How
do I design a better business organization?
Being a manager
is one of the most difficult — and potentially one
of the most rewarding — jobs that anyone can take
on in an organization. A successful manager must continuously
improve systems and processes to make them more efficient,
more effective, and less costly. Because the environment
of business is always changing — new employees,
new technology, new sources of supply, new competitors
— managers always have to be alert to the need of
restructuring their organizations to keep them competitive
in the marketplace.
As you work to design a better organization, be sure to
consider the following factors.
Division of labor
The very first step in organizational design is assigning
specific employees to specific jobs, called division of
labor.
In a one-person organization — say, a home-based
public relations agency — only one person completes
all the jobs that need to be done. The business owner
types the letters, answers the phone, places advertisements
for her business, designs promotional materials for clients,
writes press releases, schedules clients for media interviews
and radio and television appearances, does the accounting,
pays the bills, and even takes out the trash!
Once the owner of the public relations agency hires an
employee, however, then she can make her operation more
efficient through effective division of labor. The new
hire can take on tasks that the owner is not so good at
or that require a lot of work but don't generate revenues
— perhaps typing letters and answering phones. This
way, the owner can concentrate her efforts on the things
that she is best at and that have a better cash return
on the investment of her time.
When you assign a specific job to an employee, ensure
that
- The duties of the job are clear and the boundaries are
well-defined.
- The job is not too complex or too simple for the particular
employee.
- Employees are given the authority to execute their jobs
without undue management interference.
- The job is kept interesting by varying tasks, goals,
and approaches.
- Employees are well-trained to do their job.
Although the division of labor has a time-honored place
in modern business, today's most successful organizations
are going a step farther — they are cross-training
employees in the jobs of their coworkers. Employees who
know one another's jobs are much more flexible, and the
organizations they work for can be much more responsive
to changing market conditions or to the challenges of
competitors — or simply to fill in for an absent
worker. Also, cross-trained employees often have higher
morale than employees who aren't cross-trained because
the varied tasks make their jobs more interesting.
Departmentalization and cellular manufacturing
In traditional organizations, after managers hand out
individual jobs to employees, the managers then determine
whether any jobs can be grouped together into logical
divisions. So, for example, the managers group every employee
assigned a sales-oriented task together with other sales-oriented
employees to form a sales department. Employees who have
an accounting function — whether payroll, accounts
receivable, or accounts payable — are put together
to form an accounting department. And so it goes throughout
the organization.
This method, however, is the old way of doing business.
In a major blow to departmentalization, a new method of
structuring manufacturing concerns by using manufacturing
cells has broken down the organizational walls that led
to massive production inefficiencies. Cellular manufacturing
consists of closely linking work steps in a specific process.
For example, if 20 work steps are involved in completing
a piece of work (work in this case means making a product
in a plant, or processing paper in an office), linking
places the people and the machines they use next to each
other in a work cell. In a traditional manufacturing organization
these 20 work steps would have been accomplished in different
functional departments spread throughout the business
— sometimes in different buildings, cities, states,
or even countries.
Flexible work teams now comprise many functions within
organizations, and some entrepreneurial-type businesses
are not based on departments at all.
Span of control
Span of control refers to the number of employees reporting
to a particular supervisor or manager. A narrow span of
control consists of only a few employees; a wide span
of control includes many employees.
One manager, Peter, once indirectly managed a staff of
more than 200 employees working at some 45 locations nationwide.
If each employee had reported directly to Peter, his task
would have been almost impossible. But narrowing the span
of control made Peter's job feasible. Only four employees
reported directly to Peter — three project managers
and an administrative assistant — and each of the
project managers managed a group of ten or more site supervisors.
The tendency nowadays is to flatten organizations by widening
the span of control and decreasing the layers of management
(hierarchy), and by relying more on employee teams to
take on many of the roles formerly performed only by managers.
Why flatten an organization?
- The flatter an organization, the fewer layers of management.
Less management leads to less bureaucracy and quicker
decision making.
- The fewer layers of management, the more money available
to spend on other, more productive activities (such as
the company picnic — yum!).
The Complete MBA for Dummies
