MGMT Designing Adaptive Organizations Chapter 9 Structure and

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MGMT Designing Adaptive Organizations Chapter 9

MGMT Designing Adaptive Organizations Chapter 9

Structure and Process ● Organizational structure: Vertical and horizontal configuration of departments, authority, and

Structure and Process ● Organizational structure: Vertical and horizontal configuration of departments, authority, and jobs within a company ● Traditional Organizational Structure 1. Departmentalization 2. Authority 3. Job Design ● Organizational process: Collection of activities that transform inputs into outputs valued by customers 2

Departmentalization Non-traditional Structure 3

Departmentalization Non-traditional Structure 3

Departmentalization Non-Traditional Structure 4

Departmentalization Non-Traditional Structure 4

5 Traditional Methods of Departmentalization Functional Product Customer Geographic Matrix 5

5 Traditional Methods of Departmentalization Functional Product Customer Geographic Matrix 5

Departmentalization Functional Departmentalization ● Organized by function or expertise – most common ● Advantages

Departmentalization Functional Departmentalization ● Organized by function or expertise – most common ● Advantages ● allows work done by highly qualified specialists ● lowers costs by reducing duplication ● makes communication and coordination easier ● Disadvantages ● cross-department coordination can be difficult ● may lead to slower decision making 6

Departmentalization Functional Departmentalization 7

Departmentalization Functional Departmentalization 7

Departmentalization Product Departmentalization ● Organized by production of particular product or service ● Advantages

Departmentalization Product Departmentalization ● Organized by production of particular product or service ● Advantages ● allows people to specialize in one area of expertise related to a product line ● makes it easier to assess performance ● makes decision making faster because it is for a product line ● Disadvantages ● duplication - product lines will duplicate need for certain functions ● coordination across different product departments related to policies and procedures 8

Departmentalization Product Departmentalization: UTC 9

Departmentalization Product Departmentalization: UTC 9

Departmentalization Customer Departmentalization ● Organized for particular kinds of customers ● Advantages ● focuses

Departmentalization Customer Departmentalization ● Organized for particular kinds of customers ● Advantages ● focuses organization on customer needs ● allows companies to specialize products and services to customer needs ● Disadvantages ● duplication of resources ● workers might make decisions that please customers but hurt business 10

Departmentalization Customer Departmentalization: Swisscom AG - 2014 11

Departmentalization Customer Departmentalization: Swisscom AG - 2014 11

Departmentalization Customer Departmentalization: Swisscom AG - 2017 12

Departmentalization Customer Departmentalization: Swisscom AG - 2017 12

Departmentalization Geographic Departmentalization ● Organized based on location ● Advantages ● helps companies respond

Departmentalization Geographic Departmentalization ● Organized based on location ● Advantages ● helps companies respond to different markets ● reduces costs by locating unique resources closer to customers (ie. bottling companies) ● Disadvantages ● duplication of resources ● difficult to coordinate departments 13

Departmentalization Geographic Departmentalization: AB In. Bev Company - 2014 14

Departmentalization Geographic Departmentalization: AB In. Bev Company - 2014 14

Departmentalization Geographic Departmentalization: AB In. Bev Company – 2017 15

Departmentalization Geographic Departmentalization: AB In. Bev Company – 2017 15

Departmentalization Matrix Departmentalization ● Hybrid structure other methods ● Most common matrix is product

Departmentalization Matrix Departmentalization ● Hybrid structure other methods ● Most common matrix is product and functional ● Advantages ● allows companies to efficiently manage large, complex tasks ● pool of resources is larger ● gives much more diverse set of expertise and experience from other departments ● Disadvantages high level of coordination is required requires a high level of duplication employees report to two (2) bosses confusion and conflict (re schedules, budgets, resources etc. ) between project bosses – notorious for this ● requires much more management skill ● ● 16

Departmentalization Matrix Departmentalization: P & G 17

Departmentalization Matrix Departmentalization: P & G 17

Matrix Departmentalization: P & G 18

Matrix Departmentalization: P & G 18

Organizational Authority ● Chain of Command – vertical line of authority ● Unity of

Organizational Authority ● Chain of Command – vertical line of authority ● Unity of Command – the assumption that each worker will report to one boss ● Prevents confusion ● Does not apply to matrix organizations 19

Organizational Authority Types of Authorities and Functions ● Authority ● Line: Right to command

Organizational Authority Types of Authorities and Functions ● Authority ● Line: Right to command immediate subordinates in the chain of command ● Staff: Right to advise others who are not subordinates in the chain of command ● Function ● Line: Contributes in creating or selling the company’s products ● Staff: Supports line activities 20

Organizational Authority Delegation of Authority ● Assignment of authority and responsibility to a subordinate

Organizational Authority Delegation of Authority ● Assignment of authority and responsibility to a subordinate to complete manager’s tasks ● Transfer of full responsibility for the assignment to the subordinate ● Transfer of full authority over budgets, resources, and personnel ● Transfer of accountability 21

Organizational Authority Delegation – assign direct authority and responsibility to subordinate to complete tasks

Organizational Authority Delegation – assign direct authority and responsibility to subordinate to complete tasks 22

Organizational Authority Degree of Centralization ● Standardization – solving problems by consistently applying the

Organizational Authority Degree of Centralization ● Standardization – solving problems by consistently applying the same rules, procedures, and processes Centralization of authority – most authority at upper levels - high degree of standardization ● Decentralization – most authority in the lower levels ● ● ● High degree of delegation – low standardization Develops employee capabilities Faster decision making More satisfied employees and customers Better employee performance 23

Job Design ● Number, kind, and variety of tasks that individual workers perform in

Job Design ● Number, kind, and variety of tasks that individual workers perform in doing their jobs 24

Job Design Job Specialization ● Job composed of different parts of a complete task

Job Design Job Specialization ● Job composed of different parts of a complete task ● Advantages ● ● ● Job comprises a smaller part of a larger task Easy to learn (so easy it can become boring) Low variety High repetition Disadvantages ● Low job satisfaction ● High absenteeism ● High employee turnover 25

Methods Used to Improve Specialized Jobs Job Design Rotation • move worker from one

Methods Used to Improve Specialized Jobs Job Design Rotation • move worker from one specialized job to another for variety Enlargement • increase the number of different tasks the worker performs Enrichment • enlargement and authority to make meaningful decisions about their work 26

Job Design JCM – Job Characteristics Model ● Job design approach ● Internal Motivation

Job Design JCM – Job Characteristics Model ● Job design approach ● Internal Motivation – the central concern of the JCM ● Workers need to: ● Experience work as meaningful and important ● Experience responsibility for work outcomes ● Knowledge of results – how well the worker did 27

Job Design Job Characteristics Skill variety • Different activities performed in a job Task

Job Design Job Characteristics Skill variety • Different activities performed in a job Task identity • Degree to which a job requires the completion of a piece of work Task significance • Impact of a job on people inside or outside the firm Autonomy • Degree to which a job gives workers the opportunity to decide how and when to accomplish the job Feedback • Information the job provides to workers about their work performance 28

Job Design Job Characteristics Model (JCM) 29

Job Design Job Characteristics Model (JCM) 29

Job Design To Increase Internal Motivation ● Combine tasks – skill variety & task

Job Design To Increase Internal Motivation ● Combine tasks – skill variety & task identity ● Natural work units – logical groups ● Establish client relationships ● Vertical loading – pushing management authority down to workers ● Open feedback channels – direct, frequent feedback 30

Organizational Designs ● Activities within an organization that transform inputs into outputs valued by

Organizational Designs ● Activities within an organization that transform inputs into outputs valued by customers ● Mechanistic: Characterized by specialized jobs and responsibilities ● Follows centralized authority and vertical communication ● Precise, unchanging ● Organic: Characterized by broadly defined jobs and responsibilities ● Decentralized authority and horizontal communication based on task knowledge ● Loose, frequent changes ● Concerned with intraorganizational process 31

Summary Departmentalization is a method of subdividing work and workers into separate organizational units

Summary Departmentalization is a method of subdividing work and workers into separate organizational units ● Authority is the right to give commands, take action, and make decisions to achieve organizational goals ● Job design is the number, kind, and variety of tasks that individuals perform ● 32

Key Terms ● ● ● Organizational structure Organizational process Departmentalization Functional departmentalization Product departmentalization

Key Terms ● ● ● Organizational structure Organizational process Departmentalization Functional departmentalization Product departmentalization Customer departmentalization ● ● ● ● ● Geographic departmentalization Matrix departmentalization Simple matrix Complex matrix Authority Chain of command Unity of command Line authority Staff authority 33

Key Terms ● ● ● ● Line function Staff function Delegation of authority Centralization

Key Terms ● ● ● ● Line function Staff function Delegation of authority Centralization of authority Decentralization Standardization Job design Job specialization Job rotation Job enlargement Job characteristics model Internal motivation Skill variety Task identity Task significance Autonomy ● ● ● ● Feedback Mechanistic organization Organic organization Intraorganizational process Reengineering Task interdependence Pooled interdependence Sequential interdependence Reciprocal interdependence Empowering workers Empowerment Interorganizational process Modular organization Virtual organization 34