designing adaptive organizations

Designing Adaptive OrganizationsDesigning Adaptive Organizations

CHAPTER 10CHAPTER 10

2 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved.

Learning ObjectivesLearning Objectives

Discuss the fundamental characteristics of organizing, including such concepts as work specialization, chain of command, span of management, and centralization versus decentralization.

Describe functional and divisional approaches to structure.

Explain the matrix approach to structure and its application to both domestic and international organizations.

Describe the contemporary team and virtual network structures and why they are being adopted by organizations.


Learning Objectives (contd.)Learning Objectives (contd.)

Explain why organizations need coordination across departments and hierarchical levels, and describe mechanisms for achieving coordination.

Identify how structure can be used to achieve an organization’s strategic goals.

Illustrate how organization structure can be designed to fit environmental uncertainty.

Define production technology (manufacturing, service, and digital) and explain how it influences organizational structure.


OrganizingOrganizing

Organization is the deployment of resources to achieve strategic goals.

It is reflected in– Division of labor into specific departments & jobs– Formal lines of authority– Mechanisms for coordinating diverse organizational

tasks


Organization StructureOrganization StructureDefines how tasks are divided, resources are deployed, and departments are coordinated

●Set of formal tasks assigned●Formal reporting relationships●The design of systems to ensure effective coordination of employees across departments


The Organization ChartThe Organization Chart

Visual representation

Set of formal tasks

Formal reporting relationships

Framework for vertical control


Work SpecializationWork Specialization

Tasks are subdivided into individual jobs

Employees perform only the tasks relevant to their specialized function

Jobs tend to be small, but they can be performed efficiently

Division of labor concept

Degree to which


Chain of CommandChain of Command

Unbroken line of authority that links all persons in an organization

Shows who reports to whom

Associated with two underlying principles Unity of Command Scalar Principle

Unbroken line of authority that links all persons in an organization

Shows who reports to whom

Associated with two underlying principles Unity of Command Scalar Principle


AuthorityAuthority Formal and legitimate right of a manager to

make decisions and issue orders Allocate resources to achieve organizationally

desired outcomes Authority is distinguished by three

characteristics Authority is vested in organizational positions, not

people Authority is accepted by subordinates Authority flows down the vertical hierarchy

Formal and legitimate right of a manager to make decisions and issue orders

Allocate resources to achieve organizationally desired outcomes

Authority is distinguished by three characteristics Authority is vested in organizational positions, not

people Authority is accepted by subordinates Authority flows down the vertical hierarchy


ResponsibilityResponsibility

The duty to perform the task or activity an employee has been assigned

Managers are assigned authority commensurate with responsibility

Flip side of the authority coin


AccountabilityAccountability

● Mechanism through which authority and responsibility are brought into alignment

● People are subject to reporting and justifying task outcomes to those above them in the chain of command

● Can be built into the organization structure


DelegationDelegation

●Process managers use to transfer authority and responsibility

●Organizations encourage managers to delegate authority to lowest possible level


Line and Staff AuthorityLine and Staff Authority

Line Authority = individuals in management positions have the formal power to direct and control immediate subordinates

Staff Authority = granted to staff specialists in their area of expertise


Span of Management/Span of Control

Span of Management/Span of Control

Number of employees who report to a supervisor– Traditional view = seven subordinates per manager– Lean organizations today = 30+ subordinates

Supervisor Involvement– must be closely involved with subordinates, the

span should be small– need little involvement with subordinates, it can be

large

Number of employees who report to a supervisor– Traditional view = seven subordinates per manager– Lean organizations today = 30+ subordinates

Supervisor Involvement– must be closely involved with subordinates, the

span should be small– need little involvement with subordinates, it can be

large


Factors Associated With Less Supervisor Involvement

Factors Associated With Less Supervisor Involvement

Work is stable and routine Subordinates perform similar work tasks Subordinates are concentrated in a single location Subordinates are highly trained Rules and procedure defining task activities are

available Support systems and personnel are available for the

manager Little time is required in nonsupervisory activities Managers’ preferences and styles favor a large span

Work is stable and routine Subordinates perform similar work tasks Subordinates are concentrated in a single location Subordinates are highly trained Rules and procedure defining task activities are

available Support systems and personnel are available for the

manager Little time is required in nonsupervisory activities Managers’ preferences and styles favor a large span


Tall versus Flat Structure Tall versus Flat Structure

Span of Control used in an organization determines whether the structure is tall or flat

Tall structure has a narrow span and more hierarchical levels

Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels

The trend has been toward wider spans of control

Span of Control used in an organization determines whether the structure is tall or flat

Tall structure has a narrow span and more hierarchical levels

Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels

The trend has been toward wider spans of control


Centralization versus DecentralizationCentralization versus Decentralization

Centralization means that decision authority is located near the top of the organization.

Decentralization means decision authority is pushed downward to lower organizational levels.


DepartmentalizationThe basis on which individuals are grouped into departments

DepartmentalizationThe basis on which individuals are grouped into departments

Vertical functional structure. People are grouped together in departments by common skills.

Divisional structure. Grouped together based on a common product, program, or geographical region.

Matrix structure. Functional and divisional chains of command. Some employees report to two bosses.

Team-based structure. Created to accomplish specific tasks.


Virtual Network StructureVirtual Network Structure

An organizational structure that disaggregates major functions to separate companies that are brokered by a small headquarters organization.


Five Approaches to Structural DesignFive Approaches to Structural DesignExhibit 10.3


Five Approaches to Structural DesignSlide 2

Five Approaches to Structural DesignSlide 2

daft ch10 insert1.CLP

Exhibit 10.3


Vertical Functional ApproachVertical Functional Approach

Grouping of positions into departments based on similar skills, expertise, and resource use● Information flows up and down● Chain of command converges at the top● Managers and employees are compatible

because of similar training and expertise● Rules and procedures governing duties and

responsibilities


Divisional Structure AdvantagesDivisional Structure Advantages

Efficient use of resources

Skill specialization development

Top management control

Excellent coordination

Quality technical problem solving


Divisional Structure DisadvantagesDivisional Structure Disadvantages

Poor communications

Slow response to external changes

Decisions concentrated at top

Pin pointing responsibility is difficult

Limited view of organizational goals by employees


Matrix Advantages

More efficient use of resources than single hierarchy

Adaptable to changing environment

Development of both general and specialists management skills

Expertise available to all divisions Enlarged tasks for employees


Dual Authority Structure in a Matrix OrganizationDual Authority Structure in a Matrix Organization

Exhibit 10.6


Matrix Disadvantages

Dual chain of command High conflict between two sides of

matrix Many meetings to coordinate activities Need for human relations training Power domination by one side of matrix


Team Advantages

Same advantages as functional structure

Reduced barriers among departments

Quicker response time

Better morale

Reduced administrative overhead


Team Disadvantages

Dual loyalties and conflict

Time and resources spent on meetings

Unplanned decentralization


Virtual Network Approach Advantages

Can draw on expertise worldwide

Work force flexibility

Reduced administrative overhead


Network Approach Disadvantages

Lack of control, weak boundaries

Greater demands on managers

Employee loyalty weakened


Task Forces, Teams, Project Management

Task Forces, Teams, Project Management

Task Force = temporary team/committee designed to solve a short-term problem involving several departments

Project Manager = responsible for coordinating activities of several departments on a full-time basis for the completion of a specific project


ReengineeringReengineering

Radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed

Process = organized group of related tasks and activities that work together to transform inputs into outputs and create value


Factors Shaping StructureFactors Shaping Structure

Exhibit 10.13