Principles of Management. Lecture 7

Transcription

1 Principles of Management Lecture 7

2 Three Types of Control

3 Control Process Steps

4 A Definition of Organizing The Importance of Organizing Responsibilities of an organizing department would include: 1. Reorganization plans to make management system more effective and efficient 2. Plans to improve managerial skills to fit current management system needs 3. An advantageous organizational climate within the management system The Organizing Process 1. Reflect 2. Establish 3. Divide 4. Allocate 5. Evaluate The Organizing Subsystem

5 A Definition of Organizing

6 A Definition of Organizing

7 The Organization as an Open System 2 7

8 What Is Organizational Structure? Organizational Structure How job tasks are formally divided, grouped, and coordinated. Key Elements: Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization

9 What Is Organizational Structure? Work Specialization The degree to which tasks in the organization are subdivided into separate jobs. Division of labor: Makes efficient use of employee skills Increases employee skills through repetition Less between-job downtime increases productivity Specialized training is more efficient Allows use of specialized equipment

10 Economies and Diseconomies of Work Specialization

11 What Is Organizational Structure? Departmentalization The basis by which jobs are grouped together. Grouping Activities By: Function Product Geography Process Customer

12 Authority The rights inherent in a managerial position to give orders and to expect the orders to be obeyed. Chain of Command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. Unity of Command A subordinate should have only one superior to whom he or she is directly responsible.

13 Span of Control The number of subordinates a manager can efficiently and effectively direct. Concept: Wider spans of management increase organizational efficiency. Narrow Span Drawbacks: Expense of additional layers of management. Increased complexity of vertical communication. Encouragement of overly tight supervision and discouragement of employee autonomy.

14 Centralization The degree to which decision making is concentrated at a single point in the organization. Decentralization The degree to which decision making is spread throughout the organization. Formalization The degree to which jobs within the organization are standardized.

15 Advantages of centralization 1. It is a means for adopting and enforcing uniform policies and it achieves coordination and conformity since all decisions are made at one central point. 2. The quality of the decisions is expected to be higher since the top management, which makes such decisions is much more experienced and knowledgeable about organizational problems and situations Also, decisions made by subordinates in decentralization may not be optimal for the entire organization since the subordinates lack the wider perspective of the needs and issues of the organization as a whole and tend to concentrate on the optimality of their own units. 3. Centralization makes it easier to achieve balance among the activities of different departments and functional areas. If the departments of production, marketing and finance, each went its own way, then each would try to make decisions that would be beneficial to its own department, even at the cost of other departments. This would be harmful to the organization as a whole. The centralized system looks at these different sub-units as parts of the whole and relates these sub-units to each other so as to maximize the total benefits.

16 Cont. 4. Centralization results in the optimal utilization of human and physical resources. One of the disadvantages of divisionalization and decentralization is the duplication of efforts and resources for similar activities being conducted by different sectors of the Organization 5. Central management is better equipped to handle any emergencies that might affect all the units of the organization. This emergency may be related to policy matters or operational matters. This may be a breakthrough in technology or a sudden change in the tactics of competitors 6. Centralization provides for the services of staff specialists in those areas where they are needed. Different units of the same organization independently would not have the resources to provide for specialized services. 7. Centralization can be highly motivating and morale boosting for It provides prestige and power which strengthens the self-confidence which in turn would be useful in decision-making at time of a crisis

17 Advantages for decentralization. 1. It relieves the top executive from excessive work load, since in decentralization, most of the routine managerial responsibilities are delegated to subordinates. This gives the central management more time to concentrate on such tasks as planning, coordination and policy making, control. 2. It provides the foundation for the development of future executives. The more responsibility is given to subordinates, the more experience they will gain thus preparing them for higher positions. 3. Decentralization is highly motivational for subordinates because it gives them the freedom to act and to make decisions. It gives them a feeling of status and recognition which results in a feeling of dedication, commitment and belonging.

18 Cont.. 4. Decentralization leads to prompt actions and quick decisions, since the matters do not have to be referred to the higher-ups and spending time for their guidance, approvals or decisions. Also, the supervisors are much closer to the points of operations and are in a position to know the problems more accurately and are more likely to make the right decisions. 5. Decentralization results in effective control over operations and processes. In decentralization, the responsibility is much more specific and any mistakes are easily traceable. This makes accountability much more clear-cut and hence controls much more effective. In can be seen that decentralization is advantageous in most situations and unavoidable in large diversified organizations. To make decentralization more effective, its concept that it does not mean total autonomy but only operational independence and that the unit managers are responsible to the central management for their actions and results must be understood. Perhaps, the best form of decentralization would be centralized control with decentralized responsibilities.

19 Why Do Structures Differ? Mechanistic Model A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization. Organic Model A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

20 Mechanistic Versus Organic Models

21 Why Do Structures Differ? Strategy Innovation Strategy A strategy that emphasizes the introduction of major new products and services. Cost-minimization Strategy A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting. Imitation Strategy A strategy that seeks to move into new products or new markets only after their viability has already been proven.

22 The Strategy-Structure Relationship Strategy Innovation Cost minimization Imitation Structural Option Organic: A loose structure; low specialization, low formalization, decentralized Mechanistic: Tight control; extensive work specialization, high formalization, high centralization Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings

23 Why Do Structures Differ? Size Size How the size of an organization affects its structure. As an organization grows larger, it becomes more mechanistic. Characteristics of large organizations: More specialization More vertical levels More rules and regulations

24 Why Do Structures Differ? Technology Technology How an organization transfers its inputs into outputs. Characteristics of routineness (standardized or customized) in activities: Routine technologies are associated with tall, departmentalized structures and formalization in organizations. Routine technologies lead to centralization when formalization is low. Nonroutine technologies are associated with delegated decision authority.

25 Why Do Structures Differ? Environment Environment Institutions or forces outside the organization that potentially affect the organization s performance. Key Dimensions- Capacity: the degree to which an environment can support growth. Volatility: the degree of instability in the environment. Complexity: the degree of heterogeneity and concentration among environmental elements.

26 The Three Dimensional Model of the Environment Volatility Capacity Complexity

27 Organization Structure: Its Determinants and Outcomes Associated with Implicit Models of Organizational Structure Perceptions that people hold regarding structural variables formed by observing things around them in an unscientific fashion.

28 Organizational Structure Organizational Architecture The organizational structure, control systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.

29 Designing Organizational Structure Organizing The process by which managers establish working relationships among employees to achieve goals. Organizational Structure Formal system of task and reporting relationships showing how workers use resources.

30 Designing Organizational Structure Organizational design The process by which managers create a specific type of organizational structure and culture so that a company can operate in the most efficient and effective way

31 Factors Affecting Organizational Structure

32 The Organizational Environment The Organizational Environment The quicker the environment changes, the more problems face managers. Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid.

33 The Organizational Environment Strategy Different strategies require the use of different structures. A differentiation strategy needs a flexible structure, low cost may need a more formal structure. Increased vertical integration or diversification also requires a more flexible structure.

34 The Organizational Environment Technology The combination of skills, knowledge, tools, equipment, computers and machines used in the organization. More complex technology makes it harder for managers to regulate the organization.

35 The Organizational Environment Technology Technology can be measured by: Task variety: the number of new problems a manager encounters. Task analyzability: the availability of programmed solutions to a manager to solve problems.

36 The Organizational Environment Human Resources Highly skilled workers whose jobs require working in teams usually need a more flexible structure. Higher skilled workers (e.g., CA s and doctors) often have internalized professional norms and values.

37 The Organizational Environment Human Resources Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.

38 The Organizational Environment The way an organization s structure works depends on the choices managers make about: 1. How to group tasks into individual jobs 2. How to group jobs into functions and divisions 3. How to allocate authority and coordinate functions and divisions

39 Job Design Job Design The process by which managers decide how to divide tasks into specific jobs. The appropriate division of labor results in an effective and efficient workforce.

40 Job Design Job Simplification The process of reducing the tasks each worker performs. Too much simplification and boredom results.

41 Job Design Job Enlargement Increasing the number of different tasks in a given job by changing the division of labor Job Enrichment Increasing the degree of responsibility a worker has over a job

42 Job Enrichment 1. Empowering workers to experiment to find new or better ways of doing the job 2. Encouraging workers to develop new skills 3. Allowing workers to decide how to do the work 4. Allowing workers to monitor and measure their own performance

43 Grouping Jobs into Functions Function Group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs

44 Grouping Jobs into Functions Functional Structure An organizational structure composed of all the departments that an organization requires to produce its goods or services.

45 Functional Structure Advantages Encourages learning from others doing similar jobs. Easy for managers to monitor and evaluate workers. Allows managers to create the set of functions they need in order to scan and monitor the competitive environment

46 Functional Structure Disadvantages Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals.

47 Divisional Structures Divisional Structure Managers create a series of business units to produce a specific kind of product for a specific kind of customer

48 Product, Market, and Geographic Structures

49 Types of Divisional Structures Product Structure Managers place each distinct product line or business in its own self-contained division Divisional managers have the responsibility for devising an appropriate business-level strategy to allow the division to compete effectively in its industry

50 Product Structure Allows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources

51 Types of Divisional Structures Geographic Structure Divisions are broken down by geographic location Global geographic structure Managers locate different divisions in each of the world regions where the organization operates. Generally, occurs when managers are pursuing a multi-domestic strategy

52 Types of Divisional Structures Global Product Structure Each product division takes responsibility for deciding where to manufacture its products and how to market them in foreign countries worldwide

53 Global Geographic and Global Product Structures

54 Types of Divisional Structures Market Structure Groups divisions according to the particular kinds of customers they serve Allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers changing needs

55 Matrix Design Structure Matrix Structure An organizational structure that simultaneously groups people and resources by function and product. Results in a complex network of superiorsubordinate reporting relationships. The structure is very flexible and can respond rapidly to the need for change. Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both.

56 Matrix Structure

57 Product Team Design Structure Product Team Structure Does away with dual reporting relationships and two-boss managers Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to work

58 Product Team Design Structure Product Team Structure Cross-functional team is composed of a group of managers from different departments working together to perform organizational tasks.

59 Product Team Structure

60 Hybrid Structures Hybrid Structure The structure of a large organization that has many divisions and simultaneously uses many different organizational structures

61 Authority Coordinating Functions: Allocating Authority The power vested in a manager to make decisions and use resources to achieve organizational goals by virtue of his position in an organization

62 Coordinating Functions: Allocating Authority Hierarchy of Authority An organization s chain of command, specifying the relative authority of each manager. Span of Control: the number of subordinates who report directly to a manager

63 Allocating Authority Line Manager Someone in the direct line or chain of command who has formal authority over people and resources Staff Manager Managers who are functional-area specialists that give advice to line managers.

64 Tall and Flat Organizations Tall structures have many levels of authority and narrow spans of control. As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions. Communications can also become distorted as it is repeated through the firm. Can become expensive

65 Tall Organizations

66 Tall and Flat Organizations Flat structures have fewer levels and wide spans of control. Structure results in quick communications but can lead to overworked managers.

67 Flat Organizations

68 Minimum Chain of Command Minimum Chain of Command Top managers should always construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources

69 Centralization and Decentralization of Authority Decentralizing authority giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources

70 Decentralizing Authority Disadvantages Teams may begin to pursue their own goals at the expense of organizational goals Can result in a lack of communication among divisions

71 Integrating Mechanisms

72 Organizational Culture Organizational culture shared set of beliefs, expectations, values, and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals

73 Sources of an Organization s Culture

74 Characteristics of Organizational Members Ultimate source of organizational culture is the people that make up the organization Members become similar over time which may hinder their ability to adapt and respond to changes in the environment

75 Organizational Ethics Organizational Ethics moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and people outside the organization

76 Employment Relationship Human resource policies: Can influence how hard employees will work to achieve the organization s goals, How attached they will be to it Whether or not they will buy into its values and norms

77 Organizational Structure In a centralized organization: people have little autonomy norms that focus on being cautious, obeying authority, and respecting traditions emerge predictability and stability are desired goals

78 Organizational Structure In a flat, decentralized structure: people have more freedom to choose and control their own activities norms that focus on being creative and courageous and taking risks appear gives rise to a culture in which innovation and flexibility are desired goals.

79 Strong, Adaptive Cultures Versus Adaptive cultures Weak, Inert Cultures values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective

80 Strong, Adaptive Cultures Versus Inert cultures Weak, Inert Cultures Those that lead to values and norms that fail to motivate or inspire employees Lead to stagnation and often failure over time

81 Co-Ordination

82 In an organization, a harmonious relationship between the various divisions and departments is vital for its smooth functioning. The concept of coordination is viewed as one of the important functions of management. Coordination helps achieve harmony among individual efforts for the accomplishment of goals. Individual efforts must be integrated and synchronized in order to attain common objectives. It is a dynamic concept, which implies an orderly arrangement of group efforts to ensure unity of action. According to Henry Fayol. To coordinate is to harmonise all the activities of a concern so as to facilitate it s functioning on the path of success. With the increasing growth and complexity of modern organizations, the need for coordination becomes inevitable. Lack of proper coordination results in inefficient operations, delays and waste of time.

83 Definition Co-ordination is the process which ensures smooth interplay of the functions of management. Common objectives are achieved without much wastage of time, efforts and money with the help of co-ordination.

84 Definition Co-ordination is balancing and keeping the teams together by ensuring a suitable allocation of working activities to the various members and seeing that these are performed with due harmony among the members themselves.

85 Features or Characteristics Not separate functions of management. Managerial responsibility Provides unity of action Co-ordination is necessary to all levels of organization Relevant of group efforts. Continuous and dynamic process System concept

86 Need and importance of co-ordination Unity in diversity Term work or unity of directions Functional differentiation Specialization Reconciliation of goals Large number of employees Congruity of flows or congruent flows Empire building Differential and integration

87 Personal contact Principles of coordination or Essentials of effective coordination Early Start Dynamism Effective supervision Continuity Self coordination Principles of coordination simplified organization Effectives communicatio n Clear cut objectives Reciprocal relationship Effective leadership Clear definition of authority and responsibility

88 Techniques of Co-ordination Clearly Defined Objectives Effectives chain of command Coordination through group meetings Harmonious policies and procedures Effective communication

89 Techniques of Co-ordination Sound organizational structure Coordination through a liaison officer Co-operation Self coordination Coordination by leadership Incentives

90 Types of coordination Internal coordination Vertical coordination Horizontal coordination External coordination

91 Internal coordination It is the establishment of relationship of the managers, executives, divisions, subdivisions, and other workers. Vertical & Horizontal

92 Internal coordination Vertical coordination: Superior coordinates his work with his sub coordinates and vice versa. Sales manager coordinates his work with the activities of the sales supervisor.

93 Internal coordination Horizontal coordination: Horizontal Coordination refers between the persons of the same status. Coordination between the departmental heads, supervisors, co-workers

94 External coordination It is the establishment of relationship of the managers, executives, divisions, subdivisions, and other workers.

95 External coordination Market agencies Different Industrial organization General public Competitors Different institution Financial Institutions Technological Agencies Technological organization Customers government agencies Different commercial organizations

96 Problems of Co-ordination In practice coordination faces certain problems listed below. Natural hindrance Lack of administrative talent lack of techniques of coordination Ideas and objectives Misunderstanding

97 Steps of effective Co-ordination proper delegation of authority and responsibility Whole or entire activates of the organization should be divided department wise or sectionwise according to the organization Preparing and adherence to rigid rules and regulations, procedures, policies, etc. Establishment of an effective communication system

98 Steps of effective Co-ordination Establishment of employees grievances cell. There should be a proper system for reporting. Skilled workers are to be rewarded adequately. The management should induce the employees to take active part in meeting, committees, encourage the employees to have friendly relationship with others.

99 Steps of effective Co-ordination The management should encourage the employees to have friendly relationship with others. Managers should have opportunities to get training to get training in the area of leadership, coordination, planning staffing and the like.

100 Co-ordination and Co-operation Co-ordination It is the function of management. Coordination is an orderly arrangement of group efforts. The early success of an organization depends upon the degree of co-ordination. Co-ordination is obtained officially. There is a direct link between the achievement of objectives and co-ordination. Co-operation It is not a function of management. Co-operation is willingness to work with others or help others. Co-operation is the basis for co-ordination. Co-ordination is a voluntary service. There is no such direct connection between cooperation and the achievement of objectives.