Developing Effective Organizations - Principles of Management - ثالث ثانوي

Lothassair www.mm.com 2.4 Developing Effective Organizations KLEY TERMS Departmentalization Line Organization Line-and-Staff Organization Matrix Organization Team Organization Self-Directed Work Teams Centralized Organization Decentralized Organization Flattened Organization LEARNING OBJECTIVES Once you have completed this lesson, you should be able to 2.4.1 Describe the strengths and weaknesses of organizational structures. 2.4.2 Make recommendations for improving business organization. REALITY CHECK Now That's Teamwork! Faisal is very excited. Today, at work, he was appointed the new role of team leader. The company he works for, a large pharmaceu- acals producer in Jeddah, is trialing an innovative new organization- al structure, centered on teams rather than a traditional hierarchy. Workers in his office will now be grouped into teams with the au- tonomy to set their own targets and direction, instead of fairing in- struction from a line manager. Faisal will be responsible for guiding the team and moderating discussion. "This is great!" Faisal exclaims to his wife, Fatimah "We now have full control to do things the way we want to in the office. without a manager telling us what to do! As team leader, I will get to play a more active role in shaping decisions." "That is wonderful news for you," replies Fatimah "However, don't underestimate the benefits of a traditional management struc- ture, too. Managers must take responsibility for their decisions, and also many workers appreciate having clear instruction from above. The team will have to adjust to the new dynamic and take greater responsibility for the results." What's Your Reaction? Would you share Faisal's optimism about the company's new structure? Can you think of any reasons why Faisal should alse be cautious about this change of structure? التعليم 104 Chapter 2 Planning and Organizing

وارد الصليم LO 2.4.1 Types of Organizational Structures A business's organizational structure identifies the relationships among departments and personnel and indicates the lines of communication and decision making. Two primary types of organizational structures are: ■Line organizations ■Line-and-staff organizations. Newer departmental structures in companies are: ⚫ Matrix organizations ■ Team organizations. As organizations grow, multiple employees might be grouped based on the type of activity where value is created for the company. This concept is referred to as departmentalization, where senior manag- ers make conscious decisions on how to group employees that serve a similar need for the company. A manufacturer of food products, for instance, might decide to create departments based on one or more organizational needs. Functional departmentalization is the type most commonly encountered in the work- place and is reflected in line or line-and- staff organization models, where teams are grouped together according to the function of the department, and employees' skills and experience. When you hear an employee speaking about working in human resourc- es, information technology, or another area within a company, it is an example of functional departmentalization. Customer departmentalization, which also follows the line or line-and- staff organization models, groups employees to serve particular types of customer or customer segments. A company that has a local sales division and an international sales division is one such example. A com- pany that serves individual consumers and large corporations is also likely to have departments based on those customer segments Having local and International sales teams example of functional departmentalization Can you think of any others Lesson 2.4 Developing Effective Organizations 105

التعليم 106 Line Organization In a line organization, all authority and responsibility can be traced in a direct line from the top executive down to the lowest employee level in the organization. A line organization is shown in Figure 2-10 (sales is the only area for which the complete organization is shown). This type of organization is commonly used within functional departmentaliza- tion (where employees are grouped based on tasks performed, such as accounting or human resources) and customer departmentalization (where employees are grouped based on the type of customer served). The lines connecting the individual boxes indicate the lines of authority. The lines show, for example, that the president has authority over the sales manager, the sales manager has authority over the assistant sales manager, the assistant sales manager has authority over the branch managers, and the branch managers have authority over the sales rep- resentatives. In addition, the lines describe how formal communications are expected to flow up and down the organization. President Productio Mannajal Jales Manager Controlle Branch A Магаден Assistan Sales Manager Branch B Manager Sales Representative Figure 2-10 Line Organization Representatives A line organization establishes direct lines of authority and responsibility from top to bottom. Chapter 2 Planning and Organizing

عبارت التعليم In a line organization, the top executive has direct control over all units of the business, but responsibility, authority, and accountability are passed along from one person to another, down to the lowest level. Under this form of organization, each person is responsible to only one manager, who, in tum, is responsible to someone else. This type of organization can be very efficient, because new plans and ideas can be put into effect immediately in one area of the business without involvement from other areas. However, it often leads to many layers of management and isolation or lack of communication between depart- ments and divisions. There is no direct way that managers of different departments not in the same line of authority can communicate and work together. This type of isolation and focus on only one part of the organization is known as the silo effect. Line-and-Staff Organization Large and complex businesses need a great deal of expertise to operate well. Managers have greater difficulty mastering all of the knowledge and skills they need in every area of responsibility. In the line-and- staff organization, managers have direct control over the units and employees they supervise but have access to staff specialists for assis- tance. Specifically, the line-and-staff organization adds staff specialists to a line organization. It is designed to solve the problem of complexity and still retain the advantages of direct and definite lines of authority. Staff specialists give advice and assistance when needed. They have no authority over line personnel to require them to perform any task. They are there to help with specialized expertise. Thus, line personnel are still responsible to only one manager. The line-and-staff organization, shown in Figure 2-11, is like the line organization in Figure 2-10 except for the addition of the advertising specialist and the marketing research specialist. Their responsibility is to give specialized advice and assistance to the sales organization. This relationship is indicated in the organization chart by broken lines. Other examples of staff positions in some organizations are legal, technology planning, and human resources specialists. Lesson 2.4 Developing Effective Organizations 107

التعليم 108 Productio Manage Presiouunt Sams Mailayer Contratter Advertising Specialist Assant Sales Manager Bration A Manager Bration B Maneger Markening Research Specialist Sales Representatives Sales Teretentatives Line Authority Staff Advice Figure 2-11 Line-and-Staff Organization In a line-and-staff organization, staff specialists are available to provide needed advice and assistance to line managers. Matrix Organization A newer, more flexible structure is the matrix organization, some- times called a project organization. A matrix organization organizes employees into temporary work teams to carry out specific projects while working in the same functional area. For instance, a company engineer might be assigned to work as part of a team to lend his or her expertise to the team's project while still reporting to the vice president of engineering. Employees report to a project manager with authority and responsibility for the project. When a new project must be done, employees with the needed skills are assigned to work on the project team. They work for that manager until the project is finished. Then they are assigned to a new project and another project manager. Work assignments and relationships for individual projects within a matrix organization are clear but temporary Chapter 2 Planning and Organizing

In the matrix organization, there is no permanent organizational structure in which an employee continues to report to the same man- ager across a limited number of projects. It is difficult to develop an organizational chart for this type of organization because it changes regularly. Typically, the company prepares an organization chart for each project, so that employees know the current project structure and the management and employee relationships. The company prepares a new chart when that project ends and a new one begins. Figure 2-12 illustrates a matrix organization in which an employee from each functional area is assigned to a product team. عبارت التعليم Functional Area: Sales Product Team: Automotive Engineering Manufacturing Bout Lawn Equioment Figure 2-12 Matrix Organization An engineer might continue to work for the vice president of engineering but be assigned to assist with more than one project team in a matrix organization. In this case, a talented employee could have multiple-and sometimes competing- reporting responsibilities. The matrix organization is used successfully in research firms, advertis- ing agencies, and construction companies, but it is being considered by other types of businesses because it provides flexibility and allows for rapid change. This structure uses the specific skills of managers and employees as effectively as possible by bringing together people with the right skills for each project. When employees are given new pro- ject assignments, managers must be careful to define authority and responsibility so as not to violate unity of command. They also need to encourage good working relationships with new project members. Lussun 2.4 Developing Effective Organizations 109

Team Organization As highlighted in the example of Faisal in the Reality Check at the start of this lesson, the newest type of organization structure is known as team organization. A team organization divides employees into permanent work teams. The teams have responsibility and authority for important business activities with limited management control over their daily work. Teams often have team leaders who are likely to be experienced employees rather than managers Team leaders replace the traditional position of supervisor and act as facilitators more than as traditional managers. Team leaders help their teams identify problems and work with them to solve the problems as a group. Team members report to the team leader, and the team leader makes some management decisions for the team. A full-time manager is responsible for several teams and meets with team leaders for planning, progress reports, and problem solving. What are some advantages of team organization ليس fararty playeiss managerst 19

ورارت التعليم Sometimes teams are organized without a permanently designated team leader. These are self-directed work teams, in which team members together are responsible for the work assigned to the team. Self-directed work teams have a manager who they can turn to with unusual or very difficult problems, but most of the time they work together to establish goals and to plan and organize their work. Often members take tums as team leader or facilitator. A self-directed team has full authority over planning, performing, and evaluating its work. For ideas and assistance, the team may talk to other teams or draw on the support of specialists available to work with all teams in the organization. In addition, the team is expected to talk to suppliers and customers from inside or outside the business to get their input and feedback. In self-directed work teams, the team decides who will do which types of work and how they will do it. Each worker must be able to perform the tasks of other team members to cover for absent members or additional workloads. Teams can hire, train, and even remove team members; evaluate individual and team performance; and handle most of the traditional management tasks. The role of the manager is to serve as the team's consultant and to concentrate on higher-level man- agement tasks. Some differences between self-directed work teams and traditional work teams are shown in Figure 2-13. Work Categories Worker Authority Effectiveness Traditional Work Team Many narrow tasks Team leader controls all routine tasks Determined by manager and team leader evaluations, individual member performance Self-Directed Work Team One or two broad tanks Team controls tanks through group decisions Based on team performance plus breadth of skills of individual team members Figure 2-13 A Comparison of Traditional and Self-Directed Work Teams Self-directed work teams have more authority and responsibility for their work than traditional teams. Lissun 2.4 Developing Effective Organizations 111

التعليم 112 Effective work teams, whether self-directed or not, have been shown to increase productivity and improve quality. Individual team members work hard to support their team and make sure the team meets its goals. Companies that have developed effective team structures have a better record of keeping customers happy, reducing absenteeism, reducing staff turnover, and keeping motivation high. Teams require certain ingredients for success, Managers must sup port the team concept and assist the teams as needed. Team members must become competent in three areas 1. Technical job skills 2. Interpersonal skills, such as writing, speaking, discussing, and negotiating 3. Administrative skills, such as leading meetings, thinking analyti- cally, and maintaining records Teams need top management support as well as skills in these three areas to do well. New teams must have both time and suppon to be able to develop to their full potential an NET KNOWLEDGE Employee satisfaction must be an important concern of every manager Dis- sabsfied employees are likely to leave if another job becomes available. They will also be less productive than those who like their work. Search online for articles about employee engagement. If you were the top executive dl a company, how would you use this information to improve employee satisfaction in your company? Develop three recommendation that you would make to the managers who report to you. ? CHECKPOINT Who is responsible for traditional management functions in a team organization? Chapter 2 Plaining and Organizing

وارد الصليم LO 2.4.2 Improving Business Organization Traditionally, businesses have used centralized organization, in which a few top managers do all the major planning and decision making. Studies of the effect of business organization on quality and productiv- ity have discovered that companies with centralized organizations often experience some common problems. Large companies often develop very complex centralized organizational structures. Those structures may cause communication problems and the need for many policies and rules to control the organization Individual managers and employ- ees then begin to feel like unimportant parts of the business. They get frustrated when rules keep them from doing things they consider important or when it takes a long time to get decisions made. To overcome these types of problems, companies may decentralize. With decentralized organization, a large business is divided into smaller operating units, and managers who head the units have almost total responsibility and authority for operations. In many ways, the units operate as if they were independent companies. For example, a large computer manufacturer could be decentralized into operating units by categones of products (mainframes, personal computers, portables, and accessories) or by types of customers (business, government, and consumers). Computer manufacturers are often decentralized organizations. Naile some offel eximples Lesson 2.4 Developing Effective Organizations 113

التعليم Another major type of reorganization occurring in businesses today is known as flattening. A flattened organization is one with fewer levels of management than traditional structures. To achieve a flattened organization, managers and employees must assume many of the responsibilities that other businesses might achieve with more levels of management. A flattened organization should have improved commu- nication, because information has to flow through fewer levels. There should also be more coordination and cooperation because there is less specialization within the organization. In a flattened organization. managers tend to have a wider span of control to compensate for the fewer levels of hierarchy. As competition increases and customers expect businesses to improve quality and service, the organization of a business becomes very important. A complex organizational structure that requires a great deal of time for making decisions and for com- municating information will not be as competitive as one that is more flexible and responsive. ? CHECKPOINT How can business organization be made more effective? 114 Chapter 2 Planning and Organizmy

بعدارت التعليم 2.4 Assessment UNDERSTAND MANAGEMENT CONCEPTS Determine the best answer for each of the following questions. 1. If managers in large organizations have difficulty mastering the knowl- edge and skills they need in all of their areas of responsibility, which type of organizational structure would be most helpful? D. b. line and staf G. (motix d. Ham 2. For work teams to be successful in an organization, team members must become competent in all of the following areas except technical ills b. Interpersonal skill admitta d. Antana THINK CRITICALLY Answer the following questions as completely as possible 3. Why does the line organizational structure often create problems in sharing information and communicating among employees and man- agers from different departments of the organization? 4. Why are many larger companies organized in a way that has individuals reporting to managers based on departmental specialization? What are the advantages and disadvantages of having all individuals with similar job roles work together? Lesson 2.4 Developing Effective Organizations 115