Fundamentals of Management: 5-1Gao Junshan, UST Beijing Basic Organization Designs

Fundamentals of Management: 5-2Gao Junshan, UST Beijing Where We Are Part 1 Introduction Part 2 Planning Part 3 Organizing Part 4 Leading Part 5 Controlling Part 3 Organizing Chapter 5 Basic Organization Design Chapter 6 Staffing and Human Resource Management Chapter 7 Managing Change and Innovation Chapter 5 Basic Organization Design

Fundamentals of Management: 5-3Gao Junshan, UST Beijing Chapter Guide 6 Basic elements of organization structure –Work specialization, chain of command, span of control, authority and power, degree of centralization, departmentalization 4 Contingency variables affecting structure –Strategy, size, technology, environment 5 Types of organization design –Simple structure, bureaucracies, matrix structure, team based structure, boundaryless organization Study of Organizational Behavior –Individual behavior in organizations, concept of group, organizational culture

Fundamentals of Management: 5-4Gao Junshan, UST Beijing Work Specialization Chain of Command Span of Control Authority and Responsibility Responsibility DepartmentalizationDepartmentalization Degree of Centralization Centralization Basic Elements of Structure Basic elements: Overview

Fundamentals of Management: 5-5Gao Junshan, UST Beijing Economies of Work Specialization Impact from Economies of Specialization Impact from Human Diseconomies Work Specialization High Low High Productivity Basic elements: Work specialization

Fundamentals of Management: 5-6Gao Junshan, UST Beijing The Chain of Command District A District A District B District B District C District C District D District D District E District E District F District F District G District G Region 1 Region 1 Region 2 Region 2 Region 3 Region 3 Region 4 Region 4 Region 5 Region 5 Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Chief Executive Officer Chief Executive Officer Executive Vice President Executive Vice President Executive Vice President Executive Vice President President Basic elements: Chain of command

Fundamentals of Management: 5-7Gao Junshan, UST Beijing The Span of Control ContingencyVariablesContingencyVariables Level in the Organization Organization Basic elements: Span of control

Fundamentals of Management: 5-8Gao Junshan, UST Beijing Contingency Variables that Influence the Span of Control Contingency Variables that Influence the Span of Control Training and experience employees have Similarity and complexity of employees tasks Physical proximity of employees Presence of standardized procedures Capabilities of the information management system Strength of the firm’s value system Preferred style of management Basic elements: Span of control

Fundamentals of Management: 5-9Gao Junshan, UST Beijing AuthorityandResponsibility AuthorityandResponsibility Responsibility refers the obligation to perform assigned activities Authority refers the right inherent in a managerial position to give orders Basic elements: Authority and responsibility

Fundamentals of Management: 5-10Gao Junshan, UST Beijing Executive Director Assistant to the Executive Director Unit 2 Manager Unit 1 Manager Other Human Resources OperationsPurchasing Other Directors Director of Purchasing Director of Human Resources Director of Operations OtherOperationsPurchasing Human Resources Line Authority Staff Authority Basic elements: Authority and responsibility Line Versus Staff Authority

Fundamentals of Management: 5-11Gao Junshan, UST Beijing AuthorityPower Defining … An individual’s capacity to influence decisions Individual and group behavior: Group (see Chap 8 p276) The right inherent in a managerial position to give orders

Fundamentals of Management: 5-12Gao Junshan, UST Beijing Authority vs. Power Marketing Human Resources ProductionAccounting Finance Chief Executive Officer Research and Development Finance Accounting Marketing Human Resources Production Research and Development Function Authority Level The Power Core Authority is a right based one one’s position in an organization, while Power refers to individual‘s capacity to influence decisions. Authority is a two dimensional concept, while Power is a three dimensional one. Basic elements: Authority and responsibility

Fundamentals of Management: 5-13Gao Junshan, UST Beijing ExpertLegitimate Coercive Referent Reward Power Basic elements: Authority and responsibility

Fundamentals of Management: 5-14Gao Junshan, UST Beijing Building a Power Base Respect others Build power relationships Develop associations Control important information Gain seniority Build power in stages Management skills: Building a power base

Fundamentals of Management: 5-15Gao Junshan, UST Beijing The Degree of Centralization Higher Employee Empowerment Centralization Decentralization HigherLower Top Management Control Lower Basic elements: Degree of centralization

Fundamentals of Management: 5-16Gao Junshan, UST Beijing Movement of Decentralization Choose the degree of decentralization that allow management to best implement their decisions and achieve organizational goals. Determine the amount of decentralization according to the situation of each organization and the units within it. Remain financial and product distribution decisions in the hand of senior management Basic elements: Degree of centralization

Fundamentals of Management: 5-17Gao Junshan, UST Beijing Five Ways to Departmentalize ProcessProcess FunctionalFunctional CustomerCustomer ProductProduct GeographicGeographic Basic elements: Departmentalization

Fundamentals of Management: 5-18Gao Junshan, UST Beijing Product vs. Customer or Geographic Departmentalization President Marketing Planning & Economics Supply & Distribution Manufacturing Marketing Planning & Economics Supply & Distribution Manufacturing Marketing Planning & Economics Supply & Distribution Manufacturing Vice President, Fuels Vice President, Lubricants and waxes Vice President, Lubricants and waxes Director of Sales Manager, Government Accounts Manager, Wholesale Accounts Manager, Retail Accounts Sales Director Midwestern Region Sales Director Southern Region Sales Director, Western Region Sales Director Eastern Region Vice President of Sales Basic elements: Departmentalization

Fundamentals of Management: 5-19Gao Junshan, UST Beijing Functional vs. Process Departmentalization Manager, Engineering Plant Manager Manager, Purchasing Manager, Information Systems Manager, Human Resources Manager, Accounting MVA Director Treasury Department Manager Licensing Department Manager Validation Department Manager Basic elements: Departmentalization

Fundamentals of Management: 5-20Gao Junshan, UST Beijing The Contemporary View of Departmentalization Most large organization still use most or all of the types of departmental groupings Competitive environment has refocused the attention of managers on monitoring the needs of customers and responding to them. More and more use of the crossing department team as a device to accomplish organizational objectives Basic elements: Departmentalization

Fundamentals of Management: 5-21Gao Junshan, UST Beijing Contingency variables and structure: Two types of organization Organic v Collaboration v Adaptable Duties v Few Rules v Informal Communication v Decentralized Decisions v Flatter Structures Mechanistic v Rigid Hierarchy v Fixed Duties v Many Rules v Formal Communication v Centralized Decisions v Taller Structures Organizational Forms

Fundamentals of Management: 5-22Gao Junshan, UST Beijing What Determines the Best Structure? Strategy Size Technology Environment Strategy Size Technology Environment Contingency variables and structure: Major contingency variables

Fundamentals of Management: 5-23Gao Junshan, UST Beijing OrganizationDesignApplications Simple Structure Bureaucracy Matrix structures Team based Boundaryless Types of design

Fundamentals of Management: 5-24Gao Junshan, UST Beijing Wide Spans of Control FewDepartments LittleFormalization The Simple Structure Types of design: Simple structure CentralizedAuthority

Fundamentals of Management: 5-25Gao Junshan, UST Beijing The Bureaucracy DivisionalStructureFunctionalStructure Types of design: the bureaucracy

Fundamentals of Management: 5-26Gao Junshan, UST Beijing The Matrix Structure Design Engineering Contract Engineering ManufacturingPurchasingAccounting Human Resources Design Group Contract Group Manufacturing Group Human Resources Group Alpha Project Omega Project Repeated as above for each project Purchasing Group Accounting Group Beta Project Gamma Project Types of design: The matrix

Fundamentals of Management: 5-27Gao Junshan, UST Beijing The Matrix Structure Cross-FunctionalCoordinationClearAccountability Allocation of Specialists Dual Chain of Command Types of design: The matrix

Fundamentals of Management: 5-28Gao Junshan, UST Beijing The Team-Based Structure Hold Teams AccountableEmpowerWorkers Types of design: Team based

Fundamentals of Management: 5-29Gao Junshan, UST Beijing TheBoundarylessOrganizationTheBoundarylessOrganization Limited Chain Of Command Limited Chain Of Command Widened Spans Of Control Widened Spans Of Control Empowered Employee Teams Empowered Types of design: Boundaryless

Fundamentals of Management: 5-30Gao Junshan, UST Beijing TheBoundarylessOrganizationTheBoundarylessOrganization Globalization of Market and Competition Globalization of Market and Competition Advances of IT Technologies Advances of IT Technologies Changing and Volatile Business Environment Changing and Volatile Business Environment Types of design: Boundaryless

Fundamentals of Management: 5-31Gao Junshan, UST Beijing The Organization Iceberg Visible Aspects Strategies Objectives Policies and procedures Structure Technology Formal authority Chains of command Hidden aspects Attitudes Perceptions Group norms Informal interactions Interpersonal and inter-group conflicts Individual and group behavior: Overview (see Chap 8 p256)

Fundamentals of Management: 5-32Gao Junshan, UST Beijing Organizational Behavior Groups Individuals OB Focus OB Goals Predict Explain Individual and group behavior: Overview (see Chap 8 p257)

Fundamentals of Management: 5-33Gao Junshan, UST Beijing LearningLearningPerceptionPerception Individual Behavior PersonalityPersonalityAttitudesAttitudes Individual and group behavior: Individual (see Chap 8 p257~275)

Fundamentals of Management: 5-34Gao Junshan, UST Beijing Emotional Intelligence Self-Awareness Self-Management Self-Motivation Empathy Social Skills Self-Awareness Self-Management Self-Motivation Empathy Social Skills Individual and group behavior: Individual (see Chap 8 p264)

Fundamentals of Management: 5-35Gao Junshan, UST Beijing InformalFormal What Is a Group? vFormally Established vWork Assignments vSpecific Tasks vFormally Established vWork Assignments vSpecific Tasks vOccur Naturally vFriendships vCommon Interests vOccur Naturally vFriendships vCommon Interests Individual and group behavior: Group (see Chap 8 p276)

Fundamentals of Management: 5-36Gao Junshan, UST Beijing Basic Group Concepts Acceptable Standards of Behavior Shared by the Members of a Group Expected Patterns of Behavior Based on a Given Position in a Social Unit Group Roles Group Norms Individual and group behavior: Group (see Chap 8 p276)

Fundamentals of Management: 5-37Gao Junshan, UST Beijing Affiliation Status Goals Security Self-Esteem Power Why People Join Groups Individual and group behavior: Group (see Chap 8 p276)

Fundamentals of Management: 5-38Gao Junshan, UST Beijing A system of meaning that members share and that distinguishes the organization from others. What is Organizational Culture Individual and group behavior: Organizational culture

Fundamentals of Management: 5-39Gao Junshan, UST Beijing u Risk Tolerance u Reward Criteria u Conflict Tolerance u Means-End Orientation u Open-Systems Focus u Member Identity u Group Emphasis u People Focus u Unit Integration u Control Assessing an Organization’s Culture Individual and group behavior: Organizational culture

Fundamentals of Management: 5-40Gao Junshan, UST Beijing Six elements of organization structure Pros and cons of work specialization Authority vs. power Five ways of departmentalization Mechanistic vs. organic organizations Chapter Summary

Fundamentals of Management: 5-41Gao Junshan, UST Beijing Factors affect organization structures Divisional vs. functional structures Strengths of the matrix structure Boundaryless organization Meaning of organization culture Chapter Summary