVIRONMENTAL UNCERTAINTY Some organizations face stable and simple environments with little uncertainty; others face dynamic and complex environments with a lot of uncertainty. Managers try to minimize environmental uncertainty by adjusting the organization’s structure. In stable and simple environments, mechanistic designs can be more effective. On the other hand, the greater the uncertainty, the more an organization needs the flexibility of an organic design.
- 26. APPLICATION OF ORGANIZATIONDESIGN Organization design: is a process for structuring and running organizations. organization design is applied is to improve how the organization works. That can mean everything from pinpointing inefficiencies to making better, faster decisions. Organization design can improve the quality of the goods or services that an organization produces, increase profits and strengthen relationships with its customer base. Internally, it can make for safer working conditions, a happier, more motivated workforce and better prepare the business for future challenges.
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