PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter 5 5e Part III: Organizing Copyright © 2011 Cengage Learning. All rights reserved. Organizing and Delegating Work

Copyright © 2011 Cengage Learning. All rights reserved.5–2 Learning Outcomes 1. 1.Explain the difference between a flat organization and a tall organization Describe the similarities and differences among liaisons, integrators, and people in boundary roles Discuss the difference between formal and informal authority and centralized and decentralized authority 4. 4.List and briefly explain the four levels of authority Describe the relationship between line authority and staff authority Explain what an organization chart is and list the four aspects of a firm that it shows. After studying this chapter, you should be able to:

Copyright © 2011 Cengage Learning. All rights reserved.5–3 Learning Outcomes (cont’d) 7. 7.Discuss the difference between internal and external departmentalization State the similarities and differences between matrix and divisional departmentalization Explain the difference between job simplification and job expansion Describe the job characteristics model Explain how to set priorities by answering three priority questions and determining whether activities have high, medium, or low priority List the four steps in the delegation process Define the key terms listed at the end of the chapter. After studying this chapter, you should be able to:

Copyright © 2011 Cengage Learning. All rights reserved.5–4 IDEAS ON MANAGEMENT at Volkswagen 1. 1.What are the important organizational principles guiding Volkswagen in achieving its goal of becoming the world’s largest automaker? 2. 2.Would you say that Volkswagen is centralized or decentralized? Why? 3. 3.How has micromanaging affected the operations of Volkswagen? 4. 4.What prioritization issues does Volkswagen face?

Copyright © 2011 Cengage Learning. All rights reserved.5–5 Exhibit 5–1 ●Organizing Questions

Copyright © 2011 Cengage Learning. All rights reserved.5–6 Exhibit 5–2 ●Principles of Organization Unity of command and direction Chain of command Span of management (flat and tall organizations) Division of labor (specialization, departmentalization, integration) Coordination Balanced responsibility and authority Delegation Flexibility

Copyright © 2011 Cengage Learning. All rights reserved.5–7 Coordination Methods Direct Contact Liaisons Integrators Committees Boundary Roles

Copyright © 2011 Cengage Learning. All rights reserved.5–8 Balanced Responsibility and Authority ResponsibilityResponsibility  The obligation to achieve objectives by performing required activities. AuthorityAuthority  The right to make decisions, issue orders, and use resources. AccountabilityAccountability  The evaluation of how well individuals meet their responsibilities.

Copyright © 2011 Cengage Learning. All rights reserved.5–9 Balanced Responsibility and Authority (cont’d) DelegationDelegation  The process of assigning responsibility and authority for accomplishing objectives. FlexibilityFlexibility  The ability to adapt to exceptions to the rules, policies, and procedures of the organization.

Copyright © 2011 Cengage Learning. All rights reserved.5–10

Copyright © 2011 Cengage Learning. All rights reserved.5–11 Join the Discussion Ethics & Social Responsibility Breaking the RulesBreaking the Rules 1. Is it unethical to be flexible and break the law against kickbacks? 2. Why are kickbacks illegal? Who benefits from kickbacks, who gets hurt by them, and how? 3. What would you do in this situation? (Would you start giving kickbacks yourself? Blow the whistle on sales reps to their managers? Blow the whistle to an outside source like the government or the media? Do nothing?)

Copyright © 2011 Cengage Learning. All rights reserved.5–12 Authority Formal Authority (or Structure)Formal Authority (or Structure)  The organizationally-sanctioned way of getting the job done.  Organizational charts illustrate formal lines of authority in firms. Informal AuthorityInformal Authority  The patterns of relationships and communication that evolve as employees interact and communicate that is not sanctioned by the organization. Scope of AuthorityScope of Authority  A hierarchy that narrows as it flows down the organization.

Copyright © 2011 Cengage Learning. All rights reserved.5–13 Exhibit 5–3 ●Scope of Authority Responsibility and Scope of Authority

Copyright © 2011 Cengage Learning. All rights reserved.5–14 Levels of Authority 1.Authority to Inform  Inform a superior of action alternatives and the superior makes the decision. 2.Authority to Recommend  List alternatives/actions and recommend one action; superior makes action decision. 3.Authority to Report  Select and implement a course of action, reporting action to superior. 4.Full Authority  Acting independently without supervision.

Copyright © 2011 Cengage Learning. All rights reserved.5–15 Line and Staff Authority Line AuthorityLine Authority  The responsibility to make decisions and issue orders down the chain of command. Staff AuthorityStaff Authority  The responsibility of staff personnel to advise and assist line and other personnel.  Functional authority  The right of staff personnel to issue orders to line personnel in established areas of responsibility.  Dual line and staff authority  Staff personnel exercise line authority within their own departments.

Copyright © 2011 Cengage Learning. All rights reserved.5–16 Line and Staff Authority (cont’d) General StaffGeneral Staff  Work for only one manager and help the manager in any way needed. Specialist StaffSpecialist Staff  Help anyone in the organization who needs it.

Micromanagement MicromanagementMicromanagement  Is a management style where a manager’s close control the work of subordinates delays decisions, clouds goals and objectives, restricts information, discourages participation and trust, decreases motivation and stifles innovation. Avoiding MicromanagementAvoiding Micromanagement  Clearly articulate expectations.  Focus on hiring and placement of subordinates.  Give employees decision-making power.  Encourage questions and suggestions.  Offer constructive feedback.  Don’t grab the reins at the first sign of trouble. Copyright © 2011 Cengage Learning. All rights reserved.5–17

Copyright © 2011 Cengage Learning. All rights reserved.5–18 Centralized and Decentralized Authority Centralized AuthorityCentralized Authority  Important decisions are made by top managers. Decentralized AuthorityDecentralized Authority  Important decisions are made by middle and first- line managers.

Copyright © 2011 Cengage Learning. All rights reserved.5–19 Exhibit 5–4 ●Types and Levels of Authority

Copyright © 2011 Cengage Learning. All rights reserved.5–20

Copyright © 2011 Cengage Learning. All rights reserved.5–21 Organizational Design Contingency Factors Affecting StructureContingency Factors Affecting Structure  Environment (mechanistic versus organic)  Production technology  Strategy (“structure follows strategy”)  Size of the organization (larger = more formal) Organization ChartOrganization Chart  A graphic illustration of the organization’s management hierarchy and departments and their working relationships.  Level of management hierarchy, chain of command, the division and type of work, and departmentalization.

Copyright © 2011 Cengage Learning. All rights reserved.5–22 Exhibit 5–5 ●Organization Chart

Copyright © 2011 Cengage Learning. All rights reserved.5–23 Departmentalization DepartmentalizationDepartmentalization  Is the grouping of related activities into units. Types of DepartmentalizationTypes of Departmentalization  Functional departmentalization  Based on the internal operations or functions that the employees perform and the resources needed to accomplish that work.  External, or output, departmentalization  Based on activities or factors outside the organization: product, customer, or territory.  Multiple Departmentalization  Hybrid structure: matrix and divisional (SBUs)

Copyright © 2011 Cengage Learning. All rights reserved.5–24 Exhibit 5–6 ●Types of Departmentalization

Copyright © 2011 Cengage Learning. All rights reserved.5–25 Multiple Departmentalization Hybrid structures using combinations of functional and product departmentalizationHybrid structures using combinations of functional and product departmentalization Matrix DepartmentalizationMatrix Departmentalization  Unity of command  Coordination issues Divisional DepartmentalizationDivisional Departmentalization  Is based on semiautonomous business units.  Uses a conglomerate structure of unrelated business units: autonomous profit centers.

Copyright © 2011 Cengage Learning. All rights reserved.5–26 Exhibit 5–7 ●Matrix Departmentalization

Copyright © 2011 Cengage Learning. All rights reserved.5–27

Copyright © 2011 Cengage Learning. All rights reserved.5–28 Applying the Concept 3 ● (cont’d)

Copyright © 2011 Cengage Learning. All rights reserved.5–29 New Approaches to Departmentalization Departmentalization Virtual Organizations Learning Organizations Network Structures Horizontal Team Organizations

Copyright © 2011 Cengage Learning. All rights reserved.5–30 Job Design Job DesignJob Design  Is the process of identifying tasks that each employee is responsible for completing.  Affects job satisfaction and productivity.

Copyright © 2011 Cengage Learning. All rights reserved.5–31 Exhibit 5–8 ●Job Design Options Job SimplificationEliminate tasks Combine tasks Change task sequence Job ExpansionRotate jobs (job rotation) Add tasks (job enlargement) Increase task variety and employee responsibility (job enrichment) Work TeamsIntegrated Self-managed

Copyright © 2011 Cengage Learning. All rights reserved.5–32 Exhibit 5–9 ●The Job Characteristics Model

Copyright © 2011 Cengage Learning. All rights reserved.5–33

Copyright © 2011 Cengage Learning. All rights reserved.5–34 Setting Priorities Priority-Determination QuestionsPriority-Determination Questions 1.Do I need to be personally involved because of my unique knowledge or skills? 2.Is the task my responsibility, or will it affect the performance or finances of my department? 3.When is the deadline—is quick action needed? Assigning PrioritiesAssigning Priorities  Delegate (D) priority: Delegate task if the answer to question 1 is no.  High (H) priority: Assign task a high priority if you answer yes to all three questions.  Medium (M) priority: Assign task a medium priority if you answer yes to question 1 but no to one of the remaining two questions.  Low (L) priority: Assign task a low priority if you answer yes to question 1 but no to both questions 2 and 3.

Copyright © 2011 Cengage Learning. All rights reserved.5–35 Exhibit 5–10 ●Prioritized To-Do List 1.Write the task that you must perform on the task line. 2.Answer the three priority questions by placing a Y (yes) or N (no) in the relevant column. 3.Assign a priority to the task by placing the letter D (delegate), H (high), M (medium), or L (low) in the priority column. 4.Determine which task to complete now.

Copyright © 2011 Cengage Learning. All rights reserved.5–36 Delegation BenefitsBenefits  More time for other high-priority tasks.  Trains employees and improves their self-esteem.  Enriches jobs and improves personal and work outcomes. ObstaclesObstacles  Reluctance to stop doing tasks personally.  Fear of employee’s failure to accomplish task.  Threatened by employee’s success.

Copyright © 2011 Cengage Learning. All rights reserved.5–37 Exhibit 5–11 ●What to Delegate and What Not to Delegate

Copyright © 2011 Cengage Learning. All rights reserved.5–38 Join the Discussion Ethics & Social Responsibility Delegating Destroying DocumentsDelegating Destroying Documents 1. Is it ethical and socially responsible to delegate the task of destroying documents that may potentially be used as evidence of wrongdoing? 2. What would you do if your boss asked you to destroy documents and you thought the goal was to cover up evidence of wrongdoing by the firm? (Would you just do it? Say nothing but neglect to do it? Question your boss’s motives? Look closely at what you were asked to destroy? Check with your boss’s boss to make sure it's okay to do it? Tell the boss you will not do it? Tell the boss to do it himself or herself? Blow the whistle to an outside source?) 3. If you were charged with destroying evidence, do you believe it would be a good defense to say, “I was only following orders”?

Copyright © 2011 Cengage Learning. All rights reserved.5–39 Model 5-1 ● The Delegation Process 1.Explain the need for delegating and the reasons for selecting the employee. 2.Set objectives that define responsibility, the level of authority, and the deadline. 3.Develop a plan. 4.Establish control checkpoints and hold employees accountable.

Copyright © 2011 Cengage Learning. All rights reserved.5–40 KEY TERMS authorityauthority centralized authoritycentralized authority decentralized authoritydecentralized authority delegationdelegation departmentalizationdepartmentalization divisional structuredivisional structure job characteristics modeljob characteristics model job designjob design job enrichmentjob enrichment levels of authoritylevels of authority line authorityline authority micromanagementmicromanagement organization chartorganization chart priority-determination questionspriority-determination questions responsibilityresponsibility span of managementspan of management staff authoritystaff authority