DIP – 5. Organizing Function

DIP – 5. ORGANIZING

FUNCTIONLim Sei Kee @ cK

ORGANIZING Process of arranging people and

resources to work toward a common goal.

Organizing decisions divide up the work that needs to be done, allocate people and resources to do it, and coordinate results to achieve productivity.

IMPORTANCE OF ORGANIZING Divide up the work Arrange resources Coordinate activities

4

FUNDAMENTALS OF ORGANIZING The organization chart is a diagram that

illustrates the reporting lines between units and people within the organization.

The organization chart conveys four kinds of information: The boxes represent different units. The titles in each box show the work

performed by that person. Reporting relationships are shown by the lines

connecting superiors and subordinates. Levels of the organization are indicated by the

number of vertical layers in the chartCopyright © 2005 by South-Western, a division of Thomson LearningAll rights reserved

5

ORGANIZATION CHART FOR HOME DEPOT(ADAPTED FROM FIGURE 11.1)

Copyright © 2005 by South-Western, a division of Thomson LearningAll rights reserved

ExecutiveVice President,Chief Financial

Officer

ExecutiveVice President,

Marketing


Legal


HumanResources

ExecutiveVice President,Merchandising


Operations

ExecutiveVice President,InternationalTechnology

Vice President,InvestorRelations

SeniorVice President,

CustomerService


Operations

President,Western

President,Atlantic

President,Mexico


Real Estate

Chairman ofBoard and CEO

6

FUNDAMENTAL CONCEPTS OF ORGANIZING Differentiation means that the organization

is composed of units that work on specialized task using different work methods and requiring employees with unique competencies. Division of labor means that the work of the

organization is divided into smaller tasks. Specialization is the process of identifying

particular tasks and assigning them to departments, teams, or divisions.

Integration means that the various units must be put back together so that work is coordinated. Copyright © 2005 by South-

Western, a division of Thomson LearningAll rights reserved

7

FIVE ELEMENTS OF VERTICAL DESIGN

Hierarchy is a pyramid showing relationships among levels.

Span of control refers to the number of employees directly reporting to a person.

Factors influencing span of control include:1. The competence of both the

manager and the employee.2. The similarity or dissimilarity of

tasks being supervised.3. The incidence of new problems in

the manager’s department.4. The extent of clear operating

standards and rules.Copyright © 2005 by South-Western, a division of Thomson LearningAll rights reserved

8

FIVE ELEMENTS OF VERTICAL DESIGN (CONT.) Authority, Responsibility, and

Accountability Authority is the right to make a decision. Responsibility is an employee’s duty to

perform the assigned task. Accountability is the manager’s

expectation that the employee will accept credit or blame for his work.


9

FIVE ELEMENTS OF VERTICAL DESIGN (CONT.) Delegation is the process of giving

authority to a person (or group or team) to make decisions and act in certain situations.

Practices useful in effective delegation include: Establish goals and standard Ensure clarity Involvement Expect completed work Provide training Timely feedback Copyright © 2005 by South-


10

FIVE ELEMENTS OF VERTICAL DESIGN (CONT.) Centralization and Decentralization

Centralization is the concentration of authority at the top of an organization or department.

Decentralization is the delegation of authority to lower level employees or departments.

Key factors affecting decision to centralization or decentralization.Cost of decisionsUniformity of policyCompetency levelsControl mechanismsEnvironmental influencesCopyright © 2005 by South-


11

HORIZONTAL ORGANIZATIONAL DESIGN Functional Design Product Design Geographical Design Network Design


12

FUNCTIONAL DESIGN Function design means grouping

managers and employees according to their areas of expertise and the resources they use to perform their jobs.


13

FUNCTIONAL DESIGN (CONT.)

Potential Benefits Supports skill

specialization Reduces duplication of

resources & increases coordination

Enhances career development & training within functional area

Allows superiors and subordinates to share common expertise

Promotes high-quality technicaldecision making

Potential Pitfalls Inadequate

communication Conflicts over product

priorities Difficulties with interunit

coordination Focus on departmental

rather than organizational issues and goals

Develops managers who are experts in a narrow field


14

HARLEY-DAVIDSON ORGANIZATION CHART(ADAPTED FROM FIGURE 11.2)


GeneralCounsel

CEO

Controller Manufacturing

Owners Groups(HOGS)

StrategicPlanning Engineering Human

Resources

Merchandise

15

PRODUCT DESIGN Product design means that all

functions that contribute to a product are organized under one manager.


16

PRODUCT DESIGN (CONT.)Potential Benefits Permits fast changes in

a product line Allows greater product

line visibility Fosters a concern for

customer demand Clearly defines

responsibilities for each product line

Develops managers who can think across functional lines

Potential Pitfalls Not allowing efficient

utilization of skills and resources

Not fostering coordination of activities across product

Encourages politics and conflicts in resource allocation across product lines

Limits career mobility for personnel outside their own product lines


17

GENERAL DYNAMICS ORGANIZATION CHART(ADAPTED FROM FIGURE 11.3)


InformationSystems &Technology

LandSystems

Chairman & ChiefExecutive Officer

ArmamentSystems

Ordnance &TacticalSystems

BathIron

WorksElectric

Boat

CombatSystems

MarineSystems Aerospace

AviationServices

18

GEOGRAPHICAL DESIGN Geographical design organizes

activities around location.


19

GEOGRAPHICAL DESIGN (CONT.)

Potential Benefits Has facilities and the

equipment used for production and/or distribution all in one place, saving time and costs

Able to develop expertise in solving problems unique to one location

Gaining an understanding of customers’ problems and desires

Getting production closer to raw materials and suppliers

Potential Pitfalls Duplication of functions,

to varying degrees, at each regional or individual unit location

Conflict between each location's goals and the organization's goals

Adds levels of management and extensive use of rules and regulations to coordinate and ensure uniformity of quality among locations


20

STARBUCKS ORGANIZATION CHART(ADAPTED FROM FIGURE 11.4)


President,International

President

CEO

Thailand

VP,Northwest

VP,South Central

VP,Southwest

President,North America

President, Europe,Middle East, Africa

President,Japan

Senior VP,Coffee

Executive VP,Chief Financial Officer

Executive VP,Partner Resources

Executive VP,Supply Chain & Coffee

Executive VP,Legal

Australia

United Kingdom

21

NETWORK DESIGN Network design subcontracts

some or many of its operations to other firms and coordinates them to accomplish specific goals.


22

NETWORK DESIGN (CONT.)Potential Benefits Ability to gain special

knowledge and skills of others without having to hire employees

Brings together people with different insights

Allows managers the flexibility to work with a wide variety of different suppliers, customers, and other organizations

Potential Pitfalls Other organizations may fail

to live up to established deadlines

Managers must constantly monitor the quality of work provided by other organizations

Employees in the outsourced organization may not commit to the same values and sense of time urgency to which employees in the networked organization are committed


23

DREAMWORKS SKG NETWORK DESIGN(ADAPTED FROM FIGURE 11.5)


Spielberg Katzenberg Geffen (Films) (Animation) (Music)

ComputerHardware/Software

Agents

MakeupArtists

MediaRelationsTalent

ScoutsActors

Legal

FutureGames

Marketing

Technicians

CostumeDesigners

Documents

DIP – 5. Organizing Function