designing adaptive organizations

Designing Adaptive Organizations

Week 9

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Chapter Outline• Organizing– Vertical and Horizontal• Advantages/ Disadvantages

• Evolution of Organization Structure• Structure and Strategy• Structure and Technology• Types of Technology– Manufacturing, service, digital


Organizing

What? Organizational resources to achieve strategic goals

– Division of labor– Lines of authority– Coordination

Link to Planning


Organizing the Vertical Structure

Organizing Structure Defines: The set of formal tasks assigned to individuals

and departments

Formal reporting relationships

The design of the systems to ensure effective coordination


Organizing the Vertical Structure

Work Specialization

Chain of Command


Organization Chart


Authority, Responsibility, and Delegation

• What is Authority?Formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to

achieve organizational outcomes.

Authority is vested in positions, not people

Authority is accepted by subordinates

Authority flows down the vertical hierarchy

Accountability

Delegation


Line and Staff AuthorityLine departments perform primary tasksEx: Shoes, clothing– Sales– Production

Line Authority: Direct & control subordinatesStaff departments support line departments– Finance– Human Resources– Research

• Staff authority: advise, recommend specialist expertise


Span of Management

• Span of management?– Determinants

• Subordinates similar work, single location, skills of subordinates, etc.

• Determines if the organization is a:

Tall Structure

Flat Structure


Reorganization and Span of Management


Centralization and Decentralization

• Centralization• Decentralization • Factors:– Greater change and uncertainty are usually

associated with decentralization– Centralization or decentralization should fit the

firm’s strategy


Departmentalization: Functional & Divisional

• Functional Approach?• Divisional Approach– Grouping based on organizational output• Product, Program, Business (self-contained unit)• Geographic- or Customer-Based Divisions


Functional Versus Divisional Structures


Geographic-Based Global Organization Structure


Departmentalization: Matrix & Team Approach

• Matrix combines functional and divisional approaches– Improve coordination and information– Dual lines of authority


Matrix Structure


Global Matrix Structure


Team Approach• Widespread trend in departmentalization• Allows managers to delegate authority to lower

levels, Flexible, responsive

• Types– Cross-functional

– Permanent teams

• Horizontal coordination & communication


Virtual Network Approach• Extends idea of horizontal coordination

and collaboration– Partnerships– Alliances

• Could be a loose interconnected group– i.e. outsourcing

Virtual network structure means that the firm subcontracts most of its major functions to separate companies.


Network Approach to Departmentalization


Structural Advantages and Disadvantages


Organizing for Horizontal Coordination

• Lack of coordination and cooperation can cause information problems

• Horizontal – Meet fast-shifting environment– Break down barriers between departments– Need integration and coordination


Task Forces, Teams, and Project Management

Project Manager – a person responsible for coordinating the activities of several

departments on a full-time basis for the completion of a specific project

Task Force – a temporary team or committee formed to solve a specific short-term problem involving several

departments

Cross-functional Team – furthers horizontal coordination by

including members across the organization


Evolution of Organization Structures

Traditional Vertical Structure

Cross-Functional Teams andProject Managers

Reengineering toHorizontal Teams


Structure Follows Strategy

• Business performance is influenced by the company’s structure

• Strategic goals should drive structure

• Structure should be used to facilitate strategic goals


Factors Affecting Organization Structure


Relationship of Structural Approach to Strategy and the Environment


Structure Fits the Technology• Technology - knowledge, tools, techniques

and activities– Technology varies but it can impact structure

• Difference among three manufacturing technologies is technical complexity:– Small-batch and unit production– Large-batch and mass production– Continuous process production


Manufacturing Technology and Organization Structure


Service Technology• Service organizations: – Examples.

• Service technology defined as:– Intangible output– Direct contact with customers

• Need more interaction/horizontal communication

Digital technology is the use of the Internet and other digital processes to support business online.

designing adaptive organizations

Documents

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organization chart copyright

planning copyright

span of management copyright

organizational resources

organizational outputproduct

organizational outcomes

divisional approachgrouping