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!