Chapter 08

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8- 1 1- 1 McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh * * Adapting Organizations to Today’s Markets 8 CHAPTER * * *

Structuring an Organization Comprises::

8- 2 Structuring an Organization Comprises: Accountability Allocating Resources Establishing Procedures Division of Labor Team Tasks Assigning Responsibility/ Authority

Fayol’s Principles of Organization:

8- 3 Fayol’s Principles of Organization Unity of Command Hierarchy of Authority Division of Labor Subordination of Individual Interest to the General Interest Authority Degree of Centralization Clear Communication Channels Order Equity Esprit de Corps

Weber’s Organizational Principles:

8- 4 Weber’s Organizational Principles Job Descriptions Written Rules Procedures, Regulations, Policies Staffing/Promotions Based on Qualifications

Centralization (No Delegation):

8- 5 Centralization (No Delegation) Advantages Greater Top-Management Control More Efficiency Simpler Distribution System Stronger Brand/Corporate Image Disadvantages Less Responsiveness to Customers Less Empowerment Interorganizational Conflict Lower Morale Away from Headquarters

Decentralization (Delegate Authority):

8- 6 Decentralization (Delegate Authority) Advantages Better Adaptation to Customer Wants More Empowerment of Workers Faster Decision Making Higher Morale Disadvantages Less Efficiency Complex Distribution System Less Top-Management Control Weakened Corporate Image

Organizational Structures:

8- 7 Organizational Structures Tall Organizations Many Layers of Management High Cost of Management Narrow Span of Control Flat Organizations Current Trend Creation of Teams Broad Span of Control

How to Make Jobs Fit Your Company (Part 1 of 2):

8- 8 How to Make Jobs Fit Your Company (Part 1 of 2) Each manager must ask: What resources do I control to accomplish my tasks? What measures will be used to evaluate my performance? Who do I need to interact with and influence to achieve my goals? How much support can I expect when I reach out to others for help? Source: HBS Working Knowledge , October 31,2005

How to Make Jobs Fit Your Company (Part 2 of 2):

8- 9 How to Make Jobs Fit Your Company (Part 2 of 2) Four Basic Spans of a Job: The Span of Control The Span of Accountability The Span of Influence The Span of Support Source: HBS Working Knowledge , October 31,2005

Span of Control - Narrow:

8- 10 Span of Control - Narrow Advantages More Control by Top Management More Chances for Advancement Greater Specialization Closer Supervision Disadvantages Less Empowerment Higher Costs Delayed Decision Making Less Responsiveness to Customers

Span of Control - Broad:

8- 11 Span of Control - Broad Advantages Reduced Costs More Responsiveness to Customers Faster Decision Making More Empowerment Disadvantages Fewer Chances for Advancement Overworked Managers Loss of Control Less Management Expertise

Departmentalization by Function:

8- 12 Advantages Skill Development Economies of Scale Good Coordination Departmentalization by Function Disadvantages Lack of Communication Employees Identify with Department Slow Response to External Demands Narrow Specialists Groupthink

Departmentalization:

8- 13 Departmentalization By Product By Function By Customer Group By Geographic Location By Process

Line Organizations:

8- 14 Line Organizations Advantages Clear Authority & Responsibility Easy to Understand One Supervisor Per Employee Disadvantages Inflexible Few Specialists for Advice Long Line of Communication Difficult to Handle Complex Decisions

Line/Staff Organizations:

8- 15 Line/Staff Organizations Line Personnel Formal Authority Make Policy Decisions Staff Personnel Advise Line Personnel Assist Line Personnel

Matrix Organizations:

8- 16 Matrix Organizations Advantages Flexibility Cooperation & Teamwork Creativity More Efficient Use of Resources Disadvantages Costly/Complex Confusion in Loyalty Requires Good Interpersonal Skills & Cooperation Not Permanent

Important Conditions for Small Teams:

8- 17 Important Conditions for Small Teams Clear Purpose Clear Goals Correct Skills Mutual Accountability Shift Roles When Appropriate Source: CIO Dec 2003

Networking:

8- 18 Networking Real Time Transparency Virtual Corporations

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8- 19 A Virtual Corporation Core Firm Accounting Firm Production Firm Distribution Firm Advertising Agency Design Firm Legal Firm

Benefits and Concerns of Healthcare Outsourcing:

8- 20 Benefits and Concerns of Healthcare Outsourcing Benefits Provides Enough Staff to Operate the Facility Cost Savings Concerns Lower Employee Morale Liability Should Patients be Informed Confidentiality & Security Source: Healthcare Financial Management, 2005

Which Jobs Will Be Outsourced Next?:

8- 21 Which Jobs Will Be Outsourced Next? Source: USA Today

Adapting to Change:

8- 22 Adapting to Change Restructuring for Empowerment Focusing on the Customer Creating a Change-Oriented Organizational Culture The Informal Organization

Layers of Authority-Traditional:

8- 23 Layers of Authority- Traditional Top Managers- Decision Makers Middle Managers- Develops Rules & Procedures Workers and Supervisors

Inverted Organization Structure:

8- 24 Inverted Organization Structure Empowered front-line workers Support Personnel Top Mgmt.

Examples of Informal Group Norms:

8- 25 Examples of Informal Group Norms Do your job but don’t produce more than the rest of the group. Don’t tell off-color jokes or use profane language among group members. Listen to the boss and use his/her expertise but don’t trust him/her. Everyone is to be clean/organized at the workstation.

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8- 26 Never side with managers in a dispute involving group members. Respect/help your fellow group members on the job. Criticize the organization only among group members-- never among strangers. Drinking is done off-the-job-- Never at work! More Examples of Informal Group Norms

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