Chapter 9 Designing Adaptive Organizations Management 4 th

Chapter 9 Designing Adaptive Organizations Management 4 th Edition Chuck Williams Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Prepared by Deborah Baker Texas Christian University

What Would You Do? Yahoo Headquarters, Sunnyvale, California § Where do you start to fix a company that has a $100 million loss, falling ad sales, plummeting stock prices, and an unmanageable organizational structure? § Yahoo has done a poor job in establishing relationships with customers What structure should Yahoo adopt? What should you do about the informal culture? How can better decisions be made for the company? Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 2

Organizational Structure The vertical and horizontal configuration of departments, authority, and jobs within a company. Organizational Process The collection of activities that transform inputs into outputs that customers value. Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Organizational Structure Process View of Microsoft’s Organization Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 2

Designing Organizational Structures After reading these sections, you should be able to: 1. 2. 3. describe the departmentalization approach to organizational structure. explain organizational authority. discuss the different methods for job design. Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Departmentalization Functional Customer Product Geographic 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Matrix

Functional Departmentalization 1. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Functional Departmentalization Advantages § § § Work done by highly skilled specialists Lowers costs through reduced duplication Communication and coordination problems are lessened Disadvantages § § § Cross-department coordination can be difficult May lead to slower decision making Produces managers with narrow experiences 1. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Product Departmentalization United Technologies 1. 2 Carrier Chubb Hamilton Sundstrand Otis Pratt & Whitney Sikorsky --Administrative services --Communication & public relations --Customer service & support --E-Business --Engineering --etc… Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved UTC Power Adapted from Exhibit 9. 4

Product Departmentalization Advantages § § § Managers specialize, but have broader experiences Easier to assess workunit performance Decision-making is faster Disadvantages § § Duplication of activities Difficult to coordinate across departments 1. 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Customer Departmentalization Sprint Corporation Business Solutions 1. 3 Consumer Solutions Local Telecom Division Sprint North Supply U. S. Businesses Local Service Supply Chain Integration International Businesses Long. Distance Service Logistics Network Solutions Wireless Services Wireline & Wireless Services Distribution Centers (Partial Listing) Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 9. 5

Customer Departmentalization Advantages § § Focuses on customer needs Products and services tailored to customer needs Disadvantages § § § Duplication of resources Difficult to coordinate across departments Efforts to please customers may hurt the company 1. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Coca-Cola Enterprises Territories of Operation Geographic Departmentalization 1. 4 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 6

Geographic Departmentalization Advantages § § Responsive to the demands of different market areas Unique resources located close to the customer Disadvantages § § Duplication of resources Difficult to coordinate across departments 1. 4 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Matrix Departmentalization Citi. Group International Global Consumer Global Corporate & Investment Bank Global Investment Management 1. 5 Smith Barney North America (excluding Mexico) Europe, Middle East, Asia Pacific Africa Country Manager s in Spain, UAE, Kenya, Country etc. Managers in China, Australia, etc. Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 9. 7

Matrix Departmentalization Advantages § § Efficiently manage large, complex tasks Pool of available resources Disadvantages § § § Requires high levels of coordination Conflict between bosses Requires high levels of management skills 1. 5 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Organizational Authority Chain of Command Line versus Staff Authority Delegation of Authority Degree of Centralization 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 17

Chain of Command § § § The vertical line of authority in an organization Clarifies who reports to whom Unity of command § workers report to only one boss § matrix organizations violate this principle 2. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 18

Line versus Staff Authority § Line authority § the right to command immediate subordinates in the chain of command § Staff authority § the right to advise but not command others 2. 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 19

Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible. 2. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 20

Delegation of Authority 2. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 9. 8 21

How to be a More Effective Delegator 1. 2. 3. 4. 5. 6. 7. 8. 9. 2. 3 Trust your staff to be a good job Avoid seeing perfection Give effective job instructions Know your true interests Follow up on progress. Praise the efforts of your staff. Don’t wait to the last minute to delegate. Ask questions, expect answers, assist employees. Provide the resources you would provide if doing the assignment yourself. 10. Delegate to the lowest possible level. Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 9. 9 22

Degree of Centralization § Centralization of authority § primary authority is held by upper management § Decentralization § significant authority is found in lower levels of the organization § Standardization § solving problems by applying rules, procedures, and processes 2. 4 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 23

Job Design Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 24

Job Specialization § § § A job that is a small part of a larger task or process Jobs are simple, easy to learn, and economical Can lead to low satisfaction, high absenteeism, & employee turnover 3. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Job Rotation, Enlargement, and Enrichment § Job Rotation § periodically moving workers from one specialized job to another § Job Enlargement § increasing the number of tasks performed by a worker § Job Enrichment § adding more tasks and authority to an employee’s job 3. 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Job Characteristics Model § A job redesign approach that seeks to increase employee motivation § Emphasizes internal motivation § experience work as meaningful § experience responsibility for work outcomes § knowledge of results 3. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 27

Job Characteristics Model 3. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 10 28

What Really Works The Job Characteristics Model Job Satisfaction Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 66% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3. 3 probability of success 70% Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 29

What Really Works The Job Characteristics Model Job Satisfaction Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 73% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 70% 3. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 30

What Really Works The Job Characteristics Model Job Satisfaction High Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 84% Low Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% 3. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 31

What Really Works The Job Characteristics Model Workplace Absenteeism Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 63% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 68% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3. 3 probability of success 72% Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 32

What Really Works The Job Characteristics Model Workplace Absenteeism Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 74% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 72% 3. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 33

Job Redesign Techniques Redesigning Jobs Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job 3. 3 Opening Feedback Channels Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 9. 10 34

Designing Organizational Processes After reading these sections, you should be able to: 4. explain the methods that companies are using to redesign international organizational processes (i. e. , intraorganizational processes). 5. describe the methods that companies are using to redesign external organizational processes (i. e. , interorganizational processes). Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Intraorganizational Processes Reengineering Empowerment Behavioral Informality 4 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 36

Reengineering § The fundamental rethinking and radical redesign of business processes § Intended to achieve dramatic improvements in performance § Change the orientation from vertical to horizontal § Changes task interdependence 4. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 37

Reengineering and Task Interdependence 4. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 11 38

Empowerment Empowering Workers § § § Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination 4. 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 39

Behavioral Informality § § § Spontaneity Casualness Interpersonal familiarity Behavioral Formality § § § Routine & regimen Specific behavior rules Impersonal detachment 4. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 40

Behavioral Informality Popular ways to increase behavioral informality Casual Dress and Open Offices Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Do the Right Thing Don’t Scavenge That Office If Somebody Is Still in It § It’s roadkill in the animal kingdom: coworkers scavenge for office leftovers… often before an employee leaves § Do the right thing by maintaining the dignity of departing coworkers: wait until the office is empty 4. 3 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved

Interorganizational Processes Modular Organizations Virtual Organizations 5 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 43

Modular Organizations 5. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 13 44

Modular Organizations Advantages § § can cost less to run than traditional organizations lets organizations focus on core competencies Disadvantages § § loss of control from outsourcing may reduce their competitive advantage 5. 1 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 45

Virtual Organizations 5. 2 Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved Exhibit 9. 14 46

Virtual Organizations Advantages § § § 5. 2 let companies share costs fast and flexible being the “best” should provide better products Web Link Disadvantages § § difficult to control the quality of partners requires tremendous management skills http: //www. agileweb. com Chapter 9 Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved 47