designing adaptive organizations

Designing Adaptive Organizations

CHAPTER 9

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Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved.

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• 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.

Learning Outcomes

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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 and learn to work within a variety of structural configurations

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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

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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

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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

• 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

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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

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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

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Organizing Chart for a Water Bottling Plant

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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

Work is stable and routine

Subordinates perform similar work

Subordinates in single location

Highly trained and need little direction

Rules and procedures are defined

Support systems and personnel are available to manager

Little supervision is required

Managers’ personal preference favor a large span

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Reorganization to Increase Span of

Management

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Centralization and Decentralization

Centralization means that decision authority is located near the

top of the organization

Decentralization means decision authority is

pushed downward to lower organizational levels

• 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

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Departmentalization

• Basis for grouping positions into departments• Choices regarding chain of command• Five traditional approaches:

– Functional– Divisional– Matrix

• Innovative approaches:– Teams– Virtual Networks

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Approaches to Structural Design

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Approaches to Structural Design

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Vertical Functional Approach

• Grouping into departments based on skills, expertise, work activities and resource use

• Departmentalized by organizational resources

– Accounting

– Human resources

– Engineering

– Manufacturing

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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

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Functional Versus Divisional Approach

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Geographic-Based Global Organization

Structure

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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

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Dual-Authority Structure in a Matrix Organization

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Global Matrix Structure

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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

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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

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Network Approach to Departmentalization

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Structural Advantages and Disadvantages

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The Need for Coordination

Organizations grow and evolve

Organizations need systems to process information and enable communication

Coordination is the quality of collaboration across departments

Coordination is required, regardless of the structure

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Evolution of Organization Structures

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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 ForceA temporary team or committee formed to

solve a specific short-term

problem

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Examples of Project Manager Relationships

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Reengineering

• Reengineering or business process reengineering

• Radical redesign of business processes to achieve dramatic improvements– Cost– Quality– Service– Speed

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Reengineering at Michigan Casting

Center

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Structure Follows Strategy

The right structure is designed to fit the organization’s strategy

designing adaptive organizations

Business

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