OB Week 2

Vertical Task division

The process whereby a hierarchy creates different levels of management within an organization. • Senior management • Middle management • Line management

Horizontal task division

The process whereby different party of a hierarchy are grouped according to criteria, such as the function performed, the geographical area served, or the product or service provided.

Organizational structure

The roles and positions in an organization, often organized horizontally and vertically in the form of an organization chart diagram. - There is a level of management between the owner and the other workers - Day-to-day tasks, such as supervision, discipline, and calculating pay, are now delegated to the level of managers below - Commands need only be issued to managers at the level below, who will then pass the command down the hierarchy - The owner no longer needs to even see, or have any contact with, the workers at the lower level - The owner returns to a manageable span of control, as do each of the managers below

Direct control

Face-to-face control of workers by a manager or owner

Formal rationality

Technically efficient means of achieving particular ends without thinking of the human or ethical consequences

Rational organizational design

The Design of organizational structures and activities to achieve the organization's goals in the most technically efficient manner. It suggests an organization which is designed logically, systematically, and scientifically to achieve its aim. When an organization grows, and becomes larger, managers need to adopt a more indirect, impersonal control, using the bureaucratic structures and procedures which make up rational organizational design. • Impersonal control: Control of workers that is not done face-to- face, for example through delegations or rules and procedures. - e.g McDonalds: by producing a limited number of menu choices the business is able to assign set tasks to specified departments, to be completed at a set time; routinizing work. This increases control. A limited number of menu items allows for highly efficient ordering of food and supplies. - Hotels such as the Travelodge have used rationalisation, in terms of value engineering. Which they use to optimise their process, trim costs and enhance quality". Value engineering is a result of this activity; where businesses cut costs by taking out the 'frills' which not all customers want. - computer technology allows contemporary organizations to exert control -> the metaphor of the panopticon is used to examine the means by which rational organization is used to control and exert surveillance over contemporary organizations. - when first formulated in the industrial revolution, rationalization was very much presented in the one best way formulation

Red tape

Where rules and paperwork get in the way of work, and activities, - make extra work - rather than helping tasks to be performed efficiently - ability to innovate and operate can be stifled by bureaucratic red tape

M-grouping

Market division grouping e.g. advantages: disadvantages:

Iron Cage of bureaucracy

Max Weber's observation of the increased presence of bureaucracy in society and its potential to trap people in its routines and procedures. • Social (inter)actions were becoming based on efficiency instead of the old types of social (inter)actions, which were based on lineage or kinship • Behavior had become dominated by goal-oriented rationality and less by traditional values • Feudalism: promotion through favoritism and bribes • Capitalism: promotion through seniority and disciplinary control • Technically ordered, rigid, dehumanized society • One set of rules and laws that we are all subjected and must adhere to • Bureaucracies tend to generate oligarchy: a few officials hold the political and economic power

Types of organizational structures

• Line organization • Line and staff organization • Line-staff organization with F-, P-, M- or G-grouping = Divisional organization • Matrix organization / Project-based organization (line versus project organization)

What are the 4 primary components of "Iron Cage"

◦ Efficiency ◦ Calculability ◦ Predictability ◦ Control

Henri Fayol

- (1841 - 1925) - french industrialist - prescriptive - laid the foundations of management - > "General Management Theory" or "Five Functions of Management" (Many of Fayol's functions of management incolve the management of people. In a small-scale organization, this can be done through direct control. When an organization grows through impersonal control using bureaucratic structures.) - division of work where all tasks are specialized, specific roles in organization - unity of command - centralization with delegation - equality of treatment for all employees - order, everything in right place at right time - subordination of interests, organization's interests more important than individual

Max Weber

- 1864-1920 - German sociologist - descriptive - features of and Ideal bureaucracy: • Functional division of labor (horizontal differentiation) • Hierarchical structure (vertical differentiation) • rules and regulations • impersonality - the separation of working lives from personal lives • unbiased decision making - including recruitment, selection, and promotion -> ideal type of rational, technically-efficient bureaucracy - Weber was critical of the effects that bureaucracy had upon humans and society - saw its technical achievements but also its negative impacts on people - trapping people in monotonous routines, taking away people's autonomy - he noted that there was more rational-legal authority, which means authority coming from bureaucratic forms instead of tradition/charisma.

The line organization

- direct control over employees - revenue generators (manufacturing, selling) - Line managers make the majority of the decisions and direct line personnel to achieve company goals Read more: http://www.referenceforbusiness.com/management/Int-Loc/Line-and-Staff-Organizations.html#ixzz4wQPTFkwv Read more: http://www.businessdictionary.com/definition/line-and-staff-management.html - It is the most simplest form of organization. - Line of authority flows from top to bottom. - Specialized and supportive services do not take place in these organization. - Unified control by the line officers can be maintained since they can independently take decisions in their areas and spheres. - This kind of organization always helps in bringing efficiency in communication and bringing stability to a concern. http://managementstudyguide.com/line_organization.htm

Line and Staff Organization

- right to advise or assist those who possess line authority as well as other staff personnel - indirectly supporting line functions - provide support, advice, and knowledge - accounting, maintenance, personnel management - The larger the organization, the greater the need and ability to employ staff personnel http://www.businessdictionary.com/definition/line-and-staff-management.html

Bureaucratic personality/jobsworth

- tendency to follows rules (rigidly and inflexibly) to the letter rather than thinking of the bigger picture - rules are seen as important above all else - doing as one is told by rules and procedures - conformity with the rules may interfere with the achievements and purposes of the organization

Span of control

- the number of subordinates a supervisor has. - number of people who report to a manager.

Work to rule

- through following rules and procedures to the letter work is slowed down - hinder an organization in achieving its goals

What is a job?

A job is a combination of tasks, authority, and responsibilities The delegation continuum • Centralization - decentralization (continuum) • Span of control (horizontal and vertical dimension) • Organizational diagram / chart (formal organization)

Bureaucracy advantages and disadvantages

ADVANTAGES: - makes management possible on a large scale - allows Fayol's five aspects of management to take place, efficiently and on a large scale - keeps order in an organization as it grows - creates clear roles and responsibilities - outlines and limits authority - it allows for information about individuals to be stored and easily accessed - it insures impersonal fairness within an organization - equal opportunities; rules and procedures - equality and fairness in how workers are treated DISADVANTAGES: - routines and procedures are dehumanizing and disenchanting, putting people and society in an iron cage - inflexible - which creates dysfunctions (red tape, bureaucratic personality) and makes them unadaptable for change

Advantages and disadvantages of internal specialization

Advantages: • Cohesion • Clarity • Sense of belonging Disadvantages: • Boundaries • Differences in vision/interests

Horizontal Task - strict/internal differentiation - advantages and disadvantages

Advantages: • Cheap, unskilled staff can be employed • Employees can be quickly trained • Automation • Disadvantages: • Employees become bored • Feel little responsibility • More coordination • Breakdowns

Horizontal Task - slight/internal differentiation - advantages and disadvantages

Advantages: • Meaningful tasks • More responsible and satisfied employees • Better control of breakdowns / faster problem solving Disadvantages: • Higher educated staff needed • More expensive staff • Training takes longer

Classical Management School

Body of management thought based on the belief that employees have only economical and physical needs, and that social needs and need for job-satisfaction either don't exist or are unimportant. Accordingly, this school advocates high specialization of labor, centralized decision making, and profit maximization. - draw upon rational methods of managing and organizing - one best way of management - management styles and techniques draw upon Fayol and taylor Read more: http://www.businessdictionary.com/definition/classical-school-of-management.html

Impersonal control

Control of workers that is not done face-to-face, for example through delegations or rules and procedures. When an organization grows, and becomes larger, managers need to adopt a more indirect, impersonal control, using the bureaucratic structures and procedures which make up rational organizational design.

F- grouping

Functional/job -> grouping - e.g. engineering, accounting, manufacturing/production, HR/personnel, purchasing, marketing - departments where staff have similar skills and expertise, and do similar jobs - advantages: - Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations - Coordination within functional area - In-depth specialization - disadvantages: - unresponsive to change - poor communication across functional areas - limited view of organizational goals

G-grouping

Geographical grouping e.g. Western regions, southern region, eastern region, midwestern region advantages: - more effective and efficient handling of specific regional issues that arise - serve needs of unique geographic markets better disadvantages: - duplication of functions - can feel isolated from other organizational areas

What does organizational structure define?

Hierarchy (instructions) Authority (decisions) Position identification (allocation) Communication (information) Job evaluation/ reward systems (performance)

Aspects of bureaucracy

Hierarchy: The levels and ranks of an organization. Any one level reports to the level immediately above and commands the level immediately below. Often represented as an organization structure or chart, with each position within referred to as an office. - Job description: A document which outlines the formal duties and activities that the holder of a particular office will be expected to perform, and their place within the overall organizational structure Standardization: Rules, procedures, and policies are instructions which govern activity across an organization. All officials must act according to these rules, procedures and policies. - Discretion: The ability of an individual to act according to their own independent judgement, rather than being told exactly what to do - Human Resource management (HRM): The part of an organization that concentrates on policies and procedures relevant to the management of people within the organization Paperwork: such as forms, timetables, and records, is used to present and collate information about its people and processes. Official documentation and record keeping within an organization - Pro-forma (form): It is a s blank template with standard field for different types of relevant information, which is filled in as a means of capturing information for the records of the organization

Disenchantment

Loss of magical elements in society - replaced with rational, formal, and procedural

Fayol's five functions of Management in detail

Planning/forecasting Looking to the future, trying to calculate, and predict future circumstances, and acting so as to be able to respond to this. Organizing Building up the necessary structures, resources, and people to best meet the needs and goals of the organization. Coordinating Bringing together the structure, human, and resource elements of the organization to act in harmony and towards the goals of the organization. Commanding Giving orders and directions to people within the organization to maintain activity towards achieving the organization's goals. Controlling Checking and inspecting work - monitoring and surveillance of work done rather than direct command.

Fayol's five functions of Management

Planning/forecasting Organizing Coordinating Commanding Controlling

P-grouping

Product grouping Divisions/departments where each deals GAN with a different product or product range. e.g. Sky has Sky Sports, Sky Movies, Sky Atlantic etc. advantages: - Allows specialization in particular products and services - Closer to customers -> more responsive to costumers changes in tastes/fashions disadvantages: - Duplication of functions - Limited view of organizational goals

Substantive rationality

Rationality from a human and ethical perspective - if something is formally rational and efficient it does not make it substantively rational when considering its human and ethical consequences

Dysfunctions of bureaucracy

Unintended consequences of bureaucracy which lead to it not functioning in the efficient manner for which it is designed. - red tape - bureaucratic personality - trained incapacity - work to rule

Trained incapacity

when people become so reliant on rules and procedures that they become inflexible and unable to think for themselves - unable to adapt and deal with change

Matrix structure

• A project team created to carry out a specific task. • Team members come from different functional areas, and report to the project manager and their own functional manager. • different heads of different departments (e.g. finance, sales) also heads od different projects • a head of the project who coordinates staff from across the production, finance and sales department - move away from bureaucracy/ traditional bureaucratic hierarchy-> breaks Fayol's principle of unity of command (one line manager) Advantages • more knowledge and information can be shared across the organization - as people shift between teams • Increased experience • Good motivation and job satisfaction • Good for tackling complex problems Disadvantages • Expensive to have many teams • confusion about who is in charge - confusion as to who reports to whom • divided loyalties https://www.pmi.org/learning/library/matrix-organization-structure-reason-evolution-1837 http://leaderinsales.com/business/organizational-structure/matrix-organization/

Forms of internal specialization

• Functional/job -> F- grouping • Product -> P-grouping • Market division -> M-grouping • Geographical -> G-grouping