IN SEARCH OF EFFICIENCY AND SUPERIOR EXECUTION

Strategic OrganizationsStrategic Organizations

Implementation Is Strategy

Distinctive performance is almost entirely a function of deep understanding. not one thing a 1000% better but a 1000 things

1% better organizations consist of many things -- the most

critical are its inherent skills or distinctive competencies

distinctive skills -- “thousand thousand little things” are the real source of “fixed” barriers to imitation

THE CRITICAL COMPONENTS OF STRATEGIC ORGANIZATIONS

Innovative, dedicated, motivated peopleCreative empowering leadershipOrganizational structures the match competitive

strategies, efficientlyOrganizational controls and incentives that

efficiently focus people on strategic goals and objectives

appropriate administrative procedures and policiesOrganizational arrangements that efficiently

“govern” the critical activities. efficient organizational boundaries

ORGANIZATIONAL STRUCTURE

An organization should be structured by its market strategy to reach its ultimate goals

Business costs rise from: supervisory monitoring motivation problems coordination activities Misinformation or no information

HOW DO YOU GET THERE?

How do you get people to achieve organizational goals in the most efficient way possible?

Problems in managing/motivating people: Lack of interest/Laziness Unrestrained self-interest Error and mistakes Not clear in measuring performance Complexity/Inability in giving clear direction

TWO MECHANISMS

A means to coordinate the work

A means to monitor and measure effectiveness

BASIC ELEMENTS IN ORGANIZATIONAL STRUCTURES

1. Work Specialization2 Departmentalization3 Established Patterns of Authority4 Span of Control5 Methods of Coordinating the Work

Work Specializations

In hotels, work is divided between line and staff functions.

Line functions work directly with the guest in delivering the overall guest experience: Who are they?

Staff functions work to support the Line functions and are not necessarily in direct contact with the guest: Who are they?

Departmentalization

Certain jobs are logically grouped together into departments to create efficiency in the organization.

In hotels these departments must function together to deliver the guest experience.

How could a staff function such as Building Engineering impact the guest experience? Human Resources?

Established Patterns of Authority

Avoiding conflict which might impact the guest experience

Maintaining standards which might impact the guest experience

Making decisions on many issues while weighing the impact on the guest experience

Understanding and responding to a very dynamic environment: The Ritz Carlton empowerment model

Span of Control

Relates to the number of subordinates or partners who report to a supervisor

The more similar the tasks of subordinates or partners the wider the span of control

The more trained and skilled…the wider the span of control

The more predictable the work is…the wider the span of control

Methods of Coordinating the Work

Pooled interdependence – activities can be performed with little

interaction between individuals / groups e.g. cashier

– standardized rules or procedures for each to follow

– intensive training and direct supervision

Methods of Coordinating the Work

Sequential interdependence – one task’s output is the second task’s input e.g. guest check-in process (proper

coordination between front desk receptionist and bell hop, front desk and housekeeping)

– close coordination is possible only through direct communication and joint decision making

Principles of Organization Design

Chain of CommandEveryone should have a superior to report toOrganization chart should show chain of

command and span of control.From the organization chart, an employee

can trace the way up the chain of command to the GM.

Principles of Organization Design

Unity of CommandEach person should have only one superior.Unity of command is sometimes violated

when staff manager gives order to line employee. E.g. safety manager corrects a waiter (who reports to

restaurant manager)GM should help coordination if there is

confusion in unity of command.

Principles of Organization Design

DelegationProcess in which superior assigns task, responsibility and

autonomy to subordinate Degree of delegation:

Gather information for manager Give alternatives for manager to select Make recommendation for manager to approve Make decision but inform manager before proceeding Take action but inform manager Take action, need not inform manager

Efficiency AND Superior Execution

Control the Strategy means of motivating staff to work at organizational

goals Statement of goals Set of assumptions or forecasts (environmental) Qualitative statement of how business will change Specific action steps for implementation Set of financial projections

provide information and feedback (information technology)

Efficiency AND Superior Execution

Develop a Strong Adaptive Culture characterized by: Bias for action - autonomy, risk-taking,

entrepreneurship (intra) Coherent mission - sticks to what is important, close

to customers Structured for flexibility

Efficiency AND Superior Execution

Create a Meaningful Reward System Generously reward those who reach objectives and deny

reward to those who don’t. payoff should be a major piece of total compensation

and… should extend to everyone. administration is paramount (timely, consistent, fair) tightly linked to strategic objectives

Every compensation/promotion decision will be carefully scrutinized by all employees.

In designing reward systems, jobs need to be defined in terms of the results to be accomplished, not duties and responsibilities.