Chapter 4 Organizational Structure [PDF]

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CHAPTER 4: ORGANISATIONAL STRUCTURE



What is organizational design?



Arrange and structure work to accomplish organizational goal.



How? Divides work in accordance to specific jobs and group them together into specific department. Assign tasks and responsibilities Coordinate's diversity of tasks Establish relationship and formal lines of authority Allocates and deploys organizational resources



1. Work specialization (Division of labor):



Beneficial for manufacturing activities Assemble the bricks--- emphasize paint the products-Check the quality of the products-- Prepare for packaging- Distribute to end users Framing-- Siding- Painting-Inspection-



which of the job in the organization are divided into sub-tasks. Each sub task will be performed by the individual of the employee. One particular=one particular job.



Advantages and Disadvantages Advantages



Each employee can be an expert Higher levels of productivity Work completed faster and more efficient Quality control costs are lowered Sense of pride and job security Higher profit potential



Disadvantages Limit the ability to perform many tasks Feel boredom Smaller skills sets Employees rarely challenged Limited cooperation and communication Limit the amount of work



Who is my bos? Who do I report to? Who do I go if I have a problem?



Authority-What people expect to do?



2. Chain of Command



RESPONSIBILITY-THIS IS YOUR TASK!!



UNITY OF COMMAND-THIS IS YOUR MANAGER



Chain of command: The continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. WHO DO I GO TO IF I HAVE A PROBLEM? WHO DO I REPORT TO? THREE ELEMENTS: AUTHORITY, RESPONSIBILITY AND UNITY OF COMMAND



3. Span of control: The number of subordinates a manager can direct efficiently and effectively.



4. Authority: WHAT PEOPLE TO DO AND EXPECT TO DO? The rights inherent in a managerial position to give orders and expect them to be obeyed. THE CONDITIONS OF GIVING ORDERED: Understand the order Consistent and know the purpose Avoid conflicts with the personal beliefs Able to perform the tasks as directed



Line authority- employeremployee authority relationship. The position authority (given and defined by the organization) that entitles a manager to direct the work of operative employees without consulting to anyone. Staff authority Positions that have some authority (e.g., organization policy enforcement) but that are created to support, assist, and advise the holders of line authority.



Responsibility: An obligation to perform assigned activities.



5. Power: An individual’s capacity to influence decisions.



TYPES OF POWER Coercive power



Power based on fear.



Reward power Power based on the ability to distribute something that others value. Legitimate power Power based on one’s position in the formal hierarchy. Expert power Power based on one’s expertise, special skill, or knowledge. Referent power Power based on identification with a person who has desirable resources or personal traits.



Unity of command: The management principle that no person should report to more than one boss.



6. Centralization: At what organizational level are decisions made? ORGANIZATION WITH A CENTRALIZED STRUCTURE KEEP DECISION-MAKING FIRMLY AT THE TOP OF THE HIERARCHY (AMONGST THE SENIOR MANAGEMENT).



Decentralization: IN DECENTRALIZED STRUCTURE, DECISION MAKING IS SPREAD OUT TO INCLUDE MORE JUNIOR MANAGERS IN THE HIERARCHY, AS WELL AS INDIVIDUAL ORGANIZATION UNITS.



Centralization vs decentralization Decentralization



Centralization



Environment is stable



Lower level managers are not capable to make decisions



Decisions are relatively monitor



Crisis or the risk of failure



Company is large



Effective implementation of company strategies depends of managers retaining say over what happens



Environment is complex, uncertain Lower-level managers are capable to make decisions Decision is significant Corporate culture is open to allow managers a say in what happens Company is geographically dispersed Effective implementation of company strategies depends on managers being involved and flexibility to make decisions.



7. DEPARTMENTALIZATION: HOW JOBS ARE GROUPED TOGETHER



Plant Manager



Accounting Manager



Manufacturing Manager



Functional Departmentalization: The grouping of activities by functions performed



Purchasing Manager



HR Manager



Efficient according to the special skills, knowledge and orientation. Coordination within functional area In depth specialization Poor communication across functional area Limited view of organizational goals



Product Departmentalization : The grouping of activities by product produced



Sales Director



Manager, retail accounts



Wholesale manager



Purchasing Manager



CRM Manager



Customer’s needs and problems can be met by specialists Duplication of functions Groups jobs on the basis Limited view of organizational goals



Customer Departmentalization:



of specific unique customers



Vice President of Sales



Sales Director Western region



Sales Director Southern Region



Geographic Departmentalization: The grouping of activities by GEOGRAPHIC REGION



Sales Director, ASIA



Sales Director Eastern Region



MORE EFFECTIVE AND EFFICIENT IN HANDLING OF SPECIFIC REGIONAL ISSUES THAT ARISE SERVE NEEDS OF UNIQUE GEOGRAPHIC MARKETS DUPLICATION OF FUNCTIONS CAN FEEL ISOLATED FROM OTHER ORGANIZATIONAL GOALS.



Plant Superitendant



Sewing Department Manager



Planning and Milling Dpmt Manager



Assesmbling Dpmt Manager



Finishing Dpmt Manager



Inspection and Shipping Dpmt Manager



Process Departmentalization: The grouping of activities by process on the basis of product or customer flow -it is more efficient flow of work activities -can be only uses for specific types of product



Q&A Session