Designing Adaptive Organizations CHAPTER 9 chapter 9 Learning

Designing Adaptive Organizations CHAPTER 9

chapter 9 Learning Outcomes • 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. • 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. 2 Copyright © 2010 by South

chapter 9 What are Your Leadership Beliefs? • Personal beliefs about the role of leadership impact a new manager • A manager’s work is influenced by how the organization is organized • Organizational systems should be compatible with leadership beliefs • Good managers understand learn to work within a variety of structural configurations 3 Copyright © 2010 by South

chapter 9 Organizing • Organizing follows from strategy – Strategy dictates what you do – Organization dictates how you do it • Organizing is the deployment of organizational resources to achieve strategic goals 4 Copyright © 2010 by South

chapter 9 Organizing The Vertical Structure 1) The set of formal tasks assigned to individuals and departments 2) Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control 3) The design of systems to ensure effective coordination of employees across departments 5 Copyright © 2010 by South

chapter 9 Organizing Concepts • Work Specialization – the division tasks into individual jobs called division of labor • Chain of Command – a line of authority that links individuals and direct reports 6 Copyright © 2010 by South

chapter 9 Authority, Responsibility, and Delegation • The chain of command illustrates authority • Authority is the formal and legitimate right to make decisions and issues orders – Authority is vested in organizational positions, not people – Authority is accepted by subordinates – Authority flows down the vertical hierarchy • Responsibility is the duty to perform the task or activity assigned • Delegation is the process managers use to transfer authority and responsibility to others Copyright © 2010 by South 7

chapter 9 Line and Staff Authority • Line departments perform the tasks that reflect the organization’s primary goals – They work directly with customers/products • Staff departments are those departments that provide specialized skills in support of line departments – Legal, Human Resources, Marketing 8 Copyright © 2010 by South

chapter 9 Organizing Chart for a Water Bottling Plant 9 Copyright © 2010 by South

chapter 9 Span of Management • The number of employees reporting to a supervisor is span of management • Factors associated with less supervisor involvement and larger span of control Ø Work is stable and routine Ø Subordinates perform similar work Ø Subordinates in single location Ø Highly trained and need little direction Ø Rules and procedures are defined Ø Support systems and personnel are available to manager Ø Little supervision is required Ø Managers’ personal preference favor a large span Copyright © 2010 by South 10

chapter 9 Reorganization to Increase Span of Management 11 Copyright © 2010 by South

Centralization and Decentralization chapter 9 Decentralization means decision authority is pushed downward to lower organizational levels Centralization means that decision authority is located near the top of the organization • Change and uncertainty are usually associated with decentralization • The amount of centralization or decentralization should fit the firm’s strategy • During crisis or risk of company failure, authority may be centralized 12 Copyright © 2010 by South

chapter 9 Departmentalization • Basis for grouping positions into departments • Choices regarding chain of command • Five traditional approaches: – Functional – Divisional – Matrix • Innovative approaches: – Teams – Virtual Networks 13 Copyright © 2010 by South

chapter 9 Approaches to Structural Design 14 Copyright © 2010 by South

chapter 9 Approaches to Structural Design 15 Copyright © 2010 by South

Vertical Functional Approach chapter 9 • Grouping into departments based on skills, expertise, work activities and resource use • Departmentalized by organizational resources – Accounting – Human resources – Engineering – Manufacturing 16 Copyright © 2010 by South

chapter 9 Divisional Approach • Departments are grouped based on outputs – Product structure, program structure, self-contained unit structure • Many large corporations have multiple divisions for different business lines • Organizations may assign division responsibility by geographic region or customer group 17 Copyright © 2010 by South

Functional Versus Divisional chapter 9 Approach 18 Copyright © 2010 by South

chapter 9 Geographic-Based Global Organization Structure 19 Copyright © 2010 by South

chapter 9 Matrix Approach • Combines aspects of both functional and divisional structures simultaneously • Improves coordination and information sharing • A key challenge is the dual lines of authority – Employees report to two supervisors 20 Copyright © 2010 by South

chapter 9 Dual-Authority Structure in a Matrix Organization 21 Copyright © 2010 by South

chapter 9 Global Matrix Structure 22 Copyright © 2010 by South

chapter 9 Team Approach • Teamwork is a growing trend • Teams allow organizations to delegate authority • Become flexible and competitive in global environment • Organizations may use cross-functional and/or permanent team strategies 23 Copyright © 2010 by South

chapter 9 The Virtual Network Approach • Extending the boundaries of collaboration beyond the organization – Subcontracting functions to other companies – Coordinate activities • Interconnected groups of companies – partnerships and collaborations 24 Copyright © 2010 by South

chapter 9 Network Approach to Departmentalization 25 Copyright © 2010 by South

chapter 9 Structural Advantages and Disadvantages 26 Copyright © 2010 by South

chapter 9 The Need for Coordination ü Organizations grow and evolve ü Organizations need systems to process information and enable communication ü Coordination is the quality of collaboration across departments ü Coordination is required, regardless of the structure 27 Copyright © 2010 by South

chapter 9 Evolution of Organization Structures 28 Copyright © 2010 by South

chapter 9 Task Forces, Teams, and Project Management Project Managers are 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 29 Copyright © 2010 by South

chapter 9 Examples of Project Manager Relationships 30 Copyright © 2010 by South

chapter 9 Reengineering • Reengineering or business process reengineering • Radical redesign of business processes to achieve dramatic improvements – Cost – Quality – Service – Speed 31 Copyright © 2010 by South

chapter 9 Reengineering at Michigan Casting Center 32 Copyright © 2010 by South

chapter 9 Structure Follows Strategy The right structure is designed to fit the organization’s strategy 33 Copyright © 2010 by South