Transcript ORGANIZATIONS AND THEIR MANAGEMENT
ORGANIZATIONS… AND THEIR MANAGEMENT
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ORGANIZATIONS AND THEIR MANAGEMENT
Understand Topic’s Terminology Understand Organizational Processes Purpose and Structure Management’s Role Decision-Making Designing Effective Organizations 2
ORGANIZATIONS AND THEIR MANAGEMENT
Conrad Hilton (Hilton Hotels and Paris Hilton’s Great-grandfather), was asked at a Gala celebrating his life, “What was the most important lesson you’ve learned in your long and distinguished business career?” He immediately answered…
“REMEMBER TO TUCK THE SHOWER CURTAIN INSIDE THE BATHTUB”
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ORGANIZATIONS AND THEIR MANAGEMENT
Two Easy Steps for Outrageous Success DO THE RIGHT THING!
DO THE THING RIGHT!
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ORGANIZATIONS AND THEIR MANAGEMENT
THE LANGUAGE: KEY TERMS
Governance Management Leadership Organization 5
ORGANIZATIONS AND THEIR MANAGEMENT
GOVERNANCE
Set of Processes for Assigning Decision Control Rights Duty to Control Organization by Invoking or Revoking Power to make Decisions Vested in Owners (Stockholders) Transferable to Elected Directors and Delegable to Appointed Officers 6
ORGANIZATIONS AND THEIR MANAGEMENT
GOVERNANCE’S STRATEGIC FUNCTION
Deciding Proposals and Monitoring
“You miss
100%
of the Shots you never take!”
“
Wayne Gretzky, “The Great One”
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Organizations and their Management
Management:
Set of Processes Designed to Keep a Complicated System of People and Technology running Smoothly Activities: Planning, Budgeting, Staffing, Controlling and Problem-Solving Tactical Role: Initiate Proposals and Implement Ratified Decisions 8
ORGANIZATIONS AND THEIR MANAGEMENT
Marcus Buckingham,
The One Thing You Need to Know
“The Key Difference between Checkers and Chess is that in Checkers the Pieces All Move the Same Way (Supervising). In Chess all the pieces Move Differently (Managing) … Discover What is Unique about each Person and Capitalize on it.” 9
Organizations and their Management
Leadership:
A Set of Processes that Creates Organization in the First Place or… Adapts It to Significantly Changing Circumstances
Leadership:
Defines what Future should look like, Aligns People with Vision and Inspires Them to Make it Happen Despite Obstacles
Leadership
necessary in both… Governance and Management 10
ORGANIZATIONS AND THEIR MANAGEMENT
MANAGEMENT
focuses on answers…
LEADERSHIP
is a function of questions LEADERSHIP starts by asking
WHO DO WE INTEND TO BE?
NOT…“How will we do it?”
Max DePree Herman Miller
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Organizations and Their Management
What are Organizations?
Joint Activities ranging from Society as a Whole to Picnic Planning Group Legal Entity that Serves as a Nexus for Complex Set of Arrangements between Individuals 12
Organizations and Their Management
Organizational Functions
PURPOSE:
Seek and Sustain Equilibrium (“Organizing”) that Reconciles Conflicting Interests of Input Suppliers and Output Consumers
PROCESS:
Politically-Supported and Appropriately Informed Decision-making
ESSENTIAL RESOURCES:
Financial Capital Human Capital 13
Organizations and Their Management Why do Organizations Look and Act the Way They Do? Two Identifying Characteristics…
Hierarchical or “Flat”
Form of Organizational Reporting and Authority Relationships
Decentralized or Centralized
Location of Decision Rights (Power) within Organization 14
Organizations and Their Management Organizational Hierarchy measured by
Number of Levels and Ranks of Authority-delegating and Reporting Relationships Extent of Integration of Functions and Outputs: Is Organization’s Form characterized by:
Functional “Silos”
: Finance, Marketing, Production, etc., or by…
Product Lines:
Groceries, Clothing, etc.
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Organizations and their Management
Centralized or Decentralized?
Relative Number, Length and Complexity of Paths between Where Decisions are Made and Where Decisions are Implemented May be unrelated to Hierarchical Form Decentralized decision-making may be more democratic, but is it more efficient?
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Relatively narrow span of control
Hierarchical Versus Flat Organizations Chief Executive TALL ORGANIZATION Chief Executive
Relatively wide span of control
FLAT ORGANIZATION
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ORGANIZATIONS AND THEIR MANAGEMENT
Do “Flat” Organizational Structures and “Cube Farms” go together? Does they promote efficient communication of complex information? Is it a safe bet that this Office is at a “Hierarchical Organization?” Could you have a relaxed and spontaneous conversation with your boss here? 18
Gary Hamel,
Harvard Business Review
The Bottleneck is at the Top of the Bottle Theory of Organizational Design
Where are you likely to find people with the least diversity of experience, the largest investment in the past and the greatest reverence for industry dogma?
AT THE TOP!
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Organizations and their Management
Management’s “Tool” for Performing its Responsibilities:
“Decision-Making”
Making Choices from Set of Alternatives (Choice Problems) about which: Policy to Make or Action to Take 20
ORGANIZATIONS AND THEIR MANAGEMENT
CAVEATS
IDENTIFY PROBLEM
: What is the Question? Is a Decision Needed? The Best Decision You may ever make:
DO NOTHING!
Don’t be a Solution looking for a Problem!
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ORGANIZATIONS AND THEIR MANAGEMENT
“DO ONE THING EVERY DAY THAT SCARES YOU”
Eleanor Roosevelt
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Organizations and Their Management
A DECISION PROCESS…
RATIFICATION
Choose Initiatives to be Implemented
MONITORING
Measure Performance; Give Rewards
INITIATION
Generate Proposals, Utilize Resources or Structure Contracts
IMPLEMENTATIO N
Execute Ratified Decisions 23
Organizations and Their Management
MONITORING STEP
Likely to be Weakest Link Must be Comprehensive: Include Operational Results with Strategic Objectives Assessments of Results include Rewards and Punishments 24
Organizations and their Management "I've become much more decisive thanks to the rock, paper, scissors technique." Cartoon by Dave Carpenter Copyright 2005, Harvard Business Review
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ORGANIZATIONS AND THEIR MANAGEMENT
EFFECTIVE DECISION-MAKING CONSISTS OF …
POWER and… KNOWLEDGE
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Organizations and their Management
POWER
is Appropriate Combination of…
Authority:
Ability to Compel Action Obtained from Legal Grant or Delegation
Influence:
to Action Ability to Remove Impediments Obtained from Experience and Trust 27
Organizations and their Management KNOWLEDGE
-
Two Types
SPECIFIC:
Strategic - Describes What to Do; Expensive to Obtain and Transfer Examples: Relationships with Investors or Information about Products or Processes
GENERAL
: Tactical - Describes How to do Something; Inexpensive to Obtain and Transfer Examples: Operating Instructions or Product Prices 28
Marcus Buckingham,
The One Thing You Need to Know
ORGANIZATIONS AND THEIR MANAGEMENT
The “One Thing” you need to know about sustained individual success: Discover what you don’t like doing and doing it…
STOP NOW!
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Organizations and their Management Political Processes used in Organizations (Managing) include:
Conflict Negotiation Relationships: Form/Dissolve 30
Organizations and their Management
“Dancing is a Contact Sport…” “Politics in Business is a
Collision
Sport” Johnson’s Corollary to Vince Lombardi’s Famous Quip 31
Will I Like Business?
Can you Stretch – Break – but not the Rules? Are you Uncomfortable with Competitors not wanting you to Succeed?
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What Kind of Stuff do You have?
Are you Bothered by Not Knowing What will Happen? Can you make Decisions under Pressure?
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Life should NOT be a Journey to the Grave where You Arrive Safely in One Pretty and Well-Preserved Piece… Instead, Don’t You want to Skid Across the Finish Line Broadside, Thoroughly Used Up, Worn Out, Leaking Oil, Shouting… Bill McKenna, Professional
GERONIMO!!!
Motorcycle Racer (
Cycle M
agazine, February 1982)
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Organizations and their Management The Best Organizational Design happens when…
Knowledge
(General or Specific) that is Essential and Relevant is efficiently…
Co-located with
(in same place as) Decision-Maker(s) who (A) is Familiar with Decision’s Circumstances and… (B) has the Necessary Power (Authority and Influence) 35
Organizations and their Management
DECISION HIERARCHY
Higher-level Managers
Choice)
RATIFY
(Affirm Recommendations/Not Make Yes/No
and Monitor Proposals Initiated and Implemented by Lower-level Managers Formality of Process varies with Organizational Complexity Eliminating or Bypassing any Procedural Step produces Ineffective Decisions 36
Organizations and their Management
TYPE OF KNOWLEDGE IS FUNCTION OF ASSET TYPE
Tangible Assets
(Plant and Equipment) use
General Knowledge:
Easy to Obtain and Inexpensive to Transfer through Hierarchical Levels and Disperse to Decision-makers
Intangible Assets
(R&D or Brands) use
Specific
Knowledge:
Hard to Obtain and Expensive to Transfer through Hierarchical Levels and Disperse to Decision-makers 37
Organizations and their Management
HOW TO DO THIS?
Either
Move Knowledge
to Decision-Makers (Flatten the Organization’s Hierarchy) or…
Move the Decision-making Power
Knowledge and People familiar with the Decision’s Particular Circumstances (Centralize or De centralize)… to Source of
But… How Much Knowledge and How Many People?
And Be
Constantly Evaluating the Best Organizational Place
(Balance of Power and Knowledge) for Each Type of Decision 38
Organizations and their Management KEY
: UNDERSTANDING INTERDEPENDENCIES Functionality of Organization’s Assets Obtaining the Necessary Knowledge and Minimizing the Cost of Moving it to the Decision-maker Empowering Decision-makers who are most familiar with and must adapt most quickly to a Decision’s Particular Circumstances 39
Organizations and Their Management Sustaining Equilibrium requires continuously Changing an Organization's Behaviors by choosing either:
A
Different Form
A
Different Way
of Equilibrium or to Get to Equilibrium
Governance
Management
defines “What” is Equilibrium decides
“How”
Equilibrium will be Achieved Desired 40
Organizations and Their Management
Effectively Managing Organizations Requires Understanding and Using Political Systems Concepts influencing these Political Functions include: Power and Knowledge Social Networks Dominant Coalitions 41
A
THEORY OF FIRM GROWTH AND OPTIMAL ORGANIZATION SIZE
C TOTAL EXPENSES
Direct
(Variable) and
Indirect
(Fixed/Overhead)
HIGH
Unprofitable
LOW
Profitable
B
STRATEGIC CHOICE Maintain Size and Decrease Expenses or… Consider Optimal Size
FEW
Market
MOST
Internal
FIRM SIZE
Controlled Resources 42
Designing and Operating Effective Organizations KNOWLEDGE
Amount/Type Needed for Best Decisions
SPECIFIC
Strategic
: Know What to Do
GENERAL
Tactical
: Know How to Do It
WELL-DESIGNED ORGANIZATIONS
Balance Types and Amounts of Information for Every Decision
TANGIBLE
Real/Personal Property
INTANGIBLE
Intellectual Property (Knowledge)
ORGANIZATION’S ASSETS
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