Chapter-07 Creating a Flexible Organization Dr. Gehan Shanmuganathan, (DBA)

Unilever Restructures using Mobile Technology

Unilever Restructures using Mobile Technology Unilever is an outcome of a merger between a British soap maker and Dutch margarine company in 1930 Grown global powerhouse selling 400 brands in 150 nations being the world’s third-largest manufacturer of consumer goods, with more than $ 75 billion in their annual sales. Workforce of 174,000 Organized by product, location, and function Teleconferencing, internet phones service, other services for mobile workers This has reduced an office cost of 40% and increased business efficiency

Learning Objectives

Learning Objectives Understand what an organization is and identify its characteristics. Explain why job specialization is important. Identify the various bases for departmentalization. Explain how decentralization follows from delegation. Understand how the span of management describes an organization. Describe four basic forms of organizational structure

Learning Objectives (cont’d) Describe the effects of corporate culture Understand how committees and task forces are used Explain the functions of the informal organization and the grapevine in a business

What is an organization ?

What Is an Organization? A group of two or more people working together to achieve a common set of goals Developing organization charts Organization chart- positions and relationships Chain of command- line of authority from top to bottom Staff (advisory) positions- not directly but as advisors(broken lines)

Major consideration for organizing a business

Major consideration for organizing a business Job design- divide the entire organizational work Departmentalization- manageable unites Delegation- responsibility and authority Span of management- number of subordinates to a manager Chain of command- designate positions with authority and support positions

Job Design

Job Design Job specialization- separate distinctive tasks Rationale for specialization- increase of production (Adam Smith- Wealth of nation) Alternatives to job specialization Job rotation- rotate Job enlargement- horizontally Job enrichment- vertically

Explain rotation, enlargement, and enrichment

Departmentalization

Departmentalization Grouping jobs into manageable units Common bases for departmentalization By function By product By location By customer Combinations

Functions based structure GM marketing executive representative finance production Human resource

Product based structure MARKETING MANAGER MANAGER PRODUCT-A MANAGER PRODUCT-B MANAGER PRODUCT-C

market or geography based structure MARKETING MANAGER REGION MANAGER-1 REGION MANAGER-2 REGION MANAGER-3

Structure by customer

Cost and opportunity cost oriented Matrix structure 1.Inquisitive 2. Analytical 3. Collective 4. Explorative 5. Innovative 1.Quality oriented 2. Efficiency oriented 3. Time oriented 4. Process oriented Winning minded Go-getter Convincing Creative Innovative Challenge status- quo Analytical Collective Number oriented Cost and opportunity cost oriented

Delegation, decentralization, and centralization

Delegation, Decentralization, and Centralization Assigning part of a manager’s work and power to other workers Responsibility- duty to perform a job Authority- power given to perform a task Accountability- obligation to accomplish a task

Steps in the Delegation Process The manager assigns responsibility The subordinating is empowered to do the task Ultimate accountability remains with the manager

Barriers to delegation Managers unwillingness Fear of subordinate doing the work better than manager Manager is disorganized so can not delegate Feeling of the manager to get things done rather sharing

Decentralization of Authority Decentralized organization- spreads authority Centralized organization- authority centralized at the upper level Factors favoring decentralization- External environmental factors (dynamism) Nature of the decision Abilities of the lower level managers Lower level decision making skills Company tradition

The Span of Management/control Span of control- number of workers reporting directly Wide or narrow Organizational height- number of layers, or levels, of management in a firm Flat organizations- wider span of management Tall organizations- narrow span of management

Flatter and taller organizations

Forms of organizational structure

Chain of Command: Line and Staff Management Line management position Line authority- a person makes a decision and gives orders to subordinates to achieve the organization’s goal Staff management position Advisory authority – provides support advises, and expertise within an organization Functional authority – the authority of staff managers to make decisions and issue directives about their areas of expertise

Chain of Command: Line and Staff Management

Line-Staff Conflict Reasons for conflict Minimizing conflict Staff managers have formal education and more ambitious Line managers perceive staff as a threat Minimizing conflict Form teams Clear definition of responsibilities Hold both accountable for results

Forms of Organizational Structure Bureaucratic structure Characteristics- high specialization, departmentalization by function, formal delegation, high centralization, narrow span of management, formal relationships Advantages- manage large number of employees in fair manner Disadvantages- lack of flexibility and lack of individual identity in the mass Matrix structure- that combines vertical and horizontal lines of authority (cross functional teams)

The Matrix Structure (cont’d) Advantages Flexibility Increased productivity Nurture creativity Innovative Disadvantages Employees report to more than one supervisor Confusion about who is in- charge Takes time to resolve issues than individuals Personality clashes Poor communication Expensive to maintain

Forms of Organizational Structure (cont’d) Cluster structure- consists of primarily of teams with no or very few departments- teams Strengths- special projects, flexibility, explore new ideas Weaknesses- job security, stress level high Network structure (virtual organization)- perform mainly admin work while other functions outsourced Strengths- flexibility Weaknesses- high turnover

Corporate culture

Additional Factors That Influence an Organization Corporate culture Indicators of corporate culture Power People Task Process Cultural change is needed when the organizations need a paradigm change

Types of Corporate Cultures Networked culture- main function is admin while other functions outsourced Mercenary culture- employees high motivation and commitment to perform Fragmented culture- employees do not become friends, but work at the office not for the office Communal culture- friendship, commitment, high focus on performance

Additional Factors That Influence an Organization (cont’d) Committees- Types- ad hoc and standing committees

Additional Factors That Influence an Organization (cont’d) Coordination techniques- rules and procedures Informal organization Informal groups The grapevine- informal communications network

Write five key things (areas) that you can critically remember in today’s discussion

What we discussed today..

Learning Objectives Understand what an organization is and identify its characteristics. Explain why job specialization is important. Identify the various bases for departmentalization. Explain how decentralization follows from delegation. Understand how the span of management describes an organization. Describe four basic forms of organizational structure

Learning Objectives (cont’d) Describe the effects of corporate culture Understand how committees and task forces are used Explain the functions of the informal organization and the grapevine in a business

Weekly assignment - 07

Weekly assignment -07 Discuss with examples the importance of managing a flexi-organization over highly structured organizations when managing special projects. E.g- computer projects, research, and advertising projects and so on.