IN SEARCH OF EFFICIENCY AND SUPERIOR EXECUTION Strategic Organizations

Implementation Is Strategy Distinctive performance is almost entirely a function of deep understanding.  not one thing a 1000% better but a 1000 things 1% better  organizations consist of many things -- the most critical are its inherent skills or distinctive competencies  distinctive skills -- “thousand thousand little things” are the real source of “fixed” barriers to imitation

THE CRITICAL COMPONENTS OF STRATEGIC ORGANIZATIONS Innovative, dedicated, motivated people Creative empowering leadership Organizational structures the match competitive strategies, efficiently Organizational controls and incentives that efficiently focus people on strategic goals and objectives appropriate administrative procedures and policies Organizational arrangements that efficiently “govern” the critical activities. efficient organizational boundaries

ORGANIZATIONAL STRUCTURE An organization should be structured by its market strategy to reach its ultimate goals Business costs rise from: supervisory monitoring motivation problems coordination activities Misinformation or no information

HOW DO YOU GET THERE? How do you get people to achieve organizational goals in the most efficient way possible? Problems in managing/motivating people: Lack of interest/Laziness Unrestrained self-interest Error and mistakes Not clear in measuring performance Complexity/Inability in giving clear direction

TWO MECHANISMS A means to coordinate the work A means to monitor and measure effectiveness

BASIC ELEMENTS IN ORGANIZATIONAL STRUCTURES 1. Work Specialization 2 Departmentalization 3 Established Patterns of Authority 4 Span of Control 5 Methods of Coordinating the Work

Work Specializations In hotels, work is divided between line and staff functions. Line functions work directly with the guest in delivering the overall guest experience: Who are they? Staff functions work to support the Line functions and are not necessarily in direct contact with the guest: Who are they?

Departmentalization Certain jobs are logically grouped together into departments to create efficiency in the organization. In hotels these departments must function together to deliver the guest experience. How could a staff function such as Building Engineering impact the guest experience? Human Resources?

Established Patterns of Authority Avoiding conflict which might impact the guest experience Maintaining standards which might impact the guest experience Making decisions on many issues while weighing the impact on the guest experience Understanding and responding to a very dynamic environment: The Ritz Carlton empowerment model

Span of Control Relates to the number of subordinates or partners who report to a supervisor The more similar the tasks of subordinates or partners the wider the span of control The more trained and skilled…the wider the span of control The more predictable the work is…the wider the span of control

Methods of Coordinating the Work Pooled interdependence – activities can be performed with little interaction between individuals / groups e.g. cashier – standardized rules or procedures for each to follow – intensive training and direct supervision

Methods of Coordinating the Work Sequential interdependence – one task’s output is the second task’s input e.g. guest check-in process (proper coordination between front desk receptionist and bell hop, front desk and housekeeping) – close coordination is possible only through direct communication and joint decision making

Principles of Organization Design Chain of Command Everyone should have a superior to report to Organization chart should show chain of command and span of control. From the organization chart, an employee can trace the way up the chain of command to the GM.

Principles of Organization Design Unity of Command Each person should have only one superior. Unity of command is sometimes violated when staff manager gives order to line employee.  E.g. safety manager corrects a waiter (who reports to restaurant manager) GM should help coordination if there is confusion in unity of command.

Principles of Organization Design Delegation Process in which superior assigns task, responsibility and autonomy to subordinate Degree of delegation:  Gather information for manager  Give alternatives for manager to select  Make recommendation for manager to approve  Make decision but inform manager before proceeding  Take action but inform manager  Take action, need not inform manager

Efficiency AND Superior Execution Control the Strategy  means of motivating staff to work at organizational goals  Statement of goals  Set of assumptions or forecasts (environmental)  Qualitative statement of how business will change  Specific action steps for implementation  Set of financial projections  provide information and feedback (information technology)

Efficiency AND Superior Execution Develop a Strong Adaptive Culture characterized by:  Bias for action - autonomy, risk-taking, entrepreneurship (intra)  Coherent mission - sticks to what is important, close to customers  Structured for flexibility

Efficiency AND Superior Execution Create a Meaningful Reward System  Generously reward those who reach objectives and deny reward to those who don’t. payoff should be a major piece of total compensation and… should extend to everyone. administration is paramount (timely, consistent, fair) tightly linked to strategic objectives  Every compensation/promotion decision will be carefully scrutinized by all employees.  In designing reward systems, jobs need to be defined in terms of the results to be accomplished, not duties and responsibilities.