Chapter 5 Organizing

Advanced Organizer Managing Engineering and Technology Management Functions Managing Technology Personal Technology Decision Making Planning Organizing Leading Controlling Research Design Production Quality Marketing Project Management Time Management Ethics Career

Chapter Objectives Analyze the different forms of an organization Explain different organizational structures Describe the differences in line and staff relationships Describe the use and value of teams

Legal Forms of Organization Sole Proprietorship Partnership Corporations S-Corporation Limited Liability Companies Cooperatives

Sole Proprietorship Ownership:1 person Legal Restrictions: few Duration: Life of the Proprietor Taxation: Through personal tax Advantages Simple to operate Owner is free to make all decisions Disadvantages Owner faces unlimited liability Difficult to raise capital

Partnership Ownership: 2 or More Legal Restrictions: Few Duration: Taxation: Through personal tax Advantages Pooling of management skills, financial strength Disadvantages Divided decision-making authority Partners face unlimited liability

Corporations Ownership: Shareholders Legal Restrictions: many Duration: Perpetual Taxation: Double taxes Advantages Easy to raise capital, Easy to transfer ownership, and change mgmt. Disadvantages Difficult to organize Double taxes

S-Corporation Ownership: Shareholders Legal Restrictions: many Duration: No perpetual life Taxation: Through personal tax Restrictions No more than 75 owners Only one class of stock No retained earnings

Limited Liability Companies (LLC) Ownership: Members Duration: Perpetual (in most of states) Taxation: Through personal tax Advantages Limited liabilities No limitation on the number of members May issue more than one class of stock

Cooperatives Ownership: Users Legal Restrictions: Duration: Taxation: Tax-free Advantages  Disadvantages 

Organizing: Identification and classification of required activities Grouping of activities necessary to attain objectives Assignment of each grouping to a manager with authority Provision for coordination horizontally and vertically

Purpose of Organizing “Organizations are not built to serve customers; they are built to preserve internal order. To customers, the internal structure may not only mean very little; it may serve as a barrier. “Organizational charts are vertical and serving the customers is horizontal.” George Fisher, CEO, Motorola

Patterns of Departmentation Function Product Geographic location Type of customers Process or equipment Shift or time Numbers

Span of Control Number of people reporting directly to each manager Number of relationships: n [2(n-1) + n – 1] Subordinate training Nature of job supervised Rate of change of activities and personnel Clarity of instruction and delegation Staff assistance

Line & Staff Relationships Line functions: those accomplish the main mission of the organization, e.g. production, sales, finance, etc Staff functions: those help the line accomplish the objectives by providing some sort of advice or service Personal staff Specialized staff: serve the entire organization, e.g., personnel, procurement, legal counsel, market research

Line & Staff Relationships Line relationships: Superior-subordinate relationships (chain of command) typically represented vertically in organizational charts Staff relationships: Advisory in nature, degree of influence may vary Provide advice on request Recommendations when appropriate Must be consulted by line but have no direct authority Concurring authority - veto authority over line

Line and Staff Relationships Service: Centralized support functions Custodial Security Medical

Line and Staff Relationships

Modern Organization Structures Project and Other Temporary Organizations Impact of Information Revolution

Project and Other Temporary Organizations Matrix management Team Organization

Teams Small group of people Serve interests of its members Exchange ideas freely and clearly Have common goals Committed to achieving goals Each team member treated equally

Impact of Information Revolution Computer Internet Intranet

Computer Technology’s Impact on the Work Force Factory workers will require a higher level of skills Visualization Conceptual thinking Knowledge of production process Statistical inference Oral and visual communication Attentiveness Individual responsibility

Impact of Information Revolution Disappearance of job security Shared responsibility of employers (providing opportunity) and employees (self-improving) Increasing demand for professional & technical workers Decreasing demand for operators, laborers, craftsmen, clerical staff, and farm workers. Reduced real wages Continuing downsizing of staff, longer working hours under high stress. Increases in part-time, contract, and self-employed workers.