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Internal alignment: Determining the structure

Internal alignment: Determining the structure. Chapter 4. The Flow…. What shapes internal structures? Strategic choices in designing internal structures Guidance from evidence Consequences of structures. Structures Vary Among Organizations. The number of levels of work

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Internal alignment: Determining the structure

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  1. Internal alignment: Determining the structure Chapter 4

  2. The Flow…. • What shapes internal structures? • Strategic choices in designing internal structures • Guidance from evidence • Consequences of structures

  3. Structures Vary Among Organizations • The number of levels of work • The pay differentials between the levels • The criteria

  4. Managerial / professional levels at General Electric Plastics (GEP) • Executive • Director • Leadership • Technical/ managerial • Professional • Provides vision, leadership and innovation to major business segments or functions • Directs a significant functional area or smaller business segment • Individual contributors leading projects or programs with defined scope and impact, or managers leading functional components with broad scope and impact. • Individual contributors managing projects or programs with defined scope and responsibility, or first-tier management of a specialty area • Supervisors and individual contributors working on tasks, activities, and/or less complex, shorter duration projects

  5. Pay differentials between levels

  6. The criteria…. • The criteria • Content • Refers to work performed in a job and how it gets done. Tasks, behaviors, knowledge required etc. • Value • Refers to the worth of the work; its relative contribution to the organization’s objectives. • Use Value and Exchange value • Use value reflects the value of goods or services an employee produces in a job • Exchange value is whatever the employer and employee agree on for a job • Job and person-based structures • Job-based structures relies on the work content – tasks, behaviors and responsibilities • Person-based structures relies on the employee’s skills, knowledge and competencies.

  7. What shapes internal structures

  8. Strategic choices in designing internal structures • Tailoring the pay structure to the internal structure • Tailored Versus Loosely coupled • McDonald’s low cost, customer focused business strategy • 3M’s constant product innovation and short product-design-to-market cycle times • Egalitarian Versus Hierarchical • Have fewer levels, smaller differentials between adjacent levels • Hierarchies values the differences in work content, individual skills, and contributions to the organization

  9. Structure B Delayered Structure A Layered Chief Engineer Chief Engineer Engineering Manager Consulting Engineer Consulting Engineer Senior Lead Engineer Lead Engineer Senior Engineer Engineer Associate Engineer Engineer Trainee

  10. Consequences of structures • Efficiency • Fairness • Compliance

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