Designing Adaptive Organizations

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  • Designing Adaptive Organizations

    1. 1. Designing Adaptive Organizations CHAPTER 10 0
    2. 2. Learning Objectives <ul><li>Discuss the fundamental characteristics of organizing, including such concepts as work specialization, chain of command, span of management, and centralization versus decentralization. </li></ul><ul><li>Describe functional and divisional approaches to structure. </li></ul><ul><li>Explain the matrix approach to structure and its application to both domestic and international organizations. </li></ul><ul><li>Describe the contemporary team and virtual network structures and why they are being adopted by organizations. </li></ul>0
    3. 3. Learning Objectives (contd.) <ul><li>Explain why organizations need coordination across departments and hierarchical levels, and describe mechanisms for achieving coordination. </li></ul><ul><li>Identify how structure can be used to achieve an organization’s strategic goals. </li></ul><ul><li>Illustrate how organization structure can be designed to fit environmental uncertainty. </li></ul><ul><li>Define production technology (manufacturing, service, and digital) and explain how it influences organizational structure. </li></ul>0
    4. 4. Organizing <ul><li>Organization is the deployment of resources to achieve strategic goals. </li></ul><ul><li>It is reflected in </li></ul><ul><ul><li>Division of labor into specific departments & jobs </li></ul></ul><ul><ul><li>Formal lines of authority </li></ul></ul><ul><ul><li>Mechanisms for coordinating diverse organizational tasks </li></ul></ul>0
    5. 5. Organization Structure <ul><li>Defines how tasks are divided, resources are deployed, and departments are coordinated </li></ul><ul><li>Set of formal tasks assigned </li></ul><ul><li>Formal reporting relationships </li></ul><ul><li>The design of systems to ensure effective coordination of employees across departments </li></ul>0
    6. 6. The Organization Chart Visual representation Set of formal tasks Formal reporting relationships Framework for vertical control 0
    7. 7. Work Specialization <ul><li>Tasks are subdivided into individual jobs </li></ul><ul><li>Employees perform only the tasks relevant to their specialized function </li></ul><ul><li>Jobs tend to be small, but they can be performed efficiently </li></ul>Division of labor concept Degree to which 0
    8. 8. Chain of Command <ul><li>Unbroken line of authority that links all persons in an organization </li></ul><ul><li>Shows who reports to whom </li></ul><ul><li>Associated with two underlying principles </li></ul><ul><ul><li>Unity of Command </li></ul></ul><ul><ul><li>Scalar Principle </li></ul></ul>0
    9. 9. Authority <ul><li>Formal and legitimate right of a manager to make decisions and issue orders </li></ul><ul><li>Allocate resources to achieve organizationally desired outcomes </li></ul><ul><li>Authority is distinguished by three characteristics </li></ul><ul><ul><li>Authority is vested in organizational positions, not people </li></ul></ul><ul><ul><li>Authority is accepted by subordinates </li></ul></ul><ul><ul><li>Authority flows down the vertical hierarchy </li></ul></ul>0
    10. 10. Responsibility <ul><li>The duty to perform the task or activity an employee has been assigned </li></ul><ul><li>Managers are assigned authority commensurate with responsibility </li></ul>Flip side of the authority coin 0
    11. 11. Accountability <ul><li>Mechanism through which authority and responsibility are brought into alignment </li></ul><ul><li>People are subject to reporting and justifying task outcomes to those above them in the chain of command </li></ul><ul><li>Can be built into the organization structure </li></ul>0
    12. 12. Delegation <ul><li>Process managers use to transfer authority and responsibility </li></ul><ul><li>Organizations encourage managers to delegate authority to lowest possible level </li></ul>0
    13. 13. Line and Staff Authority <ul><li>Line Authority = individuals in management positions have the formal power to direct and control immediate subordinates </li></ul><ul><li>Staff Authority = granted to staff specialists in their area of expertise </li></ul>0
    14. 14. Span of Management/ Span of Control <ul><li>Number of employees who report to a supervisor </li></ul><ul><ul><li>Traditional view = seven subordinates per manager </li></ul></ul><ul><ul><li>Lean organizations today = 30+ subordinates </li></ul></ul><ul><li>Supervisor Involvement </li></ul><ul><ul><li>must be closely involved with subordinates, the span should be small </li></ul></ul><ul><ul><li>need little involvement with subordinates, it can be large </li></ul></ul>0
    15. 15. Factors Associated With Less Supervisor Involvement <ul><li>Work is stable and routine </li></ul><ul><li>Subordinates perform similar work tasks </li></ul><ul><li>Subordinates are concentrated in a single location </li></ul><ul><li>Subordinates are highly trained </li></ul><ul><li>Rules and procedure defining task activities are available </li></ul><ul><li>Support systems and personnel are available for the manager </li></ul><ul><li>Little time is required in nonsupervisory activities </li></ul><ul><li>Managers’ preferences and styles favor a large span </li></ul>0
    16. 16. Tall versus Flat Structure <ul><li>Span of Control used in an organization determines whether the structure is tall or flat </li></ul><ul><li>Tall structure has a narrow span and more hierarchical levels </li></ul><ul><li>Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels </li></ul><ul><li>The trend has been toward wider spans of control </li></ul>0
    17. 17. Centralization versus Decentralization <ul><li>Centralization means that decision authority is located near the top of the organization. </li></ul><ul><li>Decentralization means decision authority is pushed downward to lower organizational levels. </li></ul>0
    18. 18. Departmentalization The basis on which individuals are grouped into departments <ul><li>Vertical functional structure . People are grouped together in departments by common skills. </li></ul><ul><li>Divisional structure . Grouped together based on a common product, program, or geographical region. </li></ul><ul><li>Matrix structure . Functional and divisional chains of command. Some employees report to two bosses. </li></ul><ul><li>Team-based structure . Created to accomplish specific tasks. </li></ul>0
    19. 19. Virtual Network Structure <ul><li>An organizational structure that disaggregates major functions to separate companies that are brokered by a small headquarters organization. </li></ul>0
    20. 20. Five Approaches to Structural Design Exhibit 10.3 0
    21. 21. Five Approaches to Structural Design Slide 2 Exhibit 10.3 0
    22. 22. Vertical Functional Approach <ul><li>Grouping of positions into departments based on similar skills, expertise, and resource use </li></ul><ul><ul><li>Information flows up and down </li></ul></ul><ul><ul><li>Chain of command converges at the top </li></ul></ul><ul><ul><li>Managers and employees are compatible because of similar training and expertise </li></ul></ul><ul><ul><li>Rules and procedures governing duties and responsibilities </li></ul></ul>0
    23. 23. Divisional Structure Advantages <ul><li>Efficient use of resources </li></ul><ul><li>Skill specialization development </li></ul><ul><li>Top management control </li></ul><ul><li>Excellent coordination </li></ul><ul><li>Quality technical problem solving </li></ul>0
    24. 24. Divisional Structure Disadvantages <ul><li>Poor communications </li></ul><ul><li>Slow response to external changes </li></ul><ul><li>Decisions concentrated at top </li></ul><ul><li>Pin pointing responsibility is difficult </li></ul><ul><li>Limited view of organizational goals by employees </li></ul>0
    25. 25. Matrix Advantages <ul><li>More efficient use of resources than single hierarchy </li></ul><ul><li>Adaptable to changing environment </li></ul><ul><li>Development of both general and specialists management skills </li></ul><ul><li>Expertise available to all divisions </li></ul><ul><li>Enlarged tasks for employees </li></ul>0
    26. 26. Dual Authority Structure in a Matrix Organization Exhibit 10.6 0
    27. 27. Matrix Disadvantages <ul><li>Dual chain of command </li></ul><ul><li>High conflict between two sides of matrix </li></ul><ul><li>Many meetings to coordinate activities </li></ul><ul><li>Need for human relations training </li></ul><ul><li>Power domination by one side of matrix </li></ul>0
    28. 28. Team Advantages <ul><li>Same advantages as functional structure </li></ul><ul><li>Reduced barriers among departments </li></ul><ul><li>Quicker response time </li></ul><ul><li>Better morale </li></ul><ul><li>Reduced administrative overhead </li></ul>0
    29. 29. Team Disadvantages <ul><li>Dual loyalties and conflict </li></ul><ul><li>Time and resources spent on meetings </li></ul><ul><li>Unplanned decentralization </li></ul>0
    30. 30. Virtual Network Approach Advantages <ul><li>Can draw on expertise worldwide </li></ul><ul><li>Work force flexibility </li></ul><ul><li>Reduced administrative overhead </li></ul>0
    31. 31. Network Approach Disadvantages <ul><li>Lack of control, weak boundaries </li></ul><ul><li>Greater demands on managers </li></ul><ul><li>Employee loyalty weakened </li></ul>0
    32. 32. Task Forces, Teams, Project Management <ul><li>Task Force = temporary team/committee designed to solve a short-term problem involving several departments </li></ul><ul><li>Project Manager = responsible for coordinating activities of several departments on a full-time basis for the completion of a specific project </li></ul>0
    33. 33. Reengineering <ul><li>Radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed </li></ul><ul><li>Process = organized group of related tasks and activities that work together to transform inputs into outputs and create value </li></ul>0
    34. 34. Factors Shaping Structure Exhibit 10.13 0

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