Understanding business 8th by mcchugh nickels chapter 08

* * * Adapting Organizations to Today’s Markets Nickels * McHugh McGraw-Hill/Irwin Understanding Business, 8e * * CHAPTER ** McHugh 1-1 8-1 © 2008 The McGraw-Hill Companies, Inc., All Rights * * * Structuring an Organization Comprises: • Division of Labor • Accountability • Team Tasks • Allocating • Assigning Responsibility/ Authority Resources • Establishing Procedures 8-2 * * * Fayol’s Principles of Organization • Unity of Command • Degree of Centralization • Hierarchy of Authority • Clear Communication • Division of Labor Channels • Subordination of • Order Individual Interest to the General • Equity Interest • Esprit de Corps • Authority 8-3 * * * Weber’s Organizational Principles • Job Descriptions • Written Rules • Procedures, Regulations, Policies • Staffing/Promotions Based on Qualifications 8-4 * * * Centralization (No Delegation) Advantages • • • • Greater TopManagement Control More Efficiency Simpler Distribution System Stronger Brand/Corporate Image Disadvantages • Less Responsiveness to Customers Less Empowerment • • Interorganizational • Conflict Lower Morale Away from Headquarters 8-5 * * * Decentralization (Delegate Authority) Advantages • Better Adaptation to • Customer Wants • • More Empowerment of Workers • • Faster Decision Making • • Higher Morale Disadvantages Less Efficiency Complex Distribution System Less Top-Management Control Weakened Corporate Image 8-6 * * * Organizational Structures Tall Organizations • Many Layers of Management • High Cost of Management • Narrow Span of Control Flat Organizations • Current Trend • Creation of Teams • Broad Span of Control 8-7 * * * How to Make Jobs Fit Your Company (Part of 2) Each manager must ask: • • • • What resources I control to accomplish my tasks? What measures will be used to evaluate my performance? Who I need to interact with and influence to achieve my goals? How much support can I expect when I reach out to others for help? Source: HBS Working Knowledge, October 31,2005 8-8 * * * How to Make Jobs Fit Your Company (Part of 2) Four Basic Spans of a Job: • The Span of Control • The Span of Accountability • The Span of Influence • The Span of Support Source: HBS Working Knowledge, October 31,2005 8-9 * * * Span of Control - Narrow Advantages • • • • More Control by Top Management More Chances for Advancement Greater Specialization Closer Supervision Disadvantages • • • • Less Empowerment Higher Costs Delayed Decision Making Less Responsiveness to Customers 8-10 * * * Departmentalization by Function • • • Advantages Skill Development Economies of Scale Good Coordination Disadvantages • Lack of • • Communication Employees Identify with Department Slow Response to External Demands Narrow Specialists • • Groupthink 8-12 * * * Departmentalization • By Product • By Function • By Customer Group • By Geographic Location • By Process 8-13 * * * Line Organizations 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 8-14 * * * Line/Staff Organizations Line Personnel Staff Personnel • Formal Authority • Advise Line • Make Policy Decisions Personnel • Assist Line Personnel 8-15 * * * Matrix Organizations Advantages Disadvantages • Flexibility • Costly/Complex • Cooperation & • Confusion in • Creativity • Requires Good Teamwork • More Efficient Use of Resources Loyalty Interpersonal Skills & Cooperation • Not Permanent 8-16 * * * Important Conditions for Small Teams Clear Purpose Clear Goals Correct Skills Mutual Accountability Shift Roles When Appropriate Source: CIO Dec 2003 8-17 * * * Networking • Real Time • Transparency • Virtual Corporations 8-18 * * * A Virtual Corporation Accounting Firm Productio n Firm Distributio n Firm Core Firm Legal Firm Design Firm Advertisin g Agency 8-19 * * * Benefits and Concerns of Healthcare Outsourcing Benefits • • Provides Enough Staff to Operate the Facility Cost Savings • • • • Source: Healthcare Financial Management, 2005 Concerns Lower Employee Morale Liability Should Patients be Informed Confidentiality & Security 8-20 * * * Which Jobs Will Be Outsourced Next? Source: USA Today 8-21 * * * Adapting to Change • Restructuring for Empowerment • Focusing on the Customer • Creating a Change-Oriented Organizational Culture • The Informal Organization 8-22 * * * Layers of AuthorityTraditional • Top Managers- Decision Makers • Middle Managers- Develops Rules & Procedures • Workers and Supervisors 8-23 * * * Inverted Organization Structure Empowered front-line workers Support Personnel Top Mgmt 8-24 * * * Examples of Informal Group Norms • Do your job but don’t produce 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 more than the rest of 8-25 * * * More Examples of Informal Group Norms • • • • 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! 8-26 ... Specialists • • Groupthink 8-12 * * * Departmentalization • By Product • By Function • By Customer Group • By Geographic Location • By Process 8-13 * * * Line Organizations Advantages • Clear... Advancement Overworked Managers Loss of Control Less Management Expertise 8-11 * * * Departmentalization by Function • • • Advantages Skill Development Economies of Scale Good Coordination Disadvantages... Working Knowledge, October 31,2005 8-9 * * * Span of Control - Narrow Advantages • • • • More Control by Top Management More Chances for Advancement Greater Specialization Closer Supervision Disadvantages