Fundamentals of Organizing PDF

Chapter 11 Fundamentals of Organizing Introduction to Management 13th edition John R. Schermerhorn, Jr. Daniel G. Bacharach Ch.11...

Chapter 11 Fundamentals of Organizing Introduction to Management 13th edition John R. Schermerhorn, Jr. Daniel G. Bacharach Ch.11 1 “Organization isn't about perfection; it's about efficiency, reducing stress and clutter, saving time and money and improving your overall quality of life” Ch.11 2  Organizing as a Management Function ▪ Organizing Arranges, connects and integrates people and resources to work together to accomplish a goal Purpose: To create a division of labor and coordinate processes and results to achieve a common purpose. ▪ Organization Structure The system of tasks, reporting relationships and communication linkages. Formal structure: is the official structure of the organization. Ch.11 3  Organizing viewed in relationship with the other Management Functions Figure 11.1 Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 4  Organizing as a Management Function ▪ An Organization Chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. ▪ It includes: The division Supervisory Communication Major Levels of of work relationships channels subunits management Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 5  Organization Chart- Example Ch.11 6  Organizing as a Management Function ▪ Informal structures  The set of unofficial relationships between Org members “Shadow Org”! Social network analysis: Identifies informal structures and social relationships in the organization Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 7  Organizing as a Management Function Informal structures and social networks ▪ Potential advantages of informal structures: ✓ Allow people to make contacts with others who can help them get things done ✓ Stimulate learning as people work and interact together ✓ Sources of emotional support and friendship that satisfy members’ social needs Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 8  Organizing as a Management Function Potential disadvantages of informal structures: Presence of Susceptibility Diversion of “In and out to rumor; May carry May breed work efforts Feeling of groups” ; e.g. e.g. during inaccurate resistance to from alienation by Americans in bad information change important outsiders Japanese economic objectives company times, crisis.. Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 9  Traditional Organization Structures Traditional Organization Structures Types: Functional Divisional Matrix Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 10  Traditional Organization Structures Functional structures People with similar skills and performing similar tasks are grouped together into formal work units Members work in their functional areas of expertise Work well for small organizations producing few products or services Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 11  Functional Structures in a Business, Branch Bank and Community Hospital Figure 11.2 Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 12  Traditional Organization Structures Potential advantages of functional structures: ▪ Economy of scale with efficient use of resources ▪ Task assignments consistent with expertise and training ▪ High-quality technical problem solving ▪ In-depth training and skill development ▪ Clear career paths within functions Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 13  Traditional Organization Structures Potential disadvantages of functional structures: Functional chimneys problem Sense of cooperation and common Difficulties in pinpointing purpose breakdown responsibilities Narrow view of performance objectives Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 14  Traditional Organization Structures Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 15  Traditional Organization Structures Divisional structure Groups together people who work on the same product / process, serve similar customers, and/or are located in the same area or geographical region Common in complex organizations with diverse operations Avoids problems associated with functional structures ~ instead of reporting to different bosses, now one person is in charge of the whole thing! Ch.11 16  Divisional structures based on product, geography, customer and process Figure 11.3 Ch.11 17  Traditional Organization Structures Divisional structures: 1. Product structure. Groups together people and jobs focused on a single product or service. 2. Geographical structure. Groups together people and jobs performed in the same location. 3. Customer structure. Groups together people and jobs that serve the same customers or clients. 4. Process structure. Groups jobs and activities that are part of the same processes. Work Process. A group of related tasks that collectively creates a valuable work product. Examples: product purchasing, order fulfillment, L/C process at banks. Ch.11 18  Traditional Organization Structures Potential advantages of divisional structures: ✓ More flexibility in responding to environmental changes ✓ Improved coordination ✓ Clear points of responsibility ✓ Expertise focused on specific customers, products, and regions ✓ Greater ease in restructuring Ch.11 19  Traditional Organization Structures Potential disadvantages of divisional structures: Duplication of Competition and Emphasis on resources and poor divisional goals efforts across coordination at expense of divisions across divisions Org goals Ch.11 20  Traditional Organization Structures Matrix structure ▪ Often called Matrix Organization. ▪ Combines functional and divisional structures to gain advantages and minimize disadvantages of each ▪ Creating permanent teams in a matrix that cuts across functions to support specific product, project or program. ▪ Workers in matrix structure simultaneously belong to at least two formal groups- a functional group and a product, program or project team. ▪ For example, a project or task team established to develop a new product might include engineers and design specialists as well as those with marketing, financial, personnel and production skills. Ch.11 21  Traditional Organization Structures Matrix structure ▪ Have two supervisors: 1) within the function (dept head/mgr.) 2) within the team (product or project mgr.) ▪ Used in: Service Multi- Professional Non-profit Manuf’g industries fields sector national corporations Ch.11 22  Matrix structure in a small, multi-project business firm Figure 11.4 Ch.11 23  Another example of a matrix Report to the Project Manger Ch.11 24  Traditional Organization Structures Potential advantages of matrix structures: ✓ Better communication & cooperation across functions ✓ Improved decision making “team rather individual” ✓ Increased flexibility in restructuring; adding/removing/ changing operation to meet changing demand. ✓ Better customer service; blend of expertise always available. ✓ Better performance accountability ✓ Improved strategic management. “top managers freed from lower level problems” Ch.11 25  Traditional Organization Structures Potential disadvantages of matrix structures: Two-boss Team may Two-boss system can develop Increased costs system is Team meetings create task “groupitis ”; due to adding susceptible to are time confusion and strong team team leaders to power consuming conflict in work loyalty Vs. large structure struggles priorities org goals! Ch.11 26  Organization Chart Ch.11 27  Horizontal Organization Structures Horizontal Structure/flat Org: To increase collaboration in org thru harnessing the power of teams, technology & connections. Thus increasing communications, team work & flexibility while reducing hierarchy & function silos and empowering human talent. 1. Team structures Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks Often use cross-functional teams composed of members from different functional departments Project teams are convened for a specific task or project and disbanded once completed Ch.11 28  How a Team Structure uses Cross-functional Teams for improved lateral relations Figure 11.5 Ch.11 29  Horizontal Organization Structures Potential advantages of team structures: Eliminates barriers between operating departments Improved morale “shared knowledge” Greater sense of involvement & identification Increased enthusiasm for work Improved quality & speed of decision making Ch.11 30  Horizontal Organization Structures Potential disadvantages of team structures: Effective use of time Conflicting loyalties Excessive time spent depends on quality among members in meetings of interpersonal (team Vs. fn. (time is not always relations, group Assignments) productive) dynamics, and team management Ch.11 31  Horizontal Organization Structures 2. Network Structures ▪ Has a central core of full time employees surrounded by “network” of outside contractors & partners (strategic alliances) supplying essential services (grey boxes in fig. 11.6). ▪ Uses Info Technologies (IT) to link with networks of outside suppliers and service contractors ▪ Strategic alliances ~ is a cooperation agreement with another org to jointly pursue activities of mutual interest: Outsourcing strategic alliance- purchase of svc s/a accounting from another org. Supplier strategic alliance- link businesses in preferred relationship that guarantees a smooth & timely flow of quality supplies. Ch.11 32 Copyright ©2015 John Wiley & Sons, Inc.  A Network Structure for a Web-based Retail Business Figure 11.6 Other examples: medical insurance network, Mobile-applications Ch.11 33  Horizontal Organization Structures Potential advantages of network structures: ✓ Firms can operate with fewer full-time employees and less complex internal systems ✓ Reduced overhead costs “admin expenditures, rent, insurance and utility charges” and increased operating efficiency ✓ Permits operations across great distances Ch.11 34  Horizontal Organization Structures Potential disadvantages of network structures: Control and Potential lack Potential loss Excessively coordination of loyalty of control aggressive problems may among over outsourcing arise from infrequently outsourced can be network used activities dangerous complexity contractors Ch.11 35  Horizontal Organization Structures 3. Boundaryless Organizations ▪ Eliminate internal boundaries among subsystems and external boundaries with the external environment. ▪ A combination of team and network structures, with the addition of “temporariness”. ▪ Little hierarchy but lots of empowerment and use of technology. Example: Pricewaterhousecoopers (PWC) “consultant giant” knowledge sharing of 160,000 employees spread across 150 countries in a virtual-learning & problem solving network. EHS, Hakeem Program in Jordan; https://ehs.com.jo/hakeem-program Ch.11 36  The Boundaryless Organization eliminates internal and external barriers C A B E Figure 11.7 Ch.11 37  Boundaryless Organizations - Example Ch.11 38 Copyright ©2015 John Wiley & Sons, Inc.  Boundaryless Organizations - Example Ch.11 39 Copyright ©2015 John Wiley & Sons, Inc.  Boundaryless Organizations - Example Ch.11 40 Copyright ©2015 John Wiley & Sons, Inc.  Horizontal Organization Structures Boundaryless organizations- Key requirements: ▪ Absence of hierarchy ▪ Empowerment of team members ▪ Technology utilization ▪ Acceptance of temporariness Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 41  Horizontal Organization Structures Boundaryless organizations - Advantages ▪ Encourage creativity, quality, correctness, flexibility and efficiency ▪ Knowledge sharing is both a goal and essential component Ch.11 42  Horizontal Organization Structures 4. Virtual Organization ▪ A special form of Boundaryless organization ▪ Operates in a shifting network of external strategic alliances that are engaged as needed, using mobile IT solutions and the Internet. ▪ Manage relationships on line – logging in & off, do tasks, etc. No face-to-face contact. ▪ Examples:Twitter, LinkedIn communities. Ch.11 43  Organizational Designs ▪ Not all org’s are created equally. Org’s have different strategic needs, and to facilitate those needs they should have an org’l structure that supports business activities. ▪ A step-by-step methodology which identifies problems / dysfunctional of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. ▪ A formal process of integrating people, info and technology. ▪ Org’l structure is the formal authority, power & roles in an org. ▪ Organizational size, life cycle, strategy, environment and technology work together to form a complete organization. Ch.11 44  Organizational Designs ▪ Process of creating structures that accomplish mission and objectives. ▪ The best design at any given moment achieves a good match between structure & situational contingencies; including task, technology, environment and people. ▪ A problem-solving activity that should be approached from a contingency perspective. ▪ Choice between mechanistic / bureaucratic designs at one extreme, and organic / adaptive designs at the other end. Ch.11 45  Organizational Designs Mechanistic Designs Organic Designs Predictable goals Adaptable goals Centralized authority Decentralized authority Many rules and procedures Few rules and procedures Narrow spans of control Wide spans of control Specialized tasks Shared tasks Few teams and task forces Many teams and task forces Formal and impersonal Informal and personal means of coordination means of coordination Ch.11 46  A continuum of organizational design alternatives: from bureaucratic to adaptive organizations Figure 11.8 Ch.11 47  Organizational Designs Bureaucracy / Mechanistic ▪ A form of organization based on logic, order, and the legitimate use of formal authority. It is a vertical structure. ▪ Bureaucratic designs features: Clear-cut division of labor Strict hierarchy of authority Formal rules and procedures Promotion based on competency Ch.11 48  Organizational Designs External Environment determines the most appropriate design: ▪ Mechanistic designs work in a stable environment ▪ Organic designs work in a rapidly changing and uncertain environment Adaptive organizations operate with a minimum of bureaucratic feature and encourage worker empowerment and teamwork Ch.11 49  Organizational Designs Mechanistic Organic Ch.11 50  Trends in Organizational Designs ▪ Today’s environment is complex, uncertain and changing prompting more org to shift towards Horizontal and Organic structure. ▪ Contemporary organizing trends include: 1. Fewer levels of management a) Shorter chains of command b) Less unity of command 2. Wider spans of control 3. More delegation and empowerment 4. Decentralization with centralization 5. Reduced use of staff Ch.11 51  Trends in Organizational Designs 1. Chain of command Links all employees with successively higher levels of authority 2. Span of control The number of persons directly reporting to a manager; narrow = Tall structure, Wide = Flat structure  Organizing trend: Organizations are being “streamlined” by cutting unnecessary levels of management Flatter structures are viewed as a competitive advantage (wider span) Ch.11 52  Organization Chart Ch.11 53  Trends in Organizational Designs 3. More delegation and empowerment A common management failure is unwillingness to delegate Delegation leads to empowerment  Organizing trend: Managers are delegating more and finding more ways to empower people at all levels Ch.11 54  Trends in Organizational Designs Delegation and empowerment Delegation is the process of distributing and entrusting work to other persons. The manager assigns responsibility, grants authority to act, and creates accountability Authority should be commensurate/ aligns with responsibility Ch.11 55  Trends in Organizational Designs Three Steps in Delegation: Grant authority Create Assign accountability – responsibility – – allow others to require others to explain task and make decisions report back on expectations and act results Ch.11 56  Trends in Organizational Designs 4. Reduced use of staff Staff positions provide technical expertise for other parts of the organization. They provide directions & support. No one best solution for dividing line-staff responsibilities  Organizing trend: Organizations are downsizing / right sizing Organizations are lowering costs and increasing efficiency by employing fewer staff personnel and using smaller staff units Ch.11 57  Trends in Organizational Designs Ch.11 58  Trends in Organizational Designs Decentralization with centralization: Centralization is the concentration of authority for making Decentralization is the most decisions at the top dispersion of authority to levels of the organization make decisions throughout all levels of the organization ▪ It is a strategic choice between of these two ways. Ch.11 59  End of the Chapter Ch.11 Copyright ©2015 John Wiley & Sons, Inc. 60