Principles of management: Part 4 Organising and controlling

• can be measured by:
  • task variety ist the number of new or unexpected problems or situations that a person or function encounters in performing tasks or jobs
  • task analyzability is the degree to which programmed solutions are available to people or functions to solve the problems they encounter.
• high task variety and low analyzability present many unique problems to managers
  • flexible structure works best in these conditions
• low task variety and high analyzability allows managers to rely on established procedures

• the more highly skilled its workforce, and the greater the number of employees who work together in groups or teams, the more likely an organization is to use a flexible, decentralized structure and a professional culture based on values and norms that foster employee autonomy and self-control
• flexible structures, characterized by decentralized authority and empowered employees, are well suited to the needs of hightly skilled people. 

Managers must take into accoutn all four factors ( environment, strategy, technology and human resources when designin g the strucure of the organisation. 

The way an organization's structure works depends on the choices managers make about:

1. how to group tasks into individual jobs

2. how to group jobs into function and dividisons

3. how to allocate authority and coordinate or integrate functions and divisions. 

the process by which managers decide how to divide tasks itno specific jobs

the appropriate division of labor results in an effective and efficient workfoce. 

• Job simplification - the process of reducing the number of tasks that each worker performs
• Job enlargement - increasing the number of different tasks in a given job by changin the division of labor
• job enrichment - increasing hte degree of responsiblity a worker has over his or her job
  • empowering wokers to experiment to find new or better ways of doing the job
  • encouraging wokers to develop new skills
  • allowing wokers to decide how to do the work and giving hem the responsiblilty for deciding how to respond to unexpected situations
  • allowing wokers to monitor and measure their own performance. 

functional structure - an organizational structure composed of all the departements that an organization requires to produce its goods or services. 

Group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs. 

Advantages

• Encourages learning from others doing similar jobs
• Easy fo rmanagers to monitor and evaluate woekres
• Allows managers to create the set of functions they need in order to scan and monitor the competitive environment

Disadvantages

• Difficult for departements to communicate with otehrs
• preoccupation with own department and losing sight of organizational goals

product, market and geographic structures. 

an organization stucture composed of separate business units within which are the functions that work together to produce a specific product fo a specific customer

Global product structure

• each product division takes responsiblility for deciding where to manufacture its products and how to maket them in foreign countries worlwide

Product structure 

• an organizational structure in which each product line or business is handled by a self-contained division
• divisional managers have the responsiblity for devising an appropriate business-level strategy to allow the division to compete effectively in its industry. 
  • allows functional managers to specialize in one product area
  • division managers become experts in their area
  • removes need for direct supervision of division by corporate managers
  • divisional management improves the use of resources

Global geographic structure

• managers locate different division in each of the world regions where the organization operates
• generally, occurs when managers are pursuing a multi-domestic strategy

Geopgraphic structure 

• An organizational structure in which each region of a country or area of the world is served by a self-contained division. 
• divisions are broken down by geographic location

• an organizational structure in which each kind of customer is served by a sel-contained division, also called customer structure
• groups divisions according to the particular kinds of customers the company serves
• allows managers to be responsive to the needs of theri customers and act flexibly in making decisions in response to customer's changing needs. 

• An organizational structure that simutaneously groups people and resources by function and product
  • results in a complex network of superior-subordinate reporting relationship
• the structure is very flexible and can respond rapidly to the need for change
• Each employee has two bosses
  • functional manager and product manager and possibly cannot satisfy both

• an organizational structure in which employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his direct subordinates
• does away with dual reporting relationhsips and two-boss manager like the pure matrix structure

• direct contact 
• liaison roles
  • marketin manager and research and development manager meet to brainstorm new product ideas
• task forces
  • representatives fro marketing, research and development, and manufacturing meet to discuss launch of new product
• cross-functional teams 
  • a cross-functional team composed of all functions is formed to manage product to its launch in the market
• integrating roles and departments
  • senior managers provide members of cross-functional team with relevatn information from other teams and from other divisions. 

Control systems = formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about how well the organization's strategy and structure are working

an effective control system has three characteristics:

1. be flexible so managers can respond as needed
2. provide accurate information about the organizational performance
3. provide information in a timely manner

Input stage - freeforward control ( anticipate probles before they occur)

Conversion stage - concurrent control ( manage problems as they occur)

Output stage - feedback control (manage probles after they arise)

Control that allows managers to anticipate problems before they arise

• giving stringent products specifications to suppliers in advance
• IT can be used to keep in contact with suppliers and to monitor their progress

Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise

Control that gives managers information about customers' reaction to goods and services so corrective action can be taken if necessary

1. Establish standards of performance, goals, or targets against which performance is to be evaluated
   1. managers at each organizational level need to set their own standards
2. Measure actual performance
   1. managers can measure outputs resulting from worker bahavioir or they can measure the behavior themselves
   2. the more non-routine the task, the harder it is to measure behavior or outputs
3. Compare actual performacne against chosen standards of perfromance
   1. managers evaluate whether - and to what extent - performance deviates from the standards of performance chosen in step 1
4. evaluate the result and initiate corrective action if the standard is not being achieved
   1. if managers decide that the level of performance is unacceptable, they must try to change the way work activities are performed to solve the problem 

• Output control - mechanism of control: financial measures of performance, organizational goals, operation budgets
• Behavior control - mechanism of control: direct supervision , management by objectives, rules and standard operation procedures
• Clan control - mechanism of control: values, norms, socialization

1. Profit Ratios 
   1. 1 Return on Investment (ROI) 
   2. Operating margin
2. Liquidity ratios 
3. Leverage ratios 
4. Activity ratios

1. Profit Ratios - measure how efficiently managers are using organization's resoruces to generate profits
   1. 1 Return on Investment (ROI) - organization's net income before taxes divided by total assets
   2. Operating margin - is calculated by diving a compan's operating profit (profit = revenue - production cost - business costs) 

Liquidity ratios - measure how well managers have protected organizational resources to be able to meet short-term obligations

Leverage ratios - measure the degree to which managers use debt or equity to finance ongoing operations

Activity ratios - show how well managers are creating value from organizatinal assets

Earnings before interest, taxes, depreciation and amorization

corporate-level managers set goals for individual divisions that will allow the organizatio to achieve corporate goals. 

divisional managers set goals for each function that will allow the division to achieve its goals

functional managers set goals for each individual worker that will allow the function to achieve its goals

• A budget that states how managers intend to use organizational resources to achieve organizational goals efficiently
• each division is evaluated on its own budgets for cost, revenue or profit
  • managers are evaluated by how well they meet goals for controlling costs, generating rebenues, or maximizing profits while staying within their budgets

1. objective financial measures
2. challenging goals and performance standards
3. appropriate operating budgets

Managers must create output standards that motivate at all levels - they must be careful not to create short-term goals that motivate managers to ignore the future

Should not cuase managers to behave in inappropriate ways to achieve organizational goals - if stadards are set too high, workers may engage unethical behaviors to attain them. 

1. Direct supervisio
2. management by objectives
3. bureaucratic control