Each component of a business must fulfill its own purpose while simultaneiously fitting in with the others

Transcription

1 What is organizational structure Each component of a business must fulfill its own purpose while simultaneiously fitting in with the others Organizational structure the specification of the jobs to be done within a business and how these jobs relate to one another The chain of command Organization charts a physical depiction of the company s structure showing employee titles and their relationship to one another Chain of command reporting relationships within a business; the flow of decision making power in a firm When the chain of command is not clear many different kinds of problems can result The building blocks of organization structure The first step in developing the structure of any business is twofold Specialization determining who will do what Departmentalization determining how people performing certain tasks can best be grouped together Specialization Job specialization the process of identifying the specific jobs that need to be done and designating the people who will perform them All organizations have only one major job and that is to make a profit from the good or service they are selling but that gets broken down into smaller components Each component is assigned to an individual Specialization and growth In a very small organization, the owner may perform every job, but as it grows, so will the need to specialize jobs so that others can perform them Job specialization is a natural part of organizational growth

2 Departmentalization Job specialization has certain advantages individual jobs can be performed more efficiently, jobs are easier to learn, easier to replace people who leave the organization If job specialization is carried too far and jobs become narrowly defined people get bored, derive less satisfaction from their jobs and often lose sight of how their contributions fit into the overall organization Departmentalization the process of grouping jobs into logical units Control and coordination are narrowed and made easier, and top managers can see more easily how various units are performing Departmentalization allows the firm to treat a department as a profit center a separate company unit responsible for its own costs and profits Jobs are grouped logically, according to some common thread or purpose In general departmentalization may occur along functional, customer, product, geographic or process lines Establishing the decision making hierarchy Establishing the decisions making hierarchy is preceded by job specialization and departmentalization So managers must explicitly define reporting relationships among positions so that everyone will know who has responsibility for various decisions and operations The goal is to figure out how to structure and stabilize the organizational framework so that everyone works together to achieve common goals The development of the decision making hierarchy generally results from a three step process Assigning tasks determining who can make decisions and specifying how they should be made Performing tasks implementing decisions that have been made Distributing authority determining whether the organization is to be centralized or decentralized

3 Assigning tasks In a company with more than one person, individuals must work out agreements about responsibilities and authority Responsibility the duty to perform an assigned task task Authority the power to make decisions necessary to complete a Performing tasks Trouble occurs when appropriate levels of responsibility and authority are not clearly spelled out in the working relationship between managers and subordinates Delegation assignment of a task, a responsibility or authority by a manager to a subordinate Accountability liability of subordinates for accomplishing tasks assigned by managers others Fear of delegating many managers have trouble delegating tasks to Then subordinates are not able to complete a task because it was not sufficiently delegated by the manager So they have a dilemma they can t do what the boss demands but that boss will probably still hold them accountable But effective managers surround themselves with a team of strong subordinates and then delegate sufficient authority to those subordinates to get the job done Four things to keep in mind when delegating Decide on the nature of the work to be done Match the job with the skills of subordinates Make sure the person chosen understands the objectives they are supposed to achieve Make sure subordinates have the time and training necessary to do the task

4 Experts pinpoint certain indicators that managers are having trouble delegating effectively The feeling that employees can never do anything as well as they can The fear that something will go wrong is someone else takes over a job The lack of time for long range planning because they are bogged down in day-to-day operations The sense of being in the dark about industry trends and competitive products because of the time they devote to day to day operations To overcome these tendencies, small business ownders must admit that they can never go back to running all aspects of the business and that they can in fact prosper if they learn to let go and trust their employees Some managers in big companies also don t delegate as much or as well for a number of reasons They fear that the subordinates don t really know how to do the job They fear that a subordinate might show the manager up in front of others by doing a superb job The desire to keep as much control as possible over how things are done A simple lack of ability to as to how to effectively delegate to others The managers needs to recognize that they can t do the job by themselves If subordinates can t do the job, they need to be trained Mangers should recognize that if a subordinate performs well it reflects favourable on that employee s manager A manager who doesn tknow how to delegate migh need specialized training in how to divide up and assign tasks to others

5 Distributing authority Delegation involves a specific relationship between managers and subordinates Most businesses must also make decisions about general patterns of authority throughout the company Centralized organizations top mangers retain most decision making rights for themselves and top management must approve most lower level decisions before they can be implemented eg. McDonalds Decentralized organizations lower and middle level managers are allowed to make significant decisions The purpose of decentralization is to make a company more responsive to its environment by breaking the company into more manageable units and giving those units more autonomy Reducing top heavy bureaucracies is also a common goal of decentralizations Determining the optimum level of decentralization can be difficult sometimes you want to give managers autonomy, but not so much that each department/division is new competition and costing the company Tall and flat organizations Flat organizational structure an organization with relatively few layers of management usually occurs when firms are decentralized Tall organizational structure an organization with many layers of management companies with centralized authority systems typically require multiple layers Because information, whether up or down, must pass through so many organizational layers, tall structures are prone to delays in information flow But as organizations grow in size, it is both normal and necessary that they become at least somewhat taller Too few layers can create chaos and inefficiency, while too many layers can create rigidity and bureaucracy Span of control

6 The number of people managed by one manager The distribution of authority in an organization also affects the number of people who work for any individual manager Usually the span of control in flat organizations is wide, and in tall organizations span of control tends to be relatively narrow Span of control depends on many factors Employee s abilities and the supervisors managerial skills help to determine whether span of control if wide or narrow Similiarity and simplicity of those taks performed under the managers supervision and the extent to which they are interrelated If lower level managers are given more decision making authority their supervisors will have less work to do because some of the decisions they made will be transferred to subordinates which will enable them to oversee and coordinate the work of more subordinates, resulting in an increased span of control When several employees perform either the same simple task or a group of interrelated taks, a wide span of control is possible and often desirable When jobs are more diversified or prone to change a narrow span of control is preferable Downsizing the planned reduction in the scope of an organization s activity Usually means cutting substantial numbers of managers and workers and reducing the number and variety of products the company produces Downsizing may eliminate entire layers of management and the remaining mangers end up with larger spans of control Basic organizational structures There is a infinite variety of structures, but there are four basic forms functional, divisional project and international Functional structure various units are included in a group based on functions that need to be performed for the organization to reach its goals Makes use of departmentalization by function

7 Divisional structure divides the organization into divisions each of which operates as a semi autonomous unit and profit cneter Project organization Divisions in organizations can be based on products, customers or geography Because divisions are relatively autonomous, a firm can take such action with minimal disruption to its remaining business operations Divisionalized companies are free to buy, sell, create and disband divisions without disrupting the rest of their operations Divisions can maintain healthy competition among themselves by sponsoring separate advertising campaigns, fostering different corporate identities and so forth If too much control is delegated to divisional managers, corporate managers may lose touch with daily operations Competition between divisions can also become disruptive and efforts of one division may be duplicated by those of another Look at table 8.2 pg. 121 for advantages and disadvantages of the divisional structure a typical line or line staff organization is characterized by unchanging vertical authority relationships it has such a set up because the organization produces a product or service in a repetitive and predictable way but some organizations want new product opportunities or with projects that have a definitive starting and ending point these organizations use a project structure to deal with the uncertainty encountered in new situations project organization involves forming a team of specialist from different functional areas of the organization to work on a specific project if a project structure is temporary the project team disbands once the project is completed and team members return to their regular functional area or are assigned to a new project Organizational design for the twenty first century

8 as the world grows organizations continue to seek new forms of organization that permit them to compete effectively the most popular of these new forms are team organization and virtual organization team organization relies on project type teams, with little or no underlying functional hierarchy people float from project to project as dictated by their skills and the demands of those projects this strategy allows each unit to change direction, explore new ideas and try new methods without having to deal with a rigid bureaucratic superstructure virtual organization has little or no formal structure, only has a handful of permanent employees, small staff and a modest administrative facility the informal organization as the needs of the organization change, managers bring in temporary workers, lease facilities, and outsource basic support services to meet the demands of each unique situation as the situation changes, and temp workforce changes in parallel, with some people leaving the organization and others entering it the virtual organization exits only in response to its own needs all organizations have an informal organization within which people do their jobs in different ways and interact with other people in ways that do not follow formal lines of communication formal vs. Informal organizational systems formal organization of a business is the part that can be seen and represented in chart form, but the structure of a company is by no means limited to the organization chart and the formal assignment of authority informal organization everyday social interactions among employees that transcend formal jobs and job interrealationships effectively altering a company s formal structure this level of organization is sometimes just as powerful than the formal structure but on the negative side the informal organization can reinforce office politics that put the interests of the individuals ahead of those of the firm

9 a great deal of harm can be caused by distorted or inaccurate information communicated without management input or review informal groups are simply groups of people who decide to interact among themselves impact of informal groups on the organization may be positive, negative or neutral organizational grapevine an informal communications network that carries gossip and other information throughout an organization grapevines found in all organizations except the very smallest internet ins a worldwide grapecine grapevines usually pass information orally, messages often become distorted in the process the higher the source the greater the likelihood that the grapevine has the real story managers can have some control over grapevines by maintaining open channels of communication and responding vigourously to inaccurate information they can minimize the damage the grapevine can do manager can also receive valuable information from the grapevine and use it to improve decision making ignoring this valuable source of information can cuase managers to be the last to know that they are about to get a new boss or that they have potentially fatal image problem