Chapter Eight

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Chapter Eight
Organizing a Customer-Driven Business
2
Management Pyramid
CEO, Comptroller, Vice Pres.
Top
Sales Mgrs Plant Mgrs.
Mid-Level
Supervisors Foremen
Front Line/Supervisory
3
Workers in Large Companies During the Last 5
Years Have Undergone...
500 Employees
Source Gallup for Carlson Marketing Group
4
Purpose of an Organizational Chart

• 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

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Organizational Design

• Organization
• Division
• Department
• Group
• Individual

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Fayols Principles of Organization

• Degree of Centralization
• Communication Channels
• Order
• Equity
• Esprit de Corps

• Unity of Command
• Hierarchy of Authority
• Division of Labor
• Subordination of Individual Interest
• Authority

7
Webers Organizational Principles

• Job Descriptions
• Written Rules
• Procedures, Regulations, Policies
• Staffing/Promotions based on Qualifications

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Fundamentals of Bureaucracy

• Chain of Command
• Rules Regulations
• Set Up by Function
• Communication Minimal

9
Organizational Structures

• Tall Organizations
• Many Layers of Mgmt.
• Cost of Mgmt.High

• Flat Organizations
• Current Trend
• Creation of Teams

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Span of Control

• Capabilities of Subordinates Manager
• Complexity of Job
• Geographically Close
• Functional Similarity
• Need for Coordination
• Planning Demands
• Functional Complexity

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Departmentalization

• Advantages
• Skill Development
• Economies of Scale
• Good Coordination

12
Departmentalization

• Disadvantages
• Lack of Communication
• Employees Identify with Department
• Slow Response to External Demands
• Narrow Specialists

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Departmentalization

• Product
• Function

• Customer
• Location
• Process

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Centralization (No Delegation)

• Disadvantages
• Lots of Policies Procedures
• Many Layers/Slower

• Advantages
• Increased Uniformity
• Less Duplication
• Maximum Control

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Decentralization (Delegate Authority)

• Advantages
• Informed Decisions
• Worker Responsibility
• Few Layers/Faster

• Disadvantages
• Loss of Control
• Possible Duplication

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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

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Layers of Authority

• Top Managers- Decision Makers
• Middle Managers- Developed Rules Procedures
• Workers and Supervisors

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Line/Staff Organizations

• Line Personnel
• Perform Functions
• Contribute Directly to Organizational Goals

• Staff Personnel
• Advise
• Assist Line Personnel

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Matrix Organizations

• Advantages
• Flexibility
• Cooperation Teamwork
• Creativity
• More Efficient Use of Resources

• Disadvantages
• Costly/Complex
• Confusion in Loyalty
• Requires Good Interpersonal Skills Cooperation
• Not Permanent

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Tips for Team Leaders

• Dont be afraid to admit ignorance
• Know when to intervene
• Learn to truly share power
• Worry about what you take on, not what you give
  up
• Get used to learning on the job

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Networking Nets

• Networking
• Real Time
• Transparency
• Nets
• Extranet
• Intranet

Teleconference
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A Virtual Corporation (Figure 8.7)
Production Firm
Distribution Firm
Accounting Firm
Core Firm
Legal Firm
Advertising Agency
Design Firm
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The Four Rs ofOrganizational Transformation

• Reframe
• Restructure
• Revitalize
• Renew

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How to ImproveOrganizational Structure

• Break business into smaller units
• Build teamwork
• Impose autonomy
• Create meaningful incentives
• Outsource non-operating activities
• Share business capabilities across units

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Inverted Organization Structure
Empowered front-line workers
Support Personnel
Top Mgmt.
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Outsourcing
Benefits
Downside

• Time to focus on companys primary function
• Increased level of expertise
• Cost effectiveness
• Decreased overhead
• Risk reduction
• Flexibility
• Technology

• Less personal approach
• Less control by owner in planning, implementing
  carrying out companys future
• Potential for competing for the outsourcing
  firms time

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Customer -Focused Design

• Bottom-up relationships
• Outsource
• Global orientation
• Internal vs. external customers

• Information
• Build teamwork
• cross-functional
• integration
• Self-management autonomy

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Examples ofInformal Group Norms

• Do your job but dont produce more than the rest
  of the group.
• Dont tell off-color jokes or use profane
  language among group members.
• Listen to the boss and use his/her expertise but
  dont trust him/her.
• Everyone is to be clean/organized at the
  workstation.

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Examples ofInformal Group Norms(contd)

• 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!

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Key Terms

• Bureaucracy 236
• Centralized authority 244
• Continuous improvement 251
• Cross functional teams 248
• Decentralized authority 244
• Departmentalization 241
• Formal organization 255
• Informal organization 255
• Inverted organization 252
• Line personnel 245
• Matrix organization 246
• Networking 249
• Organizational culture 254

• Organizational design 236
• Outsourcing 254
• Reengineering 252
• Restructuring 238
• Span of control 239
• Staff personnel 249
• Total quality management 251