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Chapter 9 Designing Adaptive Organizations MGMT 3 Chuck Williams Copyright © 2011 by Cengage Learning. All rights reserved Designed & Prepared by B-books, Ltd.
Organizational Structure The vertical and horizontal configuration of departments, authority, and jobs within a company. Organizational Process The collection of activities that transform inputs into outputs that customers value. 2 Copyright © 2011 by Cengage Learning. All rights reserved
Organizational Structure Process View of Microsoft’s Organization 3 Copyright © 2011 by Cengage Learning. All rights reserved
Designing Organizational Structures After reading these sections, you should be able to: 1. describe the departmentalization approach to organizational structure. 2. explain organizational authority. 3. discuss the different methods for job design. 4 Copyright © 2011 by Cengage Learning. All rights reserved
Departmentalization Functional Customer Product Geographic Matrix 1 5 Copyright © 2011 by Cengage Learning. All rights reserved
Functional Departmentalization 1. 1 6 Copyright © 2011 by Cengage Learning. All rights reserved
Functional Departmentalization Advantages Disadvantages ü Work done by highly skilled specialists ü Lowers costs through reduced duplication ü Communication and coordination problems are lessened ü Cross-department coordination can be difficult ü May lead to slower decision making ü Produces managers with narrow experiences 1. 1 7 Copyright © 2011 by Cengage Learning. All rights reserved
Product Departmentalization United Technologies Carrier Hamilton Sundstrand Otis Pratt & Whitney 1. 2 Chubb Sikorsky --Administrative services --Communication & public relations --Customer service & support --E-Business --Engineering --etc… UTC Power 8 Copyright © 2011 by Cengage Learning. All rights reserved
Product Departmentalization Advantages Disadvantages • Managers specialize, but have broader experiences • Easier to assess workunit performance • Decision-making is faster • Duplication of activities • Difficult to coordinate across departments 1. 2 9 Copyright © 2011 by Cengage Learning. All rights reserved
Customer Departmentalization 1. 3 Source: “Company Structure, ” About Swisscom, available online at http: // www. swisscom. ch [accessed 14 November 2009]. 10 Copyright © 2011 by Cengage Learning. All rights reserved
Customer Departmentalization Advantages • Focuses on customer needs • Products and services tailored to customer needs Disadvantages • Duplication of resources • Difficult to coordinate across departments • Efforts to please customers may hurt the company 1. 3 11 Copyright © 2011 by Cengage Learning. All rights reserved
Dell’s Spotlight Now on Customers Beyond the Book Traditionally, Dell’s core focus has been making PCs as efficiently as possible to sell at a discount to their competitors. Like most tech companies Dell organized itself around its products. Since the beginning of 2009, Dell has taken a different approach focusing around four customer groups: consumers, corporations, small and midsized businesses, and governments and educational buyers. Dell believes that an outward focus will empower managers to better respond to client needs. Source: C. Edwards, “Dell’s Do-Over”, Business Week, 26 October 2009. 36 -40. 12 Copyright © 2011 by Cengage Learning. All rights reserved
Geographic Departmentalization 1. 4 Source: “Territories of Operation, 2007 Annual Report, ” Coca-Cola Enterprises, available online at http: //www. cokecce. com/brochures/cce_2007/index. html#territories [accessed 7 September 2008]. Copyright © 2011 by Cengage Learning. All rights reserved 13
Geographic Departmentalization Advantages • Responsive to the demands of different market areas • Unique resources located close to the customer Disadvantages • Duplication of resources • Difficult to coordinate across departments 1. 4 14 Copyright © 2011 by Cengage Learning. All rights reserved
Matrix Departmentalization 1. 5 Source: “Corporate Info: Structure, ” P&G, available online at http: // www. pg. com/jobs/corporate_structure/four_pillars. shtml [accessed 8 August 2008]. 15 Copyright © 2011 by Cengage Learning. All rights reserved
Matrix Departmentalization Advantages • Efficiently manage large, complex tasks • Pool of available resources Disadvantages • Requires high levels of coordination • Conflict between bosses • Requires high levels of management skills 1. 5 16 Copyright © 2011 by Cengage Learning. All rights reserved
Organizational Authority Chain of Command Line versus Staff Authority Delegation of Authority Degree of Centralization 2 17 Copyright © 2011 by Cengage Learning. All rights reserved
Chain of Command • The vertical line of authority in an organization • Clarifies who reports to whom • Unity of command – matrix organizations violate this principle – workers report to only one boss 2. 1 18 Copyright © 2011 by Cengage Learning. All rights reserved
Line versus Staff Authority • Line authority – the right to command immediate subordinates in the chain of command • Staff authority – the right to advise but not command others 2. 2 19 Copyright © 2011 by Cengage Learning. All rights reserved
Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible. 2. 3 20 Copyright © 2011 by Cengage Learning. All rights reserved
© Studio DL/Corbis/Jupiterimages Delegation of Authority 2. 3 21 Copyright © 2011 by Cengage Learning. All rights reserved
How to Be a More Effective Delegator 1. 2. 3. 4. 5. 6. 7. 8. 9. 2. 3 Trust your staff to do a good job. Avoid seeking perfection. Give effective job instructions. Know your true interests. Follow up on progress. Praise the efforts of your staff. Don’t wait to the last minute to delegate. Ask questions, expect answers, assist employees. Provide the resources you would expect if doing the assignment yourself. 10. Delegate to the lowest possible level. 22 Copyright © 2011 by Cengage Learning. All rights reserved
Degree of Centralization ü Centralization of authority • primary authority is held by upper management ü Decentralization • significant authority is found in lower levels of the organization ü Standardization • solving problems by applying rules, procedures, and processes 2. 4 23 Copyright © 2011 by Cengage Learning. All rights reserved
Job Design Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model 3 24 Copyright © 2011 by Cengage Learning. All rights reserved
Job Specialization § § § A job that is a small part of a larger task or process Jobs are simple, easy to learn, & economical Can lead to low satisfaction, high absenteeism, & employee turnover 3. 1 25 Copyright © 2011 by Cengage Learning. All rights reserved
Job Rotation, Enlargement, and Enrichment • Job Rotation – periodically moving workers from one specialized job to another • Job Enlargement – increasing the number of tasks performed by a worker • Job Enrichment – adding more tasks and authority to an employee’s job 3. 2 26 Copyright © 2011 by Cengage Learning. All rights reserved
Job Characteristics Model § A job redesign approach that seeks to increase employee motivation § Emphasizes internal motivation § experience work as meaningful § experience responsibility for work outcomes § knowledge of results 3. 3 27 Copyright © 2011 by Cengage Learning. All rights reserved
Job Characteristics Model 3. 3 28 Copyright © 2011 by Cengage Learning. All rights reserved
Job Redesign Techniques Redesigning Jobs Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job 3. 3 Opening Feedback Channels 29 Copyright © 2011 by Cengage Learning. All rights reserved
Designing Organizational Processes After reading these sections, you should be able to: 4. explain the methods that companies are using to redesign international organizational processes (i. e. , intraorganizational processes). 5. describe the methods that companies are using to redesign external organizational processes (i. e. , interorganizational processes). 30 Copyright © 2011 by Cengage Learning. All rights reserved
Intraorganizational Processes Reengineering Empowerment 4 31 Copyright © 2011 by Cengage Learning. All rights reserved
Reengineering § The fundamental rethinking and radical redesign of business processes § Intended to achieve dramatic improvements in performance § Change the orientation from vertical to horizontal § Change task interdependence 4. 1 32 Copyright © 2011 by Cengage Learning. All rights reserved
Reengineering and Task Interdependence 4. 1 33 Copyright © 2011 by Cengage Learning. All rights reserved
Empowerment Empowering Workers Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions § A feeling of intrinsic motivation § Workers perceive meaning in their work § Employees are capable of self-determination 4. 2 34 Copyright © 2011 by Cengage Learning. All rights reserved
Beyond the Book Behavioral Informality ü Spontaneity ü Casualness ü Interpersonal familiarity Behavioral Formality ü Routine & regimen ü Specific behavior rules ü Impersonal detachment 35 Copyright © 2011 by Cengage Learning. All rights reserved
Beyond the Book Behavioral Informality Popular ways to increase behavioral informality Casual Dress and Open Offices 36 Copyright © 2011 by Cengage Learning. All rights reserved
Interorganizational Processes Modular Organizations Virtual Organizations 5 37 Copyright © 2011 by Cengage Learning. All rights reserved
Modular Organizations 5. 1 38 Copyright © 2011 by Cengage Learning. All rights reserved
Modular Organizations Advantages Disadvantages • can cost less to run than traditional organizations • lets organizations focus on core competencies • loss of control from outsourcing • may reduce their competitive advantage 5. 1 39 Copyright © 2011 by Cengage Learning. All rights reserved
Virtual Organizations 5. 2 40 Copyright © 2011 by Cengage Learning. All rights reserved
Virtual Organizations Advantages Disadvantages • let companies share costs • fast and flexible • being the best should provide better products • difficult to control the quality of partners • requires tremendous management skills 5. 2 41 Copyright © 2011 by Cengage Learning. All rights reserved
Netflix Utilizing Virtual Teams Beyond the Book In an effort to improve the video recommendations on its website, Netflix awarded a $1 million prize to an outside group of designers with members from New Jersey, Quebec, Austria, and Israel. More than 40, 000 teams representing 186 countries participated in the competition. Many of the participants posted their results online and teams frequently worked together. A big reason for the project’s success: Netflix was able to present it as a discrete math problem with well defined parameters and objectives. Source: M. V. Copeland, “Tapping Tech’s beautiful Minds”, Fortune, 12 October 2009. 35 -36. 42 Copyright © 2011 by Cengage Learning. All rights reserved