Chapter 4 Organizing: Fundamentals, organizational design, line and staff authority, decentralization, culture Staffing: HRM and staffing

, performance appraisal, organizational change & O.D.

BUILDING BLOCKS OF ORGANIZATIONS Organizing is deciding how best to group organizational activities and resources. The manager can choose a variety of structural possibilities. The manager can put the organization together in many different ways. In this theme we focus on how the blocks of the organization can be put together organization design. Organizational structure – the set of building blocks that can be used to configure an organization.

Classical View of Structure
• • • • Division of Labour – Specialization; breaking jobs down into simple and repetitions tasks Unity of Command – a subordinate should have only one superior to whom he or she is directly responsible. Responsibility - an obligation to perform Line Authority – authority to direct the work of a subordinate

Basic Structural Formats
• • • Functional Departments – Categorizing jobs according to the activity performed. Product-Service Departments – Grouping jobs around a specific product or service. Geographic Location Departments – Adopting a structural format based on the physical dispersion of assets, resources, and customers. Customer Classification Departments – Creating a structural format centered on various customer categories.

Organizational Structure • Defines the primary reporting relationships that exist within an organization. – The chain of command and hierarchy of responsibility, authority, and accountability are established through organizational structure. Common Forms of Organizational Structure – Functional structure – Divisional structure

such as drugstores or grocery stores. • Geographic (Territorial) Departmentalization .– Matrix structure – Network structure Alternative Departmentalization Formats Divisional Organization for a Pharmaceuticals Company Organizing Departments by Self-Contained Divisions/Purposes • Marketing-channel Departmentalization – Departments focus on particular marketing channels.

– Separate departments are established for each of the territories in which the enterprise does business. Marketing Channel Departmentalization Divisional Organizations Facilitate Coordination Alternative Departmentalization Formats .

increasing speed. improving quality. incorporating IT. and improving customer satisfaction Work Flow Process Departments in Reengineered Organizations – Creating horizontal organizations that emphasize speedy work flow between two key points: • Identifying customer needs • Satisfying customer needs – Focus is outward rather than inward. Potential Advantages and Disadvantages of Organizational Structures Narrow and Wide Spans of Control .• • Reengineering into Cross-Functional Teams – Lowering costs.

The Need for Balance – The challenge is to balance the need for responsiveness to changing conditions (decentralization) with the need to create low-cost shared resources (centralization). Decentralization – The sharing of decision-making authority by management with lowerlevel employees.Factors Influencing the Span of Management • Competence of supervisor and subordinate • Physical dispersion of subordinates • Extent of nonsupervisory work in manager's jod • Degree of required interaction • Extent of standardized procedures • Similarity of tasks being supervised • Frequency of new problems • Preferences of supervisors and subordinates • The Contingency Approach to Spans of Control • Both overly narrow and overly wide spans of control are counterproductive. • Narrow spans of control are best suited for departments where the work is complex and/or the workers are widely dispersed. • • • Centralization – The retention of decision-making authority by top management. • Situational factors dictate the width of spans of control. • Wide spans of control are appropriate for departments where many workers work close together and do the same job. .

the line manager can choose whether to seek or to avoid input from the staff. whereas staff advises and assists. Staff authority is less concrete and may take a variety of forms: • authority to advise . • Authority: line authority is generally thought of as the formal or legitimate authority created by the organizational hierarchy. Differences Between Line and Staff • Purpose: the purpose of line is to work directly toward organizational goals. the manager might still choose to ignore it.Tall Versus Flat Organizations • • Line Manager – A manager who is (1) in charge of essential activities such as sales and (2) authorized to issue orders to subordinates down the chain of command.line manager must listen to the advice but can choose to heed it or ignore it • functional authority . • compulsory advice . This individual is likely to have expertise in such special areas as Equal Employment Opportunity. and even when advice is sought. this expert is likely to be given authority to make appropriate . Staff Manager – A manager without the authority to give orders down the chain of command (except in his or her own department).legitimate authority over activities related to the staff member's specialty. In Figure the vice president of human resources is a member of the professional staff. When a legal question arises that pertains to hiring. generally can only assist and advise line managers in specialized areas such as human resources management.

The costlier and riskier the decision. Factors which determine an Organization's Position on the DecentralizationCentralization Continuum • The greater the complexity and uncertainty of the environment. Decentralization and Centralization • Decentralization is the process of systematically delegating power and authority throughout the organization to middle and lower-level managers. Conferring functional authority is probably the most effective way to use staff positions. Staff Authority • Authority is based on expertise in specialty areas • Provides information. the process of systematically retaining power and authority in the hands of higher-level managers. rejected. • The history of the organization.decisions. or altered by the line organization The Changing Shape of Organizations • Characteristics of New Organizations – Fewer organizational layers – More teams – Smallness within bigness • New Organizational Configurations – Hourglass organization: a three-layer structure with constricted middle (management) layer. so there is likely to be some relationship between what an organization did in its early history and what it chooses to do today in terms of centralization or decentralization. the greater is the tendency to decentralize. • Centralization. Firms have a tendency to do what they have done in the past. and guidance in specialty areas and is not managerial in nature • The authority to make recommendations to line organization • The recommendations can be accepted. • The nature of the decisions being made is also considered. the more pressure there is to centralize. . – Virtual organizations: internet-linked networks of value-adding subcontractors. advice. – Cluster organization: collaborative structure in which teams are the primary unit. counsel. because it allows the organization to take advantage of specialized expertise while also maintaining a chain of command.

stories. 6. If lower-level managers are well qualified. culture. Organizational Cultures • Organizational Culture – The collection of shared beliefs. Inherently fuzzy: ambiguity. – The “social glue” that binds an organization’s members together. Emotionally charged: the organization’s culture serves as a security blanket to its members. competitive realities. if top management doesn't. 3. • The degree of sharing and intensity determine whether an organization’s culture is strong or weak. 5. myths. and specialized language that creates a common identity and sense of community. Collective: organizations are social entities. 2. and compensation and benefits. Historically based: trust and loyalty result from long-term organizational associations. top management can take advantage of their talents by decentralizing. contradictions. • • Characteristics of Organizational Cultures 1. and multiple meanings are part of culture. Inherently symbolic: actions often speak louder than words. – Orientations • Programs that familiarize new employees with the organization’s history. Dynamic: culture promotes stability and control.• Organizations also consider the abilities of lower-level managers. Forms and Consequences of Organizational Cultures 1. . If lower-level managers do not have the ability to make high-quality decisions. in fact. values. talented lower-level managers may leave the organization. 4. there is likely to be a high level of centralization. Organizational values: shared beliefs about what the organization stands for. – Storytelling • Recitations of heroic or inspiring deeds provide “social roadmaps” for new employees. • The Organizational Socialization Process – Organizational socialization: the process of transforming outsiders into accepted insiders. rituals.

Conveys a sense of identity for its members. A Socialization Model . How Organization Cultures Form Keeping Culture Alive • Selection – Concerned with how well the candidates will fit into the organization. Defines the boundary between one organization and others. 4. • Top Management – Senior executives help establish behavioral norms that are adopted by the organization. 3.• Strengthening Organizational Cultures – Symptoms of a weak organizational culture • Inward focus • Morale problems • Fragmentation/inconsistency • Ingrown subcultures • Warfare among subcultures • Subculture elitism Culture’s Functions: 1. Facilitates the generation of commitment to something larger than self-interest. • Socialization – The process that helps new employees adapt to the organization’s culture. – Provides information to candidates about the organization. Enhances the stability of the social system. 2.

The Change Process Lewin’s Model of change • • • Unfreezing the status quo Changing to a new state Refreezing to make the change permanent Organizational Effectiveness • Evaluation of Effectiveness – There is no single approach to that is appropriate in all circumstances or for all organizational types. .Organizational Change • • • Organizational Change – Any alterations in the people. structure. or technology of an organization Characteristics of Change – Is constant yet varies in degree and direction – Produces uncertainty yet is not completely unpredictable – Creates both threats and opportunities Managing change is an integral part of every manager’s job.

– Adapting to environmental demands and developing as a learning organization in the intermediate future. Challenges to Managing • Knowledge Management – The cultivation of a learning culture where organizational members systematically gather and share knowledge with others in order to achieve better performance • Learning Organization – An organization that has developed the capacity to continuously learn. . adapt. and change Learning Organization Vs.• The Time Dimension of Organizational Effectiveness Involves – Meeting organizational objectives and prevailing societal expectations in the near future. – Surviving as an effective organization into the future. that seeks to improve organizational effectiveness and employee well-being. Traditional Organization Organization Development (OD) Definition: “A process used to enhance both the effectiveness of an organization and the well-being of its members through planned interventions. built on humanistic-democratic values.” Organizational Development (OD) A collection of planned interventions.

Respect for people 2. systematic diagnosis. low job satisfaction = reactive • • • Often conducted by outside consultant – gives independence Views organization as a system – interdependent set of components Involves extensive planning: deal with resistance. develop change plan.turnover. get buy in etc Reasons for OD • External: *Knowledge explosion *Competitor pressure *Changing employee demands – want more decision-making and responsibility – want empowerment (see text page 274) *Legislation • Internal: *identified problem/s – turnover etc *natural growth stages Managing Planned Change .OD Values: 1. absenteeism. Trust and support 3. Confrontation 5. Power equalization 4. Participation OD Definition • Planned activity – diagnosing problems. implementing plan • OD effects entire organization – ripple effects • OD requires support – all levels • OD aims to improve organizational effectiveness and health • Goals flow from deliberate interventions OD Key Characteristics • OD initiated in response to need/problem .

Change Making things different. engaging in job actions – Implicit and deferred • Loss of employee loyalty and motivation. Resistance to Change Forms of Resistance to Change – Overt and immediate • Voicing complaints. increased absenteeism Overcoming Resistance to Change Tactics for dealing with resistance to change: • Education and communication • Participation • Facilitation and support • Negotiation • Manipulation and cooptation • Coercion Lewin’s Three-Step Change Model Unfreezing Change efforts to overcome the pressures of both individual resistance and group conformity. Refreezing Stabilizing a change intervention by balancing driving and restraining forces. Driving Forces Forces that direct behavior away from the status quo. Restraining Forces Forces that hinder movement from the existing equilibrium. increased errors or mistakes. Planned Change Activities that are intentional and goal oriented. Changing the behavior of individuals and groups in the organization. Goals of Planned Change: Improving the ability of the organization to adapt to changes in its environment. .. Change Agents Persons who act as catalysts and assume the responsibility for managing change activities.

so that they can perform multiple tasks • The team receives regular performance feedback • • OD is a complex process OD is part of an organizations natural growth – done appropriately it can ensure organizational survival Resistance to change is a major challenge for OD work • . and celebrate quality achievements • Strong quality communication efforts • Self-Managing Teams – Basic components: • Interdependence among team members • Individual members have discretion/authority to make important work decisions • Individual members possess a variety of skills.Types of Interventions: Socio-technical Systems • Quality Circles – Involving employees in work decisions • Total Quality Management (TQM) – Continuous improvement efforts • Self-Managing Teams (SMTs) – Team members have authority to make decisions and regulate the team’s activities • Total Quality Management (TQM) – Five basic components: • Total commitment from senior management • Quality standards and measures in place • Training in quality for all employees (including Statistical Process Control) • Programs/ways to reward. recognize.

STAFFING HUMAN RESOURCE PLANNING Human Resource Planning is the process of systematically reviewing HR requirements to ensure that the required number of employees. are available when needed Estimating Internal Labor Supply for a Given Unit Selection process . with the required skills.

Sincerity Morality. and taking corrective action if goals are not being achieved What to measure? Technical Attributes Knowledge and Application Achievement of targets Other quantifiable results Soft Skills Leadership and goal clarity Relationship Management Communication Personal Traits Honesty. Integrity. Ethical standing . providing constructive feedback.Performance Appraisal Process of periodically measuring employees’ progress toward agreed-upon objectives.

insiders & outsiders 360-DEGREE PERFORMANCE APPRAISAL .Uses for Performance Appraisal WHO CONDUCT THE APPRAISAL IMMEDIATE SUPERVISOR SUBORDINATES COWORKERS (Peers) OUTSIDERS – Customers – Constituents – Consultants SELF-APPRAISAL GROUPS or TEAMS 360 degree appraisal – from above & below.

results oriented 360°Appraisal More thorough DISADVANTAGE More a measure of evaluator’s writing ability Time-consuming. difficult to develop measures behaviors Unwieldy with large number of employees Time-consuming Time-consuming Common Rater Errors .Performance Appraisal Methods METHOD ADVANTAGE Written essay Simple to use than of employee’s actual performance Critical incidents Rich examples behaviorally based Graphic rating Provide quantitative scales data. lack quantification Do not provide depth of job behavior assessed Time-consuming. less timeconsuming than others BARS Focus on specific and measurable job Multiperson Compares employees with one another MBO Focuses on end goals.

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