Chapter 9 Prepared by Deborah Baker Texas Christian University Designing Adaptive Organizations Management 4th Edition Chuck Williams

What Would You Do? Where do you start to fix a company that has a $100 million loss, falling ad sales, plummeting stock prices, and an unmanageable organizational structure? Yahoo has done a poor job in establishing relationships with customers Yahoo Headquarters, Sunnyvale, California What structure should Yahoo adopt? What should you do about the informal culture? How can better decisions be made for the company?

Where do you start to fix a company that has a $100 million loss, falling ad sales, plummeting stock prices, and an unmanageable organizational structure?

Yahoo has done a poor job in establishing relationships with customers

Organizational Structure Organizational Structure The vertical and horizontal configuration of departments, authority, and jobs within a company. Organizational Process The collection of activities that transform inputs into outputs that customers value.

Organizational Structure Exhibit 9.2 Process View of Microsoft’s Organization

Designing Organizational Structures After reading these sections, you should be able to: describe the departmentalization approach to organizational structure. explain organizational authority. discuss the different methods for job design.

describe the departmentalization approach to organizational structure.

explain organizational authority.

discuss the different methods for job design.

Departmentalization 1 Customer Geographic Matrix Functional Product

Functional Departmentalization 1.1

Functional Departmentalization Work done by highly skilled specialists Lowers costs through reduced duplication Communication and coordination problems are lessened Cross-department coordination can be difficult May lead to slower decision making Produces managers with narrow experiences 1.1 Advantages Disadvantages

Work done by highly skilled specialists

Lowers costs through reduced duplication

Communication and coordination problems are lessened

Cross-department coordination can be difficult

May lead to slower decision making

Produces managers with narrow experiences

Product Departmentalization 1.2 United Technologies Carrier Hamilton Sundstrand Chubb Otis Pratt & Whitney UTC Power Adapted from Exhibit 9.4 --Administrative services --Communication & public relations --Customer service & support --E-Business --Engineering --etc… Sikorsky

Product Departmentalization Managers specialize, but have broader experiences Easier to assess work-unit performance Decision-making is faster Duplication of activities Difficult to coordinate across departments 1.2 Advantages Disadvantages

Managers specialize, but have broader experiences

Easier to assess work-unit performance

Decision-making is faster

Duplication of activities

Difficult to coordinate across departments

Customer Departmentalization Adapted from Exhibit 9.5 1.3 U.S. Businesses Local Service Supply Chain Integration Local Service Sprint Corporation International Businesses Long- Distance Service Logistics Network Long- Distance Service Solutions Wireless Services Distribution Centers Wireline & Wireless Services Business Solutions Consumer Solutions Sprint North Supply Local Telecom Division (Partial Listing)

Customer Departmentalization Focuses on customer needs Products and services tailored to customer needs Duplication of resources Difficult to coordinate across departments Efforts to please customers may hurt the company 1.3 Advantages Disadvantages

Focuses on customer needs

Products and services tailored to customer needs

Duplication of resources

Difficult to coordinate across departments

Efforts to please customers may hurt the company

Geographic Departmentalization Exhibit 9.6 Coca-Cola Enterprises Territories of Operation 1.4

Geographic Departmentalization Responsive to the demands of different market areas Unique resources located close to the customer Duplication of resources Difficult to coordinate across departments 1.4 Advantages Disadvantages

Responsive to the demands of different market areas

Unique resources located close to the customer

Duplication of resources

Difficult to coordinate across departments

Matrix Departmentalization 1.5 Adapted from Exhibit 9.7 CitiGroup International North America (excluding Mexico) Europe, Middle East, Africa Asia Pacific Global Corporate & Investment Bank Global Investment Management Global Consumer Smith Barney Country Managers in Spain, UAE, Kenya, etc. Country Managers in China, Australia, etc.

Matrix Departmentalization Efficiently manage large, complex tasks Pool of available resources Requires high levels of coordination Conflict between bosses Requires high levels of management skills 1.5 Advantages Disadvantages

Efficiently manage large, complex tasks

Pool of available resources

Requires high levels of coordination

Conflict between bosses

Requires high levels of management skills

Organizational Authority 2 Delegation of Authority Degree of Centralization Chain of Command Line versus Staff Authority

Chain of Command The vertical line of authority in an organization Clarifies who reports to whom Unity of command workers report to only one boss matrix organizations violate this principle 2.1

The vertical line of authority in an organization

Clarifies who reports to whom

Unity of command

workers report to only one boss

matrix organizations violate this principle

Line versus Staff Authority Line authority the right to command immediate subordinates in the chain of command Staff authority the right to advise but not command others 2.2 versus

Line authority

the right to command immediate subordinates in the chain of command

Staff authority

the right to advise but not command others

Delegation of Authority 2.3 Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible.

Delegation of Authority Adapted from Exhibit 9.8 2.3

How to be a More Effective Delegator Trust your staff to be a good job Avoid seeing perfection Give effective job instructions Know your true interests Follow up on progress. Praise the efforts of your staff. Don’t wait to the last minute to delegate. Ask questions, expect answers, assist employees. Provide the resources you would provide if doing the assignment yourself. Delegate to the lowest possible level. Adapted from Exhibit 9.9 2.3

Trust your staff to be a good job

Avoid seeing perfection

Give effective job instructions

Know your true interests

Follow up on progress.

Praise the efforts of your staff.

Don’t wait to the last minute to delegate.

Ask questions, expect answers, assist employees.

Provide the resources you would provide if doing the assignment yourself.

Delegate to the lowest possible level.

Degree of Centralization Centralization of authority primary authority is held by upper management Decentralization significant authority is found in lower levels of the organization Standardization solving problems by applying rules, procedures, and processes 2.4

Centralization of authority

primary authority is held by upper management

Decentralization

significant authority is found in lower levels of the organization

Standardization

solving problems by applying rules, procedures, and processes

Job Design 3 Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model

Job Specialization A job that is a small part of a larger task or process Jobs are simple, easy to learn, and economical Can lead to low satisfaction, high absenteeism, & employee turnover 3.1

A job that is a small part of a larger task or process

Jobs are simple, easy to learn, and economical

Can lead to low satisfaction, high absenteeism, & employee turnover

Job Rotation, Enlargement, and Enrichment Job Rotation periodically moving workers from one specialized job to another Job Enlargement increasing the number of tasks performed by a worker Job Enrichment adding more tasks and authority to an employee’s job 3.2

Job Rotation

periodically moving workers from one specialized job to another

Job Enlargement

increasing the number of tasks performed by a worker

Job Enrichment

adding more tasks and authority to an employee’s job

Job Characteristics Model A job redesign approach that seeks to increase employee motivation Emphasizes internal motivation experience work as meaningful experience responsibility for work outcomes knowledge of results 3.3

A job redesign approach that seeks to increase employee motivation

Emphasizes internal motivation

experience work as meaningful

experience responsibility for work outcomes

knowledge of results

Job Characteristics Model Exhibit 9.10 3.3

What Really Works The Job Characteristics Model Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 66% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 70% Job Satisfaction 3.3

What Really Works The Job Characteristics Model Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 73% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 70% Job Satisfaction 3.3

What Really Works The Job Characteristics Model Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 69% Low Growth Need Strength/Job Satisfaction High Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 84% 3.3

What Really Works The Job Characteristics Model Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 63% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 68% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 72% Workplace Absenteeism Task Significance Skill Variety 3.3

What Really Works The Job Characteristics Model Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 74% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 72% Workplace Absenteeism Provide Feedback 3.3

Job Redesign Techniques Adapted from Exhibit 9.10 3.3 Redesigning Jobs Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job Opening Feedback Channels

Designing Organizational Processes After reading these sections, you should be able to: explain the methods that companies are using to redesign international organizational processes (i.e., intraorganizational processes). describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).

explain the methods that companies are using to redesign international organizational processes (i.e., intraorganizational processes).

describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).

Intraorganizational Processes 4 Reengineering Empowerment Behavioral Informality

Reengineering The fundamental rethinking and radical redesign of business processes Intended to achieve dramatic improvements in performance Change the orientation from vertical to horizontal Changes task interdependence 4.1

The fundamental rethinking and radical redesign of business processes

Intended to achieve dramatic improvements in performance

Change the orientation from vertical to horizontal

Changes task interdependence

Reengineering and Task Interdependence Exhibit 9.11 4.1

Empowerment A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination 4.2 Empowering Workers Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions

A feeling of intrinsic motivation

Workers perceive meaning in their work

Employees are capable of self-determination

Behavioral Informality Spontaneity Casualness Interpersonal familiarity Routine & regimen Specific behavior rules Impersonal detachment 4.3 Behavioral Informality Behavioral Formality

Spontaneity

Casualness

Interpersonal familiarity

Routine & regimen

Specific behavior rules

Impersonal detachment

Behavioral Informality Popular ways to increase behavioral informality Casual Dress and Open Offices

Popular ways to increase behavioral informality

Casual Dress and Open Offices

Do the Right Thing 4.3 Don’t Scavenge That Office If Somebody Is Still in It It’s roadkill in the animal kingdom: coworkers scavenge for office leftovers… often before an employee leaves Do the right thing by maintaining the dignity of departing coworkers: wait until the office is empty DOING THE RIGHT THING

Don’t Scavenge That Office If Somebody Is Still in It

It’s roadkill in the animal kingdom: coworkers scavenge for office leftovers… often before an employee leaves

Do the right thing by maintaining the dignity of departing coworkers: wait until the office is empty

Interorganizational Processes 5 Modular Organizations Virtual Organizations

Modular Organizations 5.1 Exhibit 9.13

Modular Organizations can cost less to run than traditional organizations lets organizations focus on core competencies loss of control from outsourcing may reduce their competitive advantage 5.1 Advantages Disadvantages

can cost less to run than traditional organizations

lets organizations focus on core competencies

loss of control from outsourcing

may reduce their competitive advantage

Virtual Organizations 5.2 Exhibit 9.14

Virtual Organizations let companies share costs fast and flexible being the “best” should provide better products difficult to control the quality of partners requires tremendous management skills 5.2 Advantages Disadvantages http://www.agileweb.com Web Link

let companies share costs

fast and flexible

being the “best” should provide better products

difficult to control the quality of partners

requires tremendous management skills