Chapter-07 Creating a Flexible Organization

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CHAPTER-07

CREATING A FLEXIBLE ORGANIZATION

Dr. Gehan Shanmuganathan, (DBA)

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UNILEVER RESTRUCTURES USING MOBILE TECHNOLOGY

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UNILEVER RESTRUCTURES USING MOBILE TECHNOLOGY Unilever is an outcome of a merger between a British

soap maker and Dutch margarine company in 1930 Grown global powerhouse selling 400 brands in 150

nations being the world’s third-largest manufacturer of consumer goods, with more than $ 75 billion in their annual sales. Workforce of 174,000

Organized by product, location, and function Teleconferencing, internet phones service, other services

for mobile workers This has reduced an office cost of 40% and increased

business efficiency

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LEARNING OBJECTIVES

LEARNING OBJECTIVES

1. Understand what an organization is and identify its characteristics.

2. Explain why job specialization is important.3. Identify the various bases for departmentalization.4. Explain how decentralization follows from

delegation.5. Understand how the span of management describes

an organization.6. Describe four basic forms of organizational structure

LEARNING OBJECTIVES (CONT’D)

7. Describe the effects of corporate culture 8. Understand how committees and task

forces are used9. Explain the functions of the informal

organization and the grapevine in a business

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WHAT IS AN ORGANIZATION ?

WHAT IS AN ORGANIZATION?

A group of two or more people working together to achieve a common set of goals

Developing organization charts Organization chart- positions and relationships Chain of command- line of authority from top to

bottom Staff (advisory) positions- not directly but as

advisors(broken lines)

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MAJOR CONSIDERATION FOR ORGANIZING A BUSINESS

MAJOR CONSIDERATION FOR ORGANIZING A BUSINESS

1. Job design- divide the entire organizational work

2. Departmentalization- manageable unites

3. Delegation- responsibility and authority

4. Span of management- number of subordinates to a manager

5. Chain of command- designate positions with authority and support positions

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JOB DESIGN

JOB DESIGN

Job specialization- separate distinctive tasks Rationale for specialization- increase of production

(Adam Smith- Wealth of nation) Alternatives to job specialization

Job rotation- rotate

Job enlargement- horizontally

Job enrichment- vertically

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EXPLAIN ROTATION, ENLARGEMENT, AND ENRICHMENT

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DEPARTMENTALIZATION

Grouping jobs into manageable units

Common bases for departmentalization By function By product By location By customer Combinations

DEPARTMENTALIZATION

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FUNCTIONS BASED STRUCTURE

GM

marketing

executive

representative

finance production Human resource

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PRODUCT BASED STRUCTURE

MARKETING MANAGER

MANAGER PRODUCT-A

MANAGER PRODUCT-B

MANAGER PRODUCT-C

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MARKET OR GEOGRAPHY BASED STRUCTURE

MARKETING MANAGER

REGION MANAGER-1

REGION MANAGER-2

REGION MANAGER-3

STRUCTURE BY CUSTOMER

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MATRIX STRUCTURE

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1.Inquisitive 2. Analytical3. Collective

4. Explorative 5. Innovative

1.Quality oriented

2. Efficiency oriented 3. Time

oriented 4. Process oriented

1. Winning minded

2. Go-getter 3. Convincin

g 4. Creative

5. Innovative 6. Challenge

status- quo

1. Analytical 2. Collective 3. Number

oriented 4. Cost and

opportunity cost

oriented

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DELEGATION, DECENTRALIZATION, AND CENTRALIZATION

DELEGATION, DECENTRALIZATION, AND CENTRALIZATION

Delegation Assigning part of a manager’s work and power to other

workers

Responsibility- duty to perform a job

Authority- power given to perform a task

Accountability- obligation to accomplish a task

STEPS IN THE DELEGATION PROCESS

The manager assigns responsibility

The subordinating is empowered to do the task

Ultimate accountability remains with the manager

BARRIERS TO DELEGATION Managers unwillingness Fear of subordinate doing the work better

than manager Manager is disorganized so can not delegate Feeling of the manager to get things done

rather sharing

DECENTRALIZATION OF AUTHORITY

Decentralized organization- spreads authority Centralized organization- authority centralized at

the upper level Factors favoring decentralization-

External environmental factors (dynamism) Nature of the decision Abilities of the lower level managers Lower level decision making skills Company tradition

THE SPAN OF MANAGEMENT/CONTROL

Span of control- number of workers reporting directly Wide or narrow

Organizational height- number of layers, or levels, of management in a firm Flat organizations- wider span of management

Tall organizations- narrow span of management

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FLATTER AND TALLER ORGANIZATIONS

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FORMS OF ORGANIZATIONAL STRUCTURE

CHAIN OF COMMAND: LINE AND STAFF MANAGEMENT Line management position

Line authority- a person makes a decision and gives orders to subordinates to achieve the organization’s goal

Staff management position Advisory authority – provides support advises, and

expertise within an organization Functional authority – the authority of staff managers

to make decisions and issue directives about their areas of expertise

CHAIN OF COMMAND: LINE AND STAFF MANAGEMENT

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LINE-STAFF CONFLICT Reasons for conflict

Staff managers have formal education and more ambitious

Line managers perceive staff as a threat Minimizing conflict

Form teams Clear definition of responsibilitiesHold both accountable for results

FORMS OF ORGANIZATIONAL STRUCTURE

Bureaucratic structure Characteristics- high specialization, departmentalization

by function, formal delegation, high centralization, narrow span of management, formal relationships

Advantages- manage large number of employees in fair manner

Disadvantages- lack of flexibility and lack of individual identity in the mass

Matrix structure- that combines vertical and horizontal lines of authority (cross functional teams)

THE MATRIX STRUCTURE (CONT’D)

Advantages Flexibility Increased productivity Nurture creativity Innovative

Disadvantages Employees report to more

than one supervisor Confusion about who is in-

charge Takes time to resolve

issues than individuals Personality clashes Poor communication Expensive to maintain

FORMS OF ORGANIZATIONAL STRUCTURE (CONT’D) Cluster structure- consists of primarily of teams

with no or very few departments- teams Strengths- special projects, flexibility, explore new

ideas Weaknesses- job security, stress level high

Network structure (virtual organization)- perform mainly admin work while other functions outsourced Strengths- flexibility Weaknesses- high turnover

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CORPORATE CULTURE

ADDITIONAL FACTORS THAT INFLUENCE AN ORGANIZATION Corporate culture

Indicators of corporate culturePower PeopleTaskProcess

Cultural change is needed when the organizations need a paradigm change

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TYPES OF CORPORATE CULTURES Networked culture- main function is admin

while other functions outsourced Mercenary culture- employees high

motivation and commitment to perform Fragmented culture- employees do not

become friends, but work at the office not for the office

Communal culture- friendship, commitment, high focus on performance

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ADDITIONAL FACTORS THAT INFLUENCEAN ORGANIZATION (CONT’D)

Committees- Types- ad hoc and standing committees

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ADDITIONAL FACTORS THAT INFLUENCEAN ORGANIZATION (CONT’D)

Coordination techniques- rules and procedures

Informal organization

Informal groups

The grapevine- informal communications network

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WRITE FIVE KEY THINGS (AREAS) THAT YOU CAN CRITICALLY REMEMBER IN TODAY’S DISCUSSION

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WHAT WE DISCUSSED TODAY..

LEARNING OBJECTIVES

1. Understand what an organization is and identify its characteristics.

2. Explain why job specialization is important.3. Identify the various bases for departmentalization.4. Explain how decentralization follows from

delegation.5. Understand how the span of management describes

an organization.6. Describe four basic forms of organizational structure

LEARNING OBJECTIVES (CONT’D)

7. Describe the effects of corporate culture 8. Understand how committees and task

forces are used9. Explain the functions of the informal

organization and the grapevine in a business

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WEEKLY ASSIGNMENT - 07

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WEEKLY ASSIGNMENT -07

Discuss with examples the importance of

managing a flexi-organization over highly

structured organizations when managing

special projects. E.g- computer projects,

research, and advertising projects and so on.