4.1 Organizational Charts and Designs 4.2 Centralized and Decentralized Organization 4.3 Span of Control

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1 4. Organizing

2 4.1 Organizational Charts and Designs 4.2 Centralized and Decentralized Organization 4.3 Span of Control

3 4.4 Authority and Unity of Command 4.5 Incentives and Motivation Tools 4.6 Maslow s Hierarchy of Needs

4 4.7 McGregor s Theory X and Theory Y 4.8 Expectancy Theory 4.9 Equity Theory

5 4.10 Herzberg s 2 Factor Theory 4.11 Job Design

6 4.1 Organizational Charts and Designs

7 Organization How we bring people, resources, and information together to perform a task

8 Organization Chart The best way to show an organizational design

9 Classic Line and Staff Organization HR Mgr CEO VP VP VP Middle Mgr Middle Mgr Middle Mgr Middle Mgr Middle Mgr Workers, employees, non-managerial personnel

10 Organization Charts Show connections of positions and lines of authority Show general structure

11 Do NOT show quality of managers or the nature of the work being done

12 Functional Organization CEO Production Marketing Finance Mfg Quality Advertising Sales Accounting

13 Product Organization CEO Paint & Primer Div. Cleaning Compounds Home Products Production Production Production Marketing Marketing Marketing Accounting Accounting Accounting

14 Geographic Organization CEO North American Div. European Div. Asian Div. Production Production Production Marketing Marketing Marketing Accounting Accounting Accounting

15 Organization comes from planning. Design the way you plan to compete.

16 4.2 Centralized and Decentralized Organization

17 Centralization Where in the organization key decisions are made

18 Centralization Centralized Organizations = Key decisions are made at the top Decentralized Organizations = Key decisions are made at many levels

19 You cannot tell the degree of centralization by looking at the org chart

20 A Centralized Organization Functional Organization CEO Production Marketing Finance Mfg Quality Advertising Sales Accounting

21 A Decentralized Organization CEO Paint & Primer Div. Cleaning Compounds Home Products Production Production Production Marketing Marketing Marketing Accounting Accounting Accounting

22 Large dispersed organizations often use a decentralized structure

23 Geographic Organization CEO North American Div. European Div. Asian Div. Production Production Production Marketing Marketing Marketing Accounting Accounting Accounting

24 Centralized Organizations Tend to reduce costs by being efficient and standardized Most popular when you make only a few product types

25 Not very flexible and may not work in unstable periods

26 Decentralized Organizations More flexible and better able to adapt to changing circumstances

27 Popular when you make lots of different products or serve lots of different customer groups Typically higher costs than centralized

28 As the degree of centralization changes, an organization may need different managers.

29 4.3 Span of Control

30 Span of Control How many people report directly to a manager

31 You can increase span of control when: The manager can easily monitor employees The employees have similar jobs

32 The employees are well-trained and formally organized into teams

33 Span of Control = 3 CEO VP VP VP

34 Span of Control = 6 CEO VP

35 Span of Control = 9 CEO

36 Flattening the Organization CEO CEO VP VP VP Tall (Vertical) Flat (Horizontal)

37 The appropriate span of control depends on how much supervision employees need

38 Flattening Organizations Flat Organization = Lower costs and better up/down communications Tall Organization = Higher costs but managers have more time to plan and analyze

39 Always make your organization as flat as you can without losing control.

40 4.4 Authority and Unity of Command

41 Organizations have both formal and informal authorities. Both affect how things work

42 You can increase span of control when: The manager can easily monitor employees The employees have similar jobs

43 The employees are well-trained and formally organized into teams

44 Line of Authority (Chain of Command) CEO Line of Authority VP VP VP

45 Unity of Command Each person should be responsible to one clear superior who directs them

46 Matrix Organization Poor Unity of Command CEO Paint & Cleaning Home Primer Compounds Products Production Production Production Production Marketing Marketing Marketing Marketing Accounting Accounting Accounting Accounting

47 Formal and Informal Authority Formal Authority = Based on organizational structure and policy Informal Authority = Based on technical ability, seniority, reputation, and personal influence

48 All organizations have some degree of informal authority. Always that person whom everyone turns to

49 Informal Communications I heard it on the grape vine!

50 Informal authority and communications are usually considered important in an organization.

51 4.5 Incentives and Motivation Tools

52 Once we put people in our organization, we have to motivate them do the work we need done

53 Motivation = The intention of achieving a goal, leading to goal directed behavior Columbia Encyclopedia

54 Incentive = Something that incites or has a tendency to incite to determination or action Merriam Webster Dictionary

55 Theories of Motivation Needs Based = Motivation is the result of individuals trying to satisfy their own needs

56 Process Based = Motivation is a rational process where individuals make choices based on their own situation

57 Carrots and Sticks Rewards and Punishments

58 Reinforcement Theory Positive Reinforcement Positive action = Reward Negative Reinforcement Positive action = Nothing bad Punishment Negative action = Punishment Extinction Negative action = Nothing good

59 Rewards can be either intrinsic or extrinsic - from the inside or the outside

60 Intrinsic Motivation We do something because we gain a sense of achievement and accomplishment Fun, challenge, or a sense of personal satisfaction

61 Extrinsic Motivation We do something because we want to earn an external reward A bonus, a certificate, praise from peers, or recognition from management

62 Human beings are incredibly complex. No single theory of motivation can explain us completely.

63 4.6 Maslow s Hierarchy of Needs

64 Of all the needsbased theorists, Abraham Maslow is the most commonly used

65 Maslow s Hierarchy We are motivated by the lowest unmet need

66 Maslow s Hierarchy We are motivated by the lowest unmet need

67 S.A. Esteem Social Security/Safety Physiological

68 Physiological = Basic needs for food, water, air, and shelter Safety/security = Need for protection and confidence in survival in the future Social = Need for friendship, respect, and acceptance

69 Esteem = Need for recognition of our unique personal worth Self Actualization = When someone has meet all their lowerlevel needs and now seeks only intrinsic motivators

70 Opportunities for growth and experience S.A. Titles, parking spots, recognition Esteem Team-building and office parties Social Salary, health insurance Security/Safety Safe, comfortable work area Physiological

71 Maslow is easy to understand and intuitive, but too simple to be really useful

72 ERG Theory A more complex interpretation of needs and motivation than Maslow provides Developed by Clayton Alderfer

73 Existence = Maslow s Physiological and Safety needs. May also be known as Deficiency Needs Relatedness = Maslow s Social needs Growth = Maslow s Esteem and Self- Actualization needs

74 Relatedness and Growth may also be known as Growth Needs

75 ERG Theory Needs are NOT hierarchal and we can be motivated by different needs at the same time If we cannot meet one set of needs, we may focus on another set

76 Maslow is more familiar and easier to understand for most managers, but ERG is better at explaining real people.

77 4.7 McGregor s Theory X and Theory Y

78 Douglas McGregor describes motivational approaches based on manager s beliefs about employees

79 Theory X - Authoritarian Approach Employees only work for extrinsic rewards and must be watched and pushed

80

81 Theory Y - Participative Approach Employees seek satisfaction in work and should be included in managerial decisions

82

83 Theory X Managers Assume that: Employees need constant reward and punishment Employees cannot be trusted and need constant supervision

84 Employees hate their jobs and only work for the money

85 Theory Y Managers Assume that: Employees view work as fulfilling and satisfying Employees can be trusted to work well without supervision

86 Employees have the ability to solve problems creatively on their own

87 Theory X Organizations: Small spans of control and lots of managers/ levels Emphasis on rewards and punishments to motivate Lots of micromanagement and high employee turnover

88

89 Theory Y Organizations: Large spans of control and few managers Emphasis on teamwork and cooperation to motivate Frequent promotion opportunities

90

91 Theory X Scientific management, needsbased motivation theories, and higher costs

92 Theory Y Professional management, process-based motivation theories, and lower costs

93 Theory Y can be a more difficult and scary motivational approach but it is usually worth it.

94 4.8 Expectancy Theory

95 Expectancy theory is process-based and tells us what kinds of incentives will really motivate people

96 Expectancy theory is the result of rational analysis where people ask themselves 3 questions about a possible reward

97 The 3 Questions of Expectancy Theory 1. Will hard work lead to the right outcome? Do I Expect to be able to reach this goal? 2. Will reaching the goal deliver the reward? Do I expect my success to be rewarded?

98 3. Will the reward be valuable? Is this worth all the work it will take to get it?

99 Expectancy Theory Terms Effort Performance Reward Expectancy Instrumentality Valence Do I expect to be able to reach the goal? Will I get the reward if I do reach the goal? Is it worth the effort?

100 An answer of NO to any question means the incentive offers no motivation at all

101 Difficulty of Goal Motivation drops to zero when the goal becomes so difficult you can t Motivation expect to each it Desirability of Reward

102 Best week ever = 100 units Units Produced Units Units Units Goal =

103 Setting goals is the search for the Goldilocks zone, where the difficulty and rewards are Just Right

104

105 Management By Objective MBO Incentive system where managers and employees agree on goals and rewards. Challenge is in finding agreement and valence MBO systems align goalsetting and planning

106 The trick with Expectancy Theory is setting exactly the right goals. Usually takes experience.

107 4.9 Equity Theory

108 Equity theory is process-based and tells us how people REALLY judge the value of rewards

109 Equity theory says that we don t judge value in absolute terms. We judge it in comparison to what others get

110 Referent We look at a person or group of people and compare our treatment to theirs

111 Who is/are my referents? They are people like you, with similar jobs and inputs. If you are a clerk in accounting, you don t compare yourself to the CEO

112 Joe. Your work has been excellent. I am giving you a $10,000 bonus!

113 $10,000? That s nice but you do know that everyone else got $15,000?

114 Equity Theory is about justice, where things should be fair. When we receive a reward, the next step is to compare it to the referent. Is the reward fair?

115

116 Inputs = Things I contribute: Outputs = Things I receive: - hard work - Loyalty - Pay - Promotions - Education - Skills - Experience - Seniority Do I get the same outputs as my referents, when my inputs are as good or better? - Recognition - Opportunities - Respect - Trust

117 Equity theory demands fairness but life is seldom fair. The best approach is to discourage people from sharing salaries.

118 4.10 Herzberg s 2 Factor Theory

119 Frederick Herzberg tells us that what motivates us is very different than what satisfies us - or doesn t satisfy us

120 Herzberg vs Maslow S.A. Esteem Motivators Social Hygiene Factors Security/Safety Physical/Physiological

121 Hygiene Factors - Environmental factors around the job that can cause dissatisfaction and demotivation Motivators - Intrinsic factors of the job that cause employees to want to work harder and accomplish more

122 Hygiene Factors Company policies Supervision and relationships Working Conditions Salary Security

123 Motivators Achievement Recognition Interesting work Increased responsibility Advancement and growth

124 The key point here: Both hygiene factors and motivators affect motivation but not in the same ways

125 Once upon a time, there was a great company with terrible restrooms

126 Fixing hygiene factors can fix demotivation, but only motivators can really inspire employees to work

127 Herzberg on the Design of Jobs Job Enrichment Adding motivators like recognition, responsibility, achievement, and personal growth makes employees want to work harder

128 Herzberg s ideas are most valuable when we apply them to the design of jobs.

129 4.11 Job Design

130 If organizations really want employees to work hard, managers need to pay attention to how employee s jobs are designed

131 Herzberg tells us that motivators have almost unlimited potential to motivate employees.

132 Motivators Achievement Recognition Interesting work Increased responsibility Advancement and growth

133 Scientific Management and Job Specialization Easy to train and manage but seriously boring

134 Easy to train and manage but seriously boring

135 As the nature of businesses changed, we needed more motivated employees

136 Job Design Approach Job Enrichment Effects Adds responsibility and gives workers more control over how they do their jobs. Increased motivation Job Enlargement Adds a larger variety of tasks to a job. Makes the work less boring and gives workers a greater sense of satisfaction Job Rotation Circulates workers through a number of different jobs over time. Reduces boredom and gives a broader range of skills

137 When enlarging and enriching jobs, it is critical to think about what kinds of tasks we add, as well as how many

138 Job Characteristics Model Core Job Characteristics Psychological States Outcomes Skill Variety Task Identity Task Significance Autonomy Feedback Meaningfulness Responsibility Knowledge of results Motivation Performance Satisfaction Absenteeism Turnover

139 Once upon a time, I met 3 men cutting stone 1st - I am earning 5$ an hour 2nd - I am a craftsman, carving the best blocks I can

140 I am building a cathedral

141 The best source of long-term employee motivation is the design of jobs.

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