principles of management lesson 1 with material from business process management institute (bpmi),...

PRINCIPLES OF MANAGEMENT

LESSON 1With material from Business Process

Management Institute (BPMI), Rummler, Brache And Schermerhorn

PowerPoint Presentation to Accompany Chapter 11 of

Management, 8/eJohn R. Schermerhorn, Jr.

Prepared by: Michael K. McCuddy

Valparaiso University

Published by: John Wiley & Sons, Inc.

Management 8/e - Chapter 11 3

Organization as atransformation system

Management of thevalue chain

Customersserved

Finishedproducts

distributed

People &technology

createproducts

Materialsreceived &organized

for use

Resources &materialsflow in

Systems and the Organizational Value Chain


Organizationalnetwork of subsystems

Inputs Outputs

Purchasing &inventorysystems

Information& technology

systems

Marketing,sales and

distributionsystems

Accounting & financialsystems

Operations andservice

managementsystems

Suppliers Customers

Organizations as Networks of Subsystems


Processes cut across Functional Departments


Organization Chart for Philip’s Vintage Auto Parts

Management

Purchasing Inventory Finance Sales

Hire EmployeesDecide on Product Range

Counter Reps

Phone Reps

Pay Accounts PayableCollect Accounts ReceivableProduce Financial Statements

Store Inventory

Sell Parts Buy Parts


PartsManufacturers

Custom Workshops

PurchasingInventory

Sales(Counter Reps)

Sales(Phone Reps)

Customers

Fed Ex

ShortageNotifications

Auto Parts

Auto Parts

Back-Orders

Auto Parts

Back-Orders

Auto Parts

Auto Parts

Auto Parts

PhoneOrders

Finance

Auto Parts

Auto Parts

Payment

Invoice

Payment

Invoice

Payment

Phone Sale Notification

Till Cash

Relationship Map for Philip’s Vintage Auto Parts


BPMN with “Swim Lanes”


Business Process Modeling Notation Example


Study Question 4: How can work processes be reengineered?

Process reengineering– Systematic and complete analysis of work processes.

– Design of new and better work processes.

Work process– “A related group of tasks that create a result of value

for the customer.” (Michael Hammer)

Workflow– Movement of work from one point to another in the

manufacturing or service delivery process.


Study Question 4: How can work processes be reengineered?

Steps in reengineering core processes:– Identify core processes.

– Map core processes in respect to workflows.

– Evaluate all tasks for core processes.

– Search for ways to eliminate unnecessary tasks or work.

– Search for ways to eliminate delays, errors, and misunderstandings.

– Search for efficiencies in how work is shared and transferred among people and departments.


Study Question 1: What are the essentials of organizational design?

Organizational design

– Choosing and implementing structures that best

arrange resources to serve the organization’s

mission and objectives.

– A problem-solving activity that should be

approached from a contingency perspective.



Short-run, medium-run and long-run criteria for evaluating organizational effectiveness:– Short-run focus.

• Goal accomplishment.• Performance efficiency in resource utilization.• Stakeholder satisfaction.

– Medium-run focus.• Adaptability in the face of changing environments.• Development of people and systems to meet new challenges.

– Long-run focus.• Survival under conditions of uncertainty.



Bureaucracy

– A form of organization based on logic, order, and the

legitimate use of formal authority.

– Bureaucratic designs feature …

• Clear-cut division of labor.

• Strict hierarchy of authority.

• Formal rules and procedures.

• Promotion based on competency.



Contingency perspective on bureaucracy asks the questions:– When is a bureaucratic form a good choice for an

organization?– What alternatives exist when it is not a good choice?

Environment determines the answers to these questions.– A mechanistic design works in a stable environment– An organic design works in a rapidly changing and

uncertain environment.



Structural characteristics associated with design alternatives:– Goal predictability versus adaptability.– Authority centralized versus decentralized.– Rules and procedures many versus few.– Spans of control narrow versus wide.– Tasks specialized versus shared.– Teams and task forces few versus many.– Coordination formal and impersonal versus informal

and personal.



Mechanistic Designs– Predictable goals– Centralized authority– Many rules and

procedures– Narrow spans of

control– Specialized tasks– Few teams and task

forces– Formal and impersonal

means of coordination

Organic Designs– Adaptable goals– Decentralized authority– Few rules and

procedures– Wide spans of control– Shared tasks– Many teams and task

forces– Informal and personal

means of coordination


Organization designaligns structureswith situationalcontingencies

Environment

StrategyPeople

Size Technology

Contingencies in Organization Design


Study Question 2: How do contingency factors influence organization design?

Checklist for identifying contingency factors in organizational design:– Does the design fit well with the major problems and opportunities

of the external environment?

– Does the design support implementation of strategies and the accomplishment of key operating objectives?

– Does the design support core technologies and allow them to be used to best advantage?

– Can the design handle changes in organizational size and different stages in the organizational life cycle?

– Does the design support and empower workers and allow their talents to be used to best advantage?



Environment and organizational design —– Certain environment …

• Relatively stable and predictable elements.

• Bureaucratic organizations and mechanistic designs are appropriate.

– Uncertain environment …• More dynamic and less predictable elements.

• Adaptive organizations and organic designs are appropriate.



Strategy and organizational design —– Structure follows strategy.

– Stability strategy is supported by:

– Bureaucratic organizations using mechanistic designs.

– Growth strategies are is supported by:

– Adaptive organizations using organic designs.



Technology

– The combination of knowledge, skills,

equipment, computers, and work methods

used to transform resource inputs into

organization outputs.



Core manufacturing technologies:– Small-batch production.

• A variety of custom products are tailor-made to order.

– Mass production.• A large number of uniform products are made in an assembly-

line system.

– Continuous-process production.• A few products are made by continuously feeding raw

materials through a highly automated production system with largely computerized controls.



Technology and organization design —

– The technological imperative

• Technology is a major influence on organizational

structure.

• The best small-batch and continuous process plants

have more flexible organic structures.

• The best mass-production plants have more rigid

mechanistic structures.



Core service technologies:– Intensive technology

• Focuses the efforts of many people with special expertise on the needs of patients or clients.

– Mediating technology• Links together parties seeking a mutually beneficial exchange

of values.

– Long-linked technology• Functions like mass production, where a client is passed from

point to point for various aspects of service delivery.



Organization size, life cycle, and design —

– Larger organizations tend to have more mechanistic

designs, but it is not always best.

– Organizational life cycle:

• Birth stage — small size, simple structure.

• Youth stage — rapid growth in size, simple structure experiences

stress.

• Midlife stage — growing to large size, more complex and formal

structure.

• Maturity stage — stabilizes at large size, mechanistic structure.



Coping with the disadvantages of large size:– Downsizing.

• Reducing the scope of operations and number of employees.

– Intrapreneurship.

• The pursuit of entrepreneurial behavior by individuals and

subunits within large organizations.

– Simultaneous structures.

• Organizations that combine mechanistic and organic designs.



Human resources and good organization design —– Provides people with supporting structures

needed for both high performance and work satisfaction.

– Produces a good “fit” between organization structures and human resources.

– Allows the expertise and talents of organization members to be unlocked and utilized.


Managing the “Tight / Loose Dilemma”

Organizations must be –Tight and focused

around objectives and values.

Organizations must also be –Loose but disciplined

in actions and contributions .


High PerformanceOrganizational Designs

TIGHT and Focused

Objectives

&

Values

Actions

&

Contributions

LOOSE but Disciplined


High Performance Organizational Designs

TIGHT and Focused

Objectives

&

ValuesWhat it takes:• shared purpose• clear goals• talent• accountability


High PerformanceOrganizational Designs

Actions

&

Contributions

LOOSE but Disciplined

Support needed:• teamwork• participation• decentralization• freedom• accountability


Study Question 3: What are the major issues in subsystems design?

Basics of subsystem design …– Subsystem —

• A department or work unit headed by a manager.

• Operates as a smaller part of the larger organization.

– Ideally, each subsystem supports other subsystems, working toward interests of entire organization.



Lawrence and Lorsch’s findings on subsystems design …– The total system structures of successful firms

match the challenges of their environments.– The subsystems structures of successful firms

match the challenges of their respective subenvironments.

– Subsystems in successful firms worked well with each other.



Managing subsystem differentiation:– Differentiation is the degree of difference that

exists among the internal components of an organization.

– Common sources of subsystems differentiation:• Time orientation• Objectives• Interpersonal orientation• Formal structure



Managing subsystem integration:– Integration is the level of coordination achieved

among an organization’s internal components.

– Organization design paradox —• Increased differentiation creates the need for greater

integration.

• Integration is more difficult to achieve as differentiation increases.



Mechanisms for achieving subsystem integration:– Rules and procedures

– Hierarchical referral

– Planning

– Direct contact

– Liaison role

– Task forces

– Teams

– Matrix organizations

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principles of management lesson 1 with material from business process management institute (bpmi),...

Documents

e chapter

schermerhorn slide

e john

better work processes

map core processes

swim lanes slide

reengineering core processes

study question