LECTUREPEDIA - Ajarn Paul Tanongpol, J.D.; M.B.A.;B.A.; CBEST
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LECTUREPEDIA - Ajarn Paul Tanongpol, J.D.; M.B.A.;B.A.; CBEST
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Chapter 10 Organizing
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i. Products structure ii. Geographical structures iii. Customer structures iv. Process structures
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Organizing is defining as arranging people and resources to work toward a goal. It involves creating a division of labor for tasks to be performed and then coordinating results to achieve a common purpose.
i. The formal arrangement of various parts of the organization is known as an organizational structure.
ii. It is a system of tasks, workflows, reporting relationships, and communication channels that link together the work of diverse individuals and groups.
iii. Any structure should both allocate tasks assignments through a division of labor and provide for the coordination of performance results.
i. An organizational chart describes the arrangement of work positions within an organization. A typical organizational chart identifies various positions and job titles as well as the line of authority and communication between them.
ii. Formal structure is the official structure of the organization. It represents the way the organization is intended to function.
i. Informal structure is a set of unofficial relationships among members of the organization.
ii. Informal structure can be helpful in getting needed work accomplished in an organization.
iii. Informal learning takes place when people in the organization interact informally throughout the work day and in wide variety of unstructured situation.
iv. There may be disadvantages in informal organization. Because they exists outside the formal structure, sometimes things that go on outside the structure work against the best interest of the formal organization.
v. People in the informal setting may be susceptible to rumors and carry out actions on the basis of inaccurate information. They breed resistance to change, and even divert work efforts from important tasks.
Performance gain is possible when people are allowed to specialize and become expert in specific jobs or tasks. People are organized into working teams. This is called departmentalization.
i. The structure is organized according to functions. If each functional group does its job correctly, the business will operate successfully.
ii. Functional structures are not limited to business. This type of departmentalization can also be used in other types of organizations, such as banks and hospitals.
iii. Advantages of functional organization include: 1. Economies of scale with efficient use of resources 2. Task assignments consistent with expertise and training 3. High-quality technical problem solving 4. In-depth training and skills development within functions 5. Clear career paths within functions.
iv. If there is a lack of communication and coordination, a problem called functional chaimney will occur. Because the organization becomes so formalized through departmentalization, the sense of cooperation and common purpose will be lost.
A divisional structure is the grouping together of people working on the same product, in the same area, with similar customers, or on the same process. The advantages of divisional structures are:
o More flexibility in responding to environmental changes.
o Improve coordination across functional department
o Clear points of responsibility for product or service delivery.
o Expertise focused on specific customers, products, and regions.
o Greater ease in changing size by adding or deleting division.
ii. Products structure 1. Product structure groups together people and jobs working on a single product or service.
2. They clearly identify costs, profits, problems, and success in a market area with a central point of accountability.
iii. Geographical structures 1. A geographical structure group together people and jobs performed in the same location.
2. This arrangement is common in international operations, where it helps to focus attention on the unique cultures and requirements of particular regions.
iv. Customer structures 1. Customer structure is sometimes called market structure groups together jobs and activities that serve the same customers or clients. The major appeal is to best serve the special needs of the different customer groups.
2. Customer structures are also useful in services, i.e. banks group customers into commercial or personal client accounts.
v. Process structures 1. A work process is a group of tasks related to one another that collectively create something of value to a customer.
2. A process structure puts jobs and activities that are part of the same process together, i.e. product purchasing team, order fulfillment teams, and systems support teams.
i. A matrix structure combine functional and divisional approaches to emphasize project or program teams.
ii. The advantages of matrix structure are: 1. Better functional cooperation in operations and problem solving. 2. Increase flexibility in adding, removing, and/or changing operations to meet changing demands. 3. Better customer service. 4. Better performance. 5. Improve decision making. 6. Improve strategic management.
iii. The disadvantages of matrix structure are: 1. The two-boss system is susceptible to power struggles, as functional supervisors and team leaders vie for control.
2. Two two-boss system can also create task confusion and conflicts.
Structure innovation is always important in such for productivity improvement and competitive advantage. The right structure becomes a performance asset; the wrong one becomes a liability. Vertical structure and control-oriented structures are becoming less and less popular in today’s market.
i. Team structure uses permanent and temporary cross-functional teams to improve lateral relations.
ii. A cross functional team brings together members from different functional departments.
iii. Project teams are convened for a particular task or project and disband once it is completed.
iv. Advantages of team structures 1. Team assignment break down barriers 2. Improve speed and quality of decisions 3. Good for team members’ morale
v. Disadvantages of team structures 1. Conflicting loyalties 2. Poor time management, i.e. meeting, meeting, etc. 3. Interpersonal conflicts among members
i. A network structure uses IT to link with networks of outside suppliers and service contractors.
ii. Advantages of network structures 1. Competitive costs 2. Outsourcing 3. Creating new jobs within the network structure
iii. Disadvantages of network structure 1. The more complex the organization, the more complex the network structures.
2. Difficult to control and coordinate.
i. A boundary-less organization eliminates internal boundaries among parts and external boundaries withi the external environment.
ii. Virtual organization is a shifting network of strategic alliances that are engaged as needed.
There is an increasing use of the upside down pyramid; it puts the customer at the top, served by the workers in the middle, who are in turn supported by the managers at the bottom. This approach tries to focus attention on the customers and the marketplace.
Among the organizing trends, we see the following recurring themes: stream line operations for cost efficiency, higher performance, and increased participation by workers.
i. The chain of command links all persons with successively higher levels of authority.
ii. Under the scalar theory, there should be a clear demarcation in the chain of command linking everyone in the organization to someone higher up.
iii. The trend is that organizations are being streamlined by cutting unnecessary levels of management; flatter and more horizontal in structures and are viewed as competitive advantage.
Organizations are using more cross-functional teams, task forces, and horizontal structures, and they are becoming more customer conscious; as they do so, employees often find themselves working for more than one “boss.”
Span of control is the number of subordinates reporting directly to a manager. Flat structure has a wide span of control --- they have fewer levels of management. Tall structure has narrower span of control --- they have many levels of management.
Many organizations are shifting to wider span of control as level of management are eliminated and empowerment gains prominence; individual managers are taking responsibilities for larger number of subordinates who operate with less direct supervision.
Delegation is the process of distributing and entrusting work together persons. The trend is that managers in progressive organizations are delegating more; they are finding more ways to empower people at all levels to make more decisions affecting themselves at their work.
i. Decentralization is the concentration of authority for most decisions at the top level of an organization. It is the dispersion of authority to make decisions throughout all levels of the organization.
ii. Whereas empowerment and related forces are contributing to more centralization in organizations, advances in information technology simultaneously allow for the retention of centralized control.
i. Specialized staff provides technical expertise for other parts of the organization.
ii. Personal staff are “assistant-to” positions that support senior managers.
iii. The trend is that organizations are reducing the size of staff; they are seeking increased operating efficiency by employing fewer staff personnel and using smaller staff units.
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