Ch.9 Organizing

7/27/2019 Ch.9 Organizing

http://slidepdf.com/reader/full/ch9-organizing 1/85

Vishvesh Patel - MBA POM9 1Organizing



Vishvesh Patel - MBA POM9 2Organizing



Deciding how to best group organizational activities &resources

Vishvesh Patel - MBA POM9

3

Organizing



1. Responsibility

Obligation to carry out duties & achieve goals related to a

position

2. Authority

Rights to make decisions, carryout actions & direct others inmatters related to the duties & goals of a position.

3. Accountability

Requirement to provide satisfactory reasons for significantdeviations from duties or expected results.


4

Organizing



4. Delegation

Assignment to provide satisfactory reasons for significant

deviations from duties or expected results.

5. Autonomy

Amount of freedom or authority allowed in determiningschedules & work methods for achieving required output.

6. Feedback

Degree to which the job provides for clear & timely informationabout performance result.

The aim is to improve the performance


5

Organizing



Line diagram which shows broad outlines of an organization’sstructure.

Principles of Chart

1. As few hierarchical levels as possible.2. Chart should show who has authority over who.

3. Chart should also show official lines of responsibility &communication Vishvesh Patel - MBA POM9

Organization Chart

Communicati

on Reporting

6

Organizing


http://slidepdf.com/reader/full/ch9-organizing 7/85Vishvesh Patel - MBA POM9

Organization Chart

The organization chart conveys four kinds of information?

Organization chart: a diagram that illustratesthe reporting lines between units and peoplewithin the organization

Boxes represent different units

Titles in each box show the work performedby that person

Reporting relationships are shown by thelines connecting superiors and subordinates

Levels of the organization are indicated by

the number of vertical layers in the chart

Boxes represent different units

Titles in each box show the work performedby that person

Reporting relationships are shown by thelines connecting superiors and subordinates

Levels of the organization are indicated by

the number of vertical layers in the chart

7

Organizing



Executive

Vice President,

Chief Financial

Officer

Executive

Vice President,

Chief Financial

Officer

Executive

Vice President,

Marketing

Executive

Vice President,

Marketing

Executive

Vice President,

Legal

Executive

Vice President,

Legal

Executive

Vice President,

Human

Resources

Executive

Vice President,

Human

Resources

Executive

Vice President,

Merchandising

Executive

Vice President,

Merchandising

Executive

Vice President,

Operations

Executive

Vice President,

Operations

Executive

Vice President,

International

Technology

Executive

Vice President,

International

Technology

Vice President,

Investor Relations

Vice President,

Investor Relations

Senior

Vice President,Customer

Service

Senior

Vice President,Customer

Service

Senior

Vice President,Operations

Senior

Vice President,Operations

President,

Western

President,

WesternPresident,

Atlantic

President,

AtlanticPresident,

Mexico

President,

Mexico

Senior

Vice President,Real Estate

Senior

Vice President,Real Estate

Chairman of BoardChairman of Board

8

Organizing



Organization Structure

Set of building blocks that can be used to construct anorganization.

Defines the primary reporting relationships that exist withinan organization

Nature of Organizational StructureFormal pattern of interactions & coordination, designed bymanagement, to link the task of individuals & groups inachieving org. goals.

9

Organizing



Four Elements of Organization Structure

1. Assignment of tasks & responsibility to individuals & units.

2. Clustering these ( Units & People) to form a hierarchy.

3. Mechanisms for vertical co-ordination.

4. Mechanism for horizontal coordination.

10

Organizing



6 Building blocks

1. Designing Jobs (Job Specification)

2. Grouping Jobs (Departmentalization)

3. Establishing Reporting Relationship

4. Distributing Authority

5. Coordinating Activities

6. Differentiating Between Positions

11

Organizing



1. Job Design

1. Job Description Specification of task activities associated with a

particular job. The determination of an individual’s work related

responsibilities

1. Job Specialization Degree to which the overall task of the organization is

broken down into smaller components. Ex. Marketing – Retailing, Communicating, Strategy Ex. HR – Recruiting, Selecting, Training, Evaluating

12

Organizing



1. Job Design

2. Job Specialization

Advantages:1. Workers can become proficient (Skillful) at a task

2. Transfer time between task decrease

3. Specialized equipment can be developed

4. Employee replacement becomes easier

Disadvantages:1. Employee boredom & dissatisfaction

2. Anticipated benefits do not always occur (Take it for granted)

13

Organizing




1. Job Design

3. Job Rotation

Movement of workers from one specialized job to another. The work can learn something more

People will be motivated

3. Job Enlargement (More Jobs)

Increase the number of tasks performed by a worker.

5. Job Enrichment (Better Jobs)

Upgrading the job task.

14

Organizing





Departmentalization

The process of grouping jobs or units according to somelogical arrangement

Rationale of Departmentalization

Because of growth you can’t control all the people

15

Organizing





7 Basic Types

1. Functional ( U Type –Unitary )

2. Product ( H Type – Holding ) ( Conglomerate)

3. Customer

4. Location (Geographic)

5. Network

6. Matrix

7. Process

16

Organizing

Divisional




1. Functional Departmentalization

Structure in which positions are grouped according to theirmain functional area.

17

Organizing




1. Functional Departmentalization

•Advantages

•Efficiencies from putting together similar specialties and people withcommon skills, knowledge, and orientations

•Coordination within functional area•In-depth specialization

•Disadvantages

•Poor communication across functional areas

•Decision making process becomes slow

•Focus on departmental rather than organizational issues and goals

18

Organizing




General

Counsel

General

Counsel

CEOCEO

Controller Controller ManufacturingManufacturing

Owners GroupsOwners GroupsStrategic

Planning

Strategic

PlanningEngineeringEngineering Human

Resources

Human

Resources

MerchandiseMerchandise

19

Organizing

Functional Departmentalization




2. Product Departmentalization

Structure in which positions are grouped according to theirproducts.

20

Organizing




2. Product Departmentalization

•Advantages

•Managers specialize, but have broader experience

•Better assessment of manager performance and responsibility.

•Development of generalist managers

•Closer to customers

•Disadvantages

•Duplication of activity

•Difficult to coordinate across department

21

Organizing




Information

Systems &

Technology

Information

Systems &

Technology

Land

Systems

Land

Systems

Chairman & Chief

Executive Officer

Chairman & Chief

Executive Officer

Protection

Systems

Protection

SystemsWeapons

Systems

Weapons

SystemsElectric

Boat

Electric

Boat

Combat

Systems

Combat

SystemsMarine

Systems

Marine

Systems Aerospace Aerospace

Aviation

Services

Aviation

Services

22

Organizing

Product Departmentalization




3. Customer Departmentalization

Grouping jobs by type of customer and needs

23

Organizing

24




3. Customer Departmentalization

•Advantages

•Encourage Focus on customer Needs

•Give customers the feeling that they have an understanding supplier(Bank).

•Develop expertness in customer area

•Disadvantages

•Duplication of Function

•Difficult to coordinate across department

24

Organizing

25




4. Geographical Departmentalization

Grouping jobs on the basis of territory or geography

25

Organizing

26




4. Geographical Departmentalization

•Advantages

•More effective and efficient handling of specific regional issues thatarise

•Serve needs of unique geographic markets better

•Disadvantages

•Duplication of Function

•Can feel isolated from other organizational areas

•Conflict between each location’s goals and the organization’s goals

26

Organizing

27




27

Organizing

President,

International

President,

International

PresidentPresident

CEOCEO

ThailandThailand

VP,Northwest

VP,Northwest

VP,

South Central

VP,

South Central

VP,

Southwest

VP,

Southwest

President,

North America

President,

North America

President, Europe,

Middle East, Africa

President, Europe,

Middle East, Africa

President,

Japan

President,

Japan

Senior VP,

Coffee

Senior VP,

Coffee

Executive VP,

Chief Financial Officer

Executive VP,

Chief Financial Officer

Executive VP,

Partner Resources

Executive VP,

Partner Resources

Executive VP,

Supply Chain & Coffee

Executive VP,

Supply Chain & CoffeeExecutive VP,

Legal

Executive VP,

Legal

Australia Australia

United KingdomUnited Kingdom

28




5. Network

Subcontracts some or many of its operations to other firms andcoordinates them to accomplish specific goals

Sometimes called virtual organizations

Connects people regardless of their locations

28

Organizing

29




29

Organizing

Spielberg Katzenberg Geffen

(Films) (Animation) (Music)

Spielberg Katzenberg Geffen

(Films) (Animation) (Music)

Computer

Hardware/

Software

Computer

Hardware/

Software

Agents Agents

Makeup ArtistsMakeup Artists

Media

Relations

Media

RelationsTalent

Scouts

Talent

Scouts

Actors Actors

LegalLegal

Future

Games

Future

Games

MarketingMarketing

TechniciansTechnicians

Costume

Designers

Costume

Designers

5. Network

30




5. Network

•Advantages

•Ability to gain special knowledge and skills of others without having

to hire employees•Allows managers the flexibility to work with a wide variety of different suppliers, customers, and other organizations

•Disadvantages

•Other organizations may fail to live up to established deadlines•Managers must constantly monitor the quality of work provided byother organizations

•Employees in the outsourced organization may not hold the samevalues and sense of time urgency to which employees in theorganization are committed

30

Organizing

31




6. Matrix

A structure in which the tasks of the organization aregrouped along two organizational dimensionssimultaneously.

Examples include:

Product/function

Product/geographic region

31

Organizing

32





•Advantages

•Effectively manage large, complex task

•Efficiently carry out large, complex task

•Disadvantages

•Requires high level of coordination

•Behavioral difficulties from “two bosses”

•Lines of authority and responsibility may not be clear to individualemployees.

•Possibilities of conflict are increased.

32

Organizing

33





33

Organizing

UniversityUniversity

President

VP

Finace &

Administration

VP

Research &

Lecturing

VP

Student Matters

VP

Planning

Language

Department

Economics

Department

English

French

Marketing

Accounting

Director

MastersProgramme

Director

UndergraduateProgramme

Prof. A Prof. C

Prof. B Prof. D

34




Guidelines for Making Matrix Management Effective

34

Organizing

1. Define the objectives of the project or task.

2. Clarify the roles, authority, and responsibilities of managersand team members.

3. Ensure that influence is based on knowledge andinformation, rather than on rank.

4. Balance the power of functional and project managers.

5. Select an experienced manager for the project who canprovide leadership.

6. Undertake organization and team development.

7. Install appropriate cost, time, and quality controls thatreport deviations from standards in a timely manner.

8. Reward project managers and team members fairly.

35




7. Process Departmentalization

Grouping jobs on the basis of product or customer flow

35

Organizing

+ More efficient flow of work activities

– Can only be used with certain types of products

36




Potential Advantages and Disadvantages of Organizational Structures

36

Organizing

37





Who reports to whom?

Ex. Owner manager of small firm hire two new employees, oneto handle marketing and one to handle production, willmarketing manager report to production and production tomarketing or will each directly report to the owner manager?

Organizing

38





Issues that we have to keep in mind while one is reporting toothers.

1. Chain of command

2. Unity of command

3. Span of control

Organizing

39




1. Chain of command

The continuous line of authority (Vertical line) that extendsfrom upper organizational levels to the lowest levels andclarifies who reports to whom.

One below will report to one above.

Everyone has to support each other.

Each and every department, units have to communicate,

coordinate, report and help each others.

Number of chains (Units) increase complexity increases.

In Govt. we will find maximum numbers of departments &

levels. Organizing

40




1. Chain of command

Organizing

Who reports to whom?

41




2. Unity of Command

The management principle that no person should report tomore than one boss.

Each person within an organization must have a clearreporting relationship to one & only one boss.

Z1 reporting to only one boss y1

Y1 reporting to only one boss x

Matrix is an exception because of x-y coordination

Organizing

42




3. Span of Control ( Span of Management)

The number of subordinates reporting directly to a manager.

Number of people who report to a particular manager.

(How many people do you want to control?)

Span of control will tell you how important that manager is.

Narrow vs. Wide

Operative span (Level) – up to 30 subordinates

Executive span (Level) – 3 to 9 subordinates

Organizing

43





Organizing

44





Narrow vs. Wide

Tall vs. Flat

Tall structure has an overall narrow span of managementand more levels in the hierarchy.

Flat structure has a wide span and has fewer hierarchicallevels.

Organizing

45





Organizing



47





Organizing

48





Flat Organizations ( 2 or 3 grades/levels)

1. Leads to higher levels of employee morale & productivity.

(Problem will immediately solved)

2. More administrative responsibility for managers because of thefewer levels.

3. Generally in Business organization the structure will be Flat. Japanese organizations also use this kind of structure.

Organizing

49





Organizing

50



Vishvesh Patel - MBA POM9Organizing

51




4. Distributing Authority

Managers can distribute hisauthority through Delegation &Degree of centralization.

Delegation

“The process by whichmanagers assign a portion of

their total workload to others.”

(But manager will beresponsible and accountable)

Organizing

52




1. Delegation

Delegation Triangle

Steps in the Delegation Process

Organizing

Responsibility

Authority Accountability

53




1. Delegation

Reasons for Delegation.

To allow the manager to get more work done by utilizing the skills & talentof subordinates.

You have to watch, to whom do you want to delegate? You give the responsibility so you should also give the authority But the accountability will be yours.

To promote the development of subordinates by having them participate indecision making & problem solving

Allows subordinates to learn about overall operations To improve their managerial skills.

(It will train them to be higher level)

Organizing

54




2. Degree of centralization Centralization of Authority

Primary authority will be held by upper management

Advantage: gives top-level management maximum control.

Disadvantage: limits the organization’s ability to respond quickly

and effectively to changes in the environment.

Decentralization of Authority

Significant authority will be found in lower levels of theorganization

Specially in flat organizations Others can make decisions on behalf of others (Shipment is ready, you can

sign on behalf of me) Trust element involves here

Advantage: rapid and effective response to environmental changebecause the decision makers are the people closest to thesituation.

Disadvantage: top-level managers lose some control.Organizing

55




2. Degree of centralization

Factors that Influence the Amount of Centralization

Environment is stable Lower-level managers are not as capable or experienced

at making decisions as upper-level managers Lower-level managers do not want to have a say in

decisions Decisions are significant Organization is facing a crisis or the risk of company

failure Company is large Effective implementation of company strategies depends

on managers retaining say over what happens

Organizing

56




2. Degree of centralization

Factors that Influence the Amount of Decentralization

Environment is complex, uncertain Lower-level managers are capable and experienced at

making decisions Lower-level managers want a voice in decisions Decisions are relatively minor Corporate culture is open to allowing managers to have a

say in what happens

Company is geographically dispersed Effective implementation of company strategies depends

on managers having involvement and flexibility to makedecisions

Organizing

57




DELEGATION DECENTRALISATION

1. Delegation refers to thegranting of authority andcreation responsibility asbetween one individual

and another.2. Delegation is a process.

3. Here, the superiorcontinues to be

responsible for the workdelegated to hissubordinates.

4. Delegation is compulsory

for every unit.

1. Decentralization is thesituation which exists asa result of the systematicdelegation of authority.

2. Decentralization is theend result of delegation.

3. Here, the superior isrelieved from hisresponsibility for the

work decentralised andthe subordinate becomesliable for that.

4. It is optional.

5. In Decentralization thepersonnel is free to workwithin the code of

58





Different numbers of people

Using different types of technology

Serving different types of market & customers

But the objective will be the same.

“We want to achieve organizational goal”.

Organizing

59





The process of linking the activities of various departmentsof organization.

Example:

Tata Nano’s customer complaints regarding to safety will befulfill through coordinating activities.

Better coordination – Lesser complaints

Higher coordination – Higher level of performance & Higher productivity

Organizing





62




Levels of Work Group Interdependence

Pooled Interdependence

Occurs whenorganizational units have acommon resource but nointerrelationship with oneanother.

Organizing

BB

CC

DD

AA

FF

EE

Head-Head-

quartersquarters

63





Sequential Interdependence

Occurs when organizational units must coordinate the flowof information, resources, and tasks from one unit toanother.

Organizing

AA BB CC

64





Reciprocal Interdependence

Occurs when information, resources, and tasks must bepassed back and forward between work groups.

Organizing

A

C

E F

D

B

65




6. Differentiating between Line & Staff Positions

A Line position has authority and responsibility forachieving organizations major goal.

Positions in the direct chain of command that areresponsible for the achievement of an organizationsgoals/profit.

If there is any complaint or loss, we will ask them.

Example:

Manufacturing department, marketing department etc.

(Directly related to major goal)

Organizing



67





Organizing

President

Marketing Mfg AcctMarket

Research

Com-

puting

Legal

Office

68





Organizational objective determine the line and the staff function.

What is considered as staff function in one organization canbe line function in another.

Example

recruitment in manufacturing company and placementagency.

Organizing



70




Formal organization Formal organization belongs to the intentional structure of roles

in a formally-organized enterprise.

It is a system of well defined jobs, each bearing a definitemeasure of authority, responsibility and accountability.

informal organization The informal organization is a network of interpersonal

relationships that arise when people associate with each other.

Organizing

71






73




Structural decisions are influenced by:

Overall strategy of the organization Organizational structure follows strategy

Size of the organization Firms change from organic to mechanistic organizations as they grow in

size

Technology use by the organization Firms adapt their structure to the technology they use

Degree of environmental uncertainty Dynamic environments require organic structures; mechanistic

structures need stable environments

Organizing

74




Strategy Frameworks:

Innovation

Pursuing competitive advantage through meaningful and uniqueinnovations favors an organic structuring

Cost minimization Focusing on tightly controlling costs requires a mechanistic structure for

the organization

Imitation Minimizing risks and maximizing profitability by copying market leaders

requires both organic and mechanistic elements in the organization’sstructure

Organizing



76




Woodward’s Findings on Technology, Structure, and Effectiveness



78




Traditional Designs:

Simple Structure

Low departmentalization, wide spans of control, centralized authority,little formalization

Functional Structure Departmentalization by function

Operations, finance, human resources, and product research anddevelopment

Divisional Structure Composed of separate business units or divisions with limited autonomy

under the coordination and control of the parent corporation

Organizing



80




Contemporary Organizational Designs:

Team Structures The entire organization is made up of work groups or self-managed

teams of empowered employees. Ex. Superstore

Matrix Structures Specialists for different functional departments are assigned to work on

projects led by project managers Matrix participants have two managers

Project Structures Employees work continuously on projects, moving on to another project

as each project is completed.

Ex. Construction Company Organizing



82





Boundary less Organization

Virtual Organization An organization that consists of a small core of full-time employees and

that temporarily hires specialists to work on opportunities that arise. Ex. Amazon.com

Network Organization A small core organization that outsources its major business functions

(e.g., manufacturing) in order to concentrate on what it does best.

Modular Organization A manufacturing organization that uses outside suppliers to provide

product components for its final assembly operations. Ex. Car Manufacturing Industry

Organizing

83





Learning Organization

• An organization that has developed the capacity to continuouslylearn, adapt, and change through the practice of knowledgemanagement by employees.

• Ex. Microsoft

Organizing

84




Contemporary Organizational Designs



Documents

Ch.9 Organizing