CHAPTER-07 CREATING A FLEXIBLE ORGANIZATION 1 Dr. Gehan Shanmuganathan, (DBA) UNILEVER RESTRUCTURES USING MOBILE TECHNOLOGY 2 UNILEVER RESTRUCTURES USING MOBILE TECHNOLOGY  Unilever is an outcome of a merger between a British soap maker and Dutch margarine company in 1930  Grown global powerhouse selling 400 brands in 150 nations being the world’s third-largest manufacturer of consumer goods, with more than $ 75 billion in their annual sales. Workforce of 174,000  Organized by product, location, and function  Teleconferencing, internet phones service, other services for mobile workers  This has reduced an office cost of 40% and increased business efficiency 3 LEARNING OBJECTIVES 4 LEARNING OBJECTIVES 1. Understand what an organization is and identify its characteristics. 2. Explain why job specialization is important. 3. Identify the various bases for departmentalization. 4. Explain how decentralization follows from delegation. 5. Understand how the span of management describes an organization. 6. Describe four basic forms of organizational structure LEARNING OBJECTIVES (CONT’D) 7. Describe the effects of corporate culture 8. Understand how committees and task forces are used 9. Explain the functions of the informal organization and the grapevine in a business WHAT IS AN ORGANIZATION ? 7 WHAT IS AN ORGANIZATION?  A group of two or more people working together to achieve a common set of goals  Developing organization charts  Organization chart- positions and relationships  Chain of command- line of authority from top to bottom  Staff (advisory) positions- not directly but as advisors(broken lines) MAJOR CONSIDERATION FOR ORGANIZING A BUSINESS 9 MAJOR CONSIDERATION FOR ORGANIZING A BUSINESS 1. Job design- divide the entire organizational work 2. Departmentalization- manageable unites 3. Delegation- responsibility and authority 4. Span of management- number of subordinates to a manager 5. Chain of command- designate positions with authority and support positions JOB DESIGN 11 JOB DESIGN  Job specialization- separate distinctive tasks  Rationale for specialization- increase of production (Adam Smith- Wealth of nation)  Alternatives to job specialization  Job rotation- rotate  Job enlargement- horizontally  Job enrichment- vertically EXPLAIN ROTATION, ENLARGEMENT, AND ENRICHMENT 13 DEPARTMENTALIZATION 14 DEPARTMENTALIZATION  Grouping jobs into manageable units  Common bases for departmentalization  By function  By product  By location  By customer  Combinations FUNCTIONS BASED STRUCTURE GM marketing finance production Human resource executive representative 16 PRODUCT BASED STRUCTURE MARKETING MANAGER MANAGER PRODUCT-A MANAGER PRODUCT-B MANAGER PRODUCT-C 17 MARKET OR GEOGRAPHY BASED STRUCTURE MARKETING MANAGER REGION MANAGER-1 REGION MANAGER-2 REGION MANAGER-3 18 STRUCTURE BY CUSTOMER 8| 19 MATRIX STRUCTURE 1.Inquisitive 2. Analytical 3. Collective 4. Explorative 5. Innovative 1.Quality oriented 2. Efficiency oriented 3. Time oriented 4. Process oriented 1. Winning minded 2. Go-getter 3. Convincing 4. Creative 5. Innovative 6. Challenge status- quo 1. Analytical 2. Collective 3. Number oriented 4. Cost and opportunity cost oriented 8| 20 DELEGATION, DECENTRALIZATION, AND CENTRALIZATION 21 DELEGATION, DECENTRALIZATION, AND CENTRALIZATION  Delegation  Assigning part of a manager’s work and power to other workers  Responsibility- duty to perform a job  Authority- power given to perform a task  Accountability- obligation to accomplish a task STEPS IN THE DELEGATION PROCESS  The manager assigns responsibility  The subordinating is empowered to do the task  Ultimate accountability remains with the manager BARRIERS TO DELEGATION  Managers unwillingness  Fear of subordinate doing the work better than manager  Manager is disorganized so can not delegate  Feeling of the manager to get things done rather sharing DECENTRALIZATION OF AUTHORITY  Decentralized organization- spreads authority  Centralized organization- authority centralized at the upper level  Factors favoring decentralization External environmental factors (dynamism)  Nature of the decision  Abilities of the lower level managers  Lower level decision making skills  Company tradition THE SPAN OF MANAGEMENT/CONTROL  Span of control- number of workers reporting directly   Wide or narrow Organizational height- number of layers, or levels, of management in a firm  Flat organizations- wider span of management  Tall organizations- narrow span of management FLATTER AND TALLER ORGANIZATIONS 27 FORMS OF ORGANIZATIONAL STRUCTURE 28 CHAIN OF COMMAND: LINE AND STAFF MANAGEMENT  Line management position  Line authority- a person makes a decision and gives orders to subordinates to achieve the organization’s goal  Staff management position  Advisory authority – provides support advises, and expertise within an organization  Functional authority – the authority of staff managers to make decisions and issue directives about their areas of expertise CHAIN OF COMMAND: LINE AND STAFF MANAGEMENT 8| 30 LINE-STAFF CONFLICT  Reasons  for conflict Staff managers have formal education and more ambitious  Line managers perceive staff as a threat  Minimizing conflict  Form teams  Clear definition of responsibilities  Hold both accountable for results FORMS OF ORGANIZATIONAL STRUCTURE  Bureaucratic structure  Characteristics- high specialization, departmentalization by function, formal delegation, high centralization, narrow span of management, formal relationships  Advantages- manage large number of employees in fair manner  Disadvantages- lack of flexibility and lack of individual identity in the mass  Matrix structure- that combines vertical and horizontal lines of authority (cross functional teams) THE MATRIX STRUCTURE (CONT’D) Disadvantages Advantages   Flexibility  than one supervisor Increased productivity   Nurture creativity  Innovative Employees report to more Confusion about who is incharge  Takes time to resolve issues than individuals  Personality clashes  Poor communication  Expensive to maintain FORMS OF ORGANIZATIONAL STRUCTURE (CONT’D)  Cluster structure- consists of primarily of teams with no or very few departments- teams   Strengths- special projects, flexibility, explore new ideas  Weaknesses- job security, stress level high Network structure (virtual organization)perform mainly admin work while other functions outsourced  Strengths- flexibility  Weaknesses- high turnover 7 | 34 CORPORATE CULTURE 35 ADDITIONAL FACTORS THAT INFLUENCE AN ORGANIZATION  Corporate culture   Indicators of corporate culture  Power  People  Task  Process Cultural change is needed when the organizations need a paradigm change TYPES OF CORPORATE CULTURES  Networked culture- main function is admin while other functions outsourced  Mercenary culture- employees high motivation and commitment to perform  Fragmented culture- employees do not become friends, but work at the office not for the office  Communal culture- friendship, commitment, high focus on performance 7 | 37 ADDITIONAL FACTORS THAT INFLUENCE AN ORGANIZATION (CONT’D) Committees-  Types- ad hoc and standing committees 7 | 38 ADDITIONAL FACTORS THAT INFLUENCE AN ORGANIZATION (CONT’D)  Coordination techniques- rules and procedures  Informal organization  Informal groups  The grapevine- informal communications network 7 | 39 WRITE FIVE KEY THINGS (AREAS) THAT YOU CAN CRITICALLY REMEMBER IN TODAY’S DISCUSSION 40 WHAT WE DISCUSSED TODAY.. 41 LEARNING OBJECTIVES 1. Understand what an organization is and identify its characteristics. 2. Explain why job specialization is important. 3. Identify the various bases for departmentalization. 4. Explain how decentralization follows from delegation. 5. Understand how the span of management describes an organization. 6. Describe four basic forms of organizational structure LEARNING OBJECTIVES (CONT’D) 7. Describe the effects of corporate culture 8. Understand how committees and task forces are used 9. Explain the functions of the informal organization and the grapevine in a business WEEKLY ASSIGNMENT - 07 44 WEEKLY ASSIGNMENT -07  Discuss with examples the importance of managing a flexi-organization over highly structured organizations when managing special projects. E.g- computer projects, research, and advertising projects and so on. 45