chp10Daft 6th edFundamentals of OrganizingDeveloped by Cool Pictures & MultiMedia PresentationsCopyright 2002 by South-Western, a division of Thompson Learning. All rights reserved.Developed by Cool Pictures & MultiMedia PresentationsCopyright 2003 by South-Western, a division of Thomson Learning. All rights reserved.

OrganizingThe deployment of organizational resources to achieve strategic goalsReflects deployment of resources Shows division of laborFormal lines of authority and mechanisms is developed

Organization StructureDefines how tasks are divided, resources are deployed, and departments are coordinatedThe set of formal tasks assignedFormal reporting relationshipsThe design of systems to ensure effective coordination of employees across department

The Organization ChartThe Home Depot is the world's largest home improvement retailer currently operating 1,363 stores.Visual representationSet of formal tasksFormal reporting relationshipsFramework for vertical control

Work SpecializationTasks are subdivided into individual jobsDivision of labor conceptEmployees perform only the tasks relevant to their specialized functionJobs tend to be small, but they can be performed efficiently

Chain of CommandUnbroken line of authority that links all persons in an organizationShows who reports to whomAssociated with two underlying principlesUnity of CommandScalar Principle

AuthorityFormal and legitimate right of a manager to make decisions and issue ordersAllocate resources to achieve organizationally desired outcomesAuthority is distinguished by three characteristicsAuthority is vested in organizational positions, not peopleAuthority is accepted by subordinates Authority flows down the vertical hierarchy

ResponsibilityThe duty to perform the task or activity an employee has been assignedManagers are assigned authority commensurate with responsibility

AccountabilityMechanism through which authority and responsibility are brought into alignmentPeople are subject to reporting and justifying task outcomes to those above them in the chain of commandCan be built into the organization structure

DelegationProcess managers use to transfer authority and responsibilityOrganization encourage managers to delegate authority to lowest possible level12

Techniques for DelegationGive thorough instructionsMaintain feedbackEvaluate and reward performanceDelegate the whole taskSelect the right personDelegationEnsure that authority equals responsibility

Line and Staff PositionsLine vs. staff positionsLine vs. staff authorityAdvantages and complexities of using staff positions

Line authorityStaff authorityTM 8-8Irwin/McGraw-HillThe McGraw-Hill Companies, Inc., 1998TYPES OF AUTHORITY

Span of ManagementNumber of employees who report to a supervisorTraditional view, about seven subordinates per managerMany lean organizations today have 30, 40, or even higher subordinatesWhen supervisors must be closely involved with subordinates, the span should be smallSupervisors need little involvement with subordinates, it can be large

Factors Influencing the SpanSupervisorPreferences and skillsFew non-supervisory dutiesSubordinatesCompetence and needsJobWork similarityphysical proximityLow interaction requirements

Tall versus Flat Structure Span of Control used in an organization determines whether the structure is tall or flatTall structure has a narrow span and more hierarchical levelsFlat structure has a wide span, is horizontally dispersed and fewer hierarchical levelsThe trend has been toward wider spans of control

SPAN OF MANAGEMENTOrg.LevelMEMBERS ATEACH LEVEL1234567Span of 4Operatives : 4,096Managers : 1,396Span of 8Operatives : 4,096Managers : 585TM 8-6Irwin/McGraw-HillThe McGraw-Hill Companies, Inc., 1998(highest)1416642561,0244,09618645124,096

Centralization vs. DecentralizationThe extend to which the power and authority is retained at the top vs. delegated to lower levels.Factors influencingSize of the organizationGeographic dispersionTechnological complexityEnvironmental uncertainty

CENTRALIZATIONDECENTRALIZATIONDecision-makingDecision-makingsmallcentralizedsimplecertainsizegeographicstechnologyenvironmentlargedispersedcomplexuncertainfactorsTM 8-7Irwin/McGraw-HillThe McGraw-Hill Companies, Inc., 1998Restrictivepolicies, rules,proceduresGeneral policies, rules,procedures

Decentralization Tends To Make greater use of human resourcesReduce burdens of top managersCause decisions to be made close to the actionPermit rapid response to changes

DepartmentalizationThe basis on which individuals are grouped into departmentsVertical functional approach. People are grouped together in departments by common skills.Divisional approach. Grouped together based on a common product, program, or geographical region.Horizontal matrix approach. Functional and divisional chains of command. Some employees report to two bossesTeam-based approach. Created to accomplish specific tasksNetwork approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere. Virtual approach. Brings people together temporarily to exploit specific opportunities then disbands

Five Approaches to Structural Design

Five Approaches to Structural DesignSlide 2

Functional Structure AdvantagesEfficient use of resourcesSkill specialization developmentTop management controlExcellent coordinationQuality technical problem solving

Functional Structure DisadvantagesPoor communicationsSlow response to external changesDecisions concentrated at topPin pointing responsibility is difficultLimited view of organizational goals by employees

Divisional Structure AdvantagesFast response, flexibility in an unstable environmentFosters concern for customers needsExcellent coordination across functional departmentsEmphasis on overall product and divisional goalsDevelopment of general management skills

Divisional Structure DisadvantagesDuplication of resources across divisionsLess technical depth and specialization in divisionsPoor coordination across divisionsLess top management controlCompetition for corporate resources

Horizontal Matrix AdvantagesMore efficient use of resources than divisional structureAdaptable to changing environmentDevelopment of both general and specialists management skillsExpertise available to all divisionsEnlarged tasks for employees

Dual Authority Structure in a Matrix Organization

Horizontal Matrix DisadvantagesDual chain of commandHigh conflict between two sides of matrixMany meetings to coordinate activitiesNeed for human relations trainingPower domination by one side of matrix

Team AdvantagesSame advantages as functional structureReduced barriers among departmentsQuicker response timeBetter moraleReduced administrative overhead

Team DisadvantagesDual loyalties and conflictTime and resources spent on meetingsUnplanned decentralization

Network Approach AdvantagesGlobal competitivenessWork force flexibilityReduced administrative overhead

Network Approach DisadvantagesNo hands-on controlLoss of part of the organization severely impacts remainder of organizationEmployee loyalty weakened

Virtual OrganizationAdvantagesCan draw on expertise worldwideHighly flexible and responsiveReduced overhead costsDisadvantagesLack of control, weak boundariesGreater demand on managersCommunications difficulties

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