CHAPTER 11 1 ment ition illiams Copyright 2005
- Slides: 49
CHAPTER 11 1 ment ition illiams Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved
What Would You Do? You are the new CEO of Microsoft… . Bill Gates is having trouble letting go of Microsoft’s control. You are a micromanager and a control freak What can you and/or Gates do to make the CEO transition easier? What organizational structure best suits Microsoft at this point? Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 2
Designing Organizational Structures After reading the next three sections, you should be able to: 1. describe the departmentalization approach to organizational structure. 2. explain organizational authority. 3. discuss the different methods for job design. Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 3
Departmentalization Functional Customer Product Geographic Matrix 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 4
Functional Departmentalization Advertising Agency Sales Information Systems Accounting Human Resources Art Department Print Advertising Creative Department Radio Advertising 1. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 3 5
Functional Departmentalization Advantages. Work done by highly skilled specialists. Lowers costs through reduced duplication. Communication and coordination problems are lessened Disadvantages. Cross-department coordination can be difficult. May lead to slower decision making. Produces managers with narrow experiences 1. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 6
Product Departmentalization General Electric 1. 2 Aircraft Engines Consumer Products Consumer Finance Transportation Systems Medical Systems Specialty Materials Insurance NBC (Partial Listing of Products) Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 3 7
Product Departmentalization Advantages . Managers specialize, but have broader experiences Disadvantages. Duplication of activities. Difficult to coordinate across departments . Easier to assess workunit performance. Decision-making is faster 1. 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 8
Customer Departmentalization American Express Corporation Cards 1. 3 Travel Financial Services Business Services Classic Cards Air, Car, Hotel Reservations Advice & Planning Expense Management Solutions Lifestyle Cards Vacation & Specials Banking Small Businesses Reward Cards Worldwide Travel Offices Brokerage Financial Services (Partial Listing) Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 5 9
Customer Departmentalization Advantages . Focuses on customer needs. Products and services tailored to customer needs Disadvantages . Duplication of resources. Difficult to coordinate across departments. Efforts to please customers may hurt the company 1. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 10
Been There Done That IGUS AND THE SOLAR SYSTEM Frank Blasé, CEO of the igus corporation… . Business was slow to develop. The key to success was a focus on customers Ø created an organizational structure based on the solar system § the sun was the customer and the planets were teams of igus’ workers. Egalitarian culture and open communication Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 11
Geographic Departmentalization Coca-Cola Enterprises Central North America Group Western North America Group European Group Eastern North America Group 1. 4 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 6 12
Geographic Departmentalization Advantages . Responsive to the demands of different market areas Disadvantages . Duplication of resources. Difficult to coordinate across departments . Unique resources located close to the customer 1. 4 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 13
Matrix Departmentalization Citi. Group International Global Consumer Global Corporate & Investment Bank Global Investment Management 1. 5 Smith Barney Western Europe Central & Latin Eastern America Europe Country Manager s in Spain, France, Ireland, Country etc. Manager s in China, Japan, etc. Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 7 14
Matrix Departmentalization Advantages Disadvantages . Efficiently manage large, complex tasks . Requires high levels of coordination . Effectively carry out large, complex tasks . Conflict between bosses. Requires high levels of management skills 1. 5 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 15
Organizational Authority Chain of Command Line versus Staff Authority Delegation of Authority Degree of Centralization 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 16
Chain of Command. The vertical line of authority in an organization. Clarifies who reports to whom. Unity of command Ø workers report to only one boss Ø matrix organizations violate this principle 2. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 17
Line versus Staff Authority. Line authority Ø the right to command immediate subordinates in the chain of command Ø an activity that contributes directly to profit generation . Staff authority Ø the right to advise but not command others Ø an activity that supports profit generation 2. 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 18
Delegation of Authority. The assignment of direct authority and responsibility to a subordinate Responsibility Manager Authority Accountability Subordinate 2. 3 Adapted from Exhibit 11. 8 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 19
How to Be a More Effective Delegator 1. Trust your staff to be a good job 2. Avoid seeking perfection 3. Give effective job instructions 4. Know your true interests 5. Follow up on progress. 6. Praise the efforts of your staff. 7. Don’t wait to the last minute to delegate. 8. Ask questions, expect answers, assist employees. 9. Provide the resources you would provide if doing assignment yourself. 10. Delegate to the lowest possible level. 2. 3 Adapted from Exhibit 11. 9 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 20
Degree of Centralization of authority Ø primary authority is held by upper management . Decentralization Ø significant authority is found in lower levels of the organization . Standardization Ø solving problems by applying rules, procedures, and processes 2. 4 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 21
Job Design Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 22
Job Specialization. Breaking jobs into small tasks. Jobs are simple, easy to learn, and economical. Can lead to boredom, low satisfaction, high absenteeism, and employee turnover 3. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 23
Job Rotation, Enlargement, & Enrichment. Job Rotation Ø periodically moving workers from one specialized job to another . Job Enlargement Ø increasing the number of tasks performed by a worker . Job Enrichment Ø adding more tasks and authority to an employee’s job 3. 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 24
Blast From The Past From Farms to Factories to Telecommuting. For most of history, work occurred in homes or on farms. During industrial revolution, low-paid, unskilled workers ran machines and replaced skilled artisans Ø mass production was born Ø jobs occurred in large formal organizations Ø managers and disciplinary rules were needed 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 25
Job Characteristics Model. A job redesign approach that seeks to increase employee motivation. Emphasizes internal motivation Ø experience work as meaningful Ø experience responsibility for work outcomes Ø knowledge of results 3. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 26
Job Redesign Techniques Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job Opening Feedback Channels 3. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 10 27
Job Characteristics Model Core Job Dimensions Skill Variety Task Identity Critical Psychological States Experience Meaningfulness of Work Task Significance Autonomy Feedback Experience Responsibility for Outcomes of Work Knowledge of Actual Results of Work Activities Personal & Work Outcomes High Internal Work Motivation High-quality Work Performance High Satisfaction with Work Low Absenteeism & Turnover 3. 3 Adapted from Exhibit 11. 10 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 28
What Really Works The Job Characteristics Model Job Satisfaction Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 66% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3 probability of success 70% Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 29
What Really Works (cont. ) The Job Characteristics Model Job Satisfaction Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 73% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 70% 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 30
What Really Works (cont. ) The Job Characteristics Model Job Satisfaction High Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 84% Low Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 31
What Really Works (cont. ) The Job Characteristics Model Workplace Absenteeism Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 63% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 68% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3 probability of success 72% Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 32
What Really Works (cont. ) The Job Characteristics Model Workplace Absenteeism Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 74% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 72% 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 33
Designing Organizational Processes After reading the next two sections, you should be able to: 4. explain the methods that companies are using to redesign internal organizational processes (i. e. , intraorganizational processes). 5. describe the methods that companies are using to redesign external organizational processes (i. e. , interorganizational processes). Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 34
Intraorganizational Processes Reengineering Empowerment Behavioral Informality 4 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 35
Reengineering. The fundamental rethinking and radical redesign of business processes. Intended to achieve dramatic improvements in performance. Change the orientation from vertical to horizontal. Changes task interdependence 4. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 36
Reengineering and Task Interdependence Pooled Interdependence 4. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 11 More 37
Reengineering and Task Interdependence Sequential Interdependence 4. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 11 More 38
Reengineering and Task Interdependence Reciprocal Interdependence 4. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 11. 11 39
Empowerment Empowering Workers Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions . A feeling of intrinsic motivation. Workers perceive meaning in their work. Employees are capable of self-determination 4. 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 40
Behavioral Informality Behavioral Formality . Spontaneity . Routine & regimen . Casualness . Specific rules . Interpersonal familiarity . Impersonal attachment 4. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 41
Interorganizational Processes Modular Organizations Virtual Organizations Boundaryless Organizations 5 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 42
Modular Organizations 5. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 43
Modular Organizations Advantages Disadvantages . can cost less to run than traditional organizations . loss of control from outsourcing . lets organizations focus on core competencies . may reduce their competitive advantage 5. 1 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 44
Virtual Organizations 5. 2 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 45
Virtual Organizations Advantages . let companies share costs . difficult to control the quality of partners . fast and flexible . requires tremendous management skills . being the “best” should provide better products 5. 2 Disadvantages http: //www. agileweb. com Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 46
Boundaryless Organizations 5. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 47
Boundaryless Organizations Advantages . better utilize employee knowledge and skills. closer relationships with company’s external environment Disadvantages . transition is threatening. no clear way to achieve a boundaryless organization 5. 3 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 48
What Would You Do—II? Exide Technologies. Exide’s financial losses are increasing, share price is dropping, and the debt load is soaring. Exide is organized geographically and competition is fierce between company managers Which organizational structure should Exide use? When will Exide know when it has found the right organizational structure? What would you do? Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 49
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