The document discusses different aspects of organizational structure, including: 1) It describes common elements of organizational structure like division of labor, formal reporting relationships, and coordination systems. 2) It outlines different structural designs for organizing work like functional, divisional, matrix, and team-based structures. 3) It examines structural elements like spans of control, centralization/decentralization, and departmentalization and how they shape organizational design. 4) It discusses how factors like strategy, environment, and technology influence appropriate structural choices.

1. Designing Adaptive Organizations
Chapter 10

2. 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
Manager’s Challenge: Nissan
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3. Topics
Designing Adaptive Chapter 10
Organizations
 Organizing Principles and Concepts
 Organizing the Vertical Structure
 Using Mechanisms for Horizontal
Coordination
 Tailoring Various Elements of Structural
Design to Organizational Situations
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4. Organization Structure
Defines how tasks are divided, resources
are deployed, and departments are
coordinated
● Set of formal tasks assigned
● Formal reporting relationships
● The design of systems to ensure
effective coordination of employees
across department
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5. The Organization Chart
• Visual representation of an organization’s
structure “The Home Depot is the world's largest home
improvement retailer currently operating 1,363
• Important Features of Vertical Structure:
stores.
1. Work Specialization
2. Chain of Command
3. Authority, Responsibility and Delegation
4. Span of Management or Span of Control
5. Centralization/Decentralization
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6. Work Specialization
Division of Labor concept
 Tasks are subdivided into individual jobs
 Employees perform only the tasks relevant
to their specialized function
 Jobs tend to be small, but they can be
performed efficiently
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7. Chain of Command
 Unbroken line of authority that links all
 Unbroken line of authority that links all
persons in an organization
persons in an organization
 Shows who reports to whom
 Shows who reports to whom
 Associated with two underlying principles
 Associated with two underlying principles
 Unity of Command
 Unity of Command
 Scalar Principle
 Scalar Principle
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8. Authority
 Formal and legitimate right of a manager to
 Formal and legitimate right of a manager to
make decisions and issue orders
make decisions and issue orders
 Allocate resources to achieve organizationally
 Allocate resources to achieve organizationally
desired outcomes
desired outcomes
 Authority is distinguished by three characteristics
 Authority is distinguished by three characteristics
 Authority is vested in organizational positions, not
 Authority is vested in organizational positions, not
people
people
 Authority is accepted by subordinates
 Authority is accepted by subordinates
 Authority flows down the vertical hierarchy
 Authority flows down the vertical hierarchy
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9. Responsibility
Flip Side of the Authority coin
 The duty to perform the task or activity
an employee has been assigned
 Managers are assigned authority
commensurate with responsibility
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10. 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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11. Delegation
●Process managers use to transfer
authority and responsibility
●Organizations encourage
managers to delegate authority to
lowest possible level
Ethical Dilemma: A Matter of Delegation
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12. Delegation
Give Maintain Evaluate and reward
thorough feedback performance
instructions
Techniques for Delegation
Ensure that
Delegate the authority equals Select the right
whole task responsibility person
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13. Line and Staff Authority
 Line Authority = individuals in management
positions have the formal power to direct and
control immediate subordinates
 Staff Authority = granted to staff specialists in
their area of expertise
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14. Span of Management (also called
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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15. Factors Associated With Less
Supervisor Involvement
 Work is stable and routine
 Work is stable and routine
 Subordinates perform similar
 Subordinates perform similarwork tasks
work tasks
 Subordinates are concentrated in a single location
 Subordinates are concentrated in a single location
 Subordinates are highly trained
 Subordinates are highly trained
 Rules and procedure defining task activities are available
 Rules and procedure defining task activities are available
 Support systems and personnel are available for the
 Support systems and personnel are available for the
manager
manager
 Little time is required in nonsupervisory activities
 Little time is required in nonsupervisory activities
 Managers’ preferences and styles favor a large span
 Managers’ preferences and styles favor a large span
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16. 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 horizontally
dispersed and fewer hierarchical levels
 The trend has been toward wider spans of control
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17. Centralization versus Decentralization
 Centralization – the location of decision
authority near top organization levels
 Decentralization – the location of decision
authority near lower organization levels
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18. Centralization versus Decentralization
 Greater change and uncertainty in the
environment are usually associated with
decentralization
 The amount of centralization or
decentralization should fit the firm’s
strategy
 In times of crisis or risk of company failure,
authority may be centralized at the top
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19. Departmentalization
 The basis on which individuals are grouped into
departments and departments into the total
organization
• Five Approaches to Structural Design
1. Vertical Functional Structure
2. Divisional Structure
3. Matrix Structure
4. Team-Based Structure
5. Virtual Network Structure
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20. Vertical Functional Organizational
Structure
CEO
Finance Production Marketing
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21. Vertical Functional Structure
 Grouping of positions into departments
based on similar skills, expertise, and
resource 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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22. Divisional Structure
CEO
Consumer Lighting Medical
Products Products Systems
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23. Divisional Structure
 Departments are grouped based on similar
organizational outputs
● Each division is autonomous of the others in a
huge corporation or organization
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24. Divisional Structure Advantages
 Efficient use of resources
 Skill specialization development
 Top management control
 Excellent coordination
 Quality technical problem solving
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25. Divisional Structure
Disadvantages
 Poor communications
 Slow response to external changes
 Decisions concentrated at top
 Pin pointing responsibility is difficult
 Limited view of organizational goals by
employees
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26. Matrix Structure (Project-
based)
Employees ( ) are temporrily assigned to a specific
project team and have a permanent functional unit
CEO
Engineering Marketing Design
Project A
Manager
Project B
Manager
Project C
Manager
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27. General Motors’ IT Matrix Structure
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28. Matrix Structure
 Utilizes functional and divisional chains of
command simultaneously in the same part of
the organization
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29. 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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30. Dual-Authority Structure in a
Matrix Organization
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31. 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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32. Team Structure
Organization is made up of horizontal teams that
coordinate their activities and work directly with
customers to achieve the organization’s goals
Cross-functional teams – a group of employees from
various functional departments that meet as a team to
resolve problems
Permanent teams – a group of participants from
several functions who are permanently assigned to
solve ongoing problems of common interest
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33. Team Advantages
 Same advantages as functional
structure
 Reduced barriers among
departments
 Quicker response time
 Better morale
 Reduced administrative overhead
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34. Team Disadvantages
 Dual loyalties and conflict
 Time and resources spent on
meetings
 Unplanned decentralization
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35. Virtual Network Structure
Product Call center
development partner
partner (India)
(U.S.A.)
Core
Firm
Package
Accounting
design
partner
partner
(Canada)
(UK)
Assembly
partner
(Mexico)
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36. Virtual Network Structure
 Disaggregates major functions to separate
companies that are brokered by a small
headquarters organization
OUTSOURCING
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37. Virtual Network Advantages
 Global competitiveness
 Work force flexibility
 Reduced administrative overhead
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38. Virtual Network Disadvantages
 No hands-on control
 Loss of part of the organization severely
impacts remainder of organization
 Employee loyalty weakened
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39. Task Forces, Teams, Project
Management
 Task Force = temporary team/committee
designed to solve a short-term problem
involving several departments
 Project Manager = responsible for
coordinating activities of several departments
on a full-time basis for the completion of a
specific project
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40. Reengineering
 Radical redesign of business processes to
achieve dramatic improvements in cost,
quality, service, and speed
 Process = organized group of related tasks
and activities that work together to transform
inputs into outputs and create value
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41. Factors Shaping Structure
Structure Follows Strategy
Structure Reflects the Environment
Structure Fits the Technology
Service Technology – technology characterized
by intangible outputs and direct contact between
employees and customers
Digital Technology – technology characterized
by use of the internet and other digital processes to
conduct or support business operations
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