1. Managing Organizational Structure and Culture McGraw-Hill/Irwin Contemporary Management, 5/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. chapter ten

2. Learning Objectives 1.Define organization and explain the importance of the organizing function. 2.Discuss the advantages division of labor. 3.Discuss the concepts of authority, responsibility, and delegation. 4.Explain the concept of centralization versus decentralization. 5.Identify several reasons managers are reluctant to delegate. 6.Discuss organizational chart alternatives McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

3. Definition of Organizing Organizing – The process of establishing orderly uses for all the organization’s resources (generally talking about people). Reasons for Organizing 1.Establish lines of authority. 2.Improve communications. 3.Turn plans into action 4.Minimize waste from duplication of effort 5.Prevent idle resources

4. Division of Labor One of the main goals of organizing is to divide up the work (tasks) that needs to get done in a logical manner (jobs) & then assign people (employees) to do the specialized work. Division of Labor (steps) 1. Manager looks at all the objectives their team of employees are responsible for 2. Manager designates tasks necessary to accomplish the objectives 3. Manager Designs specific jobs by grouping tasks (aka “Job Design”) 4. Manager makes specific individuals responsible for the groupings = “specialization”.

5. DIVISION OF LABOR Q. What are the advantages and disadvantages of specialization?.

6. Division of Labor Advantages of Specialization Unclutter people’s minds from numerous tasks. Skills required for selection or training are easier to identify. Practice in the same job develops proficiency. Capitalizes on each worker’s skills and experience. Simultaneous operations are made possible. Product consistency is increased when the same output is produced by the same person. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

7. DIVISION OF LABOR Disadvantages of Specialization The human variable is ignored or downplayed Boredom can lead to lower productivity.

8. Division of Labor When dividing tasks, the manager must avoid: Overlapping responsibilities Responsibility gaps Responsibilities which don’t contribute towards objectives.

9. 10-9 A few more definitions… Job Simplification - The process of reducing the tasks each worker performs (pro’s and con’s?) Job Enlargement - Increasing the number of different tasks in a given job (pro’s and con’s?) Job Enrichment - Increasing the degree of responsibility a worker has over a job (prioritizing, processes, experimentation, skill growth)

10. AUTHORITY Types of Authority 1.Line Authority – The direct authority of managers over their subordinates 2.Staff Authority – The right to advise or assist those with line authority (ex: HR Manager) 3.Functional Authority – The right to give orders outside the normal line and staff authority (ex: VP of Finance).

11. Tapered Concept of Authority Scope of authority President Vice president General manager Superintendent Employee Board of Directors McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

12. Principles of Authority Unity of command - an employee should have one, and only one, immediate manager. Chain of Command - Authority in the organization flows through the chain of managers one link at a time, ranging from the highest to the lowest ranks. Also referred to as scalar principle. Span of Control - Number of subordinates a manager can effectively manage. Also referred to as span of management. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

13. Span of Control Q. What factors would impact the number of subordinates a manager could effectively manage? McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

14. Factors Affecting Span of Control FactorDescriptionRelationship to Span of Control ComplexityJob scope Job depth Decreases span of control VarietyNumber of different types of jobs being managed Decreases span of control ProximityPhysical dispersion of jobs being managed Increases span of control Quality of subordinates General quality of the employees being managed Increases span of control Quality of manager Ability to perform managerial duties Increases span of control McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

15. SPAN OF CONTROL Relationship between organization chart height and span of control.

16. SPAN OF CONTROL Span of Management determines the “Height” of the Organization Chart: Smaller span = Taller chart Greater span = Flatter chart The trend has been towards flatter organizations over the past couple of decades..

17. 10-17 Tall Organizations Figure 10.9

18. 10-18 Flat Organizations Figure 10.9

19. 10-19 Tall and Flat Organizations Q. What are the pros and cons of having a flatter org chart?

20. Authority - Centralization vs. Decentralization Centralization - Little authority is delegated to lower levels of management. Decentralization - A great deal of authority is delegated to lower levels of management. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

21. Authority - Centralization vs. Decentralization Scope of authority President Vice president General manager Superintendent Employee Board of Directors Scope of authority Centralized Decentralized McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

22. RESPONSIBILITY Responsibility – The obligation to accept assigned activities and perform them to the best of your ability. Responsibility is accepted when you accept a job If you agree to take on a job, then you agree to get certain things done…by yourself or through other people

23. Accountability Accountability - Holding managers responsible for how well they use their authority and meet their responsibilities. * Accountability implies there will be rewards… and punishments!.

24. DELEGATION Delegation – The process of assigning job activities and the related authority to specific individuals in the organization Why Delegate? Free up the manager for higher level activities Tasks that aren’t priorities just wouldn’t get done Develop employee abilities, knowledge, and confidence.

25. DELEGATION Steps in the Delegation Process: 1.Assign the duties (clearly) 2.Grant the authority necessary to accomplish duties 3.Ensure that the employee accepts the responsibility to complete the duties.

26. DELEGATION Q. What are some of the obstacles that prevent delegation from happening? Related to the Supervisor? Related to the Employee? Related to the Organization?.

27. Obstacles to Delegation 1.Obstacles related to the supervisor: Control Freak, lack of trust in employee abilities, insecure about their job, holding on to former tasks 2. Obstacles related to subordinates: Are afraid of failing, are afraid they won’t be supported 3. Obstacles related to organizations: Little/No prior delegation, not much to delegate due to size.

28. Guidelines for Making Delegation Effective Give employees freedom to pursue tasks in their own way Encourage employees to take an active role in defining, implementing, and communicating progress on tasks Entrust employees w/ completion of whole projects/tasks when possible Explain the relevance of delegated tasks to larger projects or to department or organization goals Allow employees access to all information, people, and departments necessary to perform delegated tasks Provide training and guidance necessary for employees to complete delegated tasks satisfactorily When possible, delegate tasks on the basis of employee interests.

29. STRUCTURE Organizational Structure – The relationships among employees in the organization  Formal Structure is represented by an organizational chart – Higher = authority and responsibility Lines show reporting relationships  Informal Structure is the unofficial relationships that evolve in a company

30. Sample Organizational Chart for Small Restaurant.

31. Organizational Charts Q. Do you think that a small restaurant could benefit from having an Org Chart or is it only useful for big companies? Q. What are the benefits of an Org Chart to managers, employees, and outsiders?.

32. Departmentalization: How departments are organized 1.Functional Departmentalization – By work activity (ex: Marketing, Finance, etc) 2.Product Departmentalization – By product/service 3.Geographic Departmentalization – By territory 4.Customer Departmentalization – By major customers 5.Manufacturing Process Departmentalization * Organization Charts can contain any number of these types of departmentalization.

33. Departmentalization Based on Function.

34. Departmentalization Based on Product.

35. Departmentalization Based on Geography.

36. Departmentalization Based on Customers.

37. Departmentalization Based on Manufacturing Process.

38. Organization Chart showing all 5 ways to Departmentalize Combined organization chart for Greene Furniture Company.

39. Q. Why Mess with an Org Chart?.

40. Why Mess with an Org Chart? 1. Manager wants to shake things up 2. Tasks change in the department/company 3. The environment changes (customers, suppliers, laws, economy, etc) 4. Employees skills evolve (or don’t!).