Fundamentals of Organization Design Chapter 10 Fundamentals of Organization Design Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002

10.1 Learning Objectives After reading this chapter, you should be able to: Explain several of the main ingredients of organization design Outline the features of four basic types of departmentalization Describe three of the principles for achieving coordination within and between departments Discuss the fundamental concepts of authority in organization design

Basic Elements of Organizing 10.2 Basic Elements of Organizing Specialization Standardization Authority Coordination Adapted from Figure 10.1

Potential Benefits of Functional Departmentalization 10.3 Potential Benefits of Functional Departmentalization Supports skill specialization Reduces duplication of resources and increases coordination within the functional area Enhances career development and training within the department Allows superiors and subordinates to share common expertise Promotes high-quality technical decision making

Potential Pitfalls of Functional Departmentalization 10.4 Potential Pitfalls of Functional Departmentalization Inadequate communication between departments May create conflict over product priorities Difficulty with interdepartmental coordination Focuses on departmental rather than organizational issues and goals Develops managers who are experts in narrow fields

Potential Benefits of Place Departmentalization 10.5 Potential Benefits of Place Departmentalization Equipment used for products is all in one place, saving time and costs Develop expertise in solving problems unique to one location Gaining an understanding of customers’ problems and desires Getting production closer to raw materials and suppliers

Potential Pitfalls of Place Departmentalization 10.6 Potential Pitfalls of Place Departmentalization Duplication of functions at each regional or individual unit location May cause conflicts between each location’s goals and organization goals Adds levels of management and extensive use of rules and regulations to coordinate and ensure uniformity of quality among locations

Potential Benefits of Product Departmentalization 10.7 Potential Benefits of Product Departmentalization Permits fast changes in a product Allows greater product visibility Fosters a concern for customer demand Clearly defines responsibilities Develops managers who can think across functional lines

Potential Pitfalls of Product Departmentalization 10.8 Potential Pitfalls of Product Departmentalization Poor utilization of skills and resources Doesn’t foster coordination of activities across product lines Fosters politics and conflicts in resource allocation across product lines Limits career mobility for personnel outside their product line

Potential Benefits of Customer Departmentalization 10.9 Potential Benefits of Customer Departmentalization Encourages greater customer focus Clearly identifies key customers Enables understanding of customer need Develops managers and employees who become customer advocates

Potential Pitfalls of Customer Departmentalization 10.10 Potential Pitfalls of Customer Departmentalization Doesn’t foster coordination between divisions organized by customer group Fosters politics and conflicts in resource allocation between divisions Employees feel pressure from customer to give them privileges Restricts problem solving to single type of customer

Principles of Coordination 10.11 Principles of Coordination Unity of command principle An employee should have only one manager Scalar principle A clear, unbroken chain of command should link every employee with someone at a higher level Span of control principle Limited number of people reporting to any one manager

Effective Delegation Establish goals and standards Ensure clarity 10.12 Effective Delegation Establish goals and standards Ensure clarity Involvement Expect completed work Provide training Timely feedback