Chapter 8 Adapting Organizations to Today s Market Building an Organization from the Bottom Up First step is organizing structuring determining what work needs to be done and then dividing up the tasks among the group division of labor Identify worker s strengths and then assign then tasks dividing into smaller jobs job specialization Process of setting up individual departments to do specialized task departmentalization Setting up a business also includes allocating resources assigning specific tasks establishing procedures Organization charts show the relationships among people who is accountable for the completion of specific work and who reports to whom Monitor environment to see what competitors are doing and what customers are demanding then adjust to new realities The Changing Organization Customers today expect high quality products and fast friendly service at a reasonable cost Reliance on rules is called bureaucracy Development of Organization Design Mass production methods for efficiently producing large quantities of goods Bigger the plant more efficient production Economies of scale situation in which companies can reduce their production costs if they can purchase raw material in bulk the average cost of goods goes down as production levels increase Henri Fayol and Mac Weber utilized their principles Unity of Command each worker is to report to one and only one boss Hierarchy of Authority all worked should know to whom they report Division of Labor functions are to be divided into areas of specialization Subordination of individual interests and general interests think as a coordinated team Authority managers have the right to give orders and the power to enforce obedience Degree of centralization the amount of decision making power vested in top management should vary by circumstances Clear communication all workers should be able to reach others in the firm quickly and easily Order materials and people should be places and maintained in the proper location Equity a manager should treat employees and peers with respect and justice Esprit de Corps a spirit of pride and loyalty should be created among people in the firm Max Weber German sociologist and economist pyramid shaped organization Put great trust in managers and felt the firm would do well if employees simply did what they were told Fayol Principles emphasized job descriptions written rules decision guidelines and detailed records consistent procedures regulations and policies staffing and promotion based on qualifications Turing Principles into Organization Design Design so managers can control workers Set up like a hierarchy a system in which one person is at the top of the organization and there is a ranked or sequential ordering from the down of managers and others who are responsible to that person top Chain of command is the line of authority that moves from the top of the hierarchy to the lowest levels Bureaucracy is an organization with many layers of managers who set rules and regulations and oversee all decisions Centralized v Decentralized Centralized authority occurs when decision making is concentrated at the top level of management EX Target CEO personally interviews candidates for the top 600 positions Decentralized authority occurs when decision making is delegated to lower level managers and employees more familiar with local conditions than headquarters managements could be Choosing the Appropriate Span of Control EX Macy s Span of control describes the optimal n umber of subordinates a manager supervises or should supervise Choosing Between Tall and Flat Organization Structures Tall organization structures an organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management 14 levels small span of control Flat organization structures organization structure that has few layers of management and a broad span of control Can respond readily to customer demands because lower level employees have authority and responsibility for making decisions and manager can be spared some day to day tasks Weighing the Advantages and Disadvantages of Departmentalization Departmentalization divides organizations into separate units usually by function design production etc Groups workers according to skills expertise or resource Advantages Employees can develop sills in depth and progress within a department as they master more skills The company can achieve economies of scale by centralizing all resources it needs and locate various experts in that area Employees can coordinate work within the function and top management can easily direct and control various department activities Disadvantages Departments may not communicate well Employees may indentify with their department s goals rather than the organization s The company s response to eternal changes may be slow People may not be trained to take different managerial responsibilities rather they tend to become narrow specialists Organizational Models Line organizations an organization that has direct two way lines of responsibility authority and communication running from the top to the bottom of the organization with all people reporting to only one supervisor Line and Staff Organizations Line personnel employees who are part of the chain of command that is responsible for achieving organized goals
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