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Transcript of Organization
The reengineering of organizations
The spirit entrepreneur sees opportunities that other business executives don't see or don't care, they have the ability to make productive factors and use them to create entirely new assets or services.
Nature of the organization as a system
There’re five subsystems.
It is also called “organization chart or org chart”, It is a visual diagram that represents the structure of an organization, showing formal relationships, lines of authority and responsibility of each department, the relationships of the departments to each other, and the hierarchy of management.
Administrative manual are documents that serve as a way of communication and coordination within an organization.
- Give details from the structure and indicates the positions and the relationships between them to achieve their goals.
- Explain the hierarchy, degrees of authority and responsibility the functions and activities of organs.
Subsystems limit liaison / support / interaction with the environment
It has the responsibility to conduct exchanges in the environment. Also, the get support and social legitimation.
It manufactures the products and services of the organization. It produces high need products.
Fundamental criteria for an Org Chart
Some entrepreneurs use information, accessible to all, to produce something new, others see opportunities for new business.
Basically the entrepreneur perceives a need and then gathers the labor force, materials and capital needed to satisfy that need.
Benefits of the spirit entrepreneur:
• Economic growth
• New technologies, products and services
• Changes in markets
Small businesses created by entrepreneurs are change agents in the market economy and the international market also offers opportunities to the entrepreneur spirit. For example:
Because entrepreneurs can make great contributions for the benefit of society, researchers have tried to analyze their personalities, skills and attitudes.
Often, minority groups feel that their bosses discriminate them, so they start a bussines by themselves.
Minority entrepreneurs are commonplace in the contemporary business world.
A clear example is the undertaking of African Americans and women.
The first theory was developed by David McClelland, who discovered that people who had business careers still a great need for achievement, that is, the psychological need to achieve goals.
Thomas Begley and David P. Boyd studied the psychology of the entrepreneur spirit, in order to find differences between entrepreneurs and managers of small businesses. Identified five dimensions:
• Need for achievement
• Position of control
• Risk tolerance
• Tolerance of ambiguity
• Type A behavior
Ellen Fagenson presents a different perspective of the psychological differences between entrepreneurs and managers.
Design Standards of an Org Chart
Deming's 14 points
1) Create constancy of purpose for improving products and services.
2) Adopt the new philosophy.
3) Cease dependence on inspection to achieve quality.
4) End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.
5) Improve constantly and forever every process for planning, production and service.
6) Institute training on the job.
7) Adopt and institute leadership.
8) Drive out fear.
9) Break down barriers between staff areas.
10) Eliminate slogans, exhortations and targets for the workforce.
11) Eliminate numerical quotas for the workforce and numerical goals for management.
12) Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
13) Institute a vigorous program of education and self-improvement for everyone.
14) Put everybody in the company to work accomplishing the transformation.
European Foundation for Quality Management (EFQM)
A business is a system created by man, which maintains a dynamic interaction with its environment, customers, suppliers, competitors, the unions, government agencies and many other external agents.
Climate for creativity
• Legitimate Power
Legitimate power is also known as positional power. It's derived from the position a person holds in an organization's hierarchy.
• Expert power
Knowledge is power. Expert power is derived from possessing knowledge or expertise in a particular area. Such people are highly valued by organizations for their problem solving skills.
• Referent Power
Referent power is derived from the interpersonal relationships that a person cultivates with other people in the organization. People possess reference power when others respect and like them.
• Coercive Power
Coercive power is derived from a person's ability to influence others via threats, punishments or sanctions.
• Reward Power
Reward power arises from the ability of a person to influence the allocation of incentives in an organization. These incentives include salary increments, positive appraisals and promotions.
Authority is the right to give orders and the power to extract obedience.
Delegation of Authority
Every manager in the organization has to perform certain activities/tasks which are assigned to him. Managers require authority in order to perform the activities assigned to him by his superiors. Hence, superiors delegate the necessary authority to their subordinates.
Principles of Delegation
• Delegation of Results Expected
• Co-equal Authority and Responsibility
• Unity of Command
• Limits of Authority
Indicate the different hierarchical levels. Represents functions, categories,posts,people.
Indicate relationships of authority. They can be Horizontal(shows equality of responsability) and vertical(show hierarchical relations of authority and responsability)
This first stage of change involves preparing the organization to accept that change is necessary, which involves break down the existing status quo before you can build up a new way of operating.
After the uncertainty created in the unfreeze stage, the change stage is where people begin to resolve their uncertainty and look for new ways to do things. People start to believe and act in ways that support the new direction.
When the changes are taking shape and people have embraced the new ways of working, the organization is ready to refreeze.
• Process innovation: the introduction of a new process for making or delivering goods and services.
Creativity and innovation
Many writers on management define creativity as generating new ideas and innovation as translating a new idea in a new company (Apple Computer), a new product (the Sony Walkman), a new service (delivery overnight in Federal Express), a new process (a waiting line for various services on a bench or amusement park), or a new production method (design and production by computer).
People have different capacity to create. Creative people also tend to be more flexible than uncreative. In an organization these people are more motivated by an interesting problem than a material reward, worked long and hard when something intrigues them.
Shape and dimension:
It must contain equally sized rectangles for representation of the areas or positions, boxes must be separated with a sufficient space. There’s no need for larger rectangles to highl ight the level hierarchical or importance of an area since this is defined by its placement in the organization.
This subsystem is responsable for maintaing in good condition the organization. Additionally, they try to meet human needs.
Subsystem of adaptation
It is responsible for organiational change. It detects problems, opportunities and technological advances in the environment.
It seeks to address, distribute and control the various subsystems. This subsystem takes decisions for the organization as a whole.
It resolves conflicts between hierarchical levels
It coordinates and direct the functional subsystems.
It coordinates external resource requirements and organizational needs
The use of connection lines:
The connecting lines should not end with arrows pointing down because it only indicates authority and not responsibility which means the ascendant element.
Administrative: Documentation is generated by the relationship with suppliers, customers and internal business sectors.
Financial: Financial management of actual or potential resources.
Accounting: It’s logging of all economic events of the company.
Commercial sales: It sales realization and possibly collections.
DIMENSIONS OF ORGANIZATIONAL DESIGN
They are divided in two types: structural and contextual. The first describes the internal characteristics of an organization; provide the basis for measuring and comparing. The second characterizes the whole organization like size, technology, external environment and objectives.
Divided by presentation
Hierarchical Organizational Chart.
It’s known also as a vertical one because represents the hierarchical structure from top to bottom. It’s the most used within organizations.
Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes.
BASES FOR ORGANIZATIONAL STRUCTURE DESIGN
Flat or horizontal organizational chart.
The hierarchical structure is represented from left to right. The title is located in the left side. The relationships are shown by the horizontal lines.
Specialization of labor
It establishes broad divisions before further subdividing employees, often by function. The broad divisions might be formed around geography, product line and type of customer or some combination of these.
Geographic structure groups employees together based upon specific geographic location. This is often used by large companies that operate in many areas throughout a territory
Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product
It’s related to the number of tasks to be performed in a certain position and the control that the worker has over them.
Formalization of behavior
It’s involves the standardization of job using manuals, rules, guidelines.
Employment training programs
Employment training programs to establish and standardize the knowledge and skill needed by employees to perform their Works.
Indoctrination of employees to learn about the misión and goals of the business.
Grouping of units
It helps in the creation and management of different units from lower order to the highest.
It’s a choice of environment control.
Planning and control systems
It establishes the action before its implementation and controls their performances in the organization.
Matrix Organizational Chart.
It’s a popular organizational chart that defines more complex structures to emphasis efficiency, creativity and innovation. It uses both horizontal and vertical lines.
Circular Organizational charts
This organizational chart represents concentric circles from inside or outside of the structure according to the order of importance.
It’s most easily recognized by departments that focus on a single function or goal.
TYPES OF ORGANIZATIONAL DESIGN
The coordination through standardization of work that create all the administrative structure.
The coordination through knowledge of the employees. They need highly trained professionals in operational center and support staff. The middle line isn’t elaborate.
The coordination is carried out by standardizing products from different production units. The middle line has a great autonomy
It’s a more complex organization. It’s requires a combining work teams and coordinates the joint.
TYPES OF ORGANIZATIONAL DESIGN
This model is used by organizations that work as a whole. It tries to break the current pyramid organizations which consider that the person is not as important as the technology and methodology. This model focuses more in the knowledge of the worker.
A strategic business organization is an operating unit within an organization that sells products or services to an identifiable group of customers; besides that, it should operate within the objectives and strategies that have been chosen by the authorities.
One of the newest organizational structures developed. Teams can be both horizontal and vertical. While an organization is constituted as a set of people who synergize individual competencies to achieve newer dimensions, the quality of organizational structure revolves around the competencies of teams in totality.
BASED IN TEAMS
The organization’s hierarchy that applies this model becomes flatter and also removes the barriers between departments in order to get a better flow of communication.
The borderless organizations as their name implies are those that have no limits. This model wants to eliminate the chain of command and replace departments with teams that have been given with authority to make decisions due to the interest of the organization’s goals
It focuses on the strategic benefits of partnerships and the formalization of organizational networks, in other words, a network of independent companies. For example: Amazon and Free Market. It uses the internet as the case of amazon.com, which sells through internet, it has no shop, no inventory, it receives only plastic money payment and their owners have managed from the family home using a personal computer. Orders and Orders are received and managed by a computer system, in which no human involved
Another modern structure is network. While business giants risk becoming too clumsy to proact (such as), act and react efficiently, the new network organizations contract out any business function, which can be done better or more cheaply. In essence, managers in network structures spend most of their time coordinating and controlling external relations, usually by electronic means.
This model includes few administrative levels. Due to this fact, the operators that were placed in the lowest levels now have higher places. It goes from high to low aspect of importance.
STRUCTURING AND ORGANIZATIONAL RELATIONSHIPS
It’s the right given to a manager to achieve the objectives of the organization as well as the legitimate power of a supervisor to direct subordinates to take action within the scope of the supervisor's position.
Power to give orders to subordinates. Line managers are responsible for attaining the organizational goals as efficiently as possible. Production and sales managers typically exercise line authority
Staff's ability to initiate actions within a given area of expertise. Functional Authority allows decisions to be implemented directly by the staff. In an organization functional authority can be found in accounting, labor etc areas.
Divided by the structure
PARTS OF AN ADMINISTRATIVE MANUAL STRUCTURE
The reengineering of organizations
The concept of reengineering organizations originated with Hammer and Champy. They defined it as "critical re-conception and radical redesign of processes to achieve dramatic improvements in performance measures such as cost, quality, service and speed".
History of quality
Steve Jobs and Steve Wozniak altered the computer market with Apple
MTV changed how to promote music
• Product innovation: the introduction of a new product, or a significant qualitative change in an existing product.
The coordination leads the strategic apex by direct supervision. Minimum staffing and midline.
ORGANIZATIONAL DESIGN: HIERARCHY
The concept comes from two words (“hieros” and “archos”). Hierarchy is the order between elements of a set. It can be applied to persons, animals or things, in ascending or descending order according to the classification criteria.
It depends directly on the acquisition, transmission and processing of information. We focus on three ways to the the effective coordination:
Use basic techniques of management.
Expanding the frountiers
CLASSIFIED BY ITS CONTENT
Reduce the need for coordination.
Job design means to decide the contents of a job. It fixes the duties and responsibilities of the job, the methods of doing the job and the relationships between the job holder (manager) and his superiors, subordinates and colleagues.
CLASSIFIED BY ITS SPECIFIC FUNCTION
CLASSIFICATION OF ADMINISTRATIVE MANUALS
PLANNING TO ELABORATE AN ADMINISTRATIVE MANUAL
2. Application of Research Techniques
3. Information Analysis
4. Structure of the Manual
5. Validity of Information
6. Authorization of Manual
7. Distribution and diffusion
8. Instructions for users
9. Review and updated
Factors Affecting Job Design
There’re two senses. They are vertical and horizontal specialization. The first occurs when the company increases more hierarchical levels in its structure because it needs to increase the quality of supervision and direction. The second occurs when the company increases the number of specialized organs in the organization because they need to increase efficiency and quality. It’s called departmentalization.
Formal lines of communication
Centralization of decisions
Look pyramid is a result of the centralization of authority at the top of the organization.
It’s simple structure and easy to understand
Clear delineation of responsibilities
Easy to implement
Stability: The centralization of decisions and the control unit .
Type of organization suitable for small businesses: For easy operationalization.
The organization doesn't respond abour changes of modern society.
Linear Authority can become autocratic; it’s going to hinder the initiative and cooperation of people.
The linear organization exaggerates the role of leadership and command.
The control units make the multidisciplinary head.
When the company grows, the linear organization causes congestion in the formal lines of communication.
Linear communications are slowed.
Authority (Functional or divided)
Direct lines of communication
Decentralization of decisions
Emphasis on specialization
Itprovides maximum charges specialization in the organization: It allows concentrate solely by its function.
It allows the best possible technical supervision: The workers are reported to specialists in their field.
It develops direct communication without intermediaries
It separates the functions of planning and control of implementation tasks.
Dilution and subsequent loss of authority.
Multiple Subordination: The subordinate has many superiors.
Tendency tension and conflict within the organization With the specialization, they can feel adversaries and generate resentment, frustration and resistance to cooperation.
Fusion linear structure with the functional structure
Coexistence formal lines of communication with direct lines of communication.
Separation operational bodies ( executive ) , and organs to help and support (counselors): Staff members are dedicated to planning and problem solving . The line managers are responsible for the execution of work and regulations formulated by the staff.
The staff advice and innovative while the company maintains the principle of authority.
The line and staff coordinate joint activity.
Existence of conflicts between line agencies and staff
Difficulty in obtaining and maintaining the balance between line and staff
It implies to group activities and tasks in relation to the functions that take place in the company.
The company is grouped by departments according to their products.
It requires differentiation and grouping the activities according to the location where the work should play or a market area to be served.
It is based on differentiation and grouping the activities according to the kind of people for what work is executed obeying certain characteristics such as gender, socioeconomic status, age, etc.
It is based on group activities by the productive or operational area to conduct the business, processes and objectives departmentalization
It’s a combination of product and functional departmentalization
Reengineering means radical change, but the tendency of organizations is to prevent radical changes, so opt for continuous improvement. Continuous improvement is to make small changes, but always trying to improve what the organization is already doing.