Adhocracy: A Closer Look

Prof Jitendra MohantySchool of ManagementKIIT UniversityBhubaneswar

As organizations take on increasingly demanding, innovative, and complex activities, they will very likely turn to adhocracy

Pure adhocracy an abstraction No pure adhocracy – only variants of

adhocracy are seen Number of design configurations of

adhocracy available

The Matrix Specialists from specific functional departments

work in one or more interdisciplinary teams led by project leaders

Adds flexibility dimension to bureaucracy’s economies of specialization

Matrix proposes two bosses: functional and project (dual command) – goes against bureaucracy’s unity of command

Legitimates lateral channels of influence

When to use Matrix Matrix seen in ad agencies, aerospace firms, R

& D labs, hospitals, universities, management consultancies, entertainment companies

Essential conditions:

(1) environmental pressure from two or three critical sectors ( Ad agency to maintain its technical focus and respond to client’s needs)

(2) interdependence between departments

(3) economies of scale in use of internal resources

Two types of matrix structure Temporary Matrix (Aerospace example):

Projects or products undergoing change continuously

Permanent Matrix (Large colleges of business): Projects or products relatively enduring

Strengths of matrix: facilitates better coordination, better

communication and more flexibility reduces bureaupathologies – prevents

displacement of goals due to departmental members tendency to protect their “little worlds”

Facilitates efficient allocation of specialists Creates increased ability to respond

rapidly to change in the environment Ensures timely project completion Cost control for economic efficiency Development of technical capability for

future Increased motivation for professionals

through a platform of democratic and scientific norms

Weaknesses of matrix Creates confusion, propensity to foster power

struggles, stress it places on individuals Absence of unity of command leads to ambiguity

– increased ambiguity leads to conflict Project managers fight to get best of specialists

– power struggle ensues High stress experienced by individuals who seek

security and certainty Multiple reporting results in role conflict –

unclear expectations produce role ambiguity

Theory Z William Ouchi: American

version of the Japanese model ( IBM, HP, P & G etc)

Theory Y : Adapted to handle high rates of employee turnover – creates mechanistic bureaucracy

Theory J: To handle low turnover – mirrors adhocracy

Theory A Theory J

ST employment Life-time employment

Specialized career paths

Non-specialized career paths

Individual decision making

Consensual decision making

Individual responsibility

Collective responsibility

Frequent appraisal Infrequent appraisal

Explicit, formalized appraisal

Implicit, informal appraisal

Rapid promotion Slow promotion

Segmented concern for people

Comprehensive concern for people

Theory Z: Japanese model adapted to fit into American culture

Essentially adhocratic Complexity low –

excessive layers unnecessary

LT loyalty and team works stressed

Theory Z Organizations

LT Employment

Moderately specialized career paths

Consensual decision making

Individual responsibility

Infrequent appraisal

Implicit, informal appraisal with explicit, formalized measures

Slow promotion

Comprehensive concern for people

The Collateral Form Allows intrapreneurship – creates spirit and rewards of

entrepreneurship within or alongside a large bureaucracy Small teams or separate business units with

independence and resources to experiment Has flexibility to solve ill-structured problems This is creating adhocracy within bureaucracy The weakness is disorder at times due to meshing

bureaucratic structure with organic units – often clash of culture results

Needs unique type of top management to blend rules, checks and balances and intolerance for failure with risk taking and making mistakes,

The Network Structure A small central organization that relies on other

organizations to perform manufacturing, distribution, marketing and other crucial functions on a central basis

Nike : an organization of relationships – billions of dollars in sales without own manufacturing facilities

Allow flexibility to focus on what it does best Managers spend most of their time coordinating

and controlling external relations

Good for certain firms requiring high flexibility to respond quickly to fashion changes (toys and apparels firms)

Suits firms whose manufacturing needs low-cost labour (outsourcing)

Weaknesses: Loss of close control – supply less predictable – innovations under the direction of another organization can not be guarded

Other Examples of AdhocracyTask Force: Temporary structure formed to

accomplish a specific, well-defined and complex task that involves a number of organizational subunits

The Committee Form: This form arises when A decision requires broad range of experience

and backgrounds All affected by decision need to be represented Desirable to spread the workload During management transition when no single

individual is ready to lead organization

Committees may be temporary or permanent

Temporary committee same as task force Permanent committees combine diverse

inputs of task force plus stability and consistency of matrix

Plural executives: committees established at top level of organization – helps handle homogeneity of top executive’s task

The Collegial Form Form of adhocracy fashionable in universities, research

labs, highly professional organizations Full democracy in making all important decisions ( vs.

representative decision making in task force or committee)

Represents the utmost in decentralization (faculty work with minimal guidelines) – great deal of leeway for departmental discretion

Bell Labs, Eastman Kodak: extremely high employee autonomy – minimum formalization – collegial decision making

Allows highly skilled professionals to adapt rapidly to changing needs of work