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MUSOLINO

Adapting Organizations

to Today’s Markets 8

CH

APTER

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Structuring an Organization Comprises:

Accountability

Allocating Resources

Establishing Procedures

Division of Labor

Team Tasks

Assigning Responsibility/ Authority

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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

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Weber’s Organizational Principles

Job Descriptions Written Rules Procedures, Regulations,

Policies Staffing/Promotions

Based on Qualifications

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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

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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

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*** 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

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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

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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

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*** 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

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*** 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

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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

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*** Departmentalization

By Product By Function By Customer

Group By

Geographic Location

By Process

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*** 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

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*** Line/Staff Organizations

Line Personnel

Formal Authority

Make Policy Decisions

Staff Personnel

Advise Line Personnel

Assist Line Personnel

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*** 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

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Important Conditions for Small Teams

1. Clear Purpose2. Clear Goals3. Correct Skills4. Mutual Accountability5. Shift Roles When Appropriate

Source: CIO Dec 2003

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Networking

Real Time

Transparency

Virtual Corporations

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A Virtual CorporationA Virtual Corporation

CoreCore

FirmFirm

Accounting Accounting FirmFirm

ProductioProduction Firmn Firm DistributioDistributio

n Firmn Firm

AdvertisinAdvertising Agencyg Agency

Design Design FirmFirm

Legal Legal FirmFirm

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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

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Which Jobs Will Be Outsourced Next?

0% 2% 4% 6% 8% 10% 12%

CustomerSupport/Sales

InformationTechnology

Manufacturing

Source: USA Today

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Adapting to Change

Restructuring for Empowerment

Focusing on the Customer

Creating a Change-Oriented Organizational Culture

The Informal Organization

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*** Layers of Authority-Traditional

Top Managers- Decision Makers

• Middle Managers- Develops Middle Managers- Develops Rules & Rules & ProceduresProcedures

• Workers and SupervisorsWorkers and Supervisors

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Inverted Organization Structure

Empowered Empowered front-line front-line workersworkersSupport Support

PersonnelPersonnel

Top Top Mgmt.Mgmt.

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Examples ofInformal 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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• 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 ofMore Examples ofInformal Group NormsInformal Group Norms