Chapter-08 organization structure, culture, and change

1. Chapter-08organization structure, culture, and change Dr. GehanShanmuganathan, (DBA)

2. Procter & Gamble

3. Procter & Gamble • Changing the structure (positions) of the organization for cultural change

4. Chapter objectives

5. 9.1 Learning Objectives 1 Describe the bureaucratic organization structure and discuss its advantages and disadvantages. 2 Explain the major ways in which organizations are divided into departments. 3 Describe four modifications of the bureaucratic structure. 4 Identify key factors that influence the selection of organization structure 5 Specify how delegation, empowerment, and decentralization spread authority in an organization 6. Identify major aspects of organizational culture 7 Describe key aspects of managing change, including gaining support for change.

6. Bureaucracy as an organization structure

7. organization structure • The arrangement of people and tasks to accomplish organizational goals • The structure specifies who reports to whom and who does what • The structure specifies who has the power/authority • The structure specifies how to communicate • The structure specifies formal and informal social group behaviors

8. Bureaucracy • A rational, systematic, and precise form of organization in which rules, regulations, and techniques of control are specifically defined

9. Principles of organization in a Bureaucracy

10. Principles of organization in a Bureaucracy • Hierarchy of authority- each lower organizational unit is controlled and supervised by a higher one • Unity of command- each subordinate receives assigned duties from one superior only and is accountable to that superior • Task specialization- division of labor is based on task specialization • Responsibilities and job description • Line and staff functions

11. Top- Level Managers Middle-Level Managers First-Level Managers Operative Employees 9.2 The Bureaucratic Form of Organization High Few Power and Authority Number of Employees Low Many

12. Advantages and disadvantages of Bureaucracy

13. Advantages and disadvantages of Bureaucracy Advantages Disadvantages • Know who is responsible for what • Helps vertical integration • Knows who has the authority to make decisions • Rigid in handling people and problems • Create inconvenience and inefficiency • Competition between departments • Frustration caused by red-tape • Slow decision making

14. Departmentalization

15. Departmentalization • The process of subdividing total work into departments

16. Functional Departmentalization • An arrangement that defines departments by the function each one performs, such as accounting or purchasing • The advantage is to increase functional efficiencies

17. Geographic Departmentalization • An arrangement of departments according to the geographic area or territory served • Advantage is that it allows for decision making at a local level, where the personnel are most familiar with the problems and the local culture, including taste, fashion, and food

18. Product- service Departmentalization • The arrangement of departments according to the products or services they provide • Advantage is to increase the product management efficiencies

19. Modifications of the Bureaucratic organization

20. Non-bureaucratic Forms of Organization 9.4 Matrix Organization Flat Structures, Downsizing, and Outsourcing Team Structure Organization by Process (Instead of Task)

21. Project and matrix organization • Project organization- A temporary group of specialists working under one manager to accomplish a fixed objective • Matrix organization- a project structure superimposed on a functional structure • These organizations are capable of managing the complexity

22. Matrix organizational structure

23. Flat structures, downsizing, and outsourcing

24. Flat organization structure • A form of organization with relatively few layers of management, making it less bureaucratic • Less span of control (number of subordinates reporting directly to a manager )

25. Downsizing or business process reengineering (BPR) • Laying off employees temporarily or permanently business process redesigning or engineering • The key motives of the downsizing are; • Less bureaucratic • Low cost • Higher profits and stock value • Downsizing also could be expensive • Early retirement pay • Disability claims • Lower productivity due to staff low moral • Against the social responsibility

26. Outsourcing • The methodology of giving out part of the entire business process to achieve cost, time, and quality benefits by focusing on the organization core competencies • Advertising • Research • Promotions campaigns • Productions

27. Home shoring • Moving customer service into workers’ homes as a form of telecommuting

28. The horizontal structure (organization by team and process)

29. horizontal structure • The arrangement of work by multidisciplinary teams that are responsible for accomplishing a process • New product development • Marketing research • Quality teams

30. horizontal structure

31. Reengineering • The radical redesign of work to achieve substantial improvements in performance • Switching from a vertical (task) emphasis to horizontal (process) emphasis could be done through reengineering

32. Focus of team or process structure • Reduce cycle time • Reduce cost • Reduce throughput time • Team members; • Need to develop a process mentality rather than a task mentality

33. A TEAMWORK FORMULA Trust Forming, Storming, Norming, Performing Team Triangle Individual Group 4 stages Congruence Cohesiveness [Bond] Team

34. A B Team Approach to a Process Collective Efforts Results C

35. Informal organization structure and communication network

36. Informal organization structure • A set of unofficial relationships that emerge to take care of events and transactions not covered by the formal structure • Social network analysis- the mapping and measuring of relationships and links between and among people, groups, and organizations • Discuss how informal networks could be influenced by the information technology. E.g- emails, Skype, video conferencing

37. Power sharing at the highest level of management

38. Power sharing at the highest level of management • Top of the organization has the highest level of power • Current trend is that one person holds two or more positions such as CEO and Chairman • This avoids the confusion of understanding of “who has the ultimate power to control” • This is designed in line with the flexible or matrix organizations concept

39. Key factors that influence the selection of an organization structure

40. Key factors that influence the selection of an organization structure • Strategy and goals - structure follows the strategy • Technology – high-tech companies use flexi organizations as technology connects worker, supplier, and customer • Size – higher the size of the organization, highly centralized the control would be • Financial condition of the firm – flatter organizations to reduce the cost factor • Environmental stability – when the business faces uncertain and unstable environments, they need flexi organizations

41. Delegation, empowerment, and decentralization

42. Delegation and Empowerment • Delegation- Assigning formal authority and responsibility for accomplishing a specific task to another person • Empowerment- The process by which managers share power with group members, thereby enhancing employees’ feeling of personal effectiveness

43. 9.5 Increasing Productivity ThroughDelegation and Empowerment 1. Assign duties to the right people 2. Delegate the whole task 5. Obtain feedback on the delegated task 4. Retain some important tasks for yourself 3. Give as much instruction as needed

44. Decentralization and centralization • Decentralization- The extent to which authority is passed down to lower levels in an organization • Centralization- The extent to which authority is retained at the top of the organization

45. Organizational culture

46. Organizational culture (corporate culture)- the soft side of the org: • The system of shared values and beliefs that actively influence the behavior of organization members • Subculture- a pocket in which the organizational culture differs from the dominant culture and from other pockets of the subculture

47. Dimensions of organizational culture

48. Dimensions of organizational culture • Values – the organization’s philosophy expressed through values guides behavior on a day-to-day basis • Relative diversity – the degree of homogeneity • Resources allocations and rewards – resources allocation send messages to employee what is valued in the firm • Degree of change – influences the organizational culture • A sense of ownership – ownership of stocks will create a culture of commitment and loyalty • Strength of the culture – strong cultures influence day-to-day behavior of the people

49. How workers learn the culture

50. Socialization • The process of coming to understand the values, norms, and customs, essential for adapting to the organization