Transcript Chapter 8

Chapter
Eight
Organizing a CustomerDriven Business
Workers in Large* Companies
During the Last 5 Years
Have Undergone...
Declining Sales or
Profits
*500+ Employees
Downsizing or
Layoffs
Merger or
Acquisition
Reengineering or
Reorganization
0%
10%
20%
30%
Source: Gallup for Carlson Marketing Group
40%
50%
60%
70%
Organizational Charts
CEO,
Top
Comptroller,
Vice Pres.
Sales Mgrs
Plant Mgrs.
Mid-Level
Front Line/Supervisory
Supervisors
Foremen
1. Purpose
Show the activities
of the organization
 Highlight
subdivisions of the
organization
 Identify different
types of work
performed

Provide information
about different
management levels
 Show the lines of
authority in the
organization and the
flow of
organizational
communications

2. Design
 Organization
CEO
Division V.P.
Department A
Group 1
Subordinate I
Department B
Group 2
Subordinate II
Division V.P.
 Division
 Department
 Group
 Individual
Fayol’s Principles
One Boss
 Hierarchy of
Authority
 Division of Labor
 Subordination of
Individual
Interest
 Authority

Degree of
Centralization
 Communication
Channels
 Order
 Equity
 Esprit de Corps

Weber’s additions
 Job
Descriptions
 Written Rules
 Procedures, Regulations, Policies
 Staffing/Promotions based on
Qualifications
Organizational Issues:
1. Structures
Tall Organizations
- Many Layers of
Mgmt.
- Cost of
Mgmt.=High
Flat Organizations
- Current Trend
- Creation of
Teams
2. Span of Control
Optimum number of subordinates
 Capabilities
of Subordinates
& Manager
 Complexity of Job
 Geographically
Boss
Subordinate
Subordinate
Closer +
 Functional Similarity +
 More Need for Coordination  Greater Planning Demands  More Functional Complexity -
Subordinate
Organization Types:
1. Bureaucracy




Chain of Command from
top down
Rules & Regulations
Boss
Vice President
Set Up by Function
Supervisor
Communication = Minimal
Employee
Not responsive to customers
Advantages
 Skill
Development
 Economies of
Scale
 Good
Coordination
College
President
Business Education
Comm., Humanities,
Social Sciences
Developmental
Studies
Math, Sciences,
Health Sciences
Technical, Industrial
Service Occupations
Disadvantages
 Lack of
Communication
 Employees
Identify with
Department
 Slow Response to
External Demands
 Narrow Specialists
Different ways to
Departmentalize
Product type
 Function in company

Customer group
 Geographic Location
 Production Process

2. Centralization
(No Delegation to Managers)
Advantages
 Increased
Uniformity
 Less Duplication
 Maximum
Control
Disadvantages
Lots of Policies
& Procedures
 Many
Layers/Slower

3. Decentralization
(Delegating Authority)
Advantages
Disadvantages
 Informed
 Loss of
Decisions
Control
 Worker
 Possible
Responsibility
Duplication
 Few
Layers/Faster
Organizational Models:
a. Line Organizations
Line Personnel
 Perform
Functions
 Contribute
Directly to
Organizational
Goals
Staff Personnel
 Advise
 Assist
Line
Personnel
Advantages
 Clear Authority
& Responsibility
 Easy to
Understand
 One Supervisor
per Employee
Disadvantages
 Inflexible
 Few Specialists
for Advice
 Long Line of
Communication
 Difficult to
Handle Complex
Decisions
b. Matrix Organizations
Specialist from different parts of
the organization for specific projects
Advantages
 Flexibility
 Cooperation &
Teamwork
 Creativity
 More Efficient
Use of
Resources
Disadvantages
 Costly/Complex
 Confusion in
Loyalty
 Requires Good
Interpersonal
Skills &
Cooperation
 Not Permanent
c. Networking & ‘Nets
like Matrix

Networking
Real Time
 Transparency


‘Nets
Extranet
 Intranet

Teleconference
d. Virtual Corporation
(Figure 8.7)
Accounting
Firm
Production
Firm
Distribution
Firm
Core
Firm
Legal
Firm
Design
Firm
Advertising
Agency
No permanent ties to core firm
How to Improve
Organizational Structure
Break
business into smaller units
Build teamwork
Impose autonomy
Create meaningful incentives
Outsource non-operating activities
Share business capabilities across
units
Outsourcing
Benefits
Time to focus on
company’s primary
function
+ Increased level of
expertise
+ Cost effectiveness
+ Decreased overhead
+ Risk reduction
+ Flexibility
+ Technology
+
Downside
-
-
Less personal
approach
Less control by
owner in planning,
implementing &
carrying out
company’s future
Potential for
competing for the
outsourcing firm’s
time
Assigning various functions to outside
organizations – legal, accounting
Informal Groups
 Relationships
that form
spontaneously within groups with
similar goals
 Learn who the important people
are.
 Work with the group.
Examples of
Informal Group Norms
Do your job but don’t produce more than
the rest of the group.
 Don’t tell off-color jokes or use profane
language among group members.
 Listen to the boss and use his/her
expertise but don’t trust him/her.
 Everyone is to be clean/organized at the
workstation.

Examples of
Informal Group Norms(cont’d)
Never side with managers in a dispute
involving group members.
 Respect/help your fellow group members
on the job.
 Criticize the organization only among
group members- never among strangers.
 Drinking is done off-the-job. Never at

work!