BBA 1564 Principles of Management PDF

ninth edition BBA 1564 STEPHEN P. ROBBINS MARY COULTER PRINCIPLES OF MANAGEMENT 1PowerPoint Presentation by Charlie Cook The University of West Alabama BBA 1564...

ninth edition BBA 1564 STEPHEN P. ROBBINS MARY COULTER PRINCIPLES OF MANAGEMENT 1PowerPoint Presentation by Charlie Cook The University of West Alabama BBA 1564 ninth edition STEPHEN P. ROBBINS MARY COULTER Organizational Structure TOPIC 5 PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter 5: Organizational Structure Learning Outcomes Successful students will be able to: - Define the term organizational structure. - Describe the various models of organizational designs. - Explain the organizational structure, and span of control. - Explain the term centralization and decentralization. © 2007 Prentice Hall, Inc. All rights reserved. 1–3 Organizing Organizing is arranging and structuring work to accomplish the organization’s goals. Designing organizational structure involves the process of organizing (the second management function) and plays an important role in the success of a company. What Is Organizational Structure? An organizational structure defines how job tasks are formally divided, grouped, and coordinated. What Is Organizational Structure? Developing or changing an organization’s structure. This process involves decisions about six (6) key elements: – Work specialization, – Departmentalization, – Chain of command, – Span of control, – Centralization/decentralization, – and formalization. (standardization of jobs and extent employee is guided by rules and procedures) What Is Organizational Structure?  What Is Organizational Structure? Work Specialization - divide a job into a number of steps, each completed by a separate individual. - work specialization increases efficiency and productivity. Departmentalization - The grouping of common tasks so that it can be coordinated. - Eg. Functional, product or service, geography, process, customer. What Is Organizational Structure? Chain of Command – the continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who. MGT104 9 What Is Organizational Structure? Span of Control – The number of employees who can be effectively and efficiently supervised by a manager. Wider spans of control – The number of persons directly reporting to a manager. Organizational Structure (cont’d) Width of span is affected by: – Skills and abilities of the manager. – Ability of subordinates ( amount of training and experience). – Superior’s willingness to delegate. – Manager’s skills, ability and preferred style. Organizing trend: Many organizations are shifting to wider spans of control as levels of management are eliminated. Managers have responsibility for a larger number of subordinates who operate with less direct supervision. Span of Control (SOC) SOC is the number of subordinates who are directly under the supervision of a manager. An appropriate SOC is important for managers to carry out his duties of coordinating and monitoring. Span of Control (SOC) (cont’d) Narrow SOC =Tall Hierarchy There are MANY levels of management. Usually for more complicated jobs or not routine jobs where it allows managers to monitor better. Usually organization has a narrow SOC at the top of the structure. Span of Control (SOC) (cont’d) Wide SOC = Flat Hierarchy There are FEWER levels of management. Many subordinates are under the manager therefore, managers must ensure that he does not lose control of subordinates. Usually for more routine and repetitive jobs. Wide span of control is usually at the lower levels. Spans of Control in FLAT versus TALL structures Factors to be Considered When Deciding SOC Characteristics and complexity of work If the job is complicated, then a narrow SOC should be used. If the job is routine or repetitive, then a wide SOC can be used. Factors to be Considered When Deciding SOC (cont’d) Ability of subordinates ( amount of training and experience). If they are capable, experience and qualified, therefore can have wide SOC because managers do not need to monitor and supervise too much. Factors to be Considered When Deciding SOC (cont’d) Superior’s willingness to delegate. If the manager is NOT willing to delegate and would like to have tight control, then a narrow SOC would be used. Factors to be Considered When Deciding SOC (cont’d) Manager’s skills, ability and preferred style. If the manager can control, delegate and distribute work well, the a wide SOC can be used. Other Factors for SOC…. Physical proximity of subordinates. Similarity or standardization of tasks. Degree of standardized procedures. Sophistication of organization's information system. Strength of organization’s value system. Study Question: What organizing trends are changing the workplace?  Shorter chains of command – The line of authority that vertically links all persons with successively higher levels of management.  Organizing trend:  Organizations are being streamlined by cutting unnecessary levels of management.  Flatter structures are viewed as a competitive advantage. Centralization and Decentralization Centralization refers to the degree to which decision making is concentrated at a single point in the organization. Decentralization decision making is pushed down to the lower subordinates/employees for action. Advantages of Centralization 1. It maintains adequate control within the management. 2. Management can ensure that the individual units are moving towards the organization interests.  Advantages of Centralization (cont’d) 3. Ensure everyone is following the same instructions to achieve the goals. 4. Requires only a few good managers to run the organization. Disadvantages of Centralization 1. Overload top management because they have to make all the decisions. 2. Does not give top managers enough time to do strategic planning. Disadvantages of Centralization (cont’d) 3. Slow down operational decision because must refer and get approval from top management. 4. Demotivate employees because they do not get to be involved in decision making. Factors that Influence the Amount of Centralization When More Centralization: – Environment is stable. – Lower-level managers are not as capable or experienced at making decisions as upper-level managers. – Lower-level managers do not want to have a say in decisions. – Decisions are relatively minor. – Organization is facing a crisis or the risk of company failure. – Company is large. – Effective implementation of company strategies depends on managers retaining say over what happens. Decentralization Is the degree to which lower level employees provide input or make decision. The decision is made NOT only by top managers but can also be done by other levels of managements. Decentralized decision-making produce wide SOC (FLAT hierarchy). Advantages of Decentralization 1. Does not overload top management because they delegate and thus do not have to make all decisions. 2. Gives top managers enough time to do strategic planning. Advantages of Decentralization (cont’d) 3. Speed up operational decisions as managers do not have to refer and get approval from top management and they can decide by themselves. 4. Motivate employees because they get to be involved in decision making. Disadvantages of Decentralization 1. It is difficult to maintain adequate control within the management. 2. Difficult for management to ensure that the individual units are moving towards the organization interests. Disadvantages of Decentralization (cont’d) 3. May not be able to ensure that everyone is following the same instructions to achieve the goals. 4. Requires many good managers to run the organization. Factors that Influence the Amount of Decentralization When More Decentralization: – Environment is complex, uncertain. – Lower-level managers are capable and experienced at making decisions. – Lower-level managers want a voice in decisions. – Decisions are significant. – Corporate culture is open to allowing managers to have a say in what happens. – Company is geographically dispersed. – Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions. Formalization Formalization refers to the degree to which jobs within the organization are standardized. The degree of formalization can vary widely between and within organizations.