Modern Organizational Structure for Today's Challenges
Structuring
Organizations for
Today’s Challenges
Chapter 8
Building or Reorganizing from the
Bottom Up
Structuring an Organization
•
Division of Labor
: dividing tasks among workers
•
Job Specialization: dividing tasks into smaller jobs
•
Departmentalization
: creating individual departments for
specialized tasks
•
Assigning
authority
and responsibility
•
Resource allocation
•
Designing procedures
to accomplish goals
•
Aided by an
organizational chart
Managing Change
•
More rapid than ever before
•
Customers, Technology, Global Business environment
•
Past: companies structured to manage employees
•
Modern: companies structured to please the
customer
Development of Organizational
Design
Fayol’s Principles of Organization
•
Before the 20
th
century, most businesses
were small, and relatively easy to manage
and organize
•
Mass production and
economies of scale
•
1919 published
General and Industrial
Management
•
Popularized after WWII in the US
Organizational Principles
•
Unity of Command
: worker reports to one boss
•
Hierarchy of Authority
: workers should know to whom they report to
•
Division of Labor
: functions divided into areas of specialization
•
The general interest is greater than the individual interest
•
Authority
(and responsibility)
•
Degree of Centralization
•
Clear
communication channels
•
Order:
materials and people maintained in right place
•
Equity
: employees deserve to be treated with respect and justice
•
Esprit de corps
Weber and Organizational Theory
•
The Theory of Social and Economic
Organizations
•
Company works most efficiently when workers
are just told what to do
•
Less decision-making the better
•
Uneducated and untrained workers
•
Similar ideas to Fayol’s, plus:
•
Job descriptions
•
Written rules, decision guidelines, and detailed
records.
•
Consistent procedures, regulations, and policies.
•
Staffing and promotion based on qualifications.
Structuring an Organization: Organizational Chart
•
Hierarchy
•
Chain of Command
assigning
authority
and responsibility
•
Division of Labor
: dividing tasks among workers
•
Job Specialization: dividing tasks into smaller jobs
•
Departmentalization
: creating individual departments for
specialized tasks
•
Bureaucracy
Reducing Bureaucracy
•
Empowerment
of employees
Structuring Decisions
Centralized vs Decentralized authority
•
Decision-making from the top or delegating to lower managers
Purchasing and promotion decisions from the top
Store manager
has authority to
buy, price, and
promote
merchandise
Why?
Span of Control
•
How many people should a manager supervise?
•
Depends on levels of Standardization of jobs
•
Less standardization means less span of control
•
However, empowering workers allows for broader span of
control
•
Also, more educated workers
•
Information technology
Tall (Mechanic)vs Flat (Organic) Hierarchy
•
Level of hierarchy
•
Layers and number of managers
•
Level of empowerment
Departmentalization options
•
Function
•
Product
•
Customer Group
•
Geographic location
•
Process
•
Hybrid
Function
(Traditional)
Product
Johnson & Johnson:
https://www.jnj.com/healthcar
e-products
Consumer
group /
Market
Geography
Process
Organizational Models
Line
•
Direct two-way lines of responsibility, authority, and
communication running from the top to the bottom of the
organization
•
Reporting to one supervisor
•
No specialists to provide support to managers
•
No legal, accounting, HR, or IT
Line-and-Staff
•
Line: responsible for
directly achieving
organizational goals
•
Staff: advice and
assist
Matrix
Explore the evolution of organizational design, from Fayol's principles to modern approaches focusing on customer satisfaction and rapid change management. Learn about key concepts such as division of labor, job specialization, and managing resources effectively in response to dynamic market demands.
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Presentation Transcript
Structuring Organizations for Today s Challenges Chapter 8
Building or Reorganizing from the Bottom Up
Structuring an Organization Division of Labor: dividing tasks among workers Job Specialization: dividing tasks into smaller jobs Departmentalization: creating individual departments for specialized tasks Assigning authority and responsibility Resource allocation Designing procedures to accomplish goals Aided by an organizational chart
Managing Change More rapid than ever before Customers, Technology, Global Business environment Past: companies structured to manage employees Modern: companies structured to please the customer
Fayols Principles of Organization Before the 20thcentury, most businesses were small, and relatively easy to manage and organize Mass production and economies of scale 1919 published General and Industrial Management Popularized after WWII in the US
Organizational Principles Unity of Command: worker reports to one boss Hierarchy of Authority: workers should know to whom they report to Division of Labor: functions divided into areas of specialization The general interest is greater than the individual interest Authority (and responsibility) Degree of Centralization Clear communication channels Order: materials and people maintained in right place Equity: employees deserve to be treated with respect and justice Esprit de corps
Weber and Organizational Theory The Theory of Social and Economic Organizations Company works most efficiently when workers are just told what to do Less decision-making the better Uneducated and untrained workers Similar ideas to Fayol s, plus: Job descriptions Written rules, decision guidelines, and detailed records. Consistent procedures, regulations, and policies. Staffing and promotion based on qualifications.
Structuring an Organization: Organizational Chart Hierarchy Chain of Command assigning authority and responsibility Division of Labor: dividing tasks among workers Job Specialization: dividing tasks into smaller jobs Departmentalization: creating individual departments for specialized tasks Bureaucracy
Reducing Bureaucracy Empowerment of employees
Centralized vs Decentralized authority Decision-making from the top or delegating to lower managers
Store manager has authority to buy, price, and promote merchandise Why?
Span of Control How many people should a manager supervise? Depends on levels of Standardization of jobs Less standardization means less span of control However, empowering workers allows for broader span of control Also, more educated workers Information technology
Tall (Mechanic)vs Flat (Organic) Hierarchy Level of hierarchy Layers and number of managers Level of empowerment
Departmentalization options Function Product Customer Group Geographic location Process Hybrid
Function (Traditional) President Finance HR Acct. Production Mktg
Product Johnson & Johnson: https://www.jnj.com/healthcar e-products CEO Consumer Products Medical Devices Pharmaceuticals Mk Prd Fin Mk Prd Fin
Consumer group / Market CEO Commercial Residential Govern ment Agric. Mk Prd Fin Mk Prd Fin
Geography CEO EMEA Latin Am. N. Amer. Asia Pac.
Process CEO Customer Acquisition Order Fulfillment R&D
Line Direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization Reporting to one supervisor No specialists to provide support to managers No legal, accounting, HR, or IT
Line-and-Staff Line: responsible for directly achieving organizational goals Staff: advice and assist
