BUS 101 (Ch 8)----(part one)

Weber's principles (are similar to Fayol's but he emphasized):

-Job descriptions. -Written rules, decision guidelines, and detailed records. -Consistent procedures, regulations, and policies. -Staffing and promotion based on qualifications.

(9) Equity

A manager should treat employees and peers with respect and justice.

Messages between the tall organizational structures

A message could be distorted as it moved up the org and back down through managers, management assistants, secretaries, assistant secretaries, supervisors, trainers, and so on.

(10) Esprit de corps

A spirit of pride and loyalty should be created among people in the firm.

Weber was in favor of bureaucracy

Although his principles made sense at the time, rules and procedures became so rigid in some companies that they grew counterproductive. But some orgs today still thrive on Weber's theories.

What are cross-functional self-managed teams?

Are groups of employees from different departments who work together on a long-term basis.

Line personnel

Are responsible for directly achieving organizational goals, and include production workers, distribution people, and marketing personnel.

Economies of scale

BUS growth led to economies of scale. This term refers to the fact that companies can reduce their production costs by purchasing raw materials in bulk. Thus, the average cost of goods decreases as production levels rise. For ex: The cost of building a car, declined sharply when automobile companies adopted mass production. Over time, such innovations became less meaningful as other companies copied the processes.

Managin change sometimes includes....

Changing the whole organizational structure. May also include nonprofit and government organizations.

Departmentalize by geographic location

Customers vary greatly by region.

Span of control

Describes the optimal number of employees a manager supervises or should supervise. What is the "right" span of control? At lower levels, where work is standardized, it's possible to implement a broad span of control (15 to 40 workers). Ex: One supervisor can be responsible for 20 or more workers assembling computers or cleaning movie theaters.

Departmentalization

Divides orgs into seperate units. The traditional way to departmentalize is by function----such as design, production, marketing, and accounting.

Job specialization

Dividing tasks into smaller jobs.

The ermegence of two organizational theorists

During this era of mass production, organizational theorists emerged. There were two influential thinkers: Henri Fayol and Max Weber.

(1) Unity of command

Each worker is to report to one boss. This to prevent confusion. Each person should report to only one manager.

Departmentalize by customer group

Ex: A pharmaceutical company might have on department for the consumer market, another that calls on hospitals (the institutional market), etc. Benefits customers for having specialists that satisfy their needs.

Authority and responsibility (2 of 2)

Finally, you'll assign authority and responsibility to those departments so you would know who was responsible in case a mistake occurs.

----Turning principles into organizational design----

Following theories like Fayol's and Weber's, managers in the late 1900s began designing orgs so that managers could control workers. Many companies are still organized that way, with everything set up in a hierarchy.

----Looking at alternative ways to departmentalize----(product-focused departmentalization)

Functional separation isn't always the most responsive form of org. There are five alternatives. One way is by product. Ex: a book publisher might have a trade book department, a textbook departmnet, etc. Called product-focused departmentalization. Considered good for customer relations.

(3) Division of labor

Functions are to be divided into areas of specialization like production, marketing, and finance.

Hiring more workers + departmentalization (1 of 2)

If your BUS is successful, you'll probably hire more workers to help. You might organize them into teams or departments to do the various tasks. Soon enough, you'll have several departments. The process of setting up departments is called departmentalization.

----Fayol's principles of org----

In France, Henri Fayol published his book "Administration industielle et generale" in 1919. It was popularized in the US in 1949 under the title, "General and Industrial Management."

Tall organizational structures

In the early 20th century, orgs grew even bigger, adding layer after layer of management to create tall organizational structures.

Bureaucracy

In the past, orgs were designed more to facilitate management than to please the customers. Companies have designed many rules and regulations to give managers control over employees. This reliance on rules is called bureaucracy. To understand where we are in org design, it helps to know where we've been.

Hierarchy

Is a system in which one person is at the top of the org and there is a ranked or sequential ordering from the top down of managers and others who are responsible to that person. Since one person can't keep track of thousands of workers, the top manager needs many lower-level managers to help.

An organizational chart

Is a visual device that shows relationships among people and divides the org's work; it shows who reports to whom. Also, there may be more layers of management between the CEO and the lowest-level employees.

The key to success

Is remaining flexible enough to adapt to the changing times. That could even mean going back to basic organizational principles and rebuilding the firm on a sound foundation.

Chain of command

Is the line of authority that moves from the top of a hierarchy to the lowest level.

One of the first steps....(organizing or structuring, also division of labor)

Is to organize your BUS. Organizing or structuring begins with determining what work needs to be done and then dividing up the tasks. This is called division of labor.

How to departmentalize?

It depends on the nature of the product and the customers. Some firms even use a combination of departmentalization techniques, like a hybrid.

One important difference between line and staff personnel

It is authority. Line personnel have formal authority to make policy decisions. Staff personnel have authority to advise line personnel and influence their decisions, but they can't make policy changes themselves. The line manager may seek or ignore the advice from staff personnel.

Advantages of a matrix org

LOOK AT TEXT.

Advantages of departmentalization:

LOOK AT TEXT.

Disadvantages of a matrix org

LOOK AT TEXT.

Disadvantages of departmentalization:

LOOK AT TEXT.

(5) Authority

Managers have the right to give orders and the power to enforce obedience. Authority and responsibility are related: whenever authority is exercised, responsibility arises.

Benefits from staff personnel

Many orgs benefit from staff advice on safety, legal issues, quality control, etc. Staff personnel strengthen the line positions and are like well-paid consultants on the org's payroll.

(8) Order

Materials and people should be placed and maintained in the proper location.

Bureaucracy (origin)

Max Weber used the word bureaucrat to describe a middle manager whose function was to implement top management's orders. Thus, bureaucracy came to be the term for an org with many layers of managers.

Max Weber and Organizational Theory

Max Webers book, "The thoery of social and economic orgs" appeared in the US in the late 1940s. Weber, a german sociologist and economist, promoted the pyramid-shaped organizational structure that became popular in large firms. Weber puts great trust in managers and felt the firm would do well if employees simply did what they were told. This is a good way for dealing with relatively uneducated and untrained workers.

Line orgs in large BUS'

May have the disadvantages of being too inflexible, of having few specialists or experts to advise people along the line, and of having lengthy lines of communication. Thus, a line org may be unable to handle complex decisions relating to thousands of products and tons of paperwork. Such orgs usually turn to a line-and-staff form of org.

Self-managed

Means that they are empowered to make decisions without management approval. The barriers among design, engineering, marketing, distribution, and other functions fall when interdepartmental teams are created. Sometimes the teams are interfirm; that is, the members come from two or more companies.

Flat organizational structures

More recently, orgs have adopted flat org structures with fewer layers of management and a broad span of control (many people report to each manager). Flat structures respond readily to customer demands because lower-level employees have authority and responsibility for making decisions, and managers can be spared some day-to-day tasks.

Matrix orgs do violate some traditional managerial principles

Normally, a person can't work effectively for two bosses. Who has the real authority? Whose directive has first priority? In reality this is a misconception, because a project manager may be given temporary authority to borrow line personnel from production, marketing, and other line functions. Thus, no one reports to more than one manager at a time.

LO 8-4: Contrast the various organizational models

Now that we've explored the basic choices in organizational design, let's look in depth at four ways to structure an org:

Centralized authority

Occurs when decision making is concentrated at the top level of management. The advantage of this type of authority is providing strong global control, it limits the flexibility to immediately respond to regional or local market changes and trends.

Decentralized authority

Occurs when decision making is delegated to lower-level managers and employees more familiar with local conditions than headquarters management could be. Very typical in large retail stores.

Cross-functional self-managed teams

One solution to the above problem is to establish long-lived teams and empower them to work closely with suppliers, customers, and others.

The actual problem with matrix orgs

Project teams are not permanent. They solve a problem and break up. There is little chance for cross-functional learning because teams often work together so briefly.

Matrix org

Specialists from different parts of the org work together temporarily on specific projects, but still remain part of a line-and-staff structure.

Networked organizational structures

Tend to be flexible. A company may work with a design expert fron another company in Italy for a year and then not need that person anymore. Such a temporary network, made of replaceable firms that join and leave as needed, is a virtual corporation.

(6) Degreee of centralization

The amount of decision-making power vested in top management should vary by circumstances. In a small org, it's possibleto centralize all decision-making power in the top manager. In a large org, however, some decision-making power, for both major and minor issues, should be delegated to lower-level managers and employees.

----Transparency and virtual orgs----

The internet has allowed companies to send real-time data to organizational partners as it is developed or collected. The result is transparency, which occurs when a company is so open to other companies that electronic info is shared as if the companies were one. With this integration, two companies can work as cloesly as two departments in traditional firms.

----Building an organization from the bottom up----

The size of the BUS does not matter, because the principles of org are the same.

What is the trend today to expand the span of control?

The trend today is to expand the span of control as orgs adopt empowerment, reduce the number of middle managers, and hire more talented and better educated lower-level employees. IT also allows managers to handle more info, so the span can be broader still.

A line org does not have any specialists who provide managerial support

There is no legal, accounting, or human resource department. Line orgs follow all of Fayol's traditional management rules. Line managers can issue orders, enforce discipline, and adjust the org as conditions change.

When do large orgs use flat structures?

They use flat structures to match the friendliness of small firms, whose workers often know customers by name. The flatter orgs become, the broader their spans of control, which means some managers lose their jobs.

----Matrix-style orgs----

Today's economy is dominated by high-growth industries like telecommunications, nanotech, robotics, biotech, etc. Emphasis is on product dev, creativity, special projects, tapid comms, and interdepartmental teamwork. From these changes, the matrix org was born.

The change in customer expectations (in today's BUS)

Today, consumers expect high-quality products and fast, friendly service (at a reasonable cost).

LO 8-3 Evaluate the choices managers make in strucuring orgs:

When designing responsive orgs, firms have to make decisions about several organizational issues: (1) centralization vs decentralization, (2) span of control, (3) tall vs flat organizational structures, and (4) departmentalization.

----LO 8-5: Identify the benefits of interfirm cooperation and coordination----

Whether it involves cutomers, suppliers, distributors, or the gov, networking uses communications tech and other means to link orgs and allow them to work together on common objectives.

(4) Subordination of individual interests to the general interest

Workers are to think of themselves as a coordinated team. The goals of the team are more important than the goals of individual workers.

----Going beyond organizational boundaries----

•Cross-functional teams work best when the voice of the customer is heard. •Teams that include customers, suppliers, and distributors go beyond organizational boundaries. •Government coordinators may assist in sharing market information across national boundaries.

(2) Hierarchy of authority

All workers should know to whom they report. At the same time, managers should have the right to give orders and expect others to follow.

Staff personnel

Advise and assist line personnel in meeting their goals, and include those in marketing research, legal advising, information technology, and human resource management.

(7) Clear communication channels

All workers should be able to reach others in the org quickly and easily.

(1) Line organizations

Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor. Common in small BUS'. Ex: employees report to the shift manager and the shift manager reports to the general manger or owner.

Employees have more free will

Slow service is not favorable today. Imagine employees have to ask their managers for permission to make a change, the process may take so long that customers become annoyed. Which is why some companies are reorganizing to let emplloyees have more free will.

Mass production

Until the 1900s, and the intro of mass production (methods for efficiently producing large quantities of goods) did production processes and BUS organization become so complex. Usually the bigger the plant, the more efficient production became.

----The development of organizational design----

Until the 20th centruy, most BUS' were small, the processes for producing goods were simple, and organizing workers was easy. Even today, organizing workers is still not too hard.

----Line-and-staff organizations----

Used to minimize the disadvantages of simple line orgs.