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chp10Daft 6th edFundamentals of OrganizingDeveloped by Cool
Pictures & MultiMedia PresentationsCopyright 2002 by
South-Western, a division of Thompson Learning. All rights
reserved.Developed by Cool Pictures & MultiMedia
PresentationsCopyright 2003 by South-Western, a division of Thomson
Learning. All rights reserved.
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OrganizingThe deployment of organizational resources to achieve
strategic goalsReflects deployment of resources Shows division of
laborFormal lines of authority and mechanisms is developed
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Organization StructureDefines how tasks are divided, resources
are deployed, and departments are coordinatedThe set of formal
tasks assignedFormal reporting relationshipsThe design of systems
to ensure effective coordination of employees across department
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The Organization ChartThe Home Depot is the world's largest home
improvement retailer currently operating 1,363 stores.Visual
representationSet of formal tasksFormal reporting
relationshipsFramework for vertical control
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Work SpecializationTasks are subdivided into individual
jobsDivision of labor conceptEmployees perform only the tasks
relevant to their specialized functionJobs tend to be small, but
they can be performed efficiently
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Chain of CommandUnbroken line of authority that links all
persons in an organizationShows who reports to whomAssociated with
two underlying principlesUnity of CommandScalar Principle
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AuthorityFormal and legitimate right of a manager to make
decisions and issue ordersAllocate resources to achieve
organizationally desired outcomesAuthority is distinguished by
three characteristicsAuthority is vested in organizational
positions, not peopleAuthority is accepted by subordinates
Authority flows down the vertical hierarchy
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ResponsibilityThe duty to perform the task or activity an
employee has been assignedManagers are assigned authority
commensurate with responsibility
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AccountabilityMechanism through which authority and
responsibility are brought into alignmentPeople are subject to
reporting and justifying task outcomes to those above them in the
chain of commandCan be built into the organization structure
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DelegationProcess managers use to transfer authority and
responsibilityOrganization encourage managers to delegate authority
to lowest possible level12
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Techniques for DelegationGive thorough instructionsMaintain
feedbackEvaluate and reward performanceDelegate the whole
taskSelect the right personDelegationEnsure that authority equals
responsibility
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Line and Staff PositionsLine vs. staff positionsLine vs. staff
authorityAdvantages and complexities of using staff positions
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Line authorityStaff authorityTM 8-8Irwin/McGraw-HillThe
McGraw-Hill Companies, Inc., 1998TYPES OF AUTHORITY
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Span of ManagementNumber of employees who report to a
supervisorTraditional view, about seven subordinates per
managerMany lean organizations today have 30, 40, or even higher
subordinatesWhen supervisors must be closely involved with
subordinates, the span should be smallSupervisors need little
involvement with subordinates, it can be large
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Factors Influencing the SpanSupervisorPreferences and skillsFew
non-supervisory dutiesSubordinatesCompetence and needsJobWork
similarityphysical proximityLow interaction requirements
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Tall versus Flat Structure Span of Control used in an
organization determines whether the structure is tall or flatTall
structure has a narrow span and more hierarchical levelsFlat
structure has a wide span, is horizontally dispersed and fewer
hierarchical levelsThe trend has been toward wider spans of
control
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SPAN OF MANAGEMENTOrg.LevelMEMBERS ATEACH LEVEL1234567Span of
4Operatives : 4,096Managers : 1,396Span of 8Operatives :
4,096Managers : 585TM 8-6Irwin/McGraw-HillThe McGraw-Hill
Companies, Inc., 1998(highest)1416642561,0244,09618645124,096
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Centralization vs. DecentralizationThe extend to which the power
and authority is retained at the top vs. delegated to lower
levels.Factors influencingSize of the organizationGeographic
dispersionTechnological complexityEnvironmental uncertainty
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CENTRALIZATIONDECENTRALIZATIONDecision-makingDecision-makingsmallcentralizedsimplecertainsizegeographicstechnologyenvironmentlargedispersedcomplexuncertainfactorsTM
8-7Irwin/McGraw-HillThe McGraw-Hill Companies, Inc.,
1998Restrictivepolicies, rules,proceduresGeneral policies,
rules,procedures
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Decentralization Tends To Make greater use of human
resourcesReduce burdens of top managersCause decisions to be made
close to the actionPermit rapid response to changes
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DepartmentalizationThe basis on which individuals are grouped
into departmentsVertical functional approach. People are grouped
together in departments by common skills.Divisional approach.
Grouped together based on a common product, program, or
geographical region.Horizontal matrix approach. Functional and
divisional chains of command. Some employees report to two
bossesTeam-based approach. Created to accomplish specific
tasksNetwork approach. Small, central hub electronically connected
to their other organizations that perform vital functions.
Departments are independent, and can be located anywhere. Virtual
approach. Brings people together temporarily to exploit specific
opportunities then disbands
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Five Approaches to Structural Design
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Five Approaches to Structural DesignSlide 2
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Functional Structure AdvantagesEfficient use of resourcesSkill
specialization developmentTop management controlExcellent
coordinationQuality technical problem solving
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Functional Structure DisadvantagesPoor communicationsSlow
response to external changesDecisions concentrated at topPin
pointing responsibility is difficultLimited view of organizational
goals by employees
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Divisional Structure AdvantagesFast response, flexibility in an
unstable environmentFosters concern for customers needsExcellent
coordination across functional departmentsEmphasis on overall
product and divisional goalsDevelopment of general management
skills
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Divisional Structure DisadvantagesDuplication of resources
across divisionsLess technical depth and specialization in
divisionsPoor coordination across divisionsLess top management
controlCompetition for corporate resources
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Horizontal Matrix AdvantagesMore efficient use of resources than
divisional structureAdaptable to changing environmentDevelopment of
both general and specialists management skillsExpertise available
to all divisionsEnlarged tasks for employees
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Dual Authority Structure in a Matrix Organization
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Horizontal Matrix DisadvantagesDual chain of commandHigh
conflict between two sides of matrixMany meetings to coordinate
activitiesNeed for human relations trainingPower domination by one
side of matrix
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Team AdvantagesSame advantages as functional structureReduced
barriers among departmentsQuicker response timeBetter moraleReduced
administrative overhead
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Team DisadvantagesDual loyalties and conflictTime and resources
spent on meetingsUnplanned decentralization
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Network Approach AdvantagesGlobal competitivenessWork force
flexibilityReduced administrative overhead
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Network Approach DisadvantagesNo hands-on controlLoss of part of
the organization severely impacts remainder of organizationEmployee
loyalty weakened
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Virtual OrganizationAdvantagesCan draw on expertise
worldwideHighly flexible and responsiveReduced overhead
costsDisadvantagesLack of control, weak boundariesGreater demand on
managersCommunications difficulties
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