9e daft chapter_9_designing_adaptive_organizations

Designing Adaptive
Organizations
CHAPTER 9

chapter9
Copyright ©2010 by South-Western, a division of Cengage
Learning. All rights reserved.
3
• 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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4
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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5
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 Force
A 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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34
Structure Follows Strategy
The right structure is designed to fit the
organization’s strategy

9e daft chapter_9_designing_adaptive_organizations

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