Ch10-Designing Adapti C31B8

8/4/2019 Ch10-Designing Adapti C31B8

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Designing Adaptive Organizations

Chapter10


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Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.

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Organizing

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

Managers Challenge: Nissan


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Designing Adaptive

Organizations

Organizing Principles and Concepts

Organizing the Vertical Structure

Using Mechanisms for HorizontalCoordination

Tailoring Various Elements of StructuralDesign to Organizational Situations

Topics

Chapter 10


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Organization Structure

Defines how tasks are divided,

resources are deployed, anddepartments are coordinated

Set of formal tasks assigned

Formal reporting relationships

The design of systems to ensureeffective coordination of employeesacross department


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The Organization Chart

The Home Depot is the world's largest home

improvement retailer currently operating

1,363 stores.

Visual representation

Set of formal tasks

Formal reporting relationships

Framework for vertical control


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Work Specialization

Tasks are subdivided into individual jobs

Employees perform only the tasks relevantto their specialized function

Jobs tend to be small, but they can be

performed efficiently

Division of labor concept


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Chain 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


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Authority

Formal and legitimate right of a manager tomake decisions and issue orders

Allocate resources to achieve organizationallydesired 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


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Responsibility

The duty to perform the task or activityan employee has been assigned

Managers are assigned authority

commensurate with responsibility

Flip side of the authority coin


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Accountability

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


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Delegation

Process managers use to transfer

authority and responsibility

Organizations encouragemanagers to delegate authority tolowest possible level

Ethical Dilemma: A Matter of Delegation


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Techniques for Delegation

Givethoroughinstructions

Maintainfeedback

Evaluate and rewardperformance

Delegate thewhole task

Select the rightperson

Delegation

Ensure thatauthority equalsresponsibility


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Line and Staff Authority

Line Authority = individuals in management

positions have the formal power to direct andcontrol immediate subordinates

Staff Authority = granted to staff specialists in

their area of expertise


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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


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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 themanager

Little time is required in nonsupervisory activities

Managers preferences and styles favor a largespan


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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 horizontallydispersed and fewer hierarchical levels

The trend has been toward wider spans of control


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Centralization versus Decentralization

Greater change and uncertainty in the

environment are usually associated withdecentralization

The amount of centralization ordecentralization should fit the firms

strategy

In times of crisis or risk of company failure,authority may be centralized at the top


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DepartmentalizationThe basis on which individuals are grouped into departments

Vertical functional approach. People are groupedtogether in departments by common skills.

Divisional approach. Grouped together based on acommon product, program, or geographical region.

Horizontal matrix approach. Functional and divisionalchains of command. Some employees report to two

bosses Team-based approach. Created to accomplish

specific tasks


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DepartmentalizationThe basis on which individuals are grouped into departments

Network approach. Small, central hubelectronically connected to their otherorganizations that perform vital functions.Departments are independent, and can belocated anywhere.

Virtual approach.

Brings people togethertemporarily to exploit specific opportunitiesthen disbands


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Five Approaches to Structural Design


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Five Approaches to Structural DesignSlide 2


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Vertical Functional Approach

Grouping of positions into departmentsbased on similar skills, expertise, andresource 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


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Divisional Structure Advantages

Efficient use of resources

Skill specialization development

Top management control

Excellent coordination

Quality technical problem solving


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Divisional Structure

Disadvantages

Poor communications

Slow response to external changes

Decisions concentrated at top

Pin pointing responsibility is difficult

Limited view of organizational goals byemployees


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Horizontal 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


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Dual Authority Structure in a

Matrix Organization


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Horizontal 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


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Team Disadvantages

Dual loyalties and conflict

Time and resources spent onmeetings

Unplanned decentralization


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Network Approach Advantages

Global competitiveness

Work force flexibility

Reduced administrative overhead


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Network Approach

Disadvantages

No hands-on control

Loss of part of the organization severelyimpacts remainder of organization

Employee loyalty weakened


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Task Forces, Teams, Project

Management

Task Force = temporary team/committeedesigned to solve a short-term probleminvolving several departments

Project Manager = responsible for

coordinating activities of several departmentson a full-time basis for the completion of aspecific project


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Reengineering

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

Process = organized group of related tasksand activities that work together to transform

inputs into outputs and create value


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Factors Shaping Structure

Structure

Follows StrategyReflects the Environment

Fits the Technology

Service Technology

Digital TechnologyExperiential Exercixe: Organic versus

Mechanistic Organization Structure

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Ch10-Designing Adapti C31B8